^ LAW 45 JOHN ST NEW YCK. esc (yUJU,(.iLs^ Law Library Cornell Law School THE GIFT OF Oharles K. Biixdiok Es^^ Ithaca, New York Date ^ril 30,1941 mLi^^/Io:^ Cornell University Library KF 2344.B36 The law of railroad rate regulation :wit 3 1924 019 290 075 Cornell University Library The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924019290075 THE LAW OF RAILROAD RATE REGULATION WITH SPECIAL UEPERBNCB TO A^[ERICAN LEGISLATION. BY JOSEPH HENRY BEALE, Jr., BUSSEY PROFESSOR OP LAW IN HARVARD UNIVERSITY AND BRUCE WYMAN, ASSISTANT PROFESSOR OF LAW IN HARVARD UNIVERSITY. BOSTON WILLIAM J. NAGEL. 1907 Copyright, 1906, Bt JOSEPH HENRY BEALE, JE., AND BRUCE WYMAN, Copyright, 1001, By JOSEPH HENRY BEALE, JB., AND BRUCE WYMAN. PREFACE. The passage of the Federal Eiailroad Rate Act of 1906 has both emphasized the present importance' and added to the future importance of the law governing the regulation of railroad rates. In all interstate shipments, which comprise so large a propor- tion of our railroad traffic, and in the local shipments of a very large number of our States, the maximum rates are now regu- lated by law; either directly by legislature, or (as is usually the case) by the action of a commission under authority conferred by the legislature. It is hardly necessary at this time to call sipecial attention to the praiotical importance to every member of the co'mmunity of the charges made by the railroads. To the vast majority these charges are an important part of the cost of their food ; it is in the power of the great trunk lines, except where the law can re- strain them, by an increase of rates to cause a. famine as serious as would be caused by a complete failure of the crops. To a. great number of our people, on the other hand, — to the great farmers of the interior, to the ranch mem of the plains, to the planters of the South, to the manufacturers of the seaboard, and to the millions of their employes who are deipendent upon their prosperity, — railroad charges are of greater immediate import- ance. The railroads, if unrestrained by law, can prosper or can ruin tihem.; they can build up a great and flourishing business, or they can turn an industrious city into a wilderness again. That power such as this should be the subject of legal restraint is inevitable; that the legal qualities and limitations of such re- straint should be of the greatest interest to the profession and to the people at large is clear. [lii] Peeface. From tihe earliest times some restraint has been exercised over suoh. lines of industry as are of vital interest to the public. The establishment of the King's peace, the protection of the weak against the actual physical violence of the strong, is the fundamental function of governmeoit in the modem sense; but of equal importance and of almost equal antiquity is the protec- tion of the common people against the greed and oppression of the powerful. In matters not vital to the life and well-being of mankind the laws of society may be left free to operate, without limitation by the sovereign power ; but in all that has to do with the necessaries of life the protection of the sovereign is extended. He protects equally against physical violence and against op- pression that affects the means of living. In modem times the prevalence in commercial life of the principle of laissez faire has led to tlie formation of great in- dustrial combinations. Great enterprises have taken the place of small ones, and great industries have been localized at the most convenient parts of the cx>untry. All tliis commercial or- ganization has been based upon the development of railroads ; which are necessary not only to bring the raw material to the factory and to distribute the finished product, but also to supply with the necessaries of life every inhabitant of the country. The result haa been tlie establishment of great and powerful cor- porations in whose hands is the railroad carriage of the country. But as these great combinations of capital have grown up under the law, so their legal rights m.ust be subject to the rights of the whole people ; great power brings as its consequence the need of control of that power for the good of the whole people. Two ways only can be found to exercise such control. One way, that advocated by the most radical statesmen, is the gov- ernment ownership and operation of the railroads. The other way, which is in fact the conserva.1;ive method of dealing with the problem, is the control of the rates and practices of the rail- roads for the public good. One or the other of these methods must be finally adopted. The conservative method is now on [iv] Feeface. trial. It bebooves the lawyers to see to it that it be so intel- ligently tried, and that the law applicable to the case be so accurately enforced, that we may not be driven perforce to the radical alternative of public owneo-sihiip. Tbe belief th.at this duty has, almosit without warning, been thrust upon the profession, and that the average lawyer has not been prepared either by study or by experience to solve the dif- ficult questions that may arise, has led the authors to prepare and publish tliis treatise, with the hope that it may help the profession to meet its new and perplexing problems. But in order to render such assistance, it seemed to the authors that a treatise wliich merely collected and discussed judicial decisions upon railroad rates would be a very imperfect work. The law of railroad rates is based upon the general principles of public- service law an.d cannot be mastered without an adequate knowl- edge of that law. The first task of the authors has therefore been to give a sufficient tliough concise view of such portions of the primary obligations of those in public employments, and particularly of carriers, as bears essentially on the problem of rates. For this portion of their subject the authors have been prepared by special studies during the last ten or twelve years ; and tbough the subject has not been greatly elaborated, it is their ho'pe that this first part of the treatise will be found generally useful. Tbat portion of tbe subject which deals more particularly with the fixing of rates has been studied with patient care, and authorities have been sought wiiierever it was thought tbey could be found. As this is a topic in the law of public employments, the doctrines involved are the same whether the rates in question are those of railroads, or of gas or water companies, or of other companies engaged in a public employment. Cases thierefore involvingtherates of tbese companies have been sought and cited. Even including these cases, the judicial decisions in which the law goveminp; rates has been involved have been few and al- most invariably recent; for the importance of the law is new. [v] Preface. It has, therefore, seemed best to examine the most important decisions in detail and to give in many cases the very language of the courts; since thus only may the reader have an accurate knowledge of the current doctrine and its probable development. ISTot that the authors have hesitated to express their own opinions upon novel or difficult points; indeed, they fear that the bar may feel that they have been too free in giving their own views (rf the law. In aealmg with rate problemsi, the authors have cited and ex- amined the decisions of the Interstate Commerce Commission in the same way that they have cited and examined those of the courts. They regard this course of action as most important. Not only in proceedings before the Commission itself, but even in the Supreme Court of the United States, these decisions have been cited as authoritative ; and with the increased power given to the Commission by the late Act its opinions will have an in- creased importance and will contribute most materially to the develoipment of the law. Our purpose has involved not merely a Study of the common law as it bears upon railroad rates, but an examination as well of the statutory provisionsi We have given the fuU text of the Interstate Commerce Act as it now stands, with full annota- tions including the decisions of the Commission and of the Courts. We have also given such parts of the State acta as were thought to be of use in such a book, onr idea being to let a law- yer in any State know what sort of statutes there are in other States. This treatise aims to give not merely the law of railroad rates, but also the practice before the Interstate Commerce Commis- sion. For this purpose those sections of the Act which touch on practice have been annotated with especial fulness, and in the Appendix have been included the Rules of Practice of the Commission and a set of approved Forms. This, it is hoped, will assist lawyers who will be engaged for the first time in prao- [vi] Preface. tioe before the Coiranission by reason of its enlarged powers and increased functions. A few words of apology must be added. While the authors have been studying this subject for many yeara, and have had th^ great advantage of discussing it with successive classes of students during that period, they undertook to write this treatise in a very few months, their idea being that to be of real use to the profession the book should be published as soon as the new federal legislation went into effect. For those who can realize by experience the labor of writing and putting through the press a work of this size and scope in so short a time the errors, typographical and otherwise, will appear not unnatural or altogether inexcusable. Many such errors will be found ; we hope however, that nothing of the sort will be so serious as to obscure the meaning of the text, and that the practical useful- ness of the book will not be affected. J. H. B., Jr. B. W. Oambeidge, July 1, 1906. [vii] BOOK T. FUNDAMEISiTAL PEIJSTCIPLES GOVERFIISTG- EAIL- ROAD SERVICE. CHAPTER I. HISTORICAL INTRODUCTION. § 1. Public callings and private callings. TOPIC A. MEDIAE\'AL COiN'DITIONS. § 2. The distinction between public employment and private business an old one. 3. Conditions of business in the Jliddle Ages. 4. Parliamentary regulation ot rates. 5. Examination of early public employments. 6. The common surgeon as an illustration. 7. The tailor as an illustration. 8. The smith as an illustration. 9. The innkeeper as an illustration. 10. The carrier as an illustration. TOPIC B. PERSISXEXCE OF STATE EEGULATION. § 11. Partial continuance of regulation to modern times. 12. Persistence of principle accompanying change of conditions. 13. Application of the principle to commodities in new countries. 14. Monopolies established by patents from the crown. 15. Grant of franchises in modern times. 16. Persistence of the class of public callings. 17. IntroductioA of improved highways by private enterprise. 18. Toll-bridges and turnpikes as illustrations. 19. Canals and waterways as illustrations. [ix] Table of Contents. TOPIC C. THEORY OF LAISSEZ FAIEE. § 20. Freedom of individual eflfort limiting the application of the prin- ciple. 21. Early decisions as to gas supply an illustration. 22. Early decisions as to waterworks an illustration. 23. Cotton press as a modern illustration. 24. Stockyards as a modern illustration. 25. Conservative and radical views concerning the public services. TOPIC D. GEOWTH OF THE PUBLIC EMPLOYMENTS. § 26. Extension of the application of the principle in recent times. 27. Growth of the public service companies in late years. 28. Grain elevators as an illustration. 29. Warehouses as an illustration. 30. Associated Press as an illustration. 31. Ticker service as an illustration. 32. The public services as virtual monopolies. 33. Overshadowing importance of the problem of rate regulation. 34. Rate regulation at the present time. PART I. Ohief Ottabaoteejstics of Common Carriage. CHAPTER II. COMMON CARRIAGE AS A PUBLIC EMPLOYMENT. § 41. Reasons for regarding carriers as in the public employment. TOPIC A. LEGAL PRIVILEGES AS GROUND OF PUBLIC POSITION OF THE CARRIER. i 42. Power of eminent domain. 43. Pipe lines as an example. 44. Cemeteries as an example. 45. Aid from taxation. 46. Irrigation canals as an example. 47. Grist mills as an example. [x] Table of CoNTEiSTS. TOPIC B. EFFECT OF LEGAL MONOPOLY CONSIDERED. 48. Grant of an exclusive franchise. 49. Bonded warehouses as an example. 50. Log-driving corporations as an example. 51. .Use of the streets. 52. Street railways as an example. 53. Electrical subways as an example. 54. General conclusions relative to special legal privileges. TOPIC C. VIRTUAL MONOPOLY AS A GKOUND OF PUBLIC POSI- TION OF THE CARRIEE. § 55. Virtual monopoly the true ground for regulating public callings. 56. Monopoly due to character of business. 57. Water works as an example. 58. Natural gas as an example. 59. Gas works as an example. 60. Electric plants as an example. TOPIC D. MONOPOLY OP THE ESTABLISHED PLANT. § 61. Monopoly due to established plant. 62. Telegraph service as an example. 63. Telephone service as an example. 64. Sewerage system as an example. 65. Docks as an example. 66. General conclusions as to virtual monopolies. 67. Law governing all public employments the same. CHAPTER III. REQUISITES OF COMMON CARRIAGE. TOPIC A. BY WHOM THE CARRIAGE IS UNDERTAKEN. 71. Who are common carriers. 72. Carriage oi goods by servant of a carrier. 73. Carriage of passengers by servant of a carrier. 74. Carrier must control the thing carried. [Xi] Table of Cojntejnts. topic b. whether these has been acceptance of passen- geks and theik belois'gings. § 75. Carriage in veliicle not intended for passengers. 76. Carriage on freight cars. 77. Carriage in a place not intended for passengers. 78. Whether there is acceptance in such cases. 79. Baggage carried in car with passenger. 80. American rule as to baggage carried by passenger. TOPIC C. WHETIIEE THEEE HAS BEEN BAILMENT MADE OF GOODS. § 81. Owner accompanies the goods and retains possession. 82. Owner accompanies the goods without retaining possession. 83. Cattle carried with a drover furnished by the owner. 84. Goods taken across a ferry by the owner. 85. Goods carried across a bridge. 86. Issue of bill of lading without receipt of goods. TOPIC D. TEAKSPOETATION NECESSAEY FOE THE CONCEPTION OF CAEEIAGE § 87. Carrier must undertake transportation. 88. Storage hulks not carriers. 89. Log drovers not carriers. 90. Drovers of cattle not carriers. 91. Vehicles leased for carriage. 92. Shipper furnishes servants to manage vehicle. TOPIC E. WHEN TEANSPOETATION IS FUENISHED BY OTHEES. I 93. Leased railways. 94. Chartered accommodations. 95. Refrigerator car lines not carriers. 96. Sleeping car companies not carriers. 97. Forwarding agents not carriers. [xii] Table of Contents. CHAPTER IV. PUBLIC PROFESSION OF THE COMMON CARRIER. § 101. Nature of public profession. TOPIC A PUBLIC EMPLOYMENT. i 102. Public profession as an assumption of a public trust. 103. Express profession of public employment. 104. By whom the profession must be made. 105. Lighterman. TOPIC B PRIVATE BUSINESS. ? 106. Employment in private business. 107. Private ferries. 108. Private railroad. i09. Private spur tracks. 110. Lateral brandies. 111. Public spur tracks. 112. Industrial railways. 113. Tap lines. 114. Distinction between public lateral branch and private spur. TOPIC C CASUAL EMPLOYMENT. § 115. Intermittent employment. 116. Shipmaster. 117. Railroad not opened for passengers. 118. Incidental employment — Wagoner. 119. Truckman. TOPIC D SPECIAL AREANGEMENTS AS TO THE CAEBIAGE. § 120. Whether the transaction is upon a public or private basis. 121. Special train. 1252. Special freight trains. 123. Private excursion trains. 124. Establishment of train on guaranty of an individual. TOPIC E EXTENT OF THE PUBLIC PKOFESSION. § 125. To what goods the profession to carry extends. 126. Money. 127. Cattle. 128. Carrier of passengers whether also a carrier of goods. i29. Rolling stock. 130. Newspapers. 131. Other special classes of goods. 132. Obligation to carry all goods of a class. [Xiii] Table of Contents. TOPIC F. EEGULAE BUSINESS. 133. Special ■ agreement. 134. Establishment of regular charge. 135. Permanent profession. 136. General practice. CHAPTER V. COMMON CARRIAGE INVOLVES COMPENSATION. § 141. Common carriage is compensated carriage. TOPIC A COMPENSATED CARRIAGE. § 142. Carriage is for hire unless it is otherwise agreed. 143. Pass issued for business reasons. 144. Carrier's services in returning goods compensated. 145. Carriage of baggaga is compensated. 146. Baggage carried without compensation. 147. Baggage carried apart from the passenger. TOPIC B GRATUITOUS ARRANGEMENTS. § 148. Gratuitous carrier liable for negligence. 149. Gratuitous passenger. 150. Carriage of children and servants. 151. Riding by mistake. TOPIC C SPECIAL CLASSES OP PERSONS. § 152. Mail clerks and express messengers. 153. Employes of the carrier. TOPIC D CARRIAGE OBTAINED BY MISREPRESENTATION. § 154. Persons never accepted in a proper place not passengers. 155. Carriage of goods secured by fraud. 156. Stealing a ride. 157. Riding on invalid ticket. 158. Attempt to escape conductor's notice. 159. Riding free by connivance of the conductor. 160. Guest of servant of the carrier. [xiv] Table of Contents. CHAPTER VI. ENUMERATION OF THE COMMON CARRIERS. 171. Varieties of common carriers. TOPIO A CAEEIEES OF GOODS. 172. Pack carriers. 173. Wagoners. 174. Hoymen. 175. Ships. 176. Canal boats. 177. Steamboats. 178. Railways. 179. Draymen. 180. Transfer companies. 181. Express companies. 182. Dispatch companies. 183. Messenger companies. 184. Towboats. TOPIC B CAEEIERS OF PASSENGEBB- 185. Ferrymen. 186. Stage coaches. 187. Hackmen. 188. Street railways. 189. Passenger elevators. 190. Pleasure railways. [xv] Table of Contents. PART II. Pbimaet Duties of Common Oaeeiees. CHAPTER VII. CONDITIONS PRECEDENT TO SERVICE. § 201. Public duty the basis of the restriction to reasonable charges. TOPIC A DUTY OWED TO CEETAIN CLASSES OF PEESONS. § 202. Service owed to certain classes. 203. Person desiring shelter merely. 204. Person desiring to transact business. 205. Sleeping and parlor car subject to similar rule. 206. Person demanding incidental services. 207. Person assisting or meeting passengers. 208. Right involved is that of the passenger. 209. Extent of carriers duty to such persons. TOPIC B TENDEE OF COMPENSATION EEQUIEBD. § 210. Payment of fare as condition of receiving. 211. What is sufficient tender of fare or freight. 212. What denomination of money may be tendered. 213. Tender of money refused as counterfeit. 214. Tender of fare usually waived by the carrier. TOPIC C. GOODS MUST BE TENDEEED IN PEOPEE MANNEE. § 215. Goods must be tendered to the carrier at proper time. 216. Passengers must enter vehicle at proper time. 217. Goods must be tendered properly packed. 218. Special freight may require special tender. 219. Shipments in bulk should be received under proper conditions. 220! Reception of live stock. TOPIC D. TEANSPOETATION MUST BE DEMANDED AT A PEOPEE PLACE. § 221. Tender for carriage must be at the proper place. 222. Extent of carrier's route. 223. The establishment of stations must be reasonable. 224. Establishment of stations by legislation. 225. Requirement of stations by the courts; conservative view. 226. Progressive view of the question of stations. 227. Carriers between certain stations only. [xvi] Table of Contents. CHAPTER VIII. EXCUSES FOR REFUSAL TO SERVE. 231. General principles governing excuses. TOPIC A ILLEGALITY INVOLVED IN SERVICE. 232. Duty not to abet illegality. 233. No right to exclude unless illegality involved. 234. Where refusal is made necessary by law. 235. Whether excused from serving by Sunday laws. 236. Whether excused from transporting intoxicating liquors for illegal sale. 237. Excused from carrying passengers who intend to do illegal acts. TOPIC B PEOTECTION OF OTHERS SERVED. i 238. Exclusion of persons dangerous or annoying to other passengers. 239. Violent persons may be excluded. 240. Insane persons may be excluded. 241. How intoxicated persons must be treated. 242. Exclusion of indecent and profane persons. 243. Exclusion of persons who bring dangerous or obnoxious articles to the vehicle. TOPIC C APPLICANT UNDER DISABILITY. ) 244. How far blind persons may be excluded. 245. How sick persons must be treated. TOPIC D REFUSAL UPON PERSONAL GROUNDS. 246. General obligations to serve all. 247. Refusal to carry because of color or race. 248. Refusing distasteful people. 249. Refusing on moral grounds. [xvii] Table of Contents. CHAPTER IX. JUSTIFICATION FOE, SUSPENSION OF SERVICE. 261. Right to suspend service. TOPIC A PEESS OF BUSINESS. 262. Lack of vehicles. 263. Sudden press of business. 264. When usual business is provided for. 265. When expected business is not provided for. TOPIC B OBDBE OF PEEFEEENCE IN CAEBIAGE. 266. Order of preference as betvreen diflferent classes of goods. 267. Public necessities considered in determining preference. 268. No preference justifiable between goods of same nature. 269. Order of preference between stations. 270. No part of the system should be given preference. 271. Order of preference between shippers. 272. Apportionment of cars to shippers. TOPIC C INTEEEUPTION BY STEIKB. 273. Refusal to receive because of strike is not justifiable. 274. Deficient service not excused by strike. 275. Refusal to receive because of the violence of the strikers or others. 276. How far employers of carriers are bound not to strike. TOPIC D WITHDEAWAL FEOM THE liUSINESS. 277. Whether there is an obligation to operate the whole system. 278. Obligation to serve according to charter provisions. 279. Service must be continued according to charter provisions. 280. Where no mandatory charter provision. 281. Partial withdrawal permitted. 282. Whether permanent abandonment is permitted. ^ 283. Complete abandonment permitted. [xviii] Table of Contents. CHAPTER X. RIGHT TO PROTECT y:S OWN INTERESTS. I 191. Public duty may conflict with business policy. TOPIC A APPLICATION FOR SERVICE BY MEMBERS OF THE PUBLIC. § 292. Those who deal with a rival must be served. 293. Carriers must take passengers who come by rival lines. 294. Railroads cannot refuse to take freight from those who deal with a rival. TOPIC B APPLICATION BY A RIVAL FOR SERVICE. § 295. Competitors have same rights as general public. 296. A competitor cannot be refused as a passenger. 297. Shipments made by a rival must be taken. TOPIC C— DEMAND BY A RIVAL FOR USE OP FACILITIES. 298. Rivals cannot demand use of facilities. 299. Passenger making use of carrier's facilities in his own business. 300. Carrier not bound to carry packed parcels. TOPIC D PROTECTION OF A COLLATERAL BUSINESS. 301. Right to engage in an independent business. 302. Carrier discriminating in favor of itself. 303. Railroad cutting its own rates for itself. 304. Charging its competitors higher relative rates. 305. Whether a collateral business is ultra vires. 306. Whether collateral businesses should be permitted. 307. Arguments for the radical view. [xix] Table of Contents. BOOK II. REGULATION OF RAILROAD RATES IE ACCORD- AI^ICE WITH COMMOIST LAW PRINCIPLES. PART I. Limitation of Chakges. CHAPTER XI. GENERAL PRINCIPLES GOVERNING COMPENSATION. i 311. General principles governing reasonableness of rates. TOPIC A THE SCHEDULE TAKEN AS A WHOLE. i 312. Reasonableness of the schedule as a whole. 313. Tests of the reasonableness of a schedule. 314. Many elements to be taken into account. 315. Interests of the companies to be considered. 316. Interests of the public to be considered. 317. Accommodation of the interests of both sought. 318. When fair net earnings left notwithstanding reduction of particular r;ite^. TOPIC B THE PAETICULAE RATES CONSIDERED SEPARATELY. § 319. Reasonableness of the separate rate. 320. Value of the service to the person served. 321. The complexities of the general problem. 322. Application of both tests necessary. 323. Relation of a particular rate to a whole schedule. 324. Possibility of increase of business if rates are lowered. 325. Inherent difficulties in accommodating all tests. 326. Governmental regulation for the best inirests of all concerned. 327. State of the authority upon the general subject. [-^X] Table of Contents. TITLE I. Reasonableness of Schedule as a Whole. CHAPTER XII. BASIS OF CAPITAL CHARGES. TOPIC A enumeration OF THE THEORIES FOR ESTIMATING CAPITAL. § 331. The various theories suggested. 332. Comparison of these theories of capital charge. 333. Cost of reproduction as a basis. 334. Money invested as a basis. 335. Outstanding capitalization as a basis. 336. Present value as a basis. 337. Competition of these diilerent theories. TOPIC B THE ORIGINAL COST AS THE BASIS OF REGULATION BY THE COMMON LAW. § 338. The investment as the capital entitled to return. 339. Argument for the rule of total investment. 340. What is the actual cost. 341. Cost to the public service company enhanced by fraudulent contract. 342. Tjnwise construction. 343. Plant unnecessarily large. 344. Portion of plant not yet in use. 345. Cost of unsuccessful experiments. TOPIC C OUTSTANDING CAPITALIZATION INCONCLUSIVE- § 346. Watered stock. 347. Nominal capitalization inconclusive. 348. Stock issues outstanding deceptive. 34©. Bonded indebtedness beyond present value of security. 350 Cost of buying up constituent roads of the present system and converting them to electric roads. [xxi] Table of Contejs'ts. topic d peesewt value as the basis of regulation by legislation. § 351. Power to set aside a statutory rate. 352. Constitutional requirements. 353. Original cost not necessarily the basis of capitalization. 354. Present value may be shown to be less than actual cost. 355. Original cost as evidence of actual value. 356. Value returned for taxation not conclusive. 357. Elements entering into the determination of present value. TOPIC E THE COST OF EEPEODUCTION AS THE BASIS OF VALUE. § 358. The rule in Minnesota. 359. Methods of the Texas commission arriving at replacement value. 360. The rule held unreasonable by Federal Courts. 361. Explanation of the California decisions. TOPIC F FEANCHISE AND GOOD-WILL^ WHETHEE ENTITLED TO BE CONSIDEEED. § 362. Value of franchise not considered in estimating rates. 363. Value of franchise as ba.sis for taxation. 364. Value of franchise when the property is bought. 365. Value of an exclusive franchise. 366. Value of a non-exclusive franchise. 367. Value of a practically exclusive franchise. 368. Physical adaptation to a going business. 369. Value as a going concern. 370. Value of " going business " whether entitled to a return. 371. Consideration given to the entrepreneur. CHAPTER XIII. RATE OF RETURN. § 381. Elements in determing a fair return. TOPIC A ESTABLISHMENT OF THE DOCTEINE OP ADEQUATE EETUEN. § 382. Rates fixed must not produce a, deficit. 383. Some return requisite. 384. Adequate return ought to be left. 385. Rates may be reduced provided reasonable return is left. 386. Reasonableness of return a judicial question. 387. Fair rate of returij. [xxii] Table op Contents. topic b interest upon bonds. § 388. Interest upon outstanding bonds protected. 389. The rate of return upon investments in general. 390. Rates at which governments can borrow, no criterion. 391. More than current rates of interest not secured to bondholders. 392. Prevailing rate of interest allowed. TOPIC C DIVIDENDS ON STOCK. § 393. Reasonable dividends allowed. • 394. Current rates of return. 395. Usual business profit. 396. Rate of return dependent upon locality. 397. Paying dividends dependent upon commercial conditions. 398. Recoupment in prosperous times. 399. No right to raise rates in prosperous times. 400. Creating a fund for payment of uniform dividends. TOPIC D BATE OF EETUBN DEPENDENT UPON THE CIIAEACTEE OF THE ENTERPRISE. § 401. Larger returns in risky enterprises. 402. Hazards of the business considered. 403. Whether the return upon all property should be the same. 404. Rate of interest dependent upon the safety of the investment. 405. Risk by reason of depreciated security not considered. 406. General policy for allowing fair return. CHAPTER XIV. OPERATING EXPENSES. TOPIC A ANNUAL CHARGES. 411. Cost of service to be earned before return on capital. 412. Items in cost of performing service. 413. Net earnings in general. 414. Expense of equipment and maintenance. 415. Cost of rolling stock. 416. Cost of supplies. 417. S:ilaries of officials. 418. Estimating labor cost. [xxiii] Table of Contents. 5 419. Loans. 420. Taxes. 421. Losses by accident. 422. Expenditures to get business. 423. Unreasonable expenditures. 424. Improvident expenditures. TOPIC B CONSTRUCTION ACCOUNTS. i 425. Betterments considered. 426. Improvement of existing plant. 427. Replacement considered as repair. 428. Permanent improvements should not be annual charge. 429. New construction should not be charged as an operating expense. TOPIC C DEPE.BCIATION REQUIREMENTS. i 430. Allowance for depreciation. 431. Renewal of equipment to offset depreciation permissible. 432. Fund for repairs. 433. Authorities refusing to allow depreciation. 434. Sinking fund requirement. 435. Sinking fund for municipal bonds. 436. Amortization of franchises. TOPIC D PAYMENTS MADE TO HOLDERS OF SBCUEITIES, 437. Whether interest on bonds is properly an annual charge. 438. Dividends payable not classified as an annual charge. CHAPTER XV. SYSTEMS OPERATED AS UNITS. 441. Complications in case of systems. TOPIC A SYSTEMS OPERATED AS UNITS. 442. Methods of consolidation. 443. Divisions as integral parts of the whole system. 444. Branch lines. 445. Unprofitable portions of the line not considered. 446. Whole systems should be taken together. 447. Rates on different parts of same system apportioned. [xxiv] Table of Contents. TOPIC B HOLDING COKPOKATIONS. § 448. Apportionment to constituent companies. 449. System taken as a whole. 450. When constituent roads are operated under separate charters. 451. Systems considered as wholes. 452. When corporations of diverse characters held. TOPIC C^ LEASED LINES. § 453. Rent of leased roads. 454. Rental must be fixed in good faith. 455. If rental becomes unjustifiable. 456. Betterments of leased roads. TOPIC D PECULIAR EXPENSE OF THE PAETICULAE SEEVICE. \ 457. Special circumstances affecting the particular rate. 458. Divisions built through a difficult territory. 459. Divisions in sparsely populated territory. 460. Way stations. 461. General requirements may produce particular losses. 462. Plant adapted for larger population. TOPIC E DIVISION BETWEEN INTERSTATE AND INTRASTATE BUSINESS. ! 463. Alternative theories of apportionment. 464. Whether State lines are arbitrary. 465. Constitutional requirements for division. 466. Methods of division. [xxv] Table of Contes^ts. TITLE II. EEASONABLEISrESS OF PaETICULAK RaTES. CHAPTER XVI. FACTORS OPERATING IN THE ESTABLISHMENT OF PARTICULAR RATES. § 471. Distribution of the burden of the schedule upon different articles carried. TOPIC A. COST OF SEEVICE AS THE BASIS OF BATE MAKING. § 472. Method of estimating cost of service. 473. Basis of proportionate rate the ton-mile cost. 474. Cost of carriage as a factor affecting particular rate. 475. Insufficiency of the principle of the cost of service. 476. Length of haul as a factor affecting a particular rate. 477. Modification of the principle of the length of liiiul necessary. 478. Volume of traffic as a factor affecting the particular rate. 479. Limitation upon the law of increasing returns. 480. Increased volume of traffic causing increase of cost. t TOPIC B VALUE OF THE SEEVICE AS THE BASIS OF EATE MAKING. § 481. What the traffic will bear as a, factor affecting particular rate. 482. Essential defects in the principle of charging \yhat the traffic will bear. 483. Making rates compared with levying taxes. 484. Rates may be shown to be unreasonable in themselves. 485. Adjustment between the claims of the company and the patron. 486. Equalization of advantage as a factor affecting the particular rate. 487. Carriers not obliged to equalize disadvantages. 488. Competition as a factor affecting the particular rate. 489. Conclusion as to proportionate rate. 490. Classification the method of establishing the particular rate. 491. All factors enter into the determining of a particular rate. [xxvi] Tabi.e of Contents. CHAPTER XVII. LEGAL LIMITATIONS UPON MAKING PARTICULAR RATES. TOPIC A CBBTAIN LIMITATIONS FUNDAMENTAL. § 500. Rates must be fair to the company and to the public. 501. Limitations within which rates must be made. 502. Unreasonable regulation forbidden. 503. Value of the services constitutes maximum limit of charge. 504. Company cannot make unreasonable rates. 505. Reasonable rates not necessarily profitable. 506. Company cannot justify exorbitant profits. 507. Application of these principles to passenger fares. TOPIC B BASING EATES UPON COST OF SERVICE. § 508. Difficulties in dividing joint costs. 509. Cost of service different for different railroad systems. 510. Cost of service different for different parts of the same system. 511. Cost of service estimated from special expenditures in moving goods. 512. Rule of proportionality in sharing costs. 513. Law of decreasing costs. 514. Cost of service a principle applicable to passenger fares. TOPIC C BATES REASONABLE IN THEMSELVES. § 515. External standards of reasonableness. 516. The carrier is entitled to reasonable compensation. 517. Current rates for other transportation. 518. Evidence inadmissible unless conditions are similar. 519. Comparison of rates between different localities unjustifiable. 520. Discussion of Cotting v. Kansas City Stock Yard Company. 521. Discussion of Canada Southern Railway v. International Bridge Company. .'i22. Principles of usual rates peculiarly applicable to passenger fare;;. TOPIC D EATES BASED UPON VALUE OF SERVICE TO THE SHIPPER. § 523. What the traffic will bear. 524. Legal limitations upon this principle necessary. 525. Limit of value of service not necessarily limit of charge. 526. Traffic will continue to move at unfair rates. 527. Worth of the service to the individuals served taken as a whole. 528. Cost of obtaining a substitute for the service furnished. 529. Charging what the traffic will bear hardly applicable to passenger fares. [xxvii] Table of Contein'ts. TOPIC E KATES DICTATED BY COMPETITION. 530. Rates may be made to meet competition. 531. Policy for permitting competitive rates. 532. Competitive rates may be made low enough to hold business. &33. Rates must not be reduced by competition below a remunerative basis. 534. Standard rate among cSmpeting lines. 535. Competition not a ground for raising rates. 536. Absence of competition does not justify increase in rates. 537. Competition justifies differences in passenger fares only to a cer- tain extent. TOPIC F ABATES DESIGNED TO EQUALIZE ADVANTAGES. ~ 538. Limited operation of the principle of equalization at law. 539. Relative rates need not be adjusted from a commercial standpoint 540. Business situation should not be ignored altogether. 541. Rates should not equalize differences in value. 542. Passenger fares slightly afi'ected by the principle. CHAPTER XVIII. CLASSIFICATIOX OF COllMODITIES. TOPIC A^ METHODS OF CLASSIFICATION. 551. The meaning of classification. 552. The necessity of classification for a proper distribution of the burden. 553. The necessity of classification for convenience in rate fixing. 554. The history of classification in the United States. 555. Uniformity of classification attempted. 556. Classification necessarily imperfect. 557. Classification not unduly minute. 558. Extra class divisions. 559. Commodity rates. 560. Method of classification. 561. Interpretation of the classification sheet. TOPIC B GENERAL PEINCIPLES IN CLASSIFYING. 562. Influences determining classification. 563. Adjustment of business to established classification. 564. Classification according to manufacturer's representations. 565. Classification of various goods. 566. Difference between forcing classification on railroads and justifying classification by railroads. [xxviii] Table of Contents. TOPIC C BASIS OF CLASSIFICATION : COMPAEISON OF COMMODITIES. 567. The reasonableness of a particular rate involves reasonableness of classification. 568. Classification not determined by consideration of rate on a par- ticular commodity. 569. Elements in comparison of commodities. 570. Comparison of similar things. 571. Vegetables for table use. 572. Perishable articles of food. 573. Groceries. 574. Articles shipped in glass. 575. Forest products. 576. Dry goods. 577. Comparison of unlike things. 578. Differences between commodities. TOPIC D CONVENIENCE IN HANDLING. 579. Classification based on nature and size of package. 580. Shipment in small packages. 581. Shipment in form more convenient for handling. 582. Shipment in form permitting greater car load. 583. Classification based on volume of business. 584. Large volume of traffic in a certain commodity. 585. Volume of traffic in general considered. 586. Perishable freight. 587. Traffic handled in special trains. 588. Special equipment not necessary for the traffic. 589. Less than usual care required. TOPIC E VALUE OF THE GOODS. 590. Value of the goods as an element in determining classification. 591. Difference betvi'een values justifies difference in classification. 592. Different classification of anthracite and bituminous coal. 593. Market value rather than intrinsic value. 594. Differing value of same kind of freight. 595. Low value of goods as reducing classification. 596. Value of the commodity not of the greatest importance. [xxix] Table of Contents. TOPIC F CAE LOAD BATES. 597. Different classification and rating between ear load and less than car load lots. 598. DiflTerence in classification not essential. 599. Minimum carloads. 600. Minimum carload regulations. 001. Mixed carloads. 602. Car loaded by several shippers. 603. Train loads. TOPIC G DIIfFEEENCE IN BATE BETWEEN CLASSES. 604. General principles governing differences between classes. 605. Low grade commodities may be carried at rates relatively low. 606. High grade commodities should not be overcharged relatively. 607. Differences between the classes should not be disproportionate. 608. Principles upon which rates for different commodities should be made. 609. Reasonableness tested by comparison. 610. Differences between similar commodities ought not to be very slight. CHAPTER XIX. LENGTH OF TRANSPORTATION. 621. General standard of comparison the ton mile. TOPIC A FACTOES MODIFYING THE TON-MILE BATE. 622. Mileage rate tends to decrease inversely with the distance. 623. Equal mileage rates impractical. 624. Rates are in rough proportion to distance normally. 625. Different cost of service; heavy grades. 026. Competition modifying distance rates. 627. Comparison of through rates and local rates. 628. Difference in char^ for carriage in opposite directions, 029. Low back freights justifiable. 630. Creation of a market by preferential rates. 631. Equalizing manufactures in different localities. 632., Passenger fares generally on a mileage basis. [xxx] Table of Contents. TOPIC B GROUPING OF STATIONS. § 633. The system of grouping. 634. Grouping by reason of competition in the articles transported. 635. Grouping must be reasonable. 636. When uniform rate to a group of stations is justifiable. 637. Basing points established. 638. Basing points justilied. TOPIC C THROUGH BATES. § 639. Carriers may combine in a joint rate. 640. The entire rate must be reasonable. 641. Share of separate carrier as evidence of unfairness of entire rate. 642. Through rate need not be a reduced rate. 643. Through rate may be given although transit is broken. 644. Certain objections to the practice of giving privileges in transit considered. 645. Rebate on reshipment. 646. A througli arrangement necessary to justify such privileges. , 647. Dangers in giving privileges in transit. 648. Through passenger accommodations. TOPIC D. EXPOET AND IMPORT BATE. § 649. Export and import rates considered. 650. Import rates may be regulated by competition. 651. Export rates regulated by competition. 652. Foreign competition justifies only necessary difiference in rate. 653. Limitations upon making export and import rates. CHAPTER XX. THE RATE AS AN ENTIRETY. § 661. Nature of a rate. TOPIC A THE UNIT FIXED BY REGULATION. § 662. Characteristics of the rate as a regulation. 663. Established classification prima facie reasonable. 064. No presumption from continuance of classification under order of commission. 665. Publication of change of rate requisite. [xxxi] Table of Contents. § 666. Classification sheet not varied by contract or representation. 667. Methods of charging in rate making. 668. A minimum rate is justifiable. 669. Where minimum is fixed excess may be charged for. 670. Minimum weights with provision for refund of excess. TOPIC B THE JOUENET THE UNIT IN PASSENGER SEBVICE. § 671. The journey is a single entire unit. 672. Fare demanded at any point on the journey. 673. Ticket entitles passenger to carriage for a single journey. 674. Passenger cannot take two journeys for a single fare. 675. Passenger cannot pay two partial fares for a single journey. 676. Part of journey completed before collection of fare. 677. Resumption of journey by rejected passenger. 678. Passenger expelled at a regular station. 679. Change of destination during the journey. 680. Second journey on same train. 681. Kon-payment of charges for prior carriages. 682. Effect of repudiation upon the applicants rights. TOPIC C THE SHIPMENT THE UNIT IN THE CAEEIAGE OF GOODS. § 683. Maritime freight. 684. Right to compensation by agreement in case of carriage by sea. 685. Right to freight on land. 686. Effect of carriage over a portion of the journey. 687. Ko freight without delivery. 688. Freight indivisible as a rule. 689. Entire freight when goods arrive damaged. 690. Effect of partial delivery. 691. Lien for entire charge on every part. 692. >Co lien except for specific charge. TOPIC D ADDITIONAL CHAEGES FOE SEPAEATE PARTS QF THE SEEVICE. § 693. General principles as to additional charges. 694. Whether extra charges should be made. 09.T Foreign system of itemized charge. 696. Charges for service before carriage is undertaken. 697. Freight should cover the entire carriage. 698. Xo separate charge for a part of the transit. 699. Charges for services during transportation. [xxxii] Table of Contents. § 700. Terminal facilities usually included in the rates. 701. Terminals regarded as connections. 702. Services after carriage is ended. 703. Storage charges. 704. Demurrage of cars. PART II. PeEVENTION of DlSCRIMIIfATION. CHAPTER XXI. GENERAL PRINCIPLES GOVERNING DISCRIMINATION. TOPIC A DIFFERING THEORIES AS TO DISCRIMINATION. 711. Development of the rule against discrimination. 712. Early view that there was no law against discrimination as such. 713. Later rule against unreasonable differences. 714. Outright discrimination now universally condemned. 715. All discrimination forbidden by the better view. TOPIC B VIEW THAT NO RULE AGAIXST DISCRIMINATION AS SUCH. 716. Extension of the rule against unreasonable rates. 717. No rule against discrimination as such. 718. Discrimination as evidence of unreasonable rates. 719. Special concessions may be made from established rates. 720. Outright discrimination unreasonable. 721. Undue preferences forbidden. 792. Special rates may not be discriminatory. 723. Exclusiveness of the privilege creates discrimination. TOPIC C VIEW THAT DISCRIMINATION ILLEGAL IN ITSELF. 724. Necessity for the rule against discrimination. 725. Evils of discriminations between competitors. 726. Discriminations foster monopolies. 727. Rule forbidding discrimination goes beyond rule beginning rea- sonable rates. 728. Public injury by discriminations in freight rates. 729. Public wrong in giving free passes to passengers. 730. Giving free passes prima facie discrimination. [xxxiii] Table of Contekts. TOPIC D WHAT CONSTITUTES DISCEIMINATION. § 731. Not all differences are discriminatory. ^ 732. Whether the rule is limited to discrimination between competitors. 733. Whether reductions can be made for benevolent purposes. 734. Whether concessions may be made for special purposes. 735. Whether differences in the conditions of service may be recognized. 736. Differences may be made proportionate to the cost of service. TITLE I. DiscEiMiifATiojr Between Peesows. CHAPTER XXII. ILLEGAL DISCRIMINATION. 741. The same rate for substantially similar services. TOPIC A CONCESSIONS TO GET COMPETITIVE BUSINESS. 742. Whether concessions may be made in competition. 743. Competitive conditions do not justify making discriminations. 744. Reductions to get competitive business illegal. 745. Concessions allowed by some cases to get shipments from outlying territory. 746. Such concessions forbidden by later cases. 747. Shippers making expensive preparations cannot be favored. 748. Additional services performed for certain shippers. TOPIC B CONCESSIONS TO LARGE SHIPPEES; 749. Whether concessions may be made to large shippers. 750. Unreasonable differences forbidden by all courts. 751. Reasonable differences permitte'd by some courts. 752. Prevalent doctrine that no reduction should be allowed. 753. Reductions to large shippers unjust to small shippers. 754. Services to large shippers and to small shippers practically identical. 755. Reductions to passengers in parties. [xxxiv] Table of Contents. TOPIC C REBATES TO EXCLaSIVE SHIPPERS. 756. Whether lower rates may be made to exclusive shippers. 757. Shippers who use rival lines must not be charged more than usual rates. 758. Whether lower rates may be given those who ship exclusively. 759. Shippers who agree to give all their business. 760. Shippers who agree to furnish large quantities of freight. 761. Charging other shippers more than contract rates. TOPIC D CONCESSIONS FOE SPECIAL KINDS OF BUSINESS. § 762. Different rates for goods used for different purposes. 763. Such rates allowed by some cases. 764. Such differences held illegal discrimination by other cases. 765. Rates to certain classes of shippers. 766. When commodities are of different character. 767. Special classes of passengers. CHAPTER XXIII. JUSTIFIABLE DIFFERENCES. TOPIC A REASONABLE DIFFERENCES IN RATES. 77). Modification of the rule forbidding different rates. 772. Kates should not be disproportionate. 773. Consideration of the cost of serving. 774. Shippers requiring less service. TOPIC B SHIPMENT IN MORE CONVENIENT UNITS. 775. Differences in the character of the service recognized. 776. Shipment in car loads. 777. Advantages of car load traffic. 778. Permission to mix carloads. 779. Lower rates for shipments in bulk. 780. Shipments in train loads problematical. 781. Contracts for regular shipments. [xxxv] Table of Contents. TOPIC C FACILITIES FURNISHED BY SHIPPEE. 782. Terminal facilities furnished by shippers. 783. Transportation expenses paid by shipper. 784. Rental paid on shippers cars. 785. Difference in rates unjustifiable unless both services are offered. 786. Various devices for giving concessions to shippers in bulk con- sidered. 787. Railroads must provide adequate equipment for handling shipments in bulk. TOPIC D OTHER CONSIDERATIONS FOR REDUCTIONS. 78S. When consideration is given for reduction. 789. Whether indefinite considerations can be a basis. 790. Concessions to those who deal with the carrier. 791. Rates adopted to foster the interests of the carrier. TITLE II. Undue Preference in Service. CHAPTER XXIV. DISCRIMINATION BETWEEN DEPENDENT SERVICES. § 801. Discrimination in regard to dependent services. TOPIC A SUBORDINATE CARRIERS OF GOODS. § 802. Duty toward expressmen considered. 803. Express companies ; conservative view. 804. Express companies; radical view. 805. Discussion of these conflicting views. 806. Exclusive contracts with private car lines. 807. Refrigerator car lines. 808. Live stock transportation companies. [xxxvi] Table of Contents. TOPIC B ^DEPENDENT PASSENGER SERVICE. 809. Duty toward hackmen considered. 810. Cases permitting discrimination between hackmen. 811. Cases forbidding discrimination between hackmen. 812. Discussion of the duty toward hackmen. 813. Hauling sleeping cars. 814. Favoring certain eating houses. 815. Treating baggage transfer men with equality. 816. Granting concessions for private businesses. TOPIC C PRIVILEGES AT FREIGHT TERMINALS. 817. Special privileges at freight terminals. 818. Arrangements with stockyards. 819. Contracts with grain elevavtors. 820. Access to connecting steamboats. 821. No access owed except at wharf stations. 822. Rights of compelling draymen. 823. Permitting limitation of telephones. 824. Fostering monopoly in public services. TOPIC D CONNECTING CARRIERS. i 826. Discrimination between connecting carriers. 826. Goods requiring further transportation. 827. Transportation in the same cars. 828. Such transportation held obligatory. 829. Through traffic agreements. 830. Through arrangements compelled. CHAPTER XXV. DISCRIMINATION BETWEEN LOCALITIES. TOPIC A DISCRIMINATION BETWEEN^ LOCALITIES AT COMMON LAW. § 831. Locality has no right to complain of rates at common law. 832. Discrimination as evidence that the higher charge is unreasonable. 833. Weight to be given to such evidence. 834. Lower rate as evidence of unreasonableness of higher. 835. Higher rate not necessarily unreasonable. 836. What circumstances may be considered. 837. Elements affecting cost of service at one point. [xxxvii] Table of Contejsts. TOPIC B UNDUE PREFERENCE OF LOCALITIES UNDER STATUTE. § 838. General principles of statutory regulation. 839. Reasonableness of rate per se immaterial under statute. 840. Interdependence of rates to various localities. 841. What preferential rates are obnoxious. 842. Discrimination explained by circumstances. TOPIC C WHAT CIRCUMSTANCES JUSTIF_Y PREFERENTIAL RATES. § 843. Equalization of commercial advantages. 844. Equalizing rates sometimes may be established. 845. Public policy for equalization. 846. Grouping by reason of competition in the articles transported. 847. Burden upon the railroad to defend discriminatory rates. 848. Question of dissimilarity of condition one of fact. TOPIC D LONG AND SHORT HAUL. § 849. Statutes regulating rates for long and short haul. 850. Various systems of making distance rates. 851. Long and short haul at common law. 852. Limitations upon charging less for longer haul. 853. Competition justifies reduction. TOPIC E COMPETITION AS A FACTOR. § 854. Competitive rate must be reasonable. 855. Non-competitive rate must not be extortionate. 856. Competition may affect all parts of a joint rate. 857. Potential competition. 858. Competition artificially removed at the nearer point. 859. Nominal competition as justifying lower rate for longer haul. 860. Stifling of competition by consideration. 861. Carrier need not consider competition. [xxxviii] Table of Contents. BOOK III, KEGULATION OF RAILEOAD EATES BY LEGISLATION. PART I. Examination of American Legislation. CHAPTER XXVI. HISTORY OF STATUTORY REGULATION. topic a legislation in ENGLAND SINCE 1830. § 871. Carriers' limitation of liability before 1830. 872. The Carriers' Act of 1830. 873. The Railway and Canal Traffic Act of 1854. 874. The Railway and Canal Commission. topic B legislation in AMERICAN STATES. § 875. Early railway charters in the United States. 876. Granger legislation. 877. Railroad Commissions. 878. Regulations against discrimination. TOPIC C FEDERAL LEGISLATION SINCE 1887. § 879. The Interstate Commerce Act. 880. The Elkins Act of 1903. TOPIC D INTERPRETATION OF THE INTERSTATE COMMERCE ACT. § 881. The long and short haul clause. 882. The fixing of rates. 883. Through routes. [xxxix] Table of CoNTEiSfTS. TOPIC E THE KATE REGULATION ACT OF 1906. 884. Occasion for the act. 885. Extension of scope of the Interstate Commerce Act. 886. Private switches. 887. Private ear lines. 888. Dealing by railroads in commodities. 889. Rate fixing and court review. 890. Through routes and rates. TITLE I. The Intbkstatb Commeece Acts. CHAPTER XXVII. CARRIAGE SUBJECT TO THE ACT. § 891. Provisions of the statute. 892. Amendments of 1906. TOPIC A EXTENT OF APPLICATION OF THE ACT. § 893. EiTect of the act. 894. Foreign carriers and discriminations. TOPIC B WHAT IS INTERSTATE COMMEECE. § 895. What are States. 896. Nature of interstate traffic. 897. Termini within a single State, route passes through a second State. 898. Breaking continuity of interstate shipment. 899. End of the interstate transit. TOPIC C CONTINUOUS CAEEIAGE UNDER COMMON CONTROL. § 900. Common arrangement. TOPIC D CAEEIEES "SUBJECT TO THE ACT. § 901. Kind of carrier subject to the act. 902. Carriage wholly within the State. 903. Local carrier taking part in through carriage. [xl] Table of Cokte^jts. CHAPTER XXVIII. REASONABLE CHARGES AND FACILITIES. § 9n. Provisions of the statute. 912. Amendments of 1906. TOPIC A THE SCHEDULE AS A WHOLE. 913. Elements considered in establishing a general tarifif of rates. 914. Bearing of tariff as a whole on reasonable rates. 915. Schedule as a whole may throw ligiit on reasonableness of par- ticular rate. 916. Schedule as a whole important where rate is fixed by public authority. TOPIC B THE PAETICULAK EATE. 917. Customary rate presumably reasonable. 918. General principles. 919. Comparison with other rates. 920. Special service. 921. Incidental charges. 922. Conditions. 923. Route. 924. Cost of service. 925. Value of service to shipper. 926. Value of goods. 927. Amount. 928. Distance. 929. Through rates. TOPIC C CLASSIFICATION. 930. General principles of classification. 931. Instances. TOPIC D UNREASONABLE EATINU. 932. General principles. 933. Passenger rates. 934. Freight rates; instances. TOPIC E EEASONABLE FACILITIES. 935. Not required by original act. 936. Switching privileges. Table of Contej^ts. CHAPTER XXIX. DISCRIMINATIONS BETWEEN PERSONS. § 941. Provisions of the statute. 942. Amendments of 1906. TOPIC A UNDUE OR UNEEASONABLE PHEPEEENCE OE ADVANTAGE. § 943. What discrimination is forbidden. 944. What preference is undue and unreasonable. 945. Device for concealing preference unavailing. 946. Preference in certain services permissible. 947. Effect of illegality on contract of carriage. TOPIC B LIKE AND CONTEMPOEANEOUS SEEVICE. § 948. Difference in time or place. 949. Difference in nature of service. TOPIC C SUBSTANTIALLY SIMILAE CIECUMSTANCES AND CONDITIONS. § 950. What circumstances can be considered. 951. Occupation of passenger or shipper. 952. Difference in amount of shipment. 953. Discrimination in use of cars. 951. Discrimination between commodities. TOPIC D SPECIAL EATE OE EEBATE. § 955. What amounts to a rebate. 956. Allowance for cars or facilities furnished by the shipper. 957. Division of rate with industrial railway. 958. Sale and delivery of commodities by a railroad. TOPIC E EXCEPTIONS. § 959. Statutory exceptions not exclusive. 960. Carriage for the government. 961. J'inisters of religion. 962. Officers and employees. 963. Mileage, excursion and commutation tickets. Txliil Table of Contents. CHAPTER XXX. DISCRIMINATION BETWEEN LOCALITIES. 971. Proviaions of the statute. 972. Amendments of 1906. TOPIC A UNDUE PEEJUDICE. 973. What constitutes undue prejudice. 974. Distance as a factor in the rate. 975. Group rates. 976. Diii'erence between through and local rates. 977. Equalizing advantages. 978. Discrimination against staple industry of a locality. 979. Milling or compressing in transit. 980. Discrimination in facilities. 981. Instances of local discrimination. TOPIC B SUBSTANTIALLY SIMILAR CIECUMSTANCES AND CONDITIONS. I 982. Substantial difference of conditions. 983. Competition. TOPIC C LONG AND SHORT HAUL. I 984. General principles governing the section. 985. Competition. 986. Relief from operation of the section. CHAPTER XXXI. INTERCHANGE OF TRAFFIC AND POOLING AGREEMENTS. j 991. Provisions of the statute. 992. Amendments of 1906. TOPIC A EEASONABLE FACILITIES FOE INTEECHANGE. § 993. Extent of application of the provision. 994. Carriage through in same car 995. Continuous carriage. 996. Discrimination between connecting lines. 997. Discrimination in furnishing optional facilities. 998. Use of tracks or terminal facilities. [xHii] Table of Contents. topic b through routing and eating. § 999. Carriers not compelled to route, bill or rate through. 1000. Carrier may select connecting line. 1001. Establishment of through route by agreement. TOPIC C PEOHIBITION OF POOLING. 5 1002. Pooling. CHAPTER XXXII. SCHEDULES OF RATES. § 1011. Provisions of the statute. ^ 1012. Amendments of 1906. TOPIC A PUBLICATION OF SCHEDULE. § 1013. What rates must be published. 1014. Terminal and refrigerating charges. 1015. Rules and regulations. 1016. Printing and keeping open to public inspection. 1017. Posting in station. TOPIC B VARIATION FROM SCHEDULE. § 1018. Any variation forbidden. 1019. Devices to avoid the section. 1020. Rate wars. TOPIC C FILING OF SCHEDULES AND AGREEMENTS. § 1021. Purpose of the filing. 1022. Presumption of legality. TOPIC D JOINT TARIFFS AND SCHEDULES. § 1023. Meaning of joint tariff. 1024. Making and filing. 1025. Whether routes must be published. 1026. Export rates. TOPIC E FORM OF SCHEDULES. ! 1027. Clearness of statement. 1028. Necessary fullness of statement. TOPIC F ENFORCEMENT OF THE SECTION. \ 1029. Invalidity of the varied rate. [xliv] Table of Contkats. CHAPTER XXXIII. ORGANIZATION AND FUNCTIONS OF THE COMMISSION. § 1031. Provisions of the Statute. 1032. Amendments of 1900. TOPIC A ADMIKISTEATIVE NATUKE OF THE COMMISSION. § 1033. Nature oi the commission. 1034. Powers of commission. TOPIC B POWEE TO INVESTIGATE AND MAKE OKDEE. § 1035. Investigation by commission. 1036. Report of commission. 1037. Opinion of commission. TOPIC C POWEll OVEE BATES. § 1038. Early difference of opinion. 1039. Decision of the Supreme Court. 1040. Indication of basis for proper rate. CHAPTER XXXIV. PROCEDURE BEFORE THE COMMISSION. § 1041. Provisions of the Statute. 1042. Amendments of 1900. TOPIC A PEOCEBDINGS ON ITS OWN MOTION. § 1043. Investigation by the Commission on its ovpn motion. 1044. Investigation by order of Congress. 1045. Investigation as result of filing new tariff. 1046. Procedure on such investigation. TOPIC B PEOCEEDINGS ON COMPLAINT. § 1047. Procedure. 1048. Parties given opportunity to be heard. 1049. Place of hearing. 1050. Pleadings. [xlv] Table of Contents. TOPIC C :PEOPEE PAETIES. 1051. Person interested as complainant. 1052. Complaint by association. 1053. Board of Trade. 1054. State Railroad Commission. 1055. Complainant not coming with clean hands. 1056. Proper parties defendant. 1057. Necessary parties defendant. 1058. Supervening receivership. 1059. One of several joint parties. 1060. Parties must have an interest. 1061. Intervening parties. TOPIC D OEDEE OF PEOCEDTJEE. 1062. Default. 1063. Stay of proceedings. 1064. Continuance for settlement. TOPIC E EVIDENCE AlTD BUEUEN OF PEOOF. § 1065. Testimony on both sides should be introduced. 1066. Acts of Commission need not be proved. 1067. Rules of evidence. 1068. Privilege against self-crimination.. 1069. Production of books and papers. 1070. Order to carrier to produce books. 1071. Methods of avoiding inconvenience of producing all books. 1072. Petitioner thus gets all material and proper evidence. 1073. Examination of vs'itnesses upon prepared statements. 1074. Hearing held where books are kept. 1075. Adverse interest of witnesses not to be considered. 1076. Rights of parties must be preserved. 1077. Presumptions. 1078. Burden of proof. TOPIC P FINDING OF THE COMMISSION. § 1079. Dismissal when order unnecessary. 1080. Reparation. 1081. Proof of damage required. 1082. Conditions of granting reparation. 1083. Finding of Commission does not work an estoppel. 1084. Difference of parties. [xlvi] Tabi-e of Conte:s'ts. § 1085. How the party may reopen case. 1086. New petition may be filed. 1087. Reopening a case for rehearing. 1088. Form and requisites of petition for rehearing. CHAPTER XXXV. JUDICIAL REMEDIES. 1091. Provisions of the statute. 1092. Anaendments of 1906. 1093. Jurisdiction and general principles. 1094. Remedy in equity. 1095. Mandamus. 1096. Action for damages. 1097. Criminal prosecution. 1098. Procedure under the Elkins act. 1099. Enforcement of order of the Commission. TITLE II. State Statutes Affectixg Kates. CHAPTER XXXVI. STATE STATUTES AGAINST EXTORTIONATE RATES. 1100. Introduction. 1101. Alabama. 1102. Arkansas. 1103. Florida. 1104. Georgia. 1105. Illinois. 1106. Iowa. 1107. Kansas. 1108. Kentucky. 1109. Massachusetts 1110. Minnesota. 1111. Mississippi. 1112. Missouri. 1113. New York. 1114. North Carolina 1115. North Dakota. 1116. South Carolina 1117. Tennessee. 1118. Texas. 1119. Vermont. 1120. West Virginia. 1121. Wisconsin. 1122. Conclusion. [xlvii] Table of Coa'tknts. CHAPTER XXXVIl. STATE STATUTES AGAINST PERSONAL DISCRIMINATION 1131. 1132. 1133. 1134. 1135. 1136. 1137. 1138. 1139. 1140. 1141. 1142. 1143. 1144. 1145. 1146. 1147. Introduction. Alabama. Arkansas. California. Delaware. Florida. Georgia. Illinois. Indiana. Iowa. Kansas. Kentucky. Louisiana. Massachusetts. Michigan. Minnesota. Mississippi. 1148. 1149. 1150. 1151. 1152. 1153. 1154. 1155. 1156. 1157. 1158. 1159. 1160. 1161. 1162. 1163. 1164. Missouri. Nebraska. New ampshire. New Mexico. North Carolina. North Dakota, Ohio. Oregon. Pennsylvania. South Carolina. South Dakota. Tennessee. Texas. Utah. Virginia. Wisconsin. Conclusion. CHAPTER XXXVIII. PROHIBITION OF UNDUE PREFERENCE IN STATE STATUTES. § 1171. 1172. 1173. 1174. 1175. 1176. 1177. 1178. 1179. 1180. 1181. 1182. 1183. 1184. 1185. 1186. Introduction. Arkansas. California. Connecticut, Florida. Georgia. Illinois. Indiana. Iowa. Kansas. Louisiana. Maine. Massachusetts. Minnesota. Mississippi. Missouri. 1187. Nebraska. 1188. New Hampshire 1189. Nevada. 1190. New Jersey. 1191. Ohio. 1192. Oregon. 1193. Pennsylvania. 1194. Rhode Island. 1195. South Carolina. 1196. South Dakota. 1197. Tennessee. 1198. Texas. 1199. Vermont. 1200. Virginia. 1201. Wisconsin. 1202. Conclusion. [xlviii] Table op CouxjiiNTS. CHAPTER XXXIX, STATE STATtJTES AGAINST LOCAL DISCRIMINATION. § 1211. 1212. 1213. 1214. 1215. 1216. 1217. 1218. 1219. 1220. 1221. 1222. 1223. 1224. 1225. 1226. Introduction. Arkansas. California. Connecticut. Illinois. Indiana. Iowa. Kansas. Kentucky. Louisiana. Massachusetts. Michigan. Minnesota. Mississippi. Missouri. Nebraska. 1227. 1228. 1229. 1230. 1231. 1232. 1233. 1234. 1235. 1236. 1237. 1238. 1239. 1240. 1241. 1242. Nevada. New Hampshire. New Jersey. North Carolina. North Dakota. Ohio. Pennsylvania. South Carolina. South Dakota. Tennessee. Texas. Vermont. Virginia. West Virginia. Wisconsin. Conclusion. CHAPTER XL. RATE REGULATION BY STATE RALROAD COMMISSIONa 1251. 1252. 1253. 1254. 1255. 1256. 1257. 1258. 1259. 1260. 1261. 1262. 1263. Introduction. Alabama. California. Florida. Georgia. Illinois. Indiana. Iowa. Kansas. Kentucky. Louisiana. Maine. Minnesota. 1264. 1265. 1266. 1267. 1268. 1269. 1270. 1271. 1272. 1273. 1274. 1275. 1276. Mississippi. Missouri. Nebraslca. New Hampshire. North Carolina. North Dakota. South Carolina. Tennessee. Texas. Virginia. Wisconsin. Washington. Conclusion. [xlix] Table of Contents. CHAPTER XLI. STATUTORY PROVISIONS FOR COURT REVIEW. 1281. Introduction. § 1290. Missouri. 1282. Alabama. 1291. North Carolina 1283. Arkansas. 1292. North Dakota. 1284. Florida. 1293. South Dakota. 1285. Indiana. 1294. Texas. 1280. Kansas. 1295. Virginia. 1287. Louisiana. 1296. Washington. 1288. Minnesota. 1297. Wisconsin. 1289. Mississippi. 1298. Conclusion. PART II. Validity of Statutes. CHAPTER XLII. STATUTORY REGULATION OF RATES AND THE CONSTITUTION. TOPIC A— NATUEE OF THE POWER TO FIX BATES. § 1301. Regulation of rates by the State. 1302. Power to pass on reasonableness of rates. 1303. Power to fix rates. 1304. Power to fix rates not a judicial power. 1305. Power to fix rates not strictly legislative. 1306. Power to fix rates executive or administrative. TOPIC B METHOD OF EXERCISING THE POWER TO FIX RATES. § 1307. Fixing rates by statute. 1308. Legislation must be general. 1309. Fixing rates by subordinate body. 1310. Fixing rates by municipal or other local government. 1311. Fixing rates by inferior courts. 1312. Fixing rates by administrative commissions. 1313. Duty of the courts to pass on reasonableness of rates. Table of Contents. topic c constitutionality of bates fixed by government. sub-topic 1 general considerations. § 1314. Unconstitutional act absolutely void. 1315. Suit against State official to declare rate void. 1316. Function of the courts in declaring rate void. 1317. Rate constitutional as to one road, not as to another. 1318. Statute constitutional in part. SUB-TOPIC 2 SEPARATION OF GOVERNMENTAL POWERS. 1319. Delegation of rate-making power. 1320. Delegation of power without appeal to the courts. 1321. Temporary interruption of appeal to the courts. 1322. Action of the rate-making body as evidence of reasonableness. 1323. Confusion of the powers of government. SUB-TOPIC 3 OBLIGATION OF CONTRACTS. § 1324. Charter of corporation as contract against rate-fixing. 1325. No contract without express provision. 1326. Conferring ordinary powers does not create contract. 1327. Contracts made by municipal ordinance. 1328. Charter by Congress. 1329. Non-user and waiver of the privilege of exemption. 1330. Assignment of privilege of exemption. SUB-TOPIC 4 PROTECTION OF PROPERTY, § 1331. Unreasonably low rates constitute a taking of property. 1332. The doctrine of the " Granger Cases." 1333. Early modification of the doctrine. 1334. The rule finally established. 1335. Exceptional rates forbidden. TOPIC D ■ CONSTITUTIONAL POWER OF CONGRESS OVER INTERSTATE RATES. § 1336. Power to fix rates appears to be given to the Congress. 1337. Power to fix rates is inherent in legislative power to regulate carriage. 1338. Congress allowed to fix maximum rates. 1339. Power of Congress to fix rates for interstate commerce has been assumed. [li] Table of Contents. A. RULES OF PRACTICE— INTERSTATE COMMERCE COMMISSION. B. FORMS OF PROCEEDINGS— INTERSTATE COM- MERCE COMMISSION. C. INTERSTATE COMMERCE LEGISLATION, 1887- 1906. D. RECENT DECISIONS ON RATE REGULATION, MAY I, igo6 — MAY i, 1907. Ti^BLE OF C^SES. INDEX. BOOK I. FUNDAMENTAL PRINCIPLES GOVEHNINa RAILROAD SERVICE. CHAPTER 1, HISTORICAL INTRODUCTION. § 1. Public callings and private callings. - TOPIC A. MEDIAEVAL CONDITIONS. § 2. The distinction between public employment and private business an old one. 3. Conditions of business in the jMiddle Ages. 4. Parliamentary regulation of rates. 5. Examination of early public employments. 6. The common surgeon as an illustration. 7. The tailor as an illustration. 8. The smith as an illustration. 9. The innkeeper as an illustration. 10. The carrier as an illustration. TOPIC B. PEESISTENCE OF STATE EEGULATION. § 11. Partial continuance of regulation to modern times. 12. Persistence of principle accompanying change of conditions. 13. Applications of the principle to commodities in new countries. 14. Monopolies established by patents from the crown. 15. Grant of franchises in modern times. 16. Persistence of the class of public callings. 17. Introduction of improved highways by private enterprise. 18. Toll-bridges and turnpikes as illustrations. 19. Canals and waterways as illustrations. TOPIC C. THEORY OF LAISSEZ EAIKE. § 20. Freedom of individual effort limiting the application of the prin- ciple. 21. Early decisions as to gas supply an illustration. 22. Early decisions as to waterworks an illustration. 23. Cotton press as a modern illustration. 24. Stockyards as a modern illustration. 25. Conservative and radical views conceniir.g the public services. [3] § 1] Eaileoad Kate Regulation. [Chap. I TOPIC D. GEOWTH OF THE PUBLIC EMPLOYMENTS. § 26. Extension of the application of the principle in recent times. 27. Growth of the public service companies in late years. 28. Grain elevators as an illustration. 29. Warehouses as an illustration. 30. Associated Press as an illustration. 31. Ticker service as an illustration. 32. The public services as virtual monopolies. 33. Overshadowing importance of the problem of rate regulation. 34. Rate regulation at the present time. § 1. Public callings and private callihgs. The distinction between the private callings — 'the rule — 'and the public callings — the exception — is a division in the law govcTning our business relations which has and will have most important consequencesi. The causes of the division axe eco- nomic rather than strictly legal. Free competition, the very basis of the modern social organization, superseded almost com- pletely mediaeval restrictions, but it has just come to be recog- nized that the process of free competition fails in some eases to secure the public good, and it has been reluctantly admitted that some control is necessiary over such lines of industry as are affected with a public interest. At this point the problem of public callings becomes a legal one. In private businesses, one may sell or not, as one pleases, manufacture what qualities one chooses, demand any price that can be got, and give any rebates that are advantageous. But in public businesses one must serve all that apply without exclusive conditions, provide adequate facilities to meet all the demands of the consumer, exact only reasonable charges for the services that are rendered, and between customers under aimilar circumstances make no discriminations. The significance of this distinction between the public call- ing and the private calling may be appreciated from an exami- nation of the general course of events leading up to the present industrial situation. For this distinction between the public [4] Chap I] HiSTOEicAX. Inteodtjction, [§§ 2, 3 callings and the private callingsi has been taken in our law from the earliest times to the present day. TOPIC A. MEDIAEVAL CONDITIONS. § 2. The distinction between public employment and private business an old one. From early times there has been a peculiar law governing certain callings which were regarded as public in character. These callings have always been regulated by the State to a greater extent than ordinary employments; indeed the differ- ence betvreen them and ordinary businesses has been so great as to constitute a difference in kind rather than in degTee ; and the regulation of the public callings has always been therefore a distinct topic of the law. The law has always imposed an af- firmative duty of action upon those who professed a public em- ployment. This distinction of the public callings from the private callings was often of the utmost importance in our early common law. Indeed, whether the defendant was in a common employment or not made more difference in the success of the plaintiff's action or its failure than it does to-day. And although many of the decisions which make the distinction are long since obsolete in one way or another, the subsequent devel- opments in the law in no manner affect the force of these cases in establishing the difference between the obligations of those in public emialoyment and those in private business as a funda- mental fact in the legal system. § 3. Conditions of business in the middle ages. In the middle ages, and long thereafter, the necessity of furthering the well-being of the people and protecting them from oppression was enough to justify State interference. In the England which we see through the medium of our earliest law reports, the mediieval system was at its highest point of [5] § 3] Raileoab Eate Regulation. [Chap. I development, hardly affected as yet by the modern ways of ar- ranging -things which were just in their beginnings. The older policy had been one of almost universal regulation. Most of the tradesi in the towns were restricted by the gild system. Under this system the services to be rendered to the public in the trades were governed by certain codes of by-laws ; but these by-laws were continually declared void by the local courts if they were oppressive. In the country at the'same time there were to be met certain privileges in carrying on business in connec- tion with the manorial system. Some businesses required the investment of more or less capital in constructing a plant, as the bake-house and the mill. It had been necessary at the out- set that these should be provided by the lord of the manor and the seignorial ban covered these, the lord granting franchises to certain persons. Those who conducted these businesses were bound to serve all fairly or answer for it to the courts of the manor. But upon the whole the ordinary trades and crafts were more freely open to any one in the country than in the towns, with their craft gilds and merchant gilds. The fundamental principles in the mediaeval order, taken as a whole, were, therefore, the establishment of special privileges and the consequent system of State regulation, both in respect to service and in respect to price ; and it is clear upon all the evidence that these principles of State regulation were put into practice by the special tribunals and the regular courts in a thorough and intimate manner. For these reasons the mediaeval system may well be described as a consumer's policy. Under the mediasval system industrial activity was limited by various restrictions. The ideal held was a society in which all things were ordered. The conception was that every man had a right to a place in this established order according to his rank, a state of affairs by most men desired. Each person was held bound to perform his ovm part; no person, therefore, should be allowed to interfere witb the employment of another. [6] Chap I] Historical Inteoductiojst. [§ 4 Of course, the modem theory is altogether different. A state of free competition is considered to be for the best interests of society; and, therefore, in our time almost every business is open to almost every man. And yet at all times in economic history both restriction and freedom are to be found in the law. The proportion, however, changes greatly. In one epoch there is much legal limitation, with little freedom left; in an- other age there is almost universal competition, with some little franchise to be found. And the rule will generally hold true that the more the natural laws of competition regulate service and price, the less the State need interfere in these respects; but conversely when competition ceases to act efficiently State control becomes necessary. § 4. Parliamentary regulation of rates. ISTot only did the law regulate business indirectly, through the courts, parliament itself frequently regulated prices of necessaries of life by direct legislation. The great staples, like wool and food, were habitually regulated in this way, and the employment and the price of labor was a subject of statu- tory provision. Thus, in 1266, Henry III., after reciting former statutes to the same effect, regulated the price of bread and ale according to the price of wheat and barley, and forbade forestalling; that is, cornering the market.-' In 1344 the ordin- ances fixing the export prices of wool were repealed after some years of trial.^ In 1349 all laborers were obliged to serve for the customary wages, and " butchers, fishmongers, regrators, hos- telers (i. e.j innkeepers), brewers, bakers, poulterers, and all other sellers of all manner of victuals," were bound to sell for a reasonable price.' These statutes continued in force through- out the middle ages, and until after the settlement of America. 151 Hen. 3, Stat. 1. 2 18 Ed. 3, cap. 3. 3 23 Ed. 3, cap. 1. §§ 5, 6] Raileoad Eate Eegulation. [Chap I § 5. Examination of early public employments. Since the modern law of public employments' is a survival of a much more generally applicable principle of the mediaeval law^ it will be instructive to examine some of the early appli- cations of the mediaeval principle, which involved the recogni- tion of the common calling as a thing apart from the private calling, presenting different conditions, and involving the neces- sity therefore of further law than that which suffices to regulate ordinary businesses. In these earliest examples there are cer- tain elements in the situation which are so characteristic that the realization of them should lead to some conception of the nature of the public employment and the law necessary for its regulation. It would be too much to expect to see the law finally settled in those times, to find modern aspects of the prob- lem altogether anticipated ; but it is not too much to hope to dis- cover some meaning in the cases, some definition of the first principles involved in the law of public employment. § 6. The common surgeon as an illustration. One decision in point is an anonymous suit in 1441.^ This was a writ of trespass on the case against one R., a veterinary surgeon, to the effect that the defendant had undertaken to cure the plaintiff's horse with skill and care of a certain trouble, and that he then so negligently and carelessly gave medicines that the horse died. In the opinion of Judge Paston may be seen the ground upon which the court proceeded : " You have not shown that he is a common surgeon to cure such horses, and therefore although he has killed your horse by his medicines, you shall have no action against him without an assumpeit." The court accordingly decided that a traverse of the assumpsit made a good issue. The significance of the assumpsit in those days was that when one man had authorized another to deal with 4y. B. 19 H. VI, 49, 5. [8] Chap I] HisTOEicAL, Inteoduction. [§ 7 personal property in the course of private business, the latter was under no legal liability tO' use care, unless he had made such a special unde^rtaking and entered upon the' performance of it. In the public businesses on the other hand the legal ob- ligation to perform the act with proper skill was well estab- lished. In England of the fifteenth century such professional men were few. This was in part due to the rudeness of the time, which made education unusual, and produced more necroman- cers than physiciians. It was in part to be traced to the re- strictions which the medieval system had put upon the practice of the profession. At all events, in the common case only one surgeon would be at hand in any one district, so that if he should refuse to bleed the patient, all might be lost. Such being the situation, it is easy to understand why the law was so stern in the case of the common doctor who undertook to cure all who came, requiring him to act with care although he prom- ised none, and giving the patient an action although he had s'ub- mitted himself to the operation, if the doctor was negligent. It was the unusual situation which produced this extraordinary law.^ § 7. The tailor as an illustration. Some light upon the position of the medieeval tailor before the law we obtain from an opinion of Brian : " I know well, if I put a robe with a tailor to be made, or if I come to a common inn or a common smith with my horse, in all cases of the sort I may have my robe lying in the tailor's shop as long as I please (without its being subject to distraint) ; for he isi , compelled by the law to do it, and he may by the law detain until he be satis- fied for the making."® 5 See Y. B. 43 Ed. Ill, 6, pi. 11; Y. B. 3 H. VI, 36, pi. 33; Y. B. 19 H. VI, 49 pi. 5; Y. B. 11 Ed. IV, 6 pi. 10; 1 Roll. Abr. 10 pi. 5; Slater v. Baker, 2 Wils. 359 (1767) ; Sears v. Prentice, 8 East, 348 (1807). fi Y. B. 22 Ed. IV, 49 pi. 15. [9] § 8] Eaileoad Rate Regulation. [Chap. I It is rather surprising to the modern mind to imagine a state of society where there was not competition enough among tailors. There has been free and lively competition for so long that the tailor at a very early time dropped from the list of public callings and is mentioned in the books no more as a member of this exceptional class of public servants. § 8. The smith as an illustration. Another instance in shown in an anonymous note in 1450 •? " Note that it was agreed by all the court that where a smith declines to shoe my horse, or an innkeeper refuses to give me entertainment at his inn, I shall have an action -on the case, notwithstanding no act is done ; for it does not sound in agree- ment. But where a carpenter makes a bargain to build me a ■ house and does nothing, no action on the case, because that does sound in agreement." The meaning of this is that in those days no action lay upon a mere agreement, and a promisor need not perform ; but that one who undertook a pub- lic employment must perform, whether he agreed or not. Here again the obligation resting upon those in common callings to serve all that apply is the basis of the case. Why is this entire distinction made between the wayside smith and the journeyman carpenter ? Because again the economic conditions of these trades were so different. So far apart were they in the eyes of the courts, that the ordinary law was protection enough for those tliat dealt with the carpenter, while an extraordinary law was needed in behalf of those that came to the smith. There were builders enough to make the situation in that business one of virtual competition, so that there was no hardship; but the farriers were so scattered that the conditions were those of virtual monopoly, which required therefore a special code, else a good horse might be ruined for ' Keilway 50, pi. 4. [10] Chap I] HiSTOEiCAL Introduction. [§ 9 want of a shoe if the wayside smith should take it into his head to refuse to serve.* § 9. The innkeeper as an illustration. One of the most noteworthy of the common callings by the early law was that of the innkeeper. In another anonymous report in 1460,® Moile, Judge, is quoted as saying: " If I come to an innkeeper to lodge with him, and he will not lodge me, I shall have on my case an action of trespass against him ; and in the same way if I oome to a victualler to buy victual, and he will not sell, I shall have an action of trespass on my case against him ; and still in such cases if he will bring a writ of debt against me on such duty I shall have my law." This stands to the present day as the law of the land . The innkeeper is in a common calling under severe penalty if he do not serve all that apply, while the ordinary shopkeeper is in a private calling free to refuse to sell if he be so minded. The surrounding circumstances must again explain the origin of this unusual law. When the weary traveller reaches the way- side inn in the gathering dusk, if the host turn him away what shall he do ? Go to the next inn ? It is miles away, and the roads are infested with robbers. The whole system of travel and communication in rural Eng- land, at the time the law of inns was in the making, required, as has been seen, that the weary traveller should find at con- venient places' beside the highway houses of entertainment and shelter to which he might resort during his journey for food, rest and protection. The ordinary laws of supply and demand would lead to the establishment of such houses by the roadside at places which would sufficiently serve the public convenience ; but thpse laws could not be trusted to secure to each individual 8 See Y. B. 46 Ed. TIT, 19 pi. 19; Y. B. 2 Ed. IV, 13 pi. 9; Y. B. 22 Ed. IV, 9 pi. 15; Y. B. 21 H. VI, 55 pi. 12; Keilway 50, pi. 4. 9Y. B. 39 H. VI, 18 pi. 24. [Ill § 10] Raileoad Rate Regtilation. [Chap. I the benefit of the food and shelter therein provided. The de- sire for gain ia not the only passion which moves men, innkeep- ers or others. Hatred, prejudice, envy, sloth or undue fastid- iousness might influence an innkeeper to refuse entertainment to a traveller, even though he could pay his score. The supply of food and shelter to a traveller was a matter of public concern, and the house which offered such food and shelter was engaged in a public service. The law must mate injustice to the in- dividual traveller impossible; the caprice of the host could not be permitted to leave a subject of the king hungry and shelter- less. In a matter of such importance the public had an in- terest, and must see that, so far as was consistent with justice to the innkeeper, his inn was carried on for the benefit of the whole public; and so it became in an exact sense a public house. ^^ § 10. The carrier as an illustration. From- the earliest times it has been agreed that the common carrier of goods is in a public employment A statement of the early law is to be found in one of the leading cases on carriers, Jackson v. Rogers," in 1683. " This was an action on the case, for that whereas defendant is a common carrier from London to Lymmington et abinde retrorsum, setting it forth as the custom of England, that he is bound to carry goods, and that the plain- tiff brought him such a pack, he refused to carry them, though offered his hire. And held by Jeffries, C. J., that the action is maintainable, as well as it is against an innkeeper for refus- ing a guest, or a smith on the road who refuses to shoe my horse, being tendered satisfaction for the same. JSTote, that it was 10 See Y. B. 11 H. IV, 45 p. 8; Y. B. 22 H. VI, 21 pi. 38; Y. B. 22 Ed. IV, 49 pi. 15; Y. B. 10 H. VII, 8 pi. 14; Y. B. 14 H. VII, 22 pi. 4; Keilway 50 pi. 4. 11 2 Show. 23. [12] Chap I] HiSTOEicAL Introduction. [§ 10 alleged and proved that he had convenience to carry the same ; and the plaintiff had a verdict." Again the explanation must be sought in the history of the times. In Plantagenet England the population lived in com- munities apart from each other, so that small attention was paid to the roads, vi^hieh were no more than trails winding through the wilderness. 'No cart could pass over them, only pack ani- mals, and so many were the bands of outlaws in the greenwood that no man might with safety traverse these paths alone. The transportation of goods was, therefore, given over to the carrier, who travelled oftentimes with trains of pack animals and a considerable company. It was also the fact that one carrier or few would thus pass over the same roads between the same towns, because the traffic was still comparatively small, as Eng- land had not yet changed from a local economy where each com- munity was sufficient to itself, into a national economy which involved interchanges of goods between distant markets. The conditions surrounding transportation were those of virtual monopoly. The merchant had therefore the protection of the law, a protection without which he was at the mercy of the car- rier with whom circumstances forced him to deal without a chance for choice. ^^ Another reason why cases against innkeepers and carriers ap- pear in our earlier reports of cases from the King's Courts while there were no cases against weavers or spinners for ex- ample, was because innkeeping and carrying were no part of the gild system in the towns, nor of the manorial system in the country; those who conducted these businesses, therefore, were free from regulation by peculiar law and special courts, and it became necessary for the common law and the national courts to take charge of the situation for the protection of the public. 12 See Rich v. Kneeland, Hob. 17; Kenrig v. Eggleston, Al. 93; Nichoia V. More, 1 Sid. 36; Morse v. Slue, 1 Vent. 190. [13 ] § 11] Eaileoad Kate Kegulation. [Chap. 1 TOPIC B. PERSISTENCE OF STATE EEGUEATION. § 11. Partial continuance of regulation to modern times. The irresistible advances of the modtTn competitive system gradually worked the destruction of the mediaeval organization of industry. Great, however, as was this change from the old economic theory to the new, it was not' complete. There had been no revolution, but merely a swinging of the pendulum. General but not absolute restriction of the freedom of trade was the policy- of the middle ages ; general freedom of trade, with the restriction of certain exceptional occupations, has become the policy of modem times. It is almost a truism that the spirit of the age molds its law. This is obviously true of that small proportion of the law which is made in the form of statutes by^ a legislature. But it is true as well of unwritten law, of which the decisions of courts are at once the cause and the evidence. The briefs are drawn and the arguments are made by members of the bar, and the decisions are reached by the judges; and judges and lawyers alike are members of the community and share its spirit and its thought. The age's ideal of right is their ideal, the method of thought about justice which is prevalent at the time is their method of thought, too ; and it therefore follows that in working out legal problems, both bench and bar work along the lines prescribed by the spirit of the age in which they live. Nowhere is the influence of the spirit of the time on the com- mon law more evident and more potent than in this question of the regulation of common trades. Following the change in economic thought which has been described, the judges in mod- ern days have been saying as to the ordinary activities of life, that it lies with the tradesman to conduct his business as he pleases, and at his own price. Not so, however, in those excep- tional trades which are known as the common callings. In the case of these callings, the law continues to regulate them as it [14] Chap I] HiSTOEicAL Inteobuction, [§ 12 has done in the past; and those who undertake to carry on such callings continue to be compelled to serve all that ajvply at a reasonable rate. The regulation of rates in the common or public callings by the government by means of the common law is therefore the persistence of a power which the State has ex- ercised from ancient times to regulate prices when it is necessary for the protection of the public from extortion. In earlier times, when most trades were privileged, there was a correspondingly great amount of regulation. To- day when in most businesses the field is free to all, it vsdll be true generally that the ordinary processes of competition will produce with more or less certainty adequate supply at fair prices. But in the businesses affected with a public interest there will be found usually a virtual monopoly ; so that it will be necessary for the law to see to it that the public are properly served at reasonable rates. § 12. Persistence of principle accompanying change of con- ditions. It will be noticed that the principle of law which permits the regulation of these callings has not been abandoned in the smallest degree, though the conditions calling for its applica- tion in modern times have greatly changed. Whenever the public is subjected to a monopoly, either because of legal grant, as in the case of the mediaeval gilds and markets, or because of the actual conditions of life, as in the case of the village surgeon or smith, the power of oppression inherent in a monopoly is re- stricted by law — whether by the common law, applied by the courts or by special legislation. Wlienever on the other hand competition becomes free, both in law and in fact, the need of governmental regulation ceases ; public opinion ceases todemand such regiilation, and the law withdraws it. In this way certain of the trades and classes of trades just enumerated having be- come corhpetitive, the law has ceased to regulate them, not be- [15] § 13i] Raileoad Rate Regulation. [Chap. I cause of a change of legal principle but because of a change in actual economic conditions. § 13. Applications of the principle to commodities in new countries. An interesting application of this principle in modem times by means of legislation occurred in the American colonies at the time of their settlement. In a new colony life is a serious thing, the necessaries of life are scarce, and the needs of thej public are pressing. The conditions are ideal for a distressing " cornering of the market " by merchants. Accordingly, though most of the statutory regulations of trades and prices had either been repealed or had become obsolete in the mother country, the colonies at an early time passed statutes regulating the prices of staple commoditiefi. Thus in Massachusetts the price of bread was regulated in 1646;^ the packing of beef and fish in casks was regulated at about the same time;^ the price of beer in 1645 f the price of labor as early as 1630.* In 1635 shopkeepers and merchants were forbidden to charge excessive prices.^ In Plymouth colony the price of beer was limited in 1636,^ and the price of boards in 1668.' In Virginia the price of tobacco was fixed. As it was in those colonies so it was probably in every one. Corn and tobacco, beer and bread, beef and boards, all that was most important for the colonists to have was regulated as a matter of course by the assemblies of the time. iMass. Colonial Laws (1672), p. 8; and see Ancient Charters & Laws, p. 752 (Act of 1720). 2 Colon. Laws, p. 16. 3 Ibid, p. 80. -ilbid, p. 104. 5 Ibid, p. 120; see, also, the Act of 1675, ibid, p. 236. 6 Plymouth Colony Laws, p. 46. 7 Ibid, p. 156. [16] Chap I] HiSTOEicAL Introduction. [§ 14 § 14. Monopolies established by patents from the crown. Toward the end of the Sixteenth century the grant of patents to reward some favorite or other was becoming so great an abuse as to shock the public conscience. The judges aa usual were influenced by this public feeling; they could not but see the discrepancy between the general theories then current and the too frequent practices of their sovereigns. They could not but recognize the change in the theory of society. They knew as all knew that free competition was to be the basis upon which the industrial order of the future was to be founded. To them therefore the growing practice of the Tudor sovereigns in grant- ing monopolies by patent to deal in this and that commodity, oil, yarn, glass and tin, and even in leather, paper, coal and steel, came as a great shock. They chafed at being obliged to recognize these grants, knowing that the undercurrent of public opinion was against monopoly ; though there was, no doubt, some policy in these grants to encourage and promote new trades and large enterprises, whereby the system of patents might have been defended, if people would have listened. The great Case of Monopolies^ shows an extraordinary preju- dice against that infamous patent of the crown granting the sole making of cards within the realm to sulsory. The company may organize, may make and sell gas, or not, at their pleasure ; and I see no more reason to hold that the duty of doing so is meant to be imperative, than tO' hold that other companies incorporated to carry on manufactures, or to do any other business, are bound to serve the public any further than they find it to be to their interest to do so. It was earnestly insisted, on the argument, that the community have a great interest in the use of gas, and that companies set up to furnish it ought to be treated like innkeepers and com- mon carriers, and that, if no precedent can be found for such a decision, this court ought to make one. But that there is no authority for so holding in England or America, where com- panies have been so long incorporated for supplying water and gas to the inhabitants of numerous towns and cities, affords a 13 Dutch (N. J. Law), 245, 72 Am. Dec. 360 (1858). [25] § 22] Eailboab Rate Regulation. [Chap. I strong presumption that there is no principle of law upon which it can b© supported." ^ § 22. Early decisions as to waterworks an illustration. But already the courts were showing an inclination to pro- tect the public in their relations with these public companies. In a case? regarding the constitutionality of the grant of emi- nent domain to a waterworks company, decided about the middle of tih.e nineteenth century by Chief Justice Shaw, he worked out a duty to supply the public by reason of the enabling clauses in the charter of the company in a way which would be plainly unjustifiable unless there were an underlying public duty. He said : " The supply of a large number of inhabitants with pure water is a public purpose. But it is urged, as an objection to the constitutionality of the act, that there is no express pro- vision therein requiring the corporation to supply all families and persons who should apply for water on reasonable terms ; that they may act capriciously and oppressively ; and that by furnishing some houses and lots and refusing supply to others, they may thus give a value to some lots, and deny it to others. This would be a plain abuse of their franchise. By accepting the act of incorporation, they undertake to do all the public duties required by it. When an individual or a corporation is guilty of a breach of public duty by misfeasance or non-fea- sance, and the law has provided no other specific punishment for its breach, an indictment vidll lie. Perhaps, also, in a suit- able case, a process to revoke and annul the franchise might be maintained." 2 Accord were: McCune v. Norwich Gas Co., 30 Conn. 521, 79 Am. Dee. 278 (1862) ; Com. ». Lowell Gas Co., 12 Allen, 75 (1866). The modern de- cisions establishing that the gas companies are in public calling are dis- cussed in § 59, infra. 3Lumbard v. Stearna, 4 Cush. 60 (1849). The modern cases establishing that the water companies are in public calling are discussed in § 57, infra. [26] Chap I] Historical Inteobtjction, [§§ 23, 24 § 23. Cotton press as a modern illustration. The conservative attitude in dealing with public employment is to consider all doubtful cases as private businesses, free to conduct their affairs as they please. But of course in such cases, if the legislature acts, the courts must accept the legis- lative declaration unless that is so unreasonable as to be un- constitutional. The courts that take the conservative view upon this general problem of State regulation of the industries go no further than this, after all. Ladd v. Cotton Press Com- pany* is one such case. There the company refused to treat its patrons alike, charging some more than others. Mr. Chief Justice Moore held that so far as the common law of Texas went the company might do what it pleased : " The business of warehousing and compressing cotton is free to every one who wishes to engage in it. 'No grant or franchise need be obtained from the State to authorize those desiring to do so to embark in this character of business. It is not one of the employments which the common law declares public. Nor is it claimed to have been made so by statute. And we know of no authority, and none has been shown us, for saying that a busi- ness strictly juris privati will become juris puhlici merely by reason of its extent. If the magnitude of a particular business is such, and the persons affected by it so numerous, that the interest of society demands that the rules and principles appli- cable to public employments should be applied to it, this would Ihave to be done by the legislature if not restrained from doing so by the constitution before the demand for such an use could be enforced by the courts." § 24. Stockyards as a modern illustration. This same conservative attitude is shown by some courts in dealing with the stockyards, another rather doubtful ease. In a 4 53 Texas, 172 (1880). L 7] § 24] Eaileoad Rate Eobgulation. [Chap. I recent decision by the United States Supreme Court, C'otting v. Kansas City Stock Yards Company,^ a variety of reasons were urged to show that the legislation of Kansas regulating stock yards and fixing their prices was unconstitutional, and the point upon which the legislation was finally declared to be void seems to be because it was discriminatory. But the suggestion is thrown out by Mr. Justice Brewer that although stock yards may be regulated by the State, perhaps the regulation ought not to be press'ed so far as in the case of railways. To quote from his own language : " Tested by the rule laid down in Munn V. Illinois, it may be conceded that the State has the power to make reasonable regulation of the charges for services rendered by the stockyards company. Its stockyards are situ- ated in one of the gateways of commerce, and so located that they furnish important facilities to all seeking transportation of cattle. While not a common carrier, nor engaged in any dis- tinctively public employment, it is doing a work in which the public has an interest, and therefore must be considered as subject to governmental regulation. But to what extent may this regulation go ? Is there no limit beyond which the State may not interfere with the charges for services of those who while not engaged in such service have yet devoted their prop- erty to a use in which the public has an interest ? . . . And while in the present case by the decisions heretofore referred to he cannot claim immunity from all State regulation, he may right- fully say that such regulation shall not operate to deprive him altogether of the ordinary privileges of others in mercantile business." " 5 183 U. S. 79, 46 L. Ed. 92, 22 Sup. Ct. 30, B. & W. 316 (1901). 6 Aec. Delaware, L. & W. Ry. v. Central S. Y. Co., 46 N. J. Eq. 280, 19 Atl. 185 (1890). [28] Cliap I] HiSTOEicAi, Introduction. [§ 25 § 25. Conservative and radical views concerning the public services. While it is generally agreed that a change has come over the spirit of our time, that State regulation is the prevailing phi- losophy of the people at tlie beginning of the twentieth century ; it must be borne in mind that this has been the result of a gradual progress of thought, and that this progress has not af- fected all men or all lawyers equally. Now, as at all times, there are conservative lawyers and radical lawyers, the former as far behind the prevailing spirit of the time as the latter go beyond it In every change of popular thought there have been laggards, and in every such change there have been those who are unable justly to estimate tlie true meaning of the change, and work beyond it into eccentricities in which the peo- ple will never follow them. We have, therefore, three general types of thought at .every time ; the conservatives, the mod- erates, and the radicals. And this is as true of legal as of eco- nomic thought. We shall therefore find many lawyers still holding conservative views as to the application of the law of public callings to modern conditions. They believe that rail- road ratesi should be unregulated, except by the desire and power of the corporation; that the conductors of every busi- ness, however necessary to public welfare, should do whatever seems good in their OAvn eyes. Some economists still tell us that the only way to get efficient service for the public is to allow the public service companies the right of exacting such rewards as they are able to get. There are still some lawyers who assure us that the spirit at least of the constitution requires that all persons and corporations be left free to get what they can out of the world. But in spite of these now obsolescent views there can be no question that the tendency to-day is to restrain in the interests of society all business which has ob- tained undue power. [29] § 26] Eaileoad Rate Eegulatiok. [Chap. I TOPIC D. GKOWTH OF THE PUBLIC EMPLOYMENTS. § 26. Extension of the application of the principle in recent times. As the prevalence of competitive conditions in business limits the application of the principles- of public service law, so the prevalence of a condition of business combination extends their application. Such a condition is novs^ prevailing. About a generation ago a change in commerical practice shovsred w;th re- markable distinctness the advantage of co-operation and combi- nation. Great enterprises took the place of small ones, and great enterprises required co-operation and combination. As the people became accustomed to look upon combination as the price of success, they came more and more to regard it as a blessing rather than an evil; and public opinion has gradually turned away from the individualistic ideal until to-day it has been fairly discarded by the current philosophy. With the principle of combination as the spring of action has come a cor- responding need of controlling the action of business combina- tion itself for the good of the whole public. As the rights of the individual trader yield to the rights of the great corpora- tion, so in the view of the man of this time, the rights of the corporation should in their turn yield to the rights of the whole people. The same spirit which fosters combination, fos- ters also control of the combination for the public benefit. The spirit of the present age, therefore, has come to be a spirit which demands that great business enterprises should be con- ducted in accordance with the requirements of society. The positive law of the public calling is the only protection that the public have in a situation such as this, where there is no competition among the sellers to operate in its favor. So much has our law been permeated with the theory of Icdssez faire, which was but lately so prominent in the policy of our State, that the admission has been made with much hesitation [30] Chap I] HiSTOEICAL iNTBODDCTIOlf. [§ 27 that State coptrol is ever necessary. But the modern conclu- sion, after some bitter experience, is that freedom can be al- lowed only where conditions of virtual competition prevail, for in conditions of virtual monopoly, without stern restrictions, there is always great mischief. There is now fortunately almost general assent to State control of the public service companies, since it is recognized that the special situation requires a special law. § 2Y. Growth of the public service companies in late years. As a result of changed business conditions and ideas, and of the great inventions which have constantly tended to increase the magnitude of business enterprises there has been in the last forty or fifty years a great growth of employments which have gained, if not a legal monopoly or at least some special legal privileges, at any rate, as a result of circumstances, a virtual monopoly in matters of public necessity. These public service companies are certainly the most considerable factor in modern commercial affairs. A merd enumeration of some of the most important of the recognized public employments will demonstrate their over- shadowing imj)ortance in modern business. Thie common car- riers of passengers and goods by land and sea, ferries and bridges, warehouses and stockyards, the supply of gas and elec- tricity for light, heat and power, telephone and telegraph, con- duit and sewer, water supply and irrigation systems, pipe lines for oil and electrical transmission lines — one may judge from this incomplete list how large a proportion of the capital of the country is invested in the equipment to furnish these ser- vices, and how great are the annual payments which the public make to those who furnish them. As these public services are treated of as constituting a single class in the discussion which follows, it is thought Avell to discuss some test cases which show the basis upon which this class is made up. [31] § 28] Eailkoab Rate Regulation. [Chap. T § 28. Grain elevators as an illustration. Any discussion of the foundations of our industrial relations must begin and end with the case of ilunn v. Illinois^ since it is recognized that this case has within its view all public duties and all private rights which are established under our system of government. Upon the right understanding of this distinction depends the true conception of our general theory of the function of State regulation. The facts of the case are worth careful examination. The General Assembly of Illinois in 1871 had passed a statute which provided a maximum rate beyond which no person should charge for the storage of grain in public elevators. The firm of Munn & Scott refused to obey the act, and accordingly were fined. They appealed the cage from court to court until the Supreme Court of the United States was reached. The Supreme Court confirmed all the decisions which had been given below and decided against the defendant. The points to be noted are four. The elevator of Munn & Scott stood upon land bought by them by private treaty ; they had no privileges in the public streets ; they had no aid from the public treasury ; they were not even incorporated. Here, then, is a case that raises the question vdthout complication. As a general problem, Mr. Justice Waite discusses it : " This brings us to inquire as to the principles upon which this power of regulation rests, in order that we may determine what is within and what without its operative effect. Looking, then, to the common law, from whence came the right which the con- stitution protects, we find that when private property is ' af- fected with a public interest, it ceases to be juris privati only.' This wag said by Lord Chief Justice Hale more than two hun- dred years ago in his treatise De Portibus Maris, and has been accepted without objection as an essential element in the law of property ever since. Property does become clothed with a 194 U. S. 113, 24 L. Ed. 77, B. & W. 71 (1876). [32] Chap I] HiSTOEicAx, Inteoduction. [§ 23 public interest when used in a manner to mate it of public con- sequence, and affect the community at large. When, therefore, one devotes his property to a use in which the public has an in- terest, he, in effect, grants to the public an interest in that use, and must submit to be controlled by the public for the common good to the extent of the interest he has thus created. He may withdraw his grant by discontinuing the use ; but so long as he maintains the use, he must submit to the control." In this case of the grain elevator experience shows that in a given community there are not usually competitive conditions; monopolistic conditions generally prevail. Why ? JSTot by acci- dental coincidence, but by natural limitation. The facts are that in any given community the plots of ground upon which this business may be conducted with convenience and efficiency are few and concentrated. In the case of the Chicago elevator those are the lots which both border upon the river and are ad- jacent to the terminals of the railroads entering the city. Thus grain elevators because of the nature of the traffic must be placed in or near a definitely fixed point; and thereby they have a virtual monopoly over their business; their number cannot be indefinitely multiplied, aad competition cannot ef- fectively regulate their business. Since their business is neces- sary to the public, it therefore follows that they must se'rve the whole public. There are elements of publicity in the business of elevating grain which peculiarly affect it with a public in- terest. They are found in the nature and extent of the busi- ness, its relation to the commerce of the State and country, and the practical monopoly enjoyed by those engaged in it. The underlying principle is that business of certain kinds holds such a peculiar relation to the public interests that there is super- induced upon it the right of public regulation.^ 2 Munn V. Illinois, supra, is undoubtedly one of the leading cases iu American constitutional law. It has been cited with approval hundreds of times, both in the federal and the State courts. See Rose's Notes on U. S. Sup. Ct. Rep. vol. 9, pp. 21-55. [33] § 29] Kaileoad Eats Begu-lation. [Chap. I { § 29. Warehouses as an illustration. This commanding position is always a badge of public call- ing, because it gives the upper hand. The- most extreme case of this sort is Nash v. Page.* That case was a controversy be- tween the proprietors of ten of the tobacco warehouses in the city of Louisville, and the appellants, twenty-seven in number, who were dealers in tobacco. It appeared that the appellants had been denied the right to make purchases of tobacco at the warehouses of which the defendants were the proprietors. Ac- cordingly, they had applied to the chancellor for an injunction asking that these warehousemen be enjoined from refusing them permission to make purchases at their several warehouses, and from rejecting their purchases when making the highest bids for the tobacco offered upon the payment of such fees as were charged other buyers. The refusal was upon the basis of a restriction which -had been lately attempted to members of the Board of Trade. The opinion of Mr. Justice Pryor is one of the most signifi- cant on this subject: " Since the formation of the State gov- ernment, the sale of this great staple has been fostered and pro- tected by legislation. Such warehouses have always been regu- lated by law for the benefit of the producer as well as those who are proprietors of these warehouses, and the latter have as- sumed an obligation to the public which exists as long as they continue public warehousemen. It is conceded fact that more than five millions in value of tobacco annually find its way from the producer to the warehouses in that city. The greater part of this product is grown within th« State, and the producer has almost oi necessity to place his tobacco under the control of and for sale by these several warehousemen at public auction. All this tobacco must necessarily pass through these warehouses, subject to such charges as are reasonable and proper. Such a 3 80 Ky. 539 (1882). [34] Chap I] HisTOEicAx, Inteodtjction. [§ 30 public duty may be imposed on these warehousemen in express terms or by implication, but whether so imposed or not, it arises from the facts of the case. In this great tobacco centre the producer is restricted to these public warehouses, or rather these public warehouses have a mutual monopoly of the sales of tobacco at auction, and the fact that there is more than one or a dozen such warehouses cannot affect the question." * § 30. Associated Press as an illustration. In various lines of business at the present time there are at most a few corporations, often one corporation, which have sub- stantial control of the market in that industry. Whether these monopolistic conditions are real or fictitious, natural or acci- dental, is the question. A most interesting case that comes to mind at this point is Inter-Ocean Publishing Company v. Asso- ciated Press.® The plaintiff newspaper had regularly taken the news of the defendant bureau. One of the by-laws of the Associated Press forbade members from buying news of any other agency ; notwithstanding which the plaintiff took specials of the Sun Publishing Association. Thereupon the Associated Press enforced its by-law against the plaintiff, which is the basis of this action. Mr. Justice Phillips held the by-law bad : " The organiza- tion of such a method of gathering information and news from so wide an extent of territory as is done by the appellee cor- poration, and the dissemination of that news, requires the expenditure of vast sums of money. It reaches out to the vari- ous parts of the United States, where its agents gather news which is wired to it, and through it such news is received by the various important newspapers of the country. Scarcely any newspaper could organize and conduct the means of gathering 4 Ace. Pannell v. Louisville T. W. Co., 113 Ky. 630, 68 S. W. 662, 23 Ky. Law. Rep. 24 (1902). 6 184 111. 438, 56 N. E. 822, B. & W. 53 (1900). [35] § 31] Raileoad Eate Regulation. [Chap. I the information that is centred in an association of the char- acter of the appellee because of the enormous expense, and no paper could be regarded as a newspaper of the day unless it had access to and published the reports from such an association aa appellee. For news gathered from all parts of the country the various newspapers are almost solely dependent on such an association, and if they are prohibited from publishing it or its use is refused to them, their character as newspapers is de- stroyed and they would soon become practically worthless pub- lications. The Associated Press, from the time of its organi- zation and establishment in business, sold its news reports to various newspapers who became members, and the publication of that news became of vast importance to the public, so that public interest is attached to the dissemination of that news. The manner in which that corporation has used its franchise has charged its business with a public interest. It has devoted its property to a jublic use, and has, in effect, granted to the public such an interest in its use that it must submit to be con- trolled by the public for the common good, to the extent of the interest it has thus created in the public in its private prop- erty." « § 31. Ticker service as an illustration. This ease of the Associated Press is supported by those de- cisions which treat the ticker service as public in its nature because of its momentary monoply in its distribution of quo- tations. In one case, Shepard v. Gold Stock and Telegraph Co.,^ one such company made the rule that the quotations fur- nished were for the subscribers' own use. The court was asked to declare the regulation void. 6 But see State v. Associated Press, 159 Mo. 410, 60 S. W. 91 (1900) j Matthews v. Associated Press, 133 N. Y. 335, 32 N. E. 981 (1893). 7 38 Hun, 338, B. & W. 52 (1885). [36] Chap I] HiSTOEiCAX, Inteoduction. [§ 32 Mr. Justice Pratt treated the question with discrimination: " Defendants are a public corporation under obligation to ren- der their services impartially and without discrimination to all persons who comply with their reasonable rules. Yet the contract entered into by the parties is not to be disregarded, and such reasonable stipulations as it contains will be respected and enforced by the court. The contract provides as follows: These reports are furnished to subscribers for their private use in their own business, exclusively. It is stipulated that such will not sell or give up the copies of the reports in whole or in part, nor permit any outside party to copy them for use or publication. Under this rule subscription by one party for the benefit of himself and others at their joint expense will not be received. The stipulation is reasonable and not in conflict with the duty owed by defendants to the public"* § 32. The public services as virtual monopolies. The extent to which a business is public is a matter of law to be determined by the courts upon the application of their own tried tests to the situation. Whether a business is public or not depends upon the situation of the general public with respect to it. Are there enough of such purveyors to serve the public ? If so, there will be virtual competition ; if not, there will be virtual monopoly. In all of the businesses discussed in this chapter competition, although from a legal point of view possible, is from the economic point of view improbable. So far as one can see, virtual competition is at an end in these great industries, and virtual monopoly will henceforth prevail. Therefore it must be said that the public has now an interest in the conduct of these businesses by their owners; they are 8 Ace. New York & C. Exchange v. Chicago Bd. of Trade, 127 111. 153, 19 N. E. 855, 11 Am. St. Rep. 107, 2 L. R. A. 41 (1889) ; Frurman v. Gold & S. Tel. Co., 32 Hun (N. Y.),4 (1884) ; Smith v. Gold & S. Tel. Co., 42 Hm (N. Y.), 454 (1886). [37] § 33] Eailboad Rate Eegulation. [Chap. I affected with, a public interest, since these agencies are carried on in a manner to make them of public consequence.. There- fore, having devoted their property to a use in which the public has an interest, they in effect have granted to the public an interest in that use, and must submit to be controlled by the public for the common good to the extent of the interest they have created. This is the application of the doctrine of Munn V. Illinois, — 'a principle above all others in our constitutional % 33. Overshadowing importance of the problem of rate regulation. All people who come in touch with the problem of rate regu- lation by any method of approach are agreed as to its over- shadowing importance. An extract from one judicial opinion^ will serve to show what strong language it is necessary to use to give any idea of vital consequence of the general issue. " The administration of justice, said Webster, ' is the chiefest concern of man upon earth.' Within the scope of that function of gov- ernment there is, perhaps, no single topic of greater magnitude or moment than controversies which arise in trade and com- merce. Said Sir Walter Ealeigh, ' Whosoever commands the trade of the world commands the riches of the world, and con- sequently the world itself.' In a material sense, and in our astonishing civilization, nothing is more important than the transportation of commodities sold or interchanged, and in transportation the stability and reasonable character of the rates charged therefor is scarcely less important than transpor- tation itself. The three grand departments of government, legislative, executive, and judicial, are with steady and swerve- less purpose enacting or enforcing laws to safeguard the rights of the general public, and as well tiiat portion engaged in the 9 Speer, J., in Tift v. Southern Ry., 138 Fed. 753 (1905). [38] Chap I] Historical Intboduction. [§ 34 business of transportation. The shippers are appealing to gov- ernment to protect them against unwarrantable exactions by the carriers. Appeal may be made by the carriers to protect their interests from unremunerative rates to which they may be re- stricted by State or other local authorities. In either case com- plaint is heard and redress is given." It is no longer doubtful that the question of the reasonableness of a rate of charge for transportation is eminently a question for judicial investi- gation."" § 34. Rate regulation at the present time. But rate regulation is not a mere theoretical possibility, it is the present practice. As this discussion progresses from chapter to chapter it will be seen how firmly established is the law that those who are conducting a public business must charge no more than a reasonable rate, and how general is tlie legislation provid- ing some method of revising the rates charged by the public service companies. At this moment this legislation is becoming more exacting; for the present tendency plainly is to do more by legislation than to provide for setting aside rates shown to be extortionate; it is to go further and permit the fixing of a new rate by the supervising authority. It can be predicted with confidence that there will be further advance along these lines until a complete system for fixing rates by governmental authority in place of the rates set aside will be established by legislation. This is the spirit of the times, and one who wishes the continuance of our present regime of private ownership of the public utilities will do well to strengthen the hands of those who are working to establish this system of State control over 10 Citing Reagan v. Farmers' Loan & Trust Co., 154 U. S. 362, 14 Sup. Ct. 1047, 38 L. Ed. 1014 (1894) ; Chicago, etc., Ry. v. Minnesota, 134 U. S. 418, 10 Sup. Ct. 462, 33 L. Ed. 970 (1890) ; Rose's Notes on U. S. Reports, vol 11, p. 946, et seq. 11 Citing Justice Blatchford, in Chicago & St. Paul Ry. v. Minnesota, 134 U. S. 418, 10 Sup. Ct. 462, 33 L. Ed. 970 (1890). [39] § 34] Eailboad Rate Regulatiojst. [Chap. I the conduct of the public services. For if this systematic pro- gram to regulate effectually the charges of the public service companies fails of something like full success, there is no alter- native but State ownership with its unknowable consequences. As matters stand to-day the advocates of State control are really the conservatives. r4oi PART I. Chieb' Oharaoteeistics of Common OIaeeiage. CHAPTER II. COMMON CAHEIAGE AS A PUBLIC EMPLOYMENT. § 41. Reasons for regarding carriers as in the public employment. \ TO'PIC A. LEGAL PRIVILEGES AS GROUND OF PUBLIC POSITION OF THE OAEEIEE. § 42. Power of eminent domain. 43. Pipe lines as an example. 44. Cemeteries as an example. 45. Aid from taxation. 46. Irrigation canals as aj example. 47. Grist mills as an example. TOPIC B. EFFECT OF LEGAL MONOPOLY CONSIDEEED. § 48. Grant of an exclusive franchise. 49. Bonded warehouses as an example. 50. Log-driving corporations as an example. 51. Use of the streets. 52. Street railways as an example. 53. Electrical subways as an example. 54. General conclusions relative to special legal privileges. TOPIC C. VIETUAL MONOPOLY AS A GROUND OF PUBLIC POSI- TION OF THE CAEEIEE. § 55. Virtual monopoly the true ground for regulating public callings. 56. Monopoly due to character of business. 67. Water works as an example. 58. Natural gas as an example. 59. Gas works as an example. 60. Electric plants as an example. [41] §§ 41, 42] Railroad Eate Regulation-. [CTiap. II TOPIC D. MONOPOLY OF THE ESTABLISHED PLANT. § 61. Monopoly due to established plant. 62. Telegraph service as an example. 63. Telephone service as an example. 64. Sewerage system as an example. 65. Docks as an example. 66. General conclusions as to virtual monopolies. 67. Law governing all public employments the same. § 41. Reasons for regarding carriers as in the public em- ployment. As has been seen, common carriage has for a long time been regarded as the typical and indeed almost the only public em- ployment; and though the number of public-seryice companies has been greatly increased of late years> it still remains the most important of all. It is worth while, therefore, to ex- amine the grounds upon which it has been supposed that the common carrier is engaged in a public employment ; and in the ceurse of that investigation to note the relation in which common carriage stands to other public employments. The most import- ant characteristic of the law of public employment to-day is the right of the State to regulate the business, and thus to secure reasonable rates and fair service. The right of regulation is now widely exercised, but the legal justification for its exercise is often placed upon untenable grounds, which must first be ex- amined. TOPIC A.- LEGAL PEIVILEGES AS GEOtTND OF PUBLIC POSITION OF THE CAEEIEE. § 42. Power of eminent domain. It is often urged that the reason a railway company can be regulated by law is because it is endowed with the right of eminent domain, and is therefore a quasi-public corporation. This reasoning seems, however, to be objectionable, because it is taking the effect for the cause. A legislature can give a rail- way company the right of eminent domain only because the [42] Chap. II] Common Caeeiage. [§ 42 company, irrespective of the enjoyment o£ that right, is already in the service of the public; since private property can by the provisions of most of our constitutions be taken by eminent domain only for a public purpose. In at least one early case ^ it was doubted whether the opera- tion of a railroad was such a public enterprise as to justify the giving of eminent domain to it. In that case, Raleigh & Gaston Railroad v. Davis, it was finally decided that the right might be granted to the company. Chief Justice Ruffin disposing of the matter thus : " Upon the supposition that the legislature may take the property to the public use, it is next said that this taking is not legitimate, because the property is bestowed on private persons. It is true that this is a private corporation, its outlays and emoluments being individual property ; but it is constituted to effect a public beoaefit by a means of a road, and that is puhlici juris. In earlier times, there seems to have been a necessity upon governments, or at least it was a settled policy with them, to effect everything of this sort by the direct and sole agency of the government. The highways were made by the public, and the use was accordingly free to the public. The government assumed the exclusive direction as well as authority, as if they chose to be seen and felt in everything, and would avoid even a remote connection between private in- terests and public institutions. An immense and beneficial revolution has been brought about in modem times by en- gaging individual enterprise, industry, and economy in the execution of public works of internal improvement The gen- eral management has been left to individuals, whose private in- terests prompt them to conduct it beneficially to the public; but it is not entirely confided to them. From the nature of their undertaking and the character of the work, they are under sufficient responsibilities to insure the construction and pre- servation of the work, which is the great object of the govern- 1 Raleigh & Gaston Ey. v. Davis, 2 Dev. & Bat. (N. C.) 451 (1837). [43] § 43] Eaileoad Rate Regulation. [Chap. II ment. The public interest and control are neither destroyed nor suspended. The control continues as far as it is consistent with the interests granted, and in all cases as far as miay be necessary to the public use. The road is a high,way, although the tolls may be private property by force of the grant of the franchise to collect." § 43. Pipe lines as an example. Upon the same principle it has been held that the right of taking property by eminent domain may be conferred upon a pipe line system. The right having been conferred by the legislature, the act was attacked as unconstitutional, because the taking was ncrt for a public purpose. In a West Virginia case,^ Mr. Justice Moore said upon that point : " It has been decided, time and time again, and is there- fore settled by the best authority, that the construction of rail- roads, turnpikes, canals, ferries, telegraphs, wharves, hasins, etc., constitutes what is generally known by the name of in- ternal improvements, and gives occasion for the exercise of the right of eminent domain. And other measures of general utility in which the public at large are interested, and which require the appropriation of private property, are within the power where they fall within the reasons underlying the cases mentioned. The charter granted to the West Virginia Trans- portation Company by special enactment of the legislature, shows that the object was to construct a line for the transporta- tion of petroleum. The charter also established the maximum charges the company should make for transportation of oils. I cannot see the pi'opriety of admitting a railroad or canal or aqueduct to be an internal improvement, and declare this tube highway not to be."* 2 West Virginia Co. v. Volcanic Co., 5 W. Va. 382 (1872). 3 See, also, Columbia Conduit Co. v. Com., 90 Pa. St. 307 (1879); W. Va. T. Co. V. Ohio R. Pipe Line Co., 22 W. Va. 600, 46 Am. Kep. 527 (1883). [44] Chap. II] Common- Cai^riage. [§ 44 § 44. Cemeteries as an example. When the power of eminent domain is conferred on a private corporation, public necessity, it is clear, must be proved in every case ; but public service must be shown also. Unless the management of the enterprise undertake to serve all that apply upon reasonable conditions, the public have no interest in the promotion or conduct of the enterp5-ise, its success or failure; and in suck a case the Constitution forbids tbe taking of private property. An unusual decision in point is the case of Ever- green Cemetery Association v. Beecher,* which arose out of a complaint asking leave to take land for burial purposes by the right of eminent domain. In sustaining a demurrer to the petition, Mr. Justice Pardee discussed the general problem, along these lines: "The safety of the living requires the burial of the dead in proper time and place; and, inasmuch as it may so happen that no individual may be willing to sell land for such use, of necessity there must remain to the public the right to acq;uire and use it under such regulations as a proper respect for the memory of the dead and the feelings of survivors demands. In order to secure for burial places during a period extending indefinitely into the future that degree of care universally demanded, the legislature per- mits associations to exist with power to discharge in behalf and for the benefit of the public tbe duty of providing, maintaining and protecting them. The use of land by them for this pur- pose does not cease to be a public use because they require varying sums for rights to bury in different localities; not even if the cost of the right is the practical exclusion of some. Cor- porations tai;e land by right of eminent domain primarily for the benefit of the public, incidentally for the benefit of them- selves. As a rule men are not allowed to ride in cars, or pass along turnpikes, or cross toll-bridges, or have grain ground at 4 53 Conn. 551, 5 Atl. ,353, B. & W. 26 (1885). [45] § 45] Eaileoad Eate Kegulation. [Chap. II the mill, without making compensation. One man asks and pays for a single seat in a car ; another for a special train ; all have rights' J each pays in proportion to his use; and some are excluded because of their inability to pay for any use; never- theless, it remains a public use as long as all persons have the same measure of right for ,tlie same measure of money. " But it is a matter of common knowledge that there are many cemeteries which are strictly private ; in which the public have not, and cannot acquire, the right to bury. Clearly the proprietors of these cannot take land for such continued private use by right of eminent domain. The complaint alleges that the plaintiff is an association duly organized under the laws of this State for the purpose of establishing a burying ground; that it now owns one ; that it desires to enlarge it ; and that such enlargement is necessary and proper. There is no allegation that the land which it desires to take for such enlargement is for the public us'e in the sense indicated in this opinion." ® § 45. Aid from taxation. The basis of the right of public regulation is often said to be the receipt by the regulated company of aid from taxation. It is doubtless true, in general, that a business which receives public aid from taxation is a public business, and is subject to public regulation; but again the effect has been taken for the cause. Under our Constitutions State aid can be granted only for a public purpose; the public character of the enterprise does not result from the grant of State aid, for it must precede it in order to make the grant valid. " The general grant of legislative power in the Constitution of a State does not enable the legisla- ture, in the exercise either of the right of eminent domain or 5 These eases, among others, show the public character of public ceme- teries: Oakland Cemetery v. St. Paul, 36 Minn. 529, 32 N.-W. 78 (1887) ; Re Deansville Cemetery Assn., 66 N. Y. 569, 23 Am. Rep. 86 (1876); Henry V. Trustees, 48 Ohio St. 671, 30 N. E. 1122 (1892) ; Cemetery Assn. v. Redd, 33 W. Va. 262, 10 S. E. 405 (1889). [46] Chap. II] Common Caeeiage. [§ 46 of the right of taxation, to take private property without the owner's conseni;, for any but a public object. jSTor can the legis- lature authorize counties, cities or towns to contract, for private objects, debts which must be paid by taxes." ® It isi only on the ground that the railroad is employed in the public service that it may receive State aid from taxation. " It was said that roads, canals, bridges, navigable streams and all other highways had in all times been matter of public concern ; that such channels of travel and of the carrying business had always been established, improved, regulated by the State, and that the railroad had not lost this character because consitructed by individual enterprise, aggregated into a corporation. We are not prepared to say that the latter view of it is not the true one especially as there are other characteristics of a public nature conferred on these corporations, such as the power to obtain right of way, their subjection to the laws which govern common carriers, and the like, which seem to justify the propo- sition." '' § 46. Irrigation canals as an example. Whenever, therefore, the propriety of the grant of State aid to a corporation is in question, the inquiry always is whether the business conducted by the grantee is affected by a public interest. It would be an obviously absurd method of solving the problem to say that the business is made public by the grant of State aid, and therefore the grant of State aid is justifiable as the business has been proved to be public. The courts there- fore wish to know from some external tests whether the business' is public in character. Thus, in the case of Fallbrook Irriga- tion District v. Bradley,^ it was claimed that a statute by which 6 Gray, J., in Cole v. La Graiige, 113 U. S. 1, 6, 28 L. Ed. 896 (1885). 7 Miller, J., in Loan Association v. Topeka, 20 Wall. (U. S.) 655, 658, 22 L. Ed. 455, 460 (1874). 8 164 U. S. 112, 41 L. Ed. 369, 17 Sup. Ct. 56 (1896). [47] § 46] Kailboad Rate Rixjulation. [Chap. II taxation was imposed for irrigation purposes was unconstitu- tional. In the course of the opinion of the court Mr. Justice Peckham said : ^ " The use must be regarded as a public use or else it would seem to follow that no general scheme of irrigation can be formed or carried into effect. . . . The use for which, private property is to be taken must be a public one, whether the taking be by the exercise of the right of emi- nent domain or by that of taxation. A private company or corporation without the power to acquire the land in irwitum would be of no real benefit. ... If that power could be conferred upon them it could only be upon the ground that the property they took was to be taken for a public purpose." ^^ 9 At page J60. 10 In the following cases, among others, the public character of the irriga- tion systems is recognized: United States — Stanislaus Co. v. San Joaquin C. & I. Co., 192 U. S. 201, 48 Law Ed. 406, 24 Sup. Ct. 24 ( 1903 ) ; San Diego L. & I. Co. v. National City, 174 U. S. 739, 43 Law Ed. 1154, 19 Sup. Ct. 804 (1899); Atlantic Trust Co. V. Goodbridge Canal & Irr. Co., 79 Fed. 39 (1897). Arizona. — Slosser v. Salt River Valley Co., 7 Ariz. 376, 65 Pac. 332, B. & W. 37 (1901). California — Price v. Riverside Co., 56 Cal. 431 (1880) ; Merrill v. South- side Irr. Co., 112 Cal. 426, 44 Pac. 720 (1896). Colorado— Wheeler v. No. Col. Irr. Co., 10 Colo. 582, 17 Pac. 487, 3 Am. St. Rep. 603, B. & W. 301 (1888); Junction Creek, etc.. Ditch Co. v. City of Durango, 21 Colo. 194, 40 Pac. 356 (1895) ; Wright v. Platte Co., 27 Colo. 322, 61 Pac. 603 (1900). 7da;io— Witterding V. Green (Idaho, 1896), 45 Pac. 134 (1896). Xonsas^Western Irr. & Land Co. v. Chapman (Kan. App. 1899), 59 Pac. 1098 (1899). Nebraska — Paxton Co. v. Farmers' Co., 45 Neb. 884, 64 N. W. 343, 50 Am. St. Rep. 585 (1895). Oregon — Umatilla Co. v. Earnhardt, 22 Ore. 389, 30 Pac. 37 (1892). Texas— Mud. Creek Irrigation Co. v. Vivian, 74 Tex. 170, 11 S. W. 1078 (1889). Washington State — ^Prescott Irrg. Co. v. Flathers, 20 Wash. 454, 55 Pac. 635 (1899). [48] Chap. II] Common Caeeiage. [§ 47 § 47. Grist mills as an example. The grist mills constitute another instance of an enterprise which it is close to the line of constitutionality for the State to aid. There is an excellent decision in the Supreme Court of the United States,** in which the tests are discussed by which the public character of a business may be judged. The. issue was whether a series of bonds were valid under the State Con- stitution. These bonds had been made to aid in the construc- tion and completion of a steam custom grist mill within the township. The Constitution empowered the execution of bonds for the purpose of building bridges, free or otherwise, or to aid in the construction of railroads or water power by donation thereto or taking stock therein, or for other works of public im- provement. Mr. Justice Hunt in delivering the opinion of the court said in part : " The mill was a steam mill. Does such an establish- ment fall within the description of other works of internal im- provement ? It would require great nicety of reasoning to give a definition of the expression internal improvement which would show that the means of transportation were more val- uable to the people of Kansas than the means of obtaining bread. It would be a poor consolation to the people of this town to give them the power of going in or out of the town upon a railroad, while they were refused the means of grinding their wheat. The statute of Kansas upon the subject of grist mills is ba^ed upon the idea, and, indeed, upon the declaration, that all grist mills are public institutions. In c. 65 of the Statute of 1868, p. 573, it is thus enacted: All water, steam or other mills, whose owners or occupiers grind or offer to grind grain for toll or pay are hereby declared public mills. Regulation is then made for the order in which customers shall be attended to, the liability of the miller, the rates of toll. Under our recent 11 Township of Burlington v. Beasley, 94 U. S. 310, 24 L. Ed. 161 (1876). [49] § 48] Eailboad Eate Eegulation. [Chap. II decision in Munn v. Illinois, and the other cases upon kindred subjects, it would be competent to the legislature of Kansas,^ to regulate the toll to be taken at these mills." It is plain that this is a close case when it comes down to final adjudication. It is true that it is indispensable that the people of Kansas should have the means of obtaining bread, but so is it necessary that they should have the means of getting meat. Purveying to a public need does not make a calling pub- lic, for upon that line of reasoning most businesses do that to a degree. It must be, therefore, that it is the conditions surround- ing tlie vending that affect the employment with a public inter- est. Where there is virtual competition the State has no func- tion to interfere: it is only where there is virtual monopoly that the State may regulate the service. Upon the whole that is the basis uppn which this opinion is founded. It holds that it would be competent for th^ legislature to regulate the toll to be taken by these mills; therefore it argues that the establish- ment of them is a public purpose, treating these matters as all one legal problem.-'^ TOPIC B. EFFECT OF LEGAL MONOPOLY CONSIDBKED. § 48. Grant of an exclusive' franchise. The grant of an exclusive franchise is, as has been seen, a thing which will justify regulating the business of the holder of it as a public business. Most carriers have no such special and exclusive franchise, and they are none the less in the public service; and the reason for including carriers in that category and for justifying the legal regulation of their business must be 12 The following cases, among others, thus in effect hold grist mills to be in public calling: Boston Mill Corp. v. Newman, 12 Pick. 467 (1832); Traver v. Merrick County, 14 Neb. 327, 45 Am. Rep. Ill (1883) ; Scudder V. Trenton Palls Co., 1 Saxt. Ch. (N. J.) 694, 23 Am. Dec. 756 (1832); Blair v. Cummings County, 111 U. S. 363, 4 Sup. Ct. 449, 28 L. Ed. 45 (1884). [50] Chap. II] Common Caebiage. [§ 49 sought elsewhere. But wherever a carrier has such an exchisive franchise (as often happens, for instance, in the case of a railway) he is for that reason subject to legal regulation. § 49. Bonded warehouses as an example. That an exclusive franchise, which constitutes a legal monop- oly, puts the person who possesses it in th© position of public service, is entirely clear. The leading case upon legal monop- oly is AUnutt v. Inglis.^ The question there was whether the London Dock Company had a right to insist upon an arbitrary hire for receiving wines into its warehouses, or whether they were bound to receive them there for a reasonable reward only. It appeared that by virtue of the Warehousing Act that com- pany alone had the legal privilege of taking goods in bond in the port of London. Lord Ellenborough said in part: " There is no doubt that the general principle is favored both in law and justice, that every man may fix what price he pleases upon his own property or the use of it; but if, for a particular purpose, the public have a right to resort to his premises and make use of them, and he have a monopoly, in them for that purpose, if he will take the benefit of that monopoly, he must as an equivalent perform the duty attached to it on reasonable terms. Here then the company's warehouses were invested with the monopoly of a public privilege, and therefore they must by law confine them- selves to take reasonable rates for the use of them for that purpose. "- According to this case special legal privilege has its correla- tive legal obligation; that is, the acceptance of unusual rights involves a continuous duty to serve all that apply. This solu- tion is in reality the logic of the situation. If by force of his 1 12 East, 527, B. & W. 70 (1810). - As to the public character of warehouses in general, see the annotation to § -28. supia. [51] § 50] Railroad Eate Eegulation. [CTiap. II franchise tlie holder could refuse facilities to all the world, the position of things wOuld be intolerable. The doctrine of this case provides an escape from that situation. It does not deny that the privilege exists to itsi full extent, but it puts upon the grantee the limitation that he may charge reasonable prices only. It is in this way iJiat in modern times the intolerable condition that special privilege without special duty would create is avoided. § 50. Log driving corporations as an example. Weymouth v. Penobsicot Log Driving Company,^ a case out- side the beaten track, shows that the doctrine of public calling will be extended to any case in which the decisive circumstance of legal monopoly is shown. This was an action brought against the log driving company by a lumberman who had hauled his logs to various landings on the west branch of the Penobscot River, where he had notified the company that they were located; he alleged that those in charge of the drive had carelessly left the logs behind so that they did not come to market that year. The company requested the court to instruct the jury that the corporation was not under any legal obligation to drive the logs upon request. Mr. Justice Danforth held that the instruction was properly refused under the circumstances. " In this case the charter con- ferred the privilege of driving, not a part, not such a portion as the company might choose, but ' all ' the logs to be driven. This right having been accepted by the company, it became a vested and also an exclusive right. It is therefore taken not only from all other corporations, but excludes the owner as well. By its acceptance and exclusion of the owner from the privilege, in justice and in law it assumed an obligation corresponding to, and commensurate with its privilege. It accepted the right to drive all the logs, and that acceptance was an undertaking to 3 71 Me. 29, B. & W. 27 (1880). [52] Chap. II] Common Caeeiage. [§§ 51, 52 drive them all, or to use reasonable skill and diligence to ac- complish that object." Upon the whole this case better than most shows the impossi- bility of any other decision in cases, like this, of legal monop- oly. Formerly the river was open to every one for the purpose of floating his logs to market; now it was closed to every one. A lumberman whom the company refused to serve would there- fore have no alternative, since to drag his logs overland to market would not be a commercial possibility. No reasonable system of law would leave without relief a man confronted with such a situation. If any rule in our law is dictated by natural justice, this one would seerd to be.* § 51. Use of the streets. Carriers and other public-service companies are sometimes granted a use of the public streets; and this right to use the streets has been urged as the reason for holding the user to be subject to regulation by law. But here again the earlier car- riers, and indeed most carriers at the present day have no pe- culiar rights in the streets. The power of regulation must therefore be sought in some other characteristic of the carrier. § 52. Street railways as an example. Of course the most obvious illustration of the grant of the use of the streets to a public service corporation is for the op- eration of a street railway. But it is because the street railway is a common carrier that it is permissible to give it the use of the streets. Sometimes this is stated rather plainly. Thus in State V. Spokane Street Railway Company,^ Mr. Justice Beeves i The following cases, among others, hold the log driving companies in public calling: Sands v. Manistee River Imp. Co., 123 U. S. 288, 31 L. EJ. 149 (1887) ; Penobscot Log D. Co. v. West Branch L. D. Co., 99 Me. 452, 3!) Atl. 593 (1905) ; Mann v. White R. L. Log Driving Co., 46 Mich. 38, 8 N. W. 550, 41 Am. Rep. 141 (1881). B 19 Wash. 518, 53 Pac. 719, 720 (1898). [53] § 53] Kaileoad Eate Regulation. [Cliap. II in establishing the public character of the business said : " Its franchise was granted to appellant by the State, not for its own profit alone or that of its stockholders, but in a large measure for the public benefit. Peculiar privileges were conferred upon it in consideration that it would provide facilities for communi- cation and for intercourse for the public. It is a common carrier. It was granted the power of eminent domain, a part of the sovereignty of the State, and, with the consent of the municipalities it may lay its tracks over the public streets and highways." ® § 53. Electrical subways as an example. A late metliod of permitting the use of the streets by elec- trical companies is by authorizing the construction of a general duct large enough to hold the wires of various companies. The electrical subway company chartered for such a purpose may or may not be given an exclusive privilege against the construction of other similar enterprises. For the purpose of accommoda- tion of various interests full power of control is usually re- served by the governmental authority which grants the rights. Often, as in the case of ISTew York, this is exercised by a special board. What are the mutual rights and duties between an electric light company and an electrical subway company? It ought not be difficult to determine. Brush Electric Illumi- 6 The following cases, among many others, involve the proposition that street railways are public business: Milwaukee El. Ky. v. Milwaukee, 87 Fed. 577 (1898) ; Barrett v. Market St. Ry., 81 Gal. 296, 22 Pae. 859, 15 Am. St. Rep. 61, B. & W. 297 (1889); Chicago & M. El. Ry. v. Ch. & N. W. Ry., 211 111. 352, 71 N. E. 1017 (1904) ; Dean v Chicago G. Ry., 64 111. App. 165 (1896) ; Levi v. Lynn & B. Ry., 11 Allen (Mass.), 300, 87 Am. Dee. 713, B. & W. 11 (1865); Parker v. Metropolitan Ry., 109 Mass. 506; Cora. v. Interstate Consolidated Ry., 187 Mass. 436 (1905); Bay V. Omaha St. Ry., 44 isTeb. 167, 62 N. W. 447, 48 Am. St. Ry. 717 (1895) ; Putnam v. Broadway & Sev. Ave. Ry., 55 N. Y. 108, 73 N. B. 580, 14 Am. Rep. 190 (1873). [54] Chap. II] Common Carriage. [§ 53 nating Company v. Consolidated Telegraph and Electrical Sub- way Company," one of the few cases in the books as yet, is hardly satisfactory in its treatment of the general question. In refusing an injunction asked by the plaintiff company in that case, to po-event the defendant company from removing the wires of the plaintiff, although the plaintiff professed itself willing to pay a reasonable price, Justice Ingraham said: " The plaintiff claims that the defendant is a quasi public corporation, and has only such rights as are given to it by char- ter, and, as it is nowhere expressly given the right to withdraw the plaintiff's wires from its ducts, when they are once there it must allow them to remain there forever ; and the only remedy that the defendant has against the plaintiff, or any onfe using its ducts, is an action at law for the recovery of the rent reserved. But the statutes and contracts in question conferred upon defendant no remedy in case of the refusal of a person using its subways to pay the rate fixed, and I can see no reason why it should not have the same rights that any other person would have under similar circumstances. It seems to me, how- ever, that this position arises out of a misconception of the de- fendant's real position. The defendant is not a common car- rier, nor has it received from the State a franchise such as is conferred upon a ferry company or a turnpike road. Defend- ant, it is true, obtained permission from the public authorities to build these subways in the public streets, and it has bound itself by contract to furnish to such corporations or individuals as have authority to use the public streets for electrical purposes the use of its subways, but such obligation rests entirely upon its contract under which, it received its authority to build its sub- ways. Irrespective of that contract, and section Y of the Acts of 1887, the plaintiff would have no right, against the will of the defendant, to use its subways, nor would the public authori- ties, nor the courts, have power to compel the defendant to give 7 15 N. Y. Supp. 811, B. & W. Cases, 30 (1891). [55] § 54] Eaileoad Eate Kegulation. [Chap. II any rights to the plaintiff. "Whatever right, therefore, the plaintiff acquired, it is under the contract under which the de- fendant had authority to build the subways, and the statutes under which such contract was made, and there can be nothing found in these statutes or contract that would justify the claim of the plaintiff. On the contrary, the utmost care is taken to provide for the payment of compensation to the defendant for the use of the subways, and defendant is expressly prevented from giving any one the right to use them, except upon the pay- ment of the rate fixed; and to say that a corporation getting permission to use the subways upon an agreement to pay the rate fixed for its use, under the provisions of the statute, could, by simply refusing to pay, defeat the express provisions of the contract by using the subway without paying for it the rate fixed or paying a less rate, would subvert the whole scheme under which the subways have been built." ® § 54. General conclusions relative to special legal privileges. It is submitted therefore, without going into more detail about the matter, that under our constitutional system no special privileges can be granted except for a public purpose. Unless there is public interest apparent the grant is void. In the case of the public service companies which have been brought for- ward for examination thus far in this discussion, a character- istic fact has been that the corporation in question enjoyed some privilege or other from the State. It is quite true that eminent domain, or at least use of the streets, may be found in many of the examples cited ; while aid out of taxation may be fastened upon in certain instances, and even actual operation by the State has been known. The question thus arises whether the establishment of public employment depends upon public privileges ; or whether the conditions of virtual monopoly, how- 8 Much to the same effect ia West Side El. Co. v. Consolidated Tel. & El. Co., 87 N. Y. App. Div. 550, 84 N. Y. Supp. 1052 (1903). [56] Chap. II] Common Caeeiage. [§ 55 ever caused, may give rise to public calling if the State has had no hand in the establishment of the situation. All these considerations are most suggestive ; indeed, one is led by them to an entire reversion of the common statement of the relation between the existence of public privileges and the establishment of public employment. It is common to argue that because a certain business has had a certain privilege granted to it, the consequence of that privilege is that the busi- ness is put by the courts in the class of public callings. But the real truth of the matter seems to be in the opposite state- ment, that no business can be granted a privilege under our con- stitutional system unless it is public in character. This is be- cause the conditions which permit competition or produce mo- nopoly are altogether external matters of fact with which, when accomplished, the law must deal. The difference between pub- lic calling and private calling is thus inherent in the nature of things. TOriC C. VIRTUAL MONOPOLY AS A GEOUND OF PUBLIC POSI- TION OF THE CAEEIEE. § 55. Virtual monopoly the true ground for regulating public callings. Upon the whole, the conditions surrounding the acknowledged public services suggest this working hypothesis, that in the pri- vate calling the situation is that of actual competition, while in the public calling the situation is that of virtual monopoly. The division indicated is a proper one; where competition prevails it regulates the conduct of business by its own processes, but monopoly requires the intervention of the law/ of the land in all cases where the business is of public importance. Wherever virtual monopoly is established the situation demands this law; that all who apply shall be served, with adequate facilities, for reasonable compensation and without discrimination. Other- wise in crucial instances of oppression, inconvenience, extor- [57] § 56] Kailroad Eatb Regulation. [Chap. II tion and injustice there will be no legal remedies for these in- dustrial wrongs. This is as true where the origin of this con- dition of monopoly is in natural limitations as where the es- tablishment of it is bj fiaf of the State. Natural monopoly should be dealt with upon the same basis as legal monopoly; and indeed is so treated by the inclusion of both within the law of public employments. Plow far, then, it can be said that the common carrier has a virtual monopoly of a business of public importance musi; now be considered. § 56. Monopoly due to character of business. The monopoly which the medieval carrier enjoyed was aue to the character of the business. Owing to the local nature of the medieval economy, the amount of traffic was small ; yet one who pursued the calling of common carriage must in order to do so effectually establish a certain regular course of business, and must be prepared to take care of traffic when it presented itself. In the nature of things, therefore, one could expect but a single carrier in any ordinary village or borough. This made competition at any place almost impossible. The extreme dif- ficulty of changing one's occupation in the middle ages contrib- uted to prevent competition. The medieval carrier, therefore, like the innkeeper, surgeon and smith, did enjoy a virtual monopoly. From the point of view of the shipper also the possibility of competition in the business of carriage is limited. If one gro- cer refuses to sell him goods he can without great inconvenience go to another. For the carriage of his goods, however, he is ordinarily limited both in time and in place. His goods must be carried from the place in which they are ; he cannot treat with another carrier ten miles away. His goods must usually be carried immediately; he cannot wait for a possible carrier to appear in the future. He isi at the mercy of the carrier who is on the spot. Even if the monopoly that results is temporary [58] Chap. II] Common Cakeiagb, [§ 57 in its nature, it is none tlie less real, and the law must step in or there 'will often be grave oppression. § 57- Water works as an example. A modern example of an employment which is public because it enjoys a virtual monopoly is that of maintaining water works. One of the earliest needs of a community is a supply of water for domestic uses; and it has been always obvious that this is a public utility in a true sense of that term. Accordingly it was conceded from the first that the situation demanded a coercive law ; but the extent to which that law took the disposition of the business out of the discretion of the corporations which pro- vided the supply was not appreciated. Haugen v. Albina Water Company^ ig a late illustration. The defendant company laid a main through Tillamook street upon which the applicant lived, but the defendant from the first refused to supply water to per- sons living between the east line of the township and Four- teenth street, within which limits the plaintiff resided. Mr. Justice Lord said in part: " It must be conceded that the defendant is engaged in a business of a public and not of a pri- vate nature, like that of ordinary corporations engaged in the manufacture of articles for sale, and that the right to dig up the streets and place therein pipes or mains for the purpose of conducting wateir for the supply of the city and its inhabitants, according to the express purpose of its incorporation and the business in which it is engaged, is a franchise, the exercise of which could only be granted by the State, or the municipality acting under legislative authority. In siuch case, how can the defendant, upon the tender of the proper compensation, refuse to supply water without distinction to one and all whos'e prop- erty abuts upon the street in which its pipes are laid ? If the supplying of a city or town with water is not a public purpose, 1 21 Oregon, 411, 28 Pac. 244, 14 L. R. A. 424, B. & W. 34 (1891). [59] § 57] Kailkoad Eate Regulation,. [Chap. II it is difBcult to conceive of any enterprise intrusted to a private corporation that could be classed under that head." Various elements combine to make the business of supplying vi^ater to a community a public calling. Perhaps the chief of these isi the natural limitation of the sources which makes the interposition of the State in aid of the enterprise necessary. The method of distribution through pipes requires the permission of the local authorities in order to lay the pipes in the public streets. All this makes competition with the established com- pany improbable, if, indeed, it does not make it impossible. At all events, monopoly in tliis service is so founded in the nature of things that competition there is all but unknown.^ 2 The following cases, among many others, hold water companies to be iu public calling: United Stoies— Spring Valley Water Works v. Schottler, 110 U. S. 347, 28 L. Ed. 173, 4 Sup. Ct. 48 (1884) ; New Orleans Water Works v. Rivers, 115 V. S. 674, 29 L. Ed. 525,6 Sup. Ct. 273 (1885) ; Long Island Water Supply Co. V. Brooklyn, 166 U. S. 685, 41 L. Ed. 1165, 17 Sup. Ct. 718 (1897); Bienville Water Supply Co. v. Mobile, 186 U. S. 212, 46 L. Ed. 1132, 22 Sup. Ct. 820 (1902) ; San Diego L. & T. Co. v. Jasper, 189 U. S. 439, 47 L. Ed. 892, 23 Sup. Ct. 571 (1903) ; Tampa Water Works Co. v. Tampa, 199 U. S. 241 ( 1905 ) ; National Water W. Co. v. Kansas City, 62 Fed. 853, 10 C. C. A. 653, 27 U. S. App. 165 (1894) ; Spring Valley Water Works V. San Francisco^ 124 Fed. 574 (1903); Palatka Water Works v. Palatka, 127 Fed. 161 (1903). Alabama — Smith v. Water Works, 104 Ala. 315, 16 So. 123 (1893); Mobile V. Bienville Water Supply Co., 130 Ala. 379, 30 So. 445, B. & W. 417 (1900). California — Spring Valley W. W. v. San Francisco, 82 Cal. 286, 16 Am. St. Rep. 116 (1890) ; San Diego Water Co. v. San Diego, 118 Cal. 556, 50 Pae. 663 (1897). Florida — Tampa Water Works Co. (Fla.), 34 So. 631 (1903). Illinois — Wagner v. Rock Island, 146 111. 139, 34 N. E. 545, 21 L. R. A. 519 (1893) ; Rogers Park Water Co, v. Fergus, 178 III. 571, 53 N. E. 363 (1899). /oico— Cedar Rapids W. Co. v. Cedar Rapids, 117 Iowa, 250, 91 N. W. 1081 (1902). Kansas — Shiras v. Ewing, 48 Kan. 170, 29 Pac. 320 (1892). Kentucky — Franke v. Paducah Water Supply Co., 88 Ky. 467, 11 S. W. 432, 718 (1892). [60] Chap. II] Common Caeeiagb. [§ 58 § 58. Natural gas as an example. The conditions surrounding the supply of natural gas present natural monopoly in a most extreme form. It is very common that the fields where the gas is found are at a considerable dis- tance from the city which consumes it. It is then obvious that no private person can get at a supply for himself outside of the established company. These conditions made the inclusion of this service within the class of public employments certain. It is not surprising that we should find a case against a natural gas company applying the doctrines of the law of public calling in the extreme form. This case is, State ex relatione Wood v. Consumers Gas Trust Company,* the relator applied for gas which was refused upon the ground that all the gas it could pro- Uaine — Eooldand Water Co. v. Adams, 84 Me. 472, 24 Atl. 840, 30 Am. St. Rep. 368 (1892) ; Kennebec Water District v. Waterville, 97 Me. 185, 54 Atl. 6, 60 L. R. A. 856 (1902) . Massachusetts — Lumbard v. Stearns, 4 Gush. 60 (1849) ; Burnett v. Com., 109 Mass. 417, 48 N. E. 758 (1897) ; Turner v. Revere Water Co., 171 Mass. 329, 56 N. E. 634, 68 Am. St. Rep. 432, 40 L. R. A. 657 (1898). Missouri — McDaniel v. Springfield Water Works, 48 Mo. App. 273 (1892). Montana— Sta.te v. Butte City Water Co., 18 Mont. 199, 44 Pac. 966, 56 Am. St. Rep. 574 (1896). Nebraska — American Water Works v. State, 46 Neb. 194, 64 N. W. 7U, 50 Am. St. Rep. 610, 30 L. R. A. 44 (1895). New Jersey — Olmstead v. Morris Aqueduct, 47 N. d. L. 311 (1885). New Yor/.— Silkman v. Water Comm'rs, 152 N. Y. 327, 46 N. E. 612, B. & W. 363 (1898). North Carolina— Grmn v. Goldsboro Water Co., 122 N. C. 206, 30 S. E. 319, 41 L. R. A. 240, B. & W. 403 (1898). Orejfon— I-Iaugen v. Albina Light Co., 21 Ore. 411, 28 Pac. 244, 14 L. R. A. 424, B. & W. Cases, 34 (1891). Pennsylvania — Brymer v. Butler Water Co., 179 Pa. St. 231, 36 A. 249, 36 L. R. A. 260, B. & W. Cases, 330 (1897). Tennessee— Wa.ta.uga. Water Co. v. Wolfe, 99 Tenn. 429, 41 S. W. 1060, 63 Am. St. Ey. 1841, B. & W. 408 (1897). Texas— City Water Co. v. State, 33 S. W. Rep. 259 (1895). England— Wuri v. Folkestone Water Works Co., 24 Q. B. Div. 334 (1890). 3 157 Ind. 345, 61 N. E. 674, 53 L. R. A. 245, B. & W. 66 (1901). [61] § 59] Eaileoad Eate Eegulatioi^. [Oliap. II vide was needed for its present customers, and the supply could not' be increased even by sinking new wells. The court held this excuse no justification. Mr. Justice Hadley, speaking for it, said in part : " The legal effect of the answer is that the-relatrix shall have no gas because her neigh- bors, in common right, have none to spare. There can be no such thing as priority, or superiority, of right among those who possess the right in common. That the beneficial agency shall fall s'hort of expectation can make no difference in the right to participate in it on equal terms. So if appellee has found it impossible to procure enough gas fully to supply all, this is no sufficient reason for permitting it to say that it will deliver all it. has to one class to the exclusion of another in like situation. . . . The principle here announced is not new. It is as old as the common law itself. It has arisen in a multi- tude of cases affecting railroad, navigation, telegraph, tele- phone, water, gas, and other like companies, and has been many times discussed and decided by the courts, and no statute has been deemed necessary to aid the courts in holding that' when a person or company undertakes to supply a demand which is ' affected with a public interest,' it must supply all alike, who are like situated, and not discriminate in favor of, nor against any." * § 59. Gas works as an example. When the first works were constructed to furnish gas through mains laid in the public streets to various householders in the community at large, new conditions in the supply of illumina- tion were created. Before that time illuminants had been commodities, bought and sold in packages, purchasable at vari- 4 Citing Cent. L. J. 278; Haugen v. Albina, etc., Co., 21 Ore. 411, B. & W. Cases, 34 ; Olmsted v. Proprietors, etc., 47 N. J. L. 311; Stern v. Wilkes- barre Gas Co., 2 Kulp. 499; Chicago, etc., Co. v. People, 56 111. 365; 8 Am. Rep. 690; Nebraska Tel. Co. v. State, 55 Neb. 627, 634; Watauga Water Co. V. Wolfe, 99 Tenn. 429, 41 S. W. 1060, 63. [62] Chap. II] Common Caeeiage. [§ 59 ous shops scattered over every city. The keepers of these shops had never been compelled to sell to all that required of them ; why then, it was asked, must gas companies be compelled to do so? At first such doubts had some currency with the courts, but at the present time there is a general agreement that man- damus should issue to compel a recalcitrant company to supply an aggrieved applicant. One of the earlier instances of this rule in the United States is to be found in Shepard v. Milwaukee Gas Light Company.^ The plaintiff complained of the refusal of the established gas works to supply him. The defendant claimed that under the circumsitances of the case it was not bound to serve the plaintiff. Mr. Justice Smith held that the gas company was bound to sell its gas to every citizen of Milwaukee upon compliance with such regulations only as the company might rightfully impose. His argument was this : " It is sufficient for the purposes of this case to know that the company had the exclusive right to manufacture and sell gas, and that hence the only means of sup- ply available to citizens was through the agency of the com- pany. Corporations of this kind are not like trading or manu- facturing corporations whose productions may be transported from market to market throughout the world. Its manufacture depends upon the consumption of the immediate neighborhood for its profit and success, and iipon no other place. From the nature of the article, the objects of the company, their relations to the community, and from all the considerations before men- tioned, it is to me apparent that the company is not at all analo- gous to an ordinary manufacturing or trading corporation." What, after all, is that element in the situation which differ- entiates the vending of candles from the purveying of gas ? Is it not this, — that the box of candles may be sent from any fac- tory into any market, a condition which preserves virtual com- petition in the sale of candles ; while a thoueand feet of gas can B6 Wis. 539, 70 Am. Dec. 479 (1858). [63] § 59] Eaileoad Eate Kegtjlation. [Chap II only be got by the consumer from the local gas company, a situ- ation which presents an inevitable monopoly in the supplying of gas. The market is thus limited by the nature of the product. It is in that senseLthat the monopoly of the local company is nat- ural, and it is for that reason that it is permanent. Experience proves that seldom in any community will competitive condi- tions prevail in the supply of gas, and never are these condi- tions lasting. This consideration must be at the basis of the universal holding at the present day that the business of gas making is one of the public services.® 6 The following decisiona hold the gas companies to be in public calling: United States— Gibha v. Consolidated Gas Co., 130 U. S. 396, 32 L. Ed. 979, 9 Sup. Ct. 553 (1889) ; Memphis Gas L. Co. v. New Memphis, 72 Fed. 952 (1896). California— Smith v. Capital Gas Co., 132 Cal. 209, 64 Pac. 258, 54 L. R. A. 769 (1901). Illinois — Chicago Gas Light Co. v. Peopled Gas Light Co., 121 111. 530, 13 N. E. 169, 2 Am. St. Rep. 124 (1887). Indiana — Coy v. Indianapolis Gas Co., 146 Ind. 655, 46 N. E. 17, 36 L. R. A. 535 (1897) ; Portland Nat. Gas Co. v. State, 135 Ind. 54, 34 N. E. 818, 21 L. R. A. 639, B. & W. 41 (1893); Rushville v. Rushville Nat. Gas. Co., 132 Ind. 575,- 28 N. E. 853, 15 L. R. A. 321 (1892). Kansas — In re Pryor, 55 Kan. 724, 41 Pac. 958, 49 Am. St. Rep. 280, 29 L. R. A. 398 (1895). Kentucky— homaville Gas Co. v. Dulaney, 100 Ky. 405, 38 S. W. 703, 36 L. R. A. 125, B. & W. 306 (1897) ; Oweusboro Gas Light Co. v. Hilde- brand, 42 S. W. Rep. 351 (1897). Maine — Brunswick Gaslight Co. v. United Gas, etc., Co., 85 Me. 532, 27 Atl. 525, 35 Am. St. Rep. 385 (1893). Maryland — Gas Light Co. of Baltimore v. Calliday, 25 Md. 1 (1866). Michigan — Williams v. Mut. Gas Co., 52 Mich. 499, 18 N. W. 236, 50 Am. Rep. 266, B. & W. 298 (1884). Montana — St. Louis v. St. Louis Gas Light Co., 70 Mo. 69 (1879). New Yorfc— People v. Manhattan Gas Co., 45 Barb. (N. Y.) 136 (1865) ; Bath Gas Light Co. v. Clafify, 74 Hun (N. Y.), 638, 26 N. Y. Supp. 287 (1893) ; Bloomfield, etc., Natural Gas l!ight Co. v. Richardson, 63 Barb. (N. Y.) 437 (1872); Schmeer v. Gas Light Co., 147 N. Y. 529, 42 N. E. 202 (1895); Morey v. Metropolitan Gas Light Co., 38 N. Y. Sup. Ct. 185 (1874); New York Cent. R. R. Co. v. Met. Gas Light Co., 5 Hun (N. Y.), 201 (1875). [64] Chap. II] CoMMOiT Caeeiage. [§ 60 § 60. Electric plants as an example. In the present generation a new method of illumination by electricity was devised which involved distribution from a cen- tral plant by a system of wires radiating through the localities served — a, very expensive plant to install. The essential feat- ures of the electric business are so like the main conditions in the gas business, it was obvious that the same law of public service was to be enforced in this instance. Indeed, it is most significant that no electric light company has ever squarely de- nied that there rested upon it the primary obligation to serve all. All this is most significant ; for it shows that the law of pub- lic service has now such general acceptation that in any new in- stance that is obvious it will be applied by the courts without ^hesitation. The latest case is Snell v. Clinton Electric Light Company, ''^ where the company refused to furnish electric light to the applicant until he paid the cost of the transformer. The real reason for the refusal was a business policy of the company to increase their operations by charging applicants for trans- formers unless the wiring of the house was done by the com- pany itself. In the present case the wiring was done by out- side parties, but the jury found that the residence was prop- erly wired. Ohio — Lanesville v. Gas Light Co., 47 OBio St. 1, 23 N. E. 55 (1889). Pennsylvania — Pittsburg's Appeal, 123 Pa. , St. 374, 25 Am. & Eng. Corp. Cases, 364 (1889); Hoehle v. Allegheny Heating Co., 5 Pa. Supr. Ct. 21 (1897); Bailey v. Fayette Gas Co., 193 Pa. St. 175, 44 Atl. 251, B. & W. 412 (1899). Washington — Faconia Hotel Co. v. Faconia Gas Light Co., 3 Wash. 310, 28 Pac. 516, 14 L. E. A. 669 (1891). Wisconsin — Shepard v. Milwaukee Gas Co., 6 Wis. 539, 70 Am. Dec^ 479 (1858). The earlier decisions to the contrary no longer have any force but are interesting historically: MoCune v. Norwich Gas Co., 30 Conn. 521, 79 Am. Dec. 278 (1864) ; Commonwealth v. Lowell Gas Co., 12 Allen, 75 (1866) ; Paterson Gas Co. v. Brady, 27 N. J. Law (3 Dutch), 245, 72 Am. Dec. 360 (1858). 7 196 111. 626, 63 N. E. 1082, 89 Am. St. Rep. 341, 58 L. R. A. 284, B. & W. 311 (1902). [65] § 60] Eaileoad Eate Eegulation. [Ciap. II In holding for the consumer Mr. Justice Carter stated the fundamental propositions involved in this way : " There is no statute regulating the manner under which electric light com- panies shall do business in this State. They are therefore sub- ject only to the common law, and such regulations as may be imposed by the municipality which grants them privileges. Ap- pellee, being organized to do a business affected with, a public interest, must treat all customers fairly and without unjust dis- crimination. Both reason and authority deny to a corporation clothed with such rights and powers and bearing such a rela- tion to the public the power to arbitrarily fix the price at which it will furnish light to those who desire to use it. The com- pany was bound to serve all its patrons alike, it could impose on the plaintiff in error no greater charge than it exacted of others." It is noticeable that in this opinion only one of the cases cited is that of an electric light company; lie other ex- amples cited involve gas and water, telephone and telegraph, proof positive that in the mind of the court these all fall within one department of the law. In this business of electric lighting one element in the condi- tions which produce monopoly is prominent, — the absence of the substitute , that is, the cost to the consumer of shifting for hims"elf if he is refused. ~So electricity at all can be produced by the smaller consumers without the installation of apparatus of great cost, operated thereafter at large expense. Moreover, this is a business where when the units are smaller the cost of production is greater by a surprising ratio, so that in ordinary conditions none of the larger consumers would go to supplying them unless the rates of the company were unreasonable. This state of affairs would put the patron at the mercy of the com- pany, unless the law interposed and compelled the renditioQ of service upon a reasonable basis." ^ 8 The following decisions, among others, hold the electric companies to be in public calling: [60] Chap. II] Common Cakriage. [§ 61 TOPIC D. MONOPOLY OF THE ESTABLISHED PLANT. § 61. Monopoly due to established plant. Medieval conditions have passed away., and the causes which contributed then to the carrier's monopoly have ceased to oper- ate ; but others of still greater force have taken their place. In the case of the important carriers to-day — ^the railway, the street railway, the express company, the steamship line — the enormous amount of- money invested discourages and prevents competition. The amount of money necessary to be raised and put at risk in order to enter upon the business of carriage is too great to subject it to competition with an already established and successful enterprise. Even when an investment is made, a competing line of railroad built or a new express company organized, it soon becomes apparent that competition is ruinous to one if not to both of the enterprises, and consolidation ret- sults, bringing monopoly again. i The magnitude of the investment required is not the only thing that deters competition. The fact that a long-established railroad or express company has a valuable plant which has been built and improved from year to year makes it almost im- possible, by the expenditure of any reasonable amount of money United States — Capital City Light Co. v. Tallahassee, 186 TJ. S. 401, 46 L. Ed. 1219. niinois—Snel\ v. Clinton Electric Light Co., 196 111. 626, 63 N. E. 1082, 89 Am. St. Rep. 341, 58 L. R. A. 284, B. & W. 311 (1902), (reversing 95 111. App. 552). Massachusetts — Opinion of Justices, 150 Mass. 592, 24 N. E. 1084 (1890). New York — Andrews v. Electric Light Co., 24 N. Y. Misc. Rep. 671, 53 N. Y. Supp. 810 (1898); Gould v. Edison Electric Co., 29 N. Y. Misc. 241, 60 N. Y. Supp. 559, B. & W. 308 (1899); Moore v. Champlain Electric Co., 88 N. Y. App. Div. 289, 85 N. Y. Supp. 37 .(1903). Oftio— Cincinnati R. R. v. Bowling Green, 57 Ohio St. 336, 49 N. E. 129, 41 L. R. A. 422, B. & W. 44 (1897). Pennsylvania — Mercur v. Media Electric Light Co., 19 Pa. Supr. Ct. 519 (1902). BnffZond— Metropolitan Electric Co. v. Ginder (1901), 2 Ch. Div. 799. [67] § 62] Railed AD Eate Regulation. [Cliap. II to provide a new enterprise with a plant equally effective. Still more, the establishment of a prosperous business and the build- ing up of a good will contribute greatly to make any possible competition ineffective. ISTot only is the good-will of an estab- lished business a valuable asset which the new enterprise can- not duplicate; a great and long established business can be much more cheaply and economically conducted than any new business, however great its capital and able its management. All these causes contribute to the virtual monopoly of- the car- rier of to-day. § 62. Telegraph service as an example. Ever since the introduction of the telegraph the situation has required special law. The applicant is confronted by a com- pany whose lines spread over great areas of the country, so that unless he is served by the company in question he usually has no method to shift for himself. Generally there is no sub- stitute. The invention of the telegraph came at a time, about the middle of the nineteenth century, when the public callings that were recognized by the courts were so few that, naturally, it was not realized that such a department of the law existed. But the need of dealing with this new agency upon the basis of re- quiring public service wasi from the first so pressing that with some violence to the facts the public telegraph was held a com- mon carrier. In truth the only similarity between these busi- nesses is that in both the obligation to serve all that apply is a necessary condition, that is', both callings are public in their nature. In one case at least the public character of the telegraph sys- tem is rested finally upon the dependence of the public upon the established system. In Ayer v. Western Union Telegraph Company,^ in 4eclaring telegraph companies to be public call- 179 Me. 493, 10 Atl. 495, 1 Am. St. Rep. 353 (1887). [68] Chap. II] Common Caeeiage. [§ 62 ings, in holding void therefore a stipulation made by them that they should not be liable for negligence, Mr. Justice Emery said : " Telegraph companies are qiuisi public servants. They receive from the public valuable franchises. They owe the pub- lic care and diligence. Their business intimately concerns the public. Many and various interests are practically dependent upon it. Nearly all interests may be affected by it." * 2 The following cases, among many others, involve the holding that the telegraph is a public calling: United States — Primrose v. Western Union Telegraph Co., 154 U. S. 1, 38 L. Ed. 883, 14 Sup. Ct. 1098, B. & W. 525 (1894); Western Union Telegraph Co. v. Call Publishing Co., 181 U. S. 92, 45 L. Ed. 765 (1901) ; Western Union Telegraph Co. v. Wyatt, 98 Fed. 335 (1899) ; United States V. Northern Pac. R. Co. et al., 120 Fed. 546 (1903). Alabama — Western Union Telegraph Co. v. Henderson, 89 Ala. 510, 7 So. 419, 18 Am. St. Rep. 148 (1890). Florida — Western Union Telegraph Co. v. Hyer, 22 Fla. 637, 1 So. 129, 1 Am. St. Rep.. 222 (1886). Illinois — People v. Western Union Telegraph Co., 166 111. 15, 46 N. E. 731 (1897). /mdiono— Telegraph Co. v. Harding, 103 Ind. 505, 3 N. B. 172 (1885). Kentucky — Camp v. Western Union Telegraph Co., 1 Met. (Ky.) 164, 71 Am. Dec. 461 (1858). Maine — Ayer v. Western Union Telegraph Co., 79 Me. 493, 10 Atl. 495, 1 Am. St. Rep. 358 (1887). Maryland — U. S. Telegraph Co. v. Gildersleeve, 29 Md. 232, 96 Am. Dec. 519 (1868), Mississippi — Western Union Telegraph Co. v. Liddell, 68 Miss. 1, 8 So. 510 (1891) ; Western Union Telegraph Co. v. Mississippi Commission, 74 Miss. 80, 21 So. 15 (1896). Missouri — Reed v. Western Union Telegraph Co., 135 Mo. 661, 37 S. W. 904, 58 Am. St. Rep. 609, 34 L. R. A. 492 (1896). Nebraska — Kempt v. Western Union Telegraph Co., 28 Neb. 661, 44 N. W. 1064, 26 Am. St. Rep. 363 (1890); Western Union Telegraph Co. v. Call Publishing Co., 44 Neb. 326, 62 N. W. 506, 48 Am. St. Rep. 729, 27 L. R. A. 622 (1895). North Carolina — Railroad Commissioners v. Western Union Telegraph Co., 113 N. C. 213, 18 S. E. 389 (1893). Pennsylvania- — Western Union Telegraph Co. v. Stevenson, 128 Pa. St. 442, 18 Atl. 441, 15 Am. St. Rep. 687, 5 L. R. A. 515 (1889). South Dakota — Kirby v. Western Union Telegraph Co., 7 So. Dak. 623, 65 N. W. 37, 30 L. R. A. 612 (1895). [69] § 63] Railroad Eatb Rekjulatioiv. [Chap. II § 63. Telephone service as an example. An excellent example of a public duty based largely on the existence of a monopoly by reason of a great established plant is that of the telephone company. In the case of the telephone duplicate services must be . provided to make competition possdble; for it is not enough, to get new takers into a new system^ the old ones must be gotten in to satisfy the new ones. From an economic point of view the du- plication of plant that is necessary to make competition possible in these public utilities is sheer waste, without compensating ad- vantages. From a business point of view tKis fact is a most effective deterrent. When one of these public services is estab- lished in a neighborkood, it is infrec||uent that men will be found to invest their money in the construction of anotber plant. Tbe risk of loss in such a case is too great, for since the market for both old and new is limited to the locality, tbe struggle must of necessity be so desperate tbat neither can expect to escape serious injury. Moreover, since most of such public works are permanent in their construction, if the venture fails of success an attempt to remove them would result in almost total loss. The best discussion of the nature of public calling is to be found in the cases concerning the telephone. These again are most of tkem common law decisions, so that they disclose the essential tests by which public calling is established. One of the best of these cases, because of its full working out of the problems, is State v. Nebraska Telephone Company.* In that case the company refused to comply with the relator's request for a telephone, giving various excuses, all of whidi the court held invalid, and thereupon issued a mandamus ordering the telephone company to fulfill its public duty to the applicant. Texas — Western Union Telegraph Co. v. Neel, 86 Tex. 368, 25 S. W. 15, 40 Am. St. Rep. 847, B. & W. 479 (1894). Vtah — Brown v. Western Union Telegraph Co., 6 Utah, 236, 21 Pao. 988, B. &W. 475 (1889). 3 17 Neb. 126, 22 N. W. 237, 52 Am. Rep. 404, B. & W. 142 (1885). [70] Chap. II] Common Carriage. [§ 63 Upon the general issue Mr. Justice Reese said : " While it is true, as claimed by respondent, that it has been organized under the general corporation laws of the State, and in some matters has no higher or greater right than an ordinary corporation, yet it is also true that it has assumed to act in a capacity which is to a great extent public, and has, in the large territory covered by it, undertaken to satisfy a public want or necessity. This public demand can only be supplied by complying with the ne- cessity which has sprung into existence by the introduction of the instrument known as the telephone, and which new demand or necessity in commerce the respondent proposes satisfying. It is also true that the respondent is not possessed of any special privileges under the statutes of the State, and that it is not under quite so heavy obligations, legally, to the public as it would be, had it been favored in that way, but we fail to see just how that fact relieves it. While there is no law giving it a monopoly of the business in the territory covered by its wires, yet it must be apparent to all that the mere fact of this terri- tory being covered by the ' plant ' of respondent, from the very nature and character of its business gives it a monopoly of the business which it transacts. No two companies will try to cover this same territory. The demands of the commerce of the present day makes the telephone a necessity. All the people upon complying with the reasonable rules and demands of the owners of the commodity — patented as it is — should have the benefits of this new commerce. The wires of respondent pass the office of the relator. Its posts are planted in the street in front of his door. In the very nature of things no other wires or posts will be placed there while those of respondent remain. The relator never can be supplied with this new element of commerce so necessary in the proeecution of all kinds of busi- ness, unless supplied by the respondent." * 4 The following decisions, among many others, hold the telephone com- panies to be in public calling: [71] § 64] Eaileoad Eate Eegulation. [Cliap. II § 64. Sewerage system as an example. The laying out of a sewerage system involves a great first cost, so great that as a commercial matter the established sys- tem wpuld never be duplicated by a competing system even if one v^ere authorized. Cases establishing the public duty of an established sewerage system to serve all that apply are few, since the works are generally constructed by the local govern- mental authorities, who seldom refuse to give service upon fair terms. There is such a case recently decided, however, Mobile United States — Chesapeake Telephone Co. v. Manning, 186 U. S. 238, 46 L. Ed. 1144, 22 Sup. Ct. 881 (1901); State v. Bell Telephone Co., 23 Fed. 539 (1885); Delaware v. Delaware Telephone Co., 57 Fed. 633, s. 0. 50 Fed. 677 (1891). Indiana — Hoekett v. State, 105 Ind. 250, 5 N. E. 178, 55 Am. Rep. 201 (1885) ; Cen. U. Telephone Co. v. Falley, 118 Ind. 194, 19 N. E. 604, 10 Am. St. Rep. 114 (1888); Central Union Telephone Co. v. Swoveland, 14 Ind. App. 341, 42 N. E. 1035 (1896). Kentucky — Louisville Transfer Co. v. American District Telegraph Co., 1 Ky. L. J. 144; Owensboro Harrison Telephone Co. v. Wisdom, 62 S. W. 529, 23 Ky. Law Rep. 97 (1901). Maryland — Chesapeake Telephone Co. v. Baltimore Telephone Co., 66 Md. 399, 7 Atl. 809, 59 Am. Rep. 167, B. & W. 185. Michigan — Mahan v. Michigan Telephone Co., 132 Mich. 242, 93 N. W. 629 (1903). Missouri — Louis v. Bell Telephone Co., 96 Mo. 623, 10 S. W. 197, 9 Am. St. Rep. 370 (1888); State v. Knitoch Telephone Co., 93 Mo. App. 349, 67 S. W. 684 (1902). i'eiraska — State v. Neb. Telephone Co., 17 Neb. 126, 22 N. W. 237, 52 Am. Rep. 404, B. & W. 142 (1885). New Yorfc— People v. Hudson R. Telephone Co., 19 Abb. N. C. (N. Y.) 466 ( 1887 ) ; Slatter of Baldwinsville Telephone Co., 24 N. Y. Misc. 221, 53 N. Y; Supp. 574 (1898). Ofeio— State v. Bell Telephone Co., 36 Ohio St. 296, 38 Am. Rep. 583 (1880). South Carolina — State v. Citizens' Telephone Co., 61 So. Car. 83, 39 S E. 257, 85 Am. St. Rep. 870 (1901). Pennsylvania — Bell Telephone Co. v. Com., 3 Atl. 825 (1886). Rhode Island — Gardner v. Providence Telephone Co., 23 R. I. 312, 50 Atl. 1014, 55 L. R. A. 115, B. & W. 202 (1901). Vermont — Commercial Union Telegraph Co. v. New Eng. Telephone Co., 61 Vt. 2411, 17 Atl. 1071, 15 Am. St. Rep. 893 (1888). [72] Chap. II] Common Caeeiage. [§ 64 V. Bienville Water Supply Company.^ The bill in that case averred an outrageous discrimination practiced by the oity, which was conducting both a water supply and a sewerage ser- vice, in charging those who had sewerage service alone from the city and those who had both sewerage service and water supply the same. Upon this showing ilr. Justice Haralson spoke sharply : " From the facts of the case, as above recited, if true — as they must be taken on demurrer, — it distinctly appears that the city, while it has the authority to do so, has never, by ordinance, fixed any charge or rate for the use of its sewers, and, indeed, is making no charge to its own customers for the use of the same; that it charges any one using its water alone as much as it charges' another for the use of both water and sewer; and against those who use the complainant's water, it charges for sewer service alone as much as it charges its own cusitomers for both water and sewerage, — thus ibaking its sewers free to those who use its water, while it imposes on complain- ant's customers a discriminating and onerous charge for the use of its sewers, — as much, as is alleged, as it charges for its own water and sewerage in addition. . Whether intended by the city to so operate or not, one can scarcely conceive of a more effective scheme to deprive the complainant of its customers than the one alleged in the bill. If complainant has to furnish its customers with water, and they are required by the city to pay for sewerage the same price it charges its own customers for its water and sewerage, it follows the complainant would have to furnish water practically free or abandon the business ; for it would be unreasonable to suppose that any one would use the complainant's water and bear the additional expense im- posed for so doing. These sewers of the city are for the public at large, and every one should be permitted to use them without any discrimination in charges against him. The franchise to 5 130 Ala. 379, 30 So. 445 (1901). [73] § 65] Eailroad Eatb Eegulation. [Ohap. II construct sewers being in the nature of a public use, the duty is on the city to supply sewerage rates to all impartially on reason- able terms. As is said by Mr. Bates : ' All persons are entitled to have the same service on equal terms and on uniform rates.' In addition it is averred, as seen, that citizens are notified by the city that they cannot use its sewers unless they subscribe for the city water, and customers of complainant, desiring to re- turn to it, are forbidden by the city from disconnecting from its pipes and connecting with complainant's, a threat the city has the physical power to enforce." * § 65. Docks as an example. The established docks are similar to these other instances re- cently under discussion. Vessels calling at a port are prac- tically forcedlo use the public docks that are open to it. There will necessarily be comparatively few docks since the positions upon deep water and near to the commercial centres are few. There will be oppression resulting from this situation unless the law of public service is applied. Barrington v. Commercial Dock Company'^ bears out this contention. The appellant was the owner of a wharf situated upon navigable water in the city of Tacoma, not located, how- ever, upon any highway. The respondents were owners of the steamer Cricket, a passenger steamer plyiiig between the cities of Tacoma and Seattle ; they instituted this action for the pur- pose of compelling the appellant to permit them to use itswharf as a landing place. Vessels of a similar character in competing business with the steamer Cricket were permitted to use the dock. The only statute gave a right to erect wharves upon navi- gable waters and to charge wharfage. The appellant therefore contended that the wharf was its private wharf, and that it had 6 See Bienville Water Supply Co. v. Mobile, 186 U. S. 212, 46 Law Ed. 1132, 22 Sup. Ct. 820, B. & W. Cases, 417 (1902). 7 15 Wash. 170, 45 Pac. 748, 33 L. R. A. 116 (1896). [74] Chap. II] Common Caeeiage. [§ 66 therefore the right to determine for itself with whom it would do business. Mr. Justice Gordon founded his argument upon these propo- sitions*: " When wharves belonging to individuals are legally thrown open to the use of the public, they become affected with a public interest. We think that in determining the character of the appellant's wharf, regard should be had to the use to which it has been devoted rather than its private ownership, and that upon the facts found the position of the appellant can- not be maintained. As well might the proprietor of a stage coach claim the right to discriminate upon the ground that the property employed in his business was private property. The doctrine, if maintained, would tend to promote and further monopolies which it is not the policy of our law to favor." * § 66. General conclusions as to virtual monopolies. A review of the instances which have been cited in the course of this discussion will show that this conception of virtual mo- nopoly will cover everything. Nothing narrower will do, as for example the difference sometimes put forward between the 8 The following oases, among many others, consider docks and wharves as public in character: United States — West Coast Co. v. Louisville & N. Ry., 121 Fed. 645, 57 C. C. A. 671 (1903). Florida — Indian River S. S. Co. v. East Coast Transportation Co., 23 Fla. 387, 10 So. 480, 29 Am. St. Rep. 258 (1891). Georgia— Robertson v. Wilder, 69 Ga. 340 (1882) ; Macon D. & S. R. R. Braham v. Ward, 117 Ga. 555, 43 S. E. 1000 (1903); District v. John- son, 1 Mackey, 51 (1881). Louisiana — Aiken v. Eagar, 35 La. Ann. 567 (1883). Minnesota — Vega Steamship Co. v. Consol. Elevator Co., 75 Minn. 308, 77 N. W. 973, 74 Am. St. Rep. 484, 43 L. R. A. 843 (1899). New ror/c— Buffalo v. Delaware, L. & W. Ry., 39 N. Y. Supp. 4 (1895) ; Alexandria Bay S. S. Co. v. N. Y. C. & H. R. Ry., 18 N. Y. App. 527, 43 N. Y. Supp. 1091 (1897). Pennsylvania — Rogers v. Stophel, 32 Pa. St. Ill (1858). [75] § 67] Eaileoad Eate Ejegulation. [Clhap. II undertaking of a public service in contradistinction to the fur- nishing of a public supply. Now, it is true that most of the cases are eases of service — the railway and the warehouse, for example; but other of the eases are of supply, — the waterworks and gas works, for instance. Indeed, there is nothing in this distinction, either in economics or in law. It is submitted that any business is made out public calling where there is a virtual monopoly inherent in the nature of things. The conclusion seems to be forced upon us that virtual mo- nopoly creates the necessity for public regulation and justifies it; and upon this our constitutional law turns. If virtual mo- nopoly is made out as the permanent condition of affairs in a given business, then the law, it seems, will consider that calling public in its nature ; on the other hand, if effective competition is proved as the regular course of things in a given industry, the law will hold all businesses within it as private in their char- acter. Under our constitutional system a distinction is made upon this line. In the public calling regulation of service, fa- cilities, prices and discriminations is possible to any extent. Monopolistic conditions demand such policy ; and at no period in history has this been more apparent than now. In the pri- vate callings no such legislation should be permitted. Com- petitive conditions require freedom, and at no epoch in our in- dustries has it been more important to insist upon this. But wherever there is virtual monopoly in a business of public im- portance at any time and from any cause, the protection of the law is requisite, requiring that all shall be served at reasonable rates. § 67. Law governing all public employments the s^me. A great variety of public employments have been enumer- ated in this chapter as illustrations of those characteristics which establish the public duty of the common carrier. When later in this volume the subject of rate regulation is reached [76] Chap. II] Common Oaeeiage. [§ 67 advantage will be taken of the fact that these various public callings have been enumerated. And throughout the main por- tion of this book in the discussion of railway rate regulation, cases involving the regulation of rates of all the public services will be discussed together in the text and cited together in the footnotes. This is justifiable if the common carrier has been shown to be simply one example of a class of public callings, all of which are governed by the same law. And it was therefore necessary to devote s'ome space in these introductory chapters to establishing that this class of public callings does exist and has common characteristics which require general law for its regulation. [77] CHAPTER III. EEQUJSITBS OF COMMON CARRIAGE. TOPIC A. BY WHOM THE CAEEIAGE IS UNDERTAKEN'. § 71. Who are common carriers. 72. Carriage of goods by servant of a carrier. 73. Carriage of passengers by servant of a carrier. 74. Carrier must control the thing carried. TOPIC B. WHETHER THERE HAS BEEN ACCEPTANCE OF PASSEN- GERS AND THEIR BELONGINGS. S 75. Carriage in vehicle not intended for passengers. 76. Carriage on freight cars. 77. Carriage ir a place not intended for passengers. 78. Whether there is acceptance in such cases. 79. Baggage carried in car veith passenger. 80. American rule as to baggage carried by passenger. TOPIC C. WHETHER THERE HAS BEEN BAILMENT MADE OP GOODS. § 81. Owner accompanies the goods and retains possession. 82. Owner accompanies the goods without retaining possession. 83. Cattle carried with a drover furnished by the owner. 84. Goods taken across a ferry by the owner. 85. Goods carried across a bridge. 86. Issue of bill of lading without receipt of goods. TOPIC D. TRANSPORTATION NECESSARY POR THE CONCEPTION OF CARRIAGE. § 87. Carrier must undertake transportation. 88. Storage hulks not carriers. 89. Log drivers not carriers. 90. Drovers of cattle not carriers. 91. Vehicles leased for carriage. 92. Shipper furnishes servants to manags vehicle. [78] Chap. Ill] Requisites of Commok Caeeiage. [§ 71 TOPIC E. WHEN TEASrSPOETATIOlT IS FUENISHED BY OTHEES. § 93. Leased railways. 94. Chartered accommodations. 95. Refrigerator car lines not carriers. 96. Sleeping car companies not carriers. 97. Forwarding agents not carriers. TOPIC A. BY WHOM THE CAEEIAGE IS UNDEETAKEW. § 11. Who are common carriers. A com men or public carrier, -whether of goods or of passen- gers, is one who is engaged in carrying as a public employment. " One who by virtue of his calling undertakes for compensation to transport personal property from one place to another for all such as may choose to employ him " — is one succinct defini- tion.^ " A person who undertakes to transport from place to place for hire the goods of those who choose to employ him " — is another.^ 1 Jackson Architectural Iron Works v. Hurlbut, 158 N. Y. 34, 38, 52 N. E. 665, 70 Am. St. Rep. 432 (1899). 2 Quoted from Elkins v. Boston & M. R. R., 23 N. H. 275 (1851). See also various definitions in Fedebal Coubt: The Neaffie, 1 Abb. (U. S.) 465, 467, 17 Fed. Cas. 10,063 (1870). State Coubts: AZoftamo— Baboock v. Heiteit, 3 Ala. 392, 396, 37 Am. Dec. 695 (1842). Illinois — in. Cent. R. R. v. Frankenberg, 54 111. 88, 95, 5 Am. Rep. 92 (1870). Georffio— Fish v. Chapman, 2 Ga. 349, 352, 46 Am. Dec. 393 (1847). Kentucky — Robertson v. Kennedy, 2 Dana (Ky), 430, 431, 26 Am. Dec. 466 (1834). Massachusetts — Dwight v. Brewster, 1 Pick. (Mass.) 50, 53, 11 Am. Dec. 133 (1822). New Hampshire — Shelden v. Robinson, 7 N. H. 157, 163, 26 Am. Dec. 726 (1834). New Jersey— Merahon v. Hobensach, 22 N. J. L. 372, 377 (1850). New Torfc— Alexander V. Greene, 7 Hill (N. Y.), 533, 544 (1844). Oregon — Honeyman v. Oregon, etc., R. Co., 13 Greg. 352, 353, 10 Pac. 628, 57 Am. Rep. 20 (1886). [79] § 72] Kaileoad Rate Regulation. [Chap. Ill Common carriage, therefore, involves a certain kind of ser- vice performed under certain conditions. In order to determine whether a person is a common carrier, it must be determined first, whether his business is that of carrying, second, whether - it is a public one. The first of these questions will be the one discussed in this chapter. This question itself has two branches ; for the conception of carriage involves first that the carrier shall have control of the person or thing carried; second, that the carrier shall transport the person or thing carried. § 12. Carriage of goods by servant of a carrier. It sometimes happens that a parcel is given to the servant of a carrier under such circumstances that it seems doubtful whether the servant or the master becomes the bailee and car- rier. It is quite possible for the servant of a carrier to take and carry goods independently of his master, and when this is alleged to be the case all the circumstances must be examined to determine the question. If the shipper is aware that the carriage is a private matter, for the private gain of the servant, he cannot hold the master liable;^ and so if he delivers to the servant to be carried gratuitously, as a matter of friendship, since such an arrangement is not a business arrangement and could hardly be supposed by the shipper to be made on the master's account.'* But the mere fact that by an arrangement between the carrier and his servant the latter was to receive the Pennsylvania — Beekman v. Shouse, 5 Rawle (Pa.), 179, 187, 28 Am. Dec. 653 (1835); Gordon v. Hutchinson, 1 W. & S. (Pa.) 285, B. & W. 3 (1841). South Carolina — Bambeig v. So. Carolina R. Co., S S. C. 61, 67, 30 Am. Eep. 13 (1877). West Virginia — Mashin v. Boston, etc., R. Co., 14 W. Va. 180, 188, 35 Am. Rep. 748 (1878). Wisconsin — Doty v. Srong, 1 Pinn. (Wis.) 313, 326, 40 Am. Dec. 7T3 (1843). England— Gishoin v. Hurst, 1 Salk, 249, B. & W. 2 (1700). 3 Butler V. Basing, 2 C. & P. 613 (1827). iSuarez v. The Washington, 1 Woods, 96, Fed. Gas. 13,585 (1870) ; Me- [80] Ciiap. Ill] Requisites of Common Carriage. [§ 73 compensation would not absolve the carrier from liability to the shipper.^ § 73. Carriage of passengers by servant of a carrier. One who is riding in the carrier's vehicle, not as ordinary passengers ride, but upon invitation of the carrier's servant, without paying fare, is not a passenger ; his relation is with the servant, not with the carrier.® Thus, where a yardmaster out of hours took an engine and car without permission of the defendant company, and invited persons to ride free in the car to a meeting, over a portion of the road not used for passenger trains, he was held not to have even apparent authority, to act for the company, and the persons so riding were not passengers.'^ And where a party of children were invited by a servant of the carrier to ride on a train which was being shifted through the yard, they were not passengers.* In a few cases however it has been held that children riding on a vehicle by invitation of a servant of the company are en- titled to be regarded as passengers. Thus, where the driver of a street car invited children to ride on the front platform, they chanics & T. Bank v. Gordon, 5 La. Ann. 604 (1850) ; Choteau v. Steam- boat St. Anthony, 16 Mo. 216 (1852). SDwight V. Brewster, 1 Pick. (Mass.) 50 (1822) ; Beau v. Sturtevant, S N. H. 146 (1835) ; Mayall v. Boston & M. R. R., 19 N. H. 122 (1848) ; Farmers' & M. Bank v. Champlain T. Co., 23 Vt. 186 (1851). sWaterbury v. New York C. & H. R. R. R., 17 Fed. Rep. 671 (riding on engine by consent of engineer) (1883) ; Atchison, T. & S. F. R. R. v. Head- land, 18 Col. 477 (1893), 33 Pac. Rep. 185 (conductor induced to let plain- tiff ride free on freight train) ; Toledo, W. & W. Ry. v. Brooks, 81 111. 245 (1876) (conductor induced to let plaintiff ride free on passenger train) ; Chicago & A. R. R. v. Michie, 83 111. 427 (1876) (riding on engine by consent of engineer) ; McVeety v. St. Paul, M. & M. Ry., 45 Minn. 268, 47 N. W. Rep. 809 (1891) (riding free on freight train); Woolsey v. Chicago, B. & Q. R. R., 39 Neb. 798, 58 N. W. Rep. 444 (1894) (riding on engine by consent of fireman, to shovel coal) ; Robertson v. New York & E. R. R., 22 Barb. (N. Y.) 91 (1856) (riding on engine by consent of engineer ) . 7 Chicago, S. P. M. & O. Ry. v. Bryant, 65 Fed. Rep. 969 (1895). SReary v. Louisville, N. O. & T. Ry., 40 La. Ann. S2, 3 So. Rep. 390 (1888). fSll § 74] Eaileoad Eate Regulatioi^. [Chap. Ill were held to be passengers;^ and where a conductor invited a boy to ride in a freight train (on which passengers were some- times carried) the boy was held to be a passenger.'" But these cases can hardly be supported on this point. The children con- cerned were clearly guests of the servant, not of the carrier. However far the apparent authority of a conductor may be held to extend, it cannot cover an invitation to ride free; free car- riage is not the carrier's business. If one riding free by invitation of a servant is not a passen- ger, a fortiori one who by misrepresentation induces the servant to let him ride free is not a passenger ;'' and still more clearly one who bribes the servant by a small fee to let him ride without paying the regular fare is not a passenger.'^ Tt will be noticed that the cases follow closely the principle that the carrier must accept the passenger; and that to prove himself a passenger one must prove either actual acceptance as such by a servant having authority, or else an exact compliance with the terms of an invitation extended by the carrier to the public. § T4. Carrier must control the thing carried. In order to be a carrier, rather than a mere furnisher of mo- tive power, the person in question must take control of some sort over the thing to be carried, whether it be a chattel or a person. There is to be sure a difference in the degree of control exer- 9 Wilton V. Middlesex R. R., 107 Mass. 108 (1871) ; Muehlhausen v. St. Louis R. R., 91 Mo. 332, 2 S. W. Rep. 315 (1886); Buck v. Power Co., 108 Mo. 185, 18 S. W. Rep. 1090 (1891). lost. Joseph & W. R. R. v. Wheeler, 35 Kan. 185, 10 Pae. Rep. 461 (1886); Sherman v. Hannibal & S. J. R. R., 72 Mo. 62 (1880) [semlle); Whitehead v. St. Louis, I. M. & S. Ry., 99 Mo. 263, 11 S. W. Rep. 751 (1889). uCondram v. Chicago, M. & S. P. Ry., 67 Fed. Rep. 522 (1895). l2McNamara v. Great Northern Ry., 61 Minn. 290, 63 N. W. Rep. 726 (1895); Janny v. Great- Northern Ry., 63 Minn. 380, 65 K. W. Rep. 450 (1896); Brevig v. Chicago, S. P. M. & 0. Ry., 64 Minn. 168, 66 N. W. Rep. 401 (1896). [82] Chap. Ill] Requisites of Common Caeeiage. [§ 75 cised in the two cases. The carrier of goods assumes possession of the goods ; he is a bailee, and without a bailment the relation of carrier of goods cannot be established. A human being can- not be the subject of bailment, and a carrier of passengers is therefore not a bailee, and has no technical possession of the person' carried ; but he does come into such a relation with the passenger as puts the latter for the time being to a considerable extent under the carrier's control. No one can be a carrier, therefore, whose business does not involve either a bailment of goods or the establishment of such a degree of control over a person as is involved in his becoming a passenger. Many illus- trations of these several principles are discussed in the sections which follow. TOPIC B. WHETHER THEEE HAS BEEN ACCEPTANCE OF PASSEN- GEES AND THEIE BELONGINGS. § 75. Carriage in vehicle not intended for passengers. In general, a carrier who by his servants receives a person to be carried on any vehicle or portion of a vehiole not provided by the carrier for passengers is not a common carrier of such person ; nor can such person demand to be carried in such a vehicle or place. On this principle, a railroad is not a com- mon carrier of a person who by permission of the carrier's ser- vant or otherwise rides on a locomotive,^ a hand car,^ or a flat car.^ 1 Lake Shore, etc., R. Co., v. Brown, 123 111. 162, 14 N. E. 197, 5 Am. St. Rep. 510 (1887); Merrill v. Eastern R. Co., 139 Mass. 238, 1 N. E. 548, 52 Am. Rep. 705 (1885); Robertson v. N. Y., etc., R. Co., 22 Barb. (N. Y.) 91 (1856) ; Ruoher v. Missouri Pae. R. Co., 61 Tex. 499 (1884); Wilcox V. San Antonio R. Co., 11 Tex. Civ. App. 487, 33 S. W. 379 (1895). 2 Willis V. Atlantic, etc., R. Co., 120 N. C. 508, 26 S. E. 784 (1897); Cincinnati, etc., R. Co. v. Morley, 4 Ohio Cir. Ct. 559 (1890); Rathbone V. Oregon R. Co., 40 Oreg. 225, 66 Pac. 909 (1901). 3 3 Higgins v. Cherokee R. R., 73 Ga. 149 (1884) {semble) ; Snyder v. Natchez, R. R. & T. R. R., 42 La. Ann. 302, 7 So. Rep. 582 (1890). [83] ;§ 76] Eaileoad Eate Eegtjlation-. [Chap. Ill On the same principle a railroad is not a common carrier of one who is received by its servants for carriage on a construc- tion train.* In such a case the court said : " It is clear that defendant's train vs^as not a passenger train within the meaning of the law, and that plaintiff's intestate was not a passenger, entitled, as a matter of legal right, to ride upon the train. The evidence, favorably stated for the plaintiff, shows that defend- ant owed no duty to plaintiff's intestate as a passenger." ^ § 76. Carriage on freight cars. It often happens, however, that a person is received by the carrier's servant into a vehicle not prepared for passengers, and is permitted to ride there. Such a reception will of course make the person a passenger provided the reception is within the authority of the servant; either because of express permis- sion given by the carrier, or because the reception is within the apparent authority of the servant. A case of the first kind occurs when a railroad is accustomed to carry passengers in freight cars. Where such a custom exists, one received on a freight train is to be regarded as a passenger quite as much as one who rides on an ordinary passenger train. A case of the second kind occurs when passengers are not uncommonly so car- iMcCauley v. Tennessee, C. I. & R. R. Co., 93 Ala. 356, 9 So. 611 (1891); Berry v. Missouri Pae. Ry., 124 Mo. 223, 25 S. W. 229 (1894); Graham v. Toror.to, G. & B. Ry., 23 Up. Can. C. P. 541 (1874). 5 Quoted from Berry v. Missouri Pac. Ry., supra. See accord; Shoemaker v. Kingsbury, 12 Wall. (U. S.) 369, 20 L. Ed. 432 (1871); Albion Lumber Co. v. DeNobra, 72 Fed. 739, 44 U. S. App. 347, 19 0. C. A. 168 (1896) ; Wade v. Futcher, etc.. Cypress Lumber Co., 74Fed.517,33 L. R. A. 255, 41 U. S. App. 45, 20 C. C. A. 515 (1896); Menaugh v. Bedford Belt R. Co., 157 Ind. 20, 60 N. E. 694 ( 1901 ) ; Evansville & R. R. R. Co. v. Barnes, 139 Ind. 254, 36 N. E. 1092 (1894) ; Nashville, etc., R. C. v. Messino, 1 Sneed. (Tenn.) 220 (1853). See San Antonio & A. P. Ry. v. Robinson, 79 Tex. 608, 15 S. W. 584 (1891). Sheerman v. Toronto, etc., Ry., 34 U. C. Q. B. 451 (1874); Graham v. Toronto, etc., Ry., 23 V. C. C. P. 541 (1874); McRae v. Canada Pacific Ry., Montreal, L. R., 4 S. C. 186 (1888). [84] Cliap. Ill] Requisites of Common Caeeiage. [§ 76 ried on freight trains in that part of the country, and one is permitted to ride on such a train by the conductor. When for any reason the conductor has apparent authority to receive a passenger, and does so, the relation of carrier and passenger is established.* In one case it appeared that the passenger was informed by a servant of the carrier that he could not, under the carrier's, rules, attach his own freight car to a passenger train and ride in it, as he desired to do ; but the servant afterwards permitted it. He was held to be a passenger.^ If the ease can be sup- ported, it must be on the ground that under the circumstances of the case he had reason to suppose that the permission of the carrier had been obtained. 6 Federal Coubts : Hazard v. Chicago, B. & Q. R. R., 1 Bias. 503, Fed. Cas. 6,275 ( 1865 ) ; Reber v. Bond, 38 Fed. Rep. 822 (1889). State Courts: Illinois— Ohio & M. R. R. v. Muhling, 30 111. 9, 81 Am. Dec. 336 (1861) ; Indiana — Ohio & M. Ry. v. Dickerson, 59 Ind. 317 (1877). Kansas — Missouri P. Ry. v. Holcomb, 44 Kan. 332, 24 Pa. 467 (1890). Mississippi — Perkins v. Chicago, S. L. & N. O. R. R., 60 Miss. 720 (1883). Missouri — Whitehead v. St. Louis, I. M. & S. Ry., 99 Mo. 263, US. W. R. 751 (1889). Nebraskor-Chicago, B. & Q. R. R. v. Troyee, 103 N. W. 680 (Neb. 1905). New Hampshire — ^Mureh v. Concord R. R., 29 N. H. 9, 61 Am. Dec. 631 (1854). ISlew Yor/c— ESgerton v. New York & H. R. R. R., 39 N. Y. 227 (1868). Texas— 1. & G. N. Ry. v. Irvine, 64 Tex. 529 (1885). So in a similar case of one riding on an engine: Lake Shore & M. S. R. R. V. Brown, 123 fll. 162, 14 N. E. 197, 5 Am. St. Rep. 510 (1887) ; or on a gravel train. Lawrenceburgh & U. M. R. R. v. Montgomery, 7 Ind. 474 (1856). 7 Lackawanna & B. R. R. v. Chenowith, 52 Pa. 382 (1866). [85] § 77] Eaileoad Ea,te Regulation. [Chap. Ill § 77. Carriage in a place not intended for passengers. When a person desiring to be transported enters a car or other part of a railroad train not intended for passengers, he does not thereby accept the carrier's invitation ; and if there is no express acceptance of him as a passenger he is not entitled to be so treated. In a Texas ease® it appeared that an intend- ing passenger, having money to pay his fare, came late to the station, and was just able to get on board th« front platform of the first car as the train started. This proved to be the front platform of a baggage car. The fireman, discovering him, com- pelled him to jump off by turning hot water from a hose on him ; and in jumping he was injured. The Court of Civil Ap- peals held that he could recover as a passenger. " While," they siaid, " the place one may be occupying upon the train at the time of his injury may be important in determining whether or not he intended to pay his fare, it does not conclusively fix his status, either as a passenger or a trespasser. It may be con- ceded that a person found in the position occupied by Eaton, Williams at the time he was injured is subject to the suspicion of being a trespasser ; but if such person, having the means and intending to pay his fare, can, as Eaton Williams in this case did, give a reasonable excuse for why he was not in a passenger coach, he will, in law, be a passenger, and entitled to protec- tion against the wrongful acts of the railroad company and its employes. Neither the carrier nor its employes can assume that a person on any car of a passenger train is a trespasser, and, if they treat him as a trespasser merely because he is not in one of the cars provided for, and usually occupied by, a pas- senger, and injury results therefrom, and the facts show that he is a passenger, the railroad company will be liable." This decision was however reversed on appeal to the Snpreme Court. One may become a passenger, the court said, by either 8 Missouri, K. & T. Ry. v. Williams (Tex. Civ. App.) 40 S. W. 350 (18B7). [86] Chap. Ill] Requisites of Common Caeeiage. [§ 78 an express or an implied contract'. There was no express con- tract in this case ; and " in order to raise such an implied con- tract, the party desiring to be carried by the railroad company must take passage on that part of the train provided by it for carrying passengers." * § T8. Whether there is acceptance in such cases. A case almost identical in its facts was decided in South Caro- lina between the first decision and the appeal in the Texas case ; and largely on the authority of the Texas Court of Civil Ap- peals the plaintiff was held to be a passenger.^" Chief Justice Mclver dissented, taking the same ground on which the Su- preme Court placed itself in the Texas case. If, he said, " the plaintiff, with his ticket in his pocket, had got on the pilot, or the engine itself, or upon the tender, or upon the express car, it certainly could not, with any propriety, be said that he had thereby established the relationship of passenger between him- self and the company. Why ? Simply because such places are not the proper places for passengers to be received or trans- ported ; and it seems to me that the same may be said of a bag- gage car. If, then, the relationship of passenger and carrier had not been established between plaintiff and defendant at the time of the accident, it is dear tha.t the defendant company owed no duty to the plaintiff except such as it might owe him as a trespasser." The reasoning of the dissenting opinion is hard to resist. The case is not like that of taking a wrong train by mistake ; for there the person gets into a ear intended for passengers, while here, as the chief justice pointed out, he knew that a baggagq 9 Missouri K. & T. Ry. v. Williams, 91 Tex. 255, 42 S. W. Rep. 855 (1897). It is hard to see how the defendant could escape liability under the circumstances even by proving that the plaintiff was not a passenger; since the injury was wanton, and was apparently inflicted in the car- rier's service. 10 Martin v. Southern Ry., 51 S. C. 150, 28 S. E. Eep. 303 (1897). [87] § 78] Kaileoad Kate Kegulatioet. [Chap. Ill car was not prepared for the reception of passengers. The haste with which the plaintiff took the train has prevented him from so taking it as to make himself a passenger by bringing himself within, the terms of the company's invitation. Yet it must be clear that he can be treated in no worse way than an innocent trespasser; and if wantonly injured by a servant of the com- pany in the course of his employment, the carrier should be liable. It was urged in the dissenting opinion in the South Carolina case that the servant was not acting in the course of the employment ; but this view would seem to be mistaken. The same facts came up in Illinois, and it was held that the person did not become a pasisenger by getting safely upon the platform.^ ^ "A passenger must put himself in the care of the railroad company, and there must be something from which it may fairly be implied that the company had accepted him as a passenger." The distinction is to be noted between persons who having once become passengers then go without permission of the com- pany into some place not provided for passengers, and persons who, intending to become passengers, go in the first instance to such a place. While the latter do not technically become pas- sengers at all, since they never place themselves within the terms of the carrier's offer to receive them,-*^ persons who have already become passengers do not forfeit that position by go- ing into some car or some part of a car in which passengers are not allowed to ride. Such conduct may be negligent, and if the negligence contributes to an injury it may therefore bar recovery for the injury ; but the recovery cannot be denied on the ground that the injured person was not a passenger. ^^ 11 Illinois Cen. E. R. v. O'Keefe, 168 111. 115, 48 N. E. 294, 61 Am. St. Eep. 68, 39 L. R. A. 148 (1897). iSBricker v. Campbell, 132 Pa. 1, 18 Atl. 983 (1890). "Kentucky C. R. R. v. Thomas, 79 Ky. 160, 42 Am. Rep. 208 (1880) (express car) ; Bard v. Pennsylvania Traction Co., 176 Pa. 97, 34 Atl. 953, 53 Am. St. Rep. 672 (1896) (bumper of street car); Little Rock [88] Chap. Ill] Requisites of Common Caeeiage. [§ 7& § 79. Luggage carried in car with passenger. Where a passenger takes with him in the vehicle in which he is carried small articles of personal baggage it may be difficult to determine how far the responsibility of the carrier extends to them. It was clearly stated in an early English case that the carrier would be resrponsible for it : " If a man travel in a stage- coach and take his portmanteau, with him, though he has his eye upon the portmanteau, yet the carrier is not absolved from his responsibility, but will be liable if the portmanteau be lost." ^* And this doctrine has been extended to the case of railway carriage. If the railway porter takes luggage to carry for a passenger and places it in the train or in a cab, and it is lost, before it is redelivered to the passenger, the car- rier is doubtless liable as such,^^ the responsibility beginning when the luggage is delivered to the porter. Ihe language used in several cases goes further, and appears to hold that where the luggage is placed by the porter in the carriage with the pas- senger the carrier continues responsible as such, being still in possession of the luggage.-"' That this would be true if the luggage is placed in the carriage of the passenger, not at the request of the latter, but for the carrier's convenience,- is, of course, clear; and this would be even more obvious if the pas- senger objected to such disposition of the luggage;'^ but the & F. S. Ey. V. Miles, 40 Ark. 298, 40 Am. Rep. 10 (1883) (top of freight car); Merrill v. Eastern R. R., 139 Mass. 238, 1 N. E. 548, 52 Am. Rep. 705 (1885) (step of steam-car); New Orleans & N. E. R. R. v. Thomas, 60 Fed. 379, 9 C. C. A. 29, 23 U. S. App. 37 (1894) (top of cattle-car). MChambre, J., in Robinson v. Dunmore, 2 B. & P. 416, 419 (1834). 15 Richards v. London & B. Ry., 7 C. B. 839, 18 L. J. (C. P.) 251 (1849); Butcher v. London & S. W. Ry., 16 C. B. 13, 24 L. J. (C.P.) 137 (1855); Le Conteur v. London & S. W. Ry., 6 B. & S. 961, L. R. 1 Q. B. 54 (1865). i6Munster v. South Eastern Ry., 4 C. B. (N. S.) 676, 27 L. J. (C.P.) 308 (1858); Le Conteur v. London & S. W. Ey., 6 B. & S. 961, L. R. 1 Q. B. 54 (1865); Talley v. Great Western Ry., L. R. 6 C. P. 44 (1870). "MuBster v. South Eastern Ey., 4 C. B. (N. S.) 676, 27 L. J. (C.P.) 308 (1858). [89] § 80] Railed AD Kate Regulation. [Chap. Ill English courts go further : " It is the every-day's practice of passengers by railways to carry cloaks and such like articles with them in tihe carriages, with the consent of the company, and it cannot be said that the company have on that account parted with their custody of them as carriers." ^^ It is, however, clear that the carrier is not, under such circumstances, an in- surer and that the amount of care required of it is materially lessened by the fact that the passenger is in actual control.^' § 80. American rule as to luggage carried by passenger. In this country (very likely because of a different usage as to the matter, the railroad company here not taking charge of personal -luggage, aa a matter of course, by its porters or other servants) it has never been bupposed that the railroad company assumed possession of personal luggage taken into its train by a passenger ; and it has therefore never been held liable for such luggage as carrier.^** And so a steamboat company is not a carrier of the passen- ger's watch and clothing, which he wears on his person, or the 18 Lush, J., in Le Conteur v. London & S. W. Ry., supra. MTalley v. Great Western Ry., L. R. 6 C. P. 44 (1870). 20 United States — Henderson v. Louisville & N. R. R., 123 U. S. 61, 31 L. Ed. 92 (1887); Walsh v. The Wright, Newb. 494, Fed. Cas. 17,113 (1854). Massachusetts — ^Murray v. International St. Ship Co., 170 Mass. 166, 48 N. E. 1093, 64 Am. St. Rep. 290 (1898) ; Kingsley v. Lake Shore, etc., R. Co., 125 Mass. 54, 28 Am. Rep. 200 (1878). Mississippi — Illinois Cent. R. Co. v. Handy, 63 Miss. 609, 56 Am. Rep. 346 (1886). New York — Weeks v. hew York, etc., R. Co., 72 N. Y. 50, 28 Am. Rep. 104 (1878); Sehalscha v. Third Ave. R. Co., 19 Misc. (N. Y.) 141, 43 N. Y. Suppl. 251 (1897) ; Tower v. Utica & S. R. R. Co., 7 Hill (N. Y.), 47, 42 Am. Dec. 36 (1844). Ohio — Greenfield First Nat. Bank v. Marietta, etc., R. Co., 20 Ohio St. 259, 5 Am. Rep. 655 (1870). Pennsylvania — American Steamship Co. v. Bryan, 83 Pa. St. 446 (1877). Teajas— Bonner v. Demendoya (Texas App., 1891), 16 S. W. 976 (189X). [90] Chap. Ill] Requisites of Commobt Caeeiage. [§ 80 luggage he takes with him into his stateroom, since the posses- sion of it is not given to the company.^ ^ Sleeping car companies are held not liable for hand baggage of passengers upon the same principles, but of course the danger from theft from sleeping passengers being peculiar, the com- pany owes to them the utmost protection, and the porter must keep continual watch.^^ 21- United States— The R. E. Lee, 2 Abb. (U. S.) 49, Fed. Cas. 11,690 (1870) ; Walsh v. The H. M. Wright, Newb. Adm. (U. S.) 494, Fed. Cas. No. 17,115 (1854). Kentucky/ — Steamboat Crystal Palace v. Vanderpoot, 16 B. Mon. (Ky.) 302 (1855). Maine — Abbott v. Bradstreet, 55 Me. 530 (1868). Massachusetts — Clark v. Burns, 118 Mass. 275, 19 Am. Rep. 456 (1875). Michigan — McKee v. Owen, 15 Mich. 115 (1866). Pennsylvania — ^American St. Ship Co. v. Bryan, 83 Penn. St. 440 (1877). Wisconsin — Gleason v. Goodrich Transp. Co., 32 Wis. 85, 14 Am. Rep. 716 (1873). Contra, New York — Gore v. Norwich Trans. Co., 2 Daly (N. Y.) 254 (1867); Mudgett v. Bay State St. Beat Co., 1 Daly (N. Y.) 151 (1861); Van Horn v. Kermit, 4 E. D. Smith (N. Y.) 453 (1855); Cro- zier V. Boston, etc.. Steamboat Co., 43 How. Pr. (N. Y.) 466 (1871). These cases place the liability of the company on the same ground aa that of an innkeeper. ■22 United States — Barrott v. Pullman's Palace Car Co., 51 Fed. 796 (1892). Alabama — Cooney v. Pullman Palace Car Co., 121 Ala. 368, 25 So. 712, 53 L. R. A. 690 (1898); Pullman Palace Car Co. v. Adams, 120 Ala. 581, 24 So. 921, 74 Am. St. Rep. 53, 45 L. R. A. 767 (1898). Georgia — Pullman's Palace Car Co. v. Martin, 95 Ga. 314, 22 S. E. 700, 29 L. R. A. 498 (1894). Kentucky — Pullman's Palace Car Co. v. Hunter, 21 Ky. 1248, 54 S. W. 845, 47 L. R. A. 286 (1900); Pullman's Palace Car Co. v. Gaylord, 9 Ky. L. Rep. 58 (1887). Mississippi — 111. Cent. R. Co. v. Handy, 63 Miss. 609, 56 Am. Rep. 846 (1886). ilftssoMri— Hampton v. Pullman Car Co., 42 Mo. App. 134 (1890); Wilson V. Baltimore, etc., R. Co., 32 Mo. App. 682 (1888); Root v. N. Y. Cent. Sleeping Car Co., 28 Mo. App. 199 (1887). New Yorfc— Williams v. Webb, 22 Misc. (N. Y.) 513, 49 N. Y. Suppl. nil, 27 Misc. (N. Y.) 508, 58 N. Y. Suppl. 300 (1899). [91] §§ 81, 82] Railroad Eate Regulation. [Chap. Ill TOPIC C. WHETHER THERE HAS BEEN BAILMENT MADE OF GOODS. § 81. Owner accompanies the goods and retains possession. If thp owner of goods goes along with them and retains pos- session of them, the person who furnishes the vehicle is not a carrier, since he is not a bailee. This was the position of af- fairs presented by the leading case of the East India Company V. Pullen.1 The defendant in that case was a common lighter- man. " It was the usage of the company on the unshipping of their goods to clap an officer, who is called a guardian, in the lighter, who, as soon as the lading is taken in, puts the com- pany's lock on the hatches, and goes with the goods to see them safe delivered at the warehouse.'' This usage having been fol- lowed, and part of the goods lost, the company sued the de- fendant. At the trial, before Lord Chief Justice Raymond, the court " was of opinion this differed from the common case, this not being any trust in the defendant, and the goods were not to be considered as ever having been in his possession, but in the possession of the company's servant, who had hired the lighter to use himself. He thought, therefore, the action was not main- tainable, so the plaintiffs were nonsuited." ^ § 82. Owner accompanies the goods without retaining pos- session. If the shipper or his servant merely goes along with the goods and has an eye on them for greater security, while the carrier has the possession or general control, the carrier becomes re- Pennsylvania — Pfaelzer v. Pullman Palace Car Co., 4 Wkly. Notes Cas. (Pa.) 240 (1877). Teajas— Pullman Palace Car Co. v. Pollock, 69 Tex. 120, 5 S. W. 814, 5 Am. St. Rep. 31 (1887). 11 Strange, 690 (1726). 2 See, also. White v. Winnisemmet Co., 7 Cush. 155 (1851) ; New York V. Starin, 106 N. Y. 1, 12 N. E. 631 (1887). [92] Chap. Ill] Requisites of Common Carriage. [§§ 83, 84 sponsible as such upon assuming possession. So, where a serv- ant of the shipper went along with the carrier, on accadnt of the carrier being a stranger to the shipper, this was held not to negative the'carrier's responsibility, the case being distinguished from- the usage of the East India Company, " who never intrust the lighterman with their goods, but give the whole charge of the property to one of their ofScers." In this case, the court said the defendant " must have had possession of them for the purpose of carrying his contract into effect, which he could not have, done without such possession." ^ § 83. Cattle carried with a drover furnished by the owner. Though the owner of cattle or his servant may accompany the cattle, as a drover, while they are being carried, and may care for them, feed and water them, and help load and unload them, the railroad company is none the less the bailee and carrier of the cattle ; " he must do all this while the cattle are in the pos- session of the railroad company and at such times as it chooses to select for the purpose." * § 84. Goods taken across a ferry by the owner. In the case of a ferry, the fact that the owner usually goes along with the goods and often retains the entire charge and management of them (as for instance where he drives a horse on the ferryboat and manages him while on the boat), materially modifies the relation of carrier and shipper, so that the carrier 3 Robinson v. Dunmore, 2 B. & P. 41G (1801). See, also, Brind v. Dale, 8 Cas. & P. 207 (1837); Cohen v. Frost, 2 Duer, 335 (1853); Ilollistor V. Nowker, 19 Wend. (N. Y.) 234 (1838). iDennison, J., in Atchison, T. & S. F. R. R. v. Ditmars, 3 Kan. App. 459, 43 Pac. 833 (1896). To the same effect, McAlister v. Chicago, R. I. & P.R. R., 74 Mo. 351 (1881; D. U. Veirick v. Mo. Pac. R. R., 57 Mo. App. 550 (1891); Feinberg v. Delaware, L. & W. R. R., 52 N. J. L. 451, 20 Atl. 33 (1889); Harris v. iSTorthern Indiana R. R., 20 N. y. 232.(1859). [93] § 84] Eaileoad Kate Regulation. [Chap. Ill may not be responsible for any injury caused by defect in placing or managing the property ; but this does not necessarily prevent the ferryman from being a carrier. So in the leading case of White v. Winnisimmet Co./ Mr. Justice D&wey said: " To a certain extent, persons keeping and maintaining a ferry are common carriers, and subject to the liabilities attaching to common carriers. It would be so, if a bale of goods or an article of merchandise was delivered by the owner to the agent of a ferry company, to be carried from one place to another for hire. . . . The principle above stated would embrace the case of a horse and wagon received by a ferryman to be transported by him on a ferry-boat, the ferryman accepting the exclusive cus- tody of the same for &"uch purposej and the owner having, for the time being, surrendered the possession to the ferryman." ^ Where the ferryman takes such charge of the passenger's goods (as was probably the ordinary case in the older ferries), the ferryman is a carrier of the goods as well as of the passenger.^ The modern ferryman, however, seldom concerns himself with the property of the traveller; and while he is, of course, a carrier of the passenger, the goods are not so bailed to him as to constitute him a carrier of the goods. As Mr. Justice Dewey said furtlier, in his opinion already cited :* " But the traveller uses the ferry-boat as he would a toll-bridge, personally driving his horse upon the boat, selecting his position on the same, and himself remaining on the boat ; neither putting his horse into the care and custody of the ferryman, nor signifying to him or his servants any wish or purpose to do so ; and the only posses- sion and custody, by the ferryman, of the horse and vehicle to which he is attached, is that which necessarily results from the traveller's driving his horse and wagon, or other vehicle, on 57 Gush. (Mass.) 155 (1851). 6 See, also, New York v. Starln, 106 N. Y. 1, 12 N. E. 631 (1887). 7 Walker v. Jackson, 10 M. & W. 161 (1842); Wilsons v. Hamilton, 4 Ohio S. 722. (1855); Cook v. Gourdin, 2 N. & McC. (S. C.) 19 (1819). 8 White V. Winnisemmet Co., supra. [94] Chap. Ill] Requisites of Common Caeeiaqe. [§§ 85, 86 board the boat, and paying the ordinary toll for a passage. . . . The case of such a traveller, though not entirely similar, much more resembles that of a traveller upon a toll-bridge or turnpike road; who, while he uses the easement of another, yet retains the possession and custody of his horse and wagon."^ § 85. Goods carried across a bridge. A bridge company which owns a bridge used by a railroad company is not a carrier of the goods hauled over it by the rail- road; even if the bridge company itself furnishes the motive power for hauling cars over its tracks. While it hauls the cars, it has no possession of the contents of the ears, which are at all times in tlie possession of tbe railroad company as the only carrier. ■^'' On the same principle an ordinary toll-bridge is not § 86. Issue of bill of lading without receipt of goods. Since a bailment is required before the carrier of goods be- comes responsible as such, it must be clear that without such bailment one cannot be a carrier of goods. It sometimes hap- pens that a bill of lading is issued by the servant of a carrier without a delivery to the carrier of the goods named in the bill. Such issue of a bill of lading does not make the carrier respon- sible as a carrier for the goods described in the bill.^^ 9 To the same effect, Frierson v. Frazier (Ala.), 37 So. 825 (1904); Wyckoff V. Queen's County Ferry Co., 52 N. Y. 32, 11 Am. Rep. 650 (1873). 10 Kentucky & I. Bridge Co. v. Louisville & M. R. Ry., 37 Fed. 567, 2 L. R. A. 289 (1889). But in Norfolk & P. Belt Line Co. v. Com., 103 Va. 289, 49 S. E. 39 (1904), a switching company was held to be a common carrier. ilGriegsby v. Chappell, 5 Rich. L. (S. C.) 443 (1852). 12 Schooner Freeman v. Buckingham, 18 How. (U. S.) 182 (1855); Pol- lard V. Vinton, 105 U. S. 7, 26 L. Ed. 998 (1881); The Loon, 7 Blateh. 244, Fed. Cas. 8,499 (1870); Fellows v. The Powell, 16 La. Ann. 316, 79 Am. Dec. 581 (1851); Baltimore & O. R. R. v. Wilkens, 44 Md. 11, 22 [95] f 87] Eaileoad Rate Regulation. [Chap. Ill In some jurisdictions, to be sure, it has been held that if a bill of lading was issued by the proper agent of the carrier and was indorsed for value to a bona fide purchaser, the carrier could not as against him dispute the receipt of the goods, ^^ and where a carrier issued two bills of lading for the same goods, and the two bills' came into the hands of two holders for ralue and with- out notice, it was held that the carrier could not dispute the re- ceipt of two lots of goods. '* But this is based on the doctrine of estoppel ; the carrier is not responsible as such on the real facts, but in this particular case the real facts cannot be shown. TOPIC D. TEASrSPOETATION NECESSARY FOE THE CONCEPTION OF CAEEIAGE. § 87. Carrier must undertake transportation. Supposing a bailment of goods or an acceptance of a pas- senger, it is still necessary in order to have a case of carriage that transportation should be furnished, or at least undertaken. One who does not undertake to transport goods or a passenger cannot be a carrier, whatever else he may be, although he. may be engaged in a public employment analogous to that of the car- rier. To carry on transportation a vehicle of some sort is almost indispensible. The vehicle used is immaterial. Thus, a common carrier may transport on a sled hauled by an ox- team.^ But a " slide " constructed in a river to facilitate the » Am. Rep. 26 (1875); Sears v. Wingate, 3 All. (Mass.) 103 (1861); Louisiana Nat. Bank v. Lavielle, 52 Mo. 380 (1873); Williams v. Wil- mington & W. R. R., 93 N. C. 42 (1885) ; Dean v. King, 22 Ohio St. 118 (1871); Grant v. Norway, 10 C. B. 665 (1851). 13 Wichita Sav. Bank v. Atchison, T. & S. F. R. R., 20 Kan. 519 (1878) ; Sioux City & P. R. R. v. First Nat. Bank, 10 Neb. 556 (1880); Armour V. Michigan C. R. R., 65 N. Y. Ill, 22 Am. Rep. 603 (1875); Brooke V. New York, L. E. & W. R. R., 108 Pa. 529, 1 Atl. 206, 56 Am. Rep. 235 U885). 14 Coventry v. Great Eastern Ry., 11 Q. B. D. 776 (1883). 1 Robertson v. Kennedy, 2 Dana (Ky.) 430 (1834). [96] Chap. Ill] Requisites of Common Cabeiaqb. [§ 88 passage of logs is not a carrier ; not only does it not carry, but it is not even a bailee.^ § 88. Storage hulks not carriers. It is plain, of course, that those who purport to provide storage and nothing more, as wharfingers, warehousemen, grain elevator owners and cold storage proprietors, are in no sense carriers, since they do not purport to transport property. A test case for this may be found in New Zealand.* There meat was received into a cold storage hulk, which was afloat in the harbor but moored for the season near to the wharves, to be kept until opportunity served to despatch the meat by steamers to foreign ports. The meat was injured, and the contention was that the law of common carriers applied. On that point Mr. Justice Denneston said : " I do not see that the fact of the sub- ject-matter of this contract being, or having been, a ship and being afloat, in any way affects the position of the parties. The contract is for the hire of a store and machinery, the lessors to supply men and to do certain work on the goods stored. If this be Sfo, it disposes of the applicability of a great majority of cases cited. The strong inclination both in the courts and the legislature to limit the attempts of common carriers by sea and land to contract themselves out of this liability for negligence seems based upon the same grounds, which originally led to their being saddled with the liability of insurers ; the difliculties of proof where incidents must be within the knowledge mainly of the carrier and his servants, and the fact that in the cases of railway companies at least, they could often, if not restrained by law, dictate their own terms. I take the defendant company to be simply the bailee of the plaintiff company of the sheep 2 Queen v. McFarlane, 7 Can. 216 (1882). 3 Canterbury Meat Co. v. Shaw & Co., 7 L. R. New Zealand, 70S (1889). [97] §§ 89, 90] Eaileoab Eate Eequlatioit. [Chap. Ill frozen by it; what is called in the notes to Coggs v. Bernard, locatio operis faciendi." ^ § 89. Log drivers not carriers. A log-driver is not a carrier; for though he may take pos- session of the logs as a bailee, he does not undertake to carry, but only to perform certain services while the logs are being carried by a natural force. " This kind of service differs very much from the possession and transfer of articles which are always in custody, and which could not be moved except by the vehicles of the carrier. . . . The entire absence of any mo- tive power, and the function of guiding and regulating things which move themselves or are moved by some independent force, make it impossible to treat these classes of business as car- riage in fact, and it is difficult to see how, if involving no car- riage, there is any propriety in calling them carriage." ® A log- driving company is, however, probably in the public employ- ment.® § 90. Drovers of cattle not carriers. An agister of cattle, although a bailee, is not a carrier ; for the transportation is furnished not by the agister, but merely by the cattle themselves. " Drovers, or as the common law calls them, agisters, perform functions not uiilike those of log drivers. Their animals move themselves, while logs are moved by the stream, and the beasts have a species of intelligence, while logs and currents move unconsciously. Yet the chief business of the men in charge of both is to prevent the property < Citing Smith's Leading Oases ( 8th Ed. ) , p. 232. 5 Campbell, J., in Mann v. White River L. & B. Co., 46 Mich. 38, 41 Am. Rep. 141 (1881). 6 Weymouth v. Penobscot L. D. Co., 11 Me. 29, B. & W. 27 (1880); (where, however, the public duty may have rested on the legal monopoly granted ) . [98] C'hap. Ill] Requisites of Common Caeeiage. [§§ 91, 92 from straying or stopping, and to guide it where it belongs. No one regards drovers as carriers."^ § 91. Vehicles leased for carri3ge. When the owner of a vehicle makes a lease of it to another party, who uses it for the carriage of goods, plainly the lessor is not the carrier. Thus, in Bell v. Pidgeon,® the owner of some scows which he used in his business leased them to others for the transportation of their chalk. It was held that the owner was in no sense a carrier, since he neither took possession nor furnished the motive power. But in Campbell v. Perkins,^ where the defendants owned a line of boats, and used them as common carriers of passengers and goods, and chartered one of them to another company for a single trip, but retained the charge of it, and of navigating it, it was held that they were liable to a passenger for the loss of his baggage. § 92. Shipper furnishes servants to manage the vehicle. ^; So where the shipper himself furnished the cars and brake- men, this was held not to affect the liability of the carrier, the entire train while on the route being under the control and management of the conductor and other servants of the car- rier.^" In a case in the Supreme Court of the United States the carrier was engaged in transporting a body of soldiers and their baggage. The soldiers packed their own baggage in a car selected by themselves, and it was asserted that an armed guard 7 Campbell, J., in Mann v. White River L. & B. Co., 46 Mich. 38, 40, 41 Am. Rep. 141 (1881). 8 5 Fed. 634 (1882). And see to the same eflfeet. Lamb v. Parkman, 1 Sprague 343, Fed. Cas. 8,020 (1857); Phelps v. Windsor T. B. Co., 131 N. C. 12, 42 S. E. 335 (1902). 9 4 Sheldon (N. Y.) 430 (1855). lOMallory v. Tioga R. R., 39 Barb. (N. Y.) 488 (1862). [99] § 93] Eaileoad Eate Regulation. [Chap. Ill accompanied the baggage.-'^ Mr. Justice Field, speaking for the courtj said : " If it were admitted that a special guard was appointed for the car on the route, the admission would not aid the company or relieve it of liability. The control and manage^ ment of the ear, or of the train, by the servants and employees of the company, were not impeded or interfered with; and where no such interference is attempted, it can never be a ground for limiting the responsibility" of the carrier that the owner of the property accompanies it and keeps a watchful look- out for its safety." TOPIC E. WHEN TEANSPOETATION IS FtTRNISHED BY OTHEES. § 93. Leased railways. The history of railways in this country has been one of con- stant combination of the existing roads into longer lines. This is sometimes accomplished by a consolidation of two railway corporations into one. But it is frequently done by leasing one railway to another, the latter road then operating both. Where this is the case, it must be clear that the operating road is ipso facto a common carrier, and cannot escape liability as such by proving its lack of statutory authority. It is in fact carrying on the business of carriage over the whole line.^ The leased road, on the other hand, has evidently gone out of the business of carrying, and can no longer be held to be a car- rier, though it may, as a corporation, continue liable for the re- ception and safe carriage of persons .or goods because of some provision in its charter.^ ■11 Hannibal & S. J. R. R. v. Swift, 12 Wall. (U. S.) 262 (1878). iMcCheer v. Manchester & L. R. R., 13 Gray (Mass.), 124, 74 Am. Deo. 624 (1859); Feital v. Middlesex R. R., 109 Mass. 398, 12 Am. Rep. 720 (1872). SLangley v. Boston & M. R. R., 10 Gray (Mass.), 103 (1859). [100] Chap. Ill] Requisites op Common Caeeiage. § 94. Chartered accommodations. If an entire train, including the motive power, be chartered to a person who undertakes the entire management himself, the railroad is not a carrier of goods or persons carried on the train.* And so, where a railroad simply loaned a train to an asso- ciation of railroad employers, who themselves operated and managed the train, the railroad was held not to owe the duty of a common carrier to persons riding on the train.* But where a single car is chartered and loaded by a shipper, and is then taken by the railroad for transportation, on its regu- lar trains, the railroad is a carrier of the goods loaded in the car.^ § 95. Refrigerator car lines not carriers. By a practice now prevailing fruit is carried in refrigerator cars, which are arranged to contain ice. These cars were formerly provided in small numbers by the railroads themselves, but they are now substantially all owned by a private corpora- tion.® The position of such a corporation is obviously much like that of a sleeping car company. It is not a carrier ; the railway company performs the carriage, the refrigerator car line fur- nishing only certain additional accommodations and con- veniences. But though not technically a carrier, the refrigera- tor car line is carrying on a business which is of public im- 3 East Tenn. & Ga. E. K. v. Whittle, 27 Ga. 535 (1859). 4 Davis V. Chicago, St. P. M. & 0. R. R., 45 Fed. 543 (1891). BFordyce v. McFlynn, 56 Ark. 424, 19 S. W. 961 (1892); Central R. R. V. Anderson, 58 Ga. 393 (1877) ; Ohio & M. R. R. v. Dunbar, 20 111. 623 (1858). In Kimball v. Rutland & B. R. R., 26 Vt. 247 (1854), the contrary doctrine seems to be stated, but on examination it will appear that the question was really concerning the degree of responsibility of the railroad. 6 The Armour Car Lines; see Re Transportation of Fruit, 10 I. C. R. 360 (1905). [101] § 96] Kaileoab Rate Reouiation. [Chap. Ill portance in connection with the railway, and like the sleeping- car company, it is therefore engaged in a public employment which, though not identical with that of a common carrier, is analogous to it, and imposes similar legal obligations upon the corporation. The same thing would, of course, be true of a tank car line. As a matter of fact the tank car lines seem uaually to have been owned or controlled by private shippers and used by them for their own shipments only. In such a case there seems to be no question of public employment since there is no undertaking to serve people generally.'' Although not technically carriers, the conductors of such busines's, when upon a public basis, are usually in the public employment and engaged in a calling analogous to that of the common carrier ; and statutory regulations* adopted for the con- trol of common carriers often apply to them. This important fact must be borne in mind throughout the future discussion. § 96. Sleeping-car company not common carrier. The sleeping-car company is not a carrier of passengers. It provides, to be sure, a vehicle for them to ride in, and accommo- dations for their comfort while riding; but the railroad com- pany and not the car company undertakes and is responsible for the transportation, and has entire charge of the journey. If the journey is vmduly delayed or interrupted, or the train meets with an accident whereby the passenger is injured, the fault is with the railroad company alone. It is accordingly almost universally held that a sleeping-car company is not a common carrier,' although in a public employment. 7 See State v. Cincinnati, N. 0. & T. P. Ry., 47 Ohio St. 130, 23 N. E. 928, 7 L. R. A. 319 (1890). 'These are discussed in Book III, infra. 9 Federal Courts : Blum V. Southern P. P. C. Co., 1 Flip. 500, Fed. Cas. No. 1,574 (1876); Lemon v. Pullman P. C. Co., 52 Fed. 262 (1892). [102] Chap. Ill] Requisites of Common C'aeiiiage. [§97 Therefore the sleeping-car company is not responsible for the act of a' railroad company over which its cars are sclleduled to run in failing to run trains/" or in unreasonable delay in run- ning its trains ;^^ nor is it liable for the wrongful expulsion of the passenger from the train by the servants of the railroad. ^^ § 97. Forwarding agents not carriers. A forwarding agent, who takes goods merely for the purpose of choosing a proper carrier and delivering the goods to him to State Couets: AZaftoma— Pullman P. C. Co. v. Adams, 120 Ala. 581, 24 So. 921, 74 Am. St. Rep. 53, 45 L. R. A. 767 (1898). Colorado — Pullman P. C. Co. v. Frendenstein, 3 Colo. App. 540, 34 Pae. 578 (1893). Georgia— Pullman's P. C. Co. v. Hall, 106 Ga. 765, 32 S. E. 923, 71 Am. St. Rep. 293 (1899). /iJinois— Pullman P. C. Co. v. Smith, 73 111. 360, 24 Am. Rep. 258 (1874). /radioma— ^Woodruff S. & P. Co. v. Diehl, 84 Ind. 474, 43 Am. Rep. 102 (1882). ^ewtMC%— Pullman P. C. Co. v. Gaylord, 9 Ky. L. Rep. 58 (1887). Massachusetts — Whitney v. Pullman P. C. Co., 143 Mass. 243, 9 N. E. 619 (1887); Dawley v. Wagner P. C. Co., 169 Mass. 315, 47 N. E. 1024 (1897). Mississippi — In Mississippi a sleeping-car company is declared a com- mon carrier by the constitution: Pullman P. C. Co. v. Lawrence, 74 Miss. 782, 22 So. 53 (1897). Missouri — Sealing v. Pullman P. C. Co., 24 Mo. App. 29 (1886). New York— Tracy v. Pullman P. C. Co., 67 How. Pr. (N. Y.) 154 (1884); Welding v. Wagner, 1 City Ct. Rep.' (N. Y.) 66 (1878). Pennsylvania — Pfaelzer v. Pullman P. C. Co., 4 W. N. C. (Pa.) 240 (1877); Pullman P. C. Co. v. Gardner, 3 Penny. (Pa.) 84, 14 W. N. C. 17 (1883). Tennessee— Fullmnn -P. C. Co. v. Gavin, 93 Tenn. 53, 23 S. W. 70, 42 Am. St. Rep. 902, 21 L. R. A. 289 (1893). Texas — The contrary is stated in Pullman P. C. Co. v. Pollock, 69 Te.x. 120, 5 Am. St. Rep. 31 (1887). lOSimms v. Pullman S..C. Co., Fed. Cas. No. 12,869a (1878). IJ Pfaelzer v. Pullman P. C. Co., 4 W. N. C. (Pa.) 240 (1877). 12 Pullman P. C. Co. v. Lee, 49 111. App. 75 (1892) ; Lawrence v. Pull- man P. Co., 141 Mass. 1, B. & W. 139 (1887). [103] § 97] Eaileoad Hate Kegulation. [Chap. Ill carry, although, a bailee, is not one who undertakes the trans- portation 'of the goods on his own account, and he is therefore not a carrier of the goods. -^^ He differs in this respect from an express company ^* or a dispatch transportation company,^® which though not personally carrying, still undertakes the car- riage. MBriggs V. Boston & A. R. E., 6 Allen, 246 (1863) ; Roberts v. Turner, 12 Johns. 232, 7 Am. Dec. 311 (1854); Brown v. Denison, 2 Wend. 593 (1829) ; Piatt v. Hibbard, 7 Cow. (N. Y.) 497 (1827) ; Achley v. Kellogg, 8 Cow. (N. Y.) 223 (1828); Teall v. Sears, 9 Barb. (N. Y.) 317 (1850); Stannard v. Prince, 64 N. Y. 300 (1876). li Infra 171. is Infra 172. [104] CHAPTER IV. PUBLIC PROFESSION OF THE COMMON CAHRIER. 101. Nature of public profession. TOPIC A PUBLIC EMPLOYMENT. 102. Public profession as an assumption of a public trust. 103. Express profession of public employment. 104. By whom the profession must be made. 105. Lighterman. TOPIC B PEIVATE BUSINESS. 106. Employment in private business. 107. Private ferries. 108. Private railroad. 109. Private spur tracks. 110. Lateral branches. 111. Public spur traclcs. 112. Industrial railways. 113. Tap lines. 114. Distinction between public lateral branch and private spur. TOPIC C CASUAL EMPLOYMENT. 115. Intermittent employment. 116. Shipmaster. 117. Railroad not opened for passengers. 118. Incidental employment — Wagoner. 119. Truckman. I TOPIC D SPECIAL AUEANGBMENTS AS TO THE CARRIAGE. 120. Whether the transaction is upon a public or private basis. 121. Special train. 122. Special freight trains. 123. Private excursion trains. 124. Establishment of train on guaranty of an individual. [105] 101] Eaileoad Rate Regulation. [Chap. IV, TOPIC E EXTENT OP THE PtTBLIC PROFESSION. I 125. To what goods the profession to carry extends. 126. Money. 127. Cattle. 128. Carrier of passengers whether also a carrier of goods. 129. Rolling stock. 130. Newspapers. 131. Other special classes of goods. 132. Obligation to carry all goods of a class. TOPIC P. EEGULAK BUSINESS. § 133. Special agreement. 134. Establishment of regular charge. 135. Permanent profession. 136. General practice. § 101. Nature of public profession. The plainest justification for the imposition of the extraordi- nary law which requires those who are in public callings to serve all that apply at reasonable rates, is that in initiation the service is voluntary. People are not forced into public service against their wills; it is only when they have held themselves out in some way as ready to accommodate all that apply that they are bound to serve indiscriminately. Whether there has been such a general undertaking to serve the general public is the primary question on the establishment of public calling. B'Ut it is a question of fact rather than a question of law in most cases; and the discussion of it requires the statement of many cases involving many close issues of fact. For although the public profession is often enougb made in express terms, as by the advertisement of a carrier ; it is also not infrequently left to implication from the general course of business. So very often there is no other way of judging of the nature of the business. [106] Chap. IV] Public Profession. [§§ 102, 103 TOPIC A PUBLIC EMPLOYMENT. § 102. Public profession as an assumption of a public trust. In the earlier cases of public employment the profession to serve all that appear was spoken of as the assumption of a pub- lic trust in undertaking the business or as granting to the public of an interest in that business. The original rule was clearly expressed over two centuries ago by Lord Holt:^ "Wherever any subject takes upon himself a public trust for the benefit of the rest of his fellow-subjects, he is eo ipso bound to serve the subject in all the things that are within the reach and compre- hension of such an office, under pain of an action against him. . . . If, on the road a shoe falls off my horse, and I come to a smith to have one put on, and the smith refuse to do it, an action will lie against him, because he has made profession of a trade which is for the public good, and has thereby exposed and vested an interest of himself in all the king's subjects that will employ him in the way of his trade. If an innkeeper refuse to entertain a guest, where his house is not full, an action will lie against him ; and so against a carrier, if his horses be not loaded and he refuses to take a packet proper to be sent by a carrier ; and I have known such actions maintained, though the cases are not reported. ... If the inn be full, or the carrier's horses loaded, the action will not be for such refusal ; but one that has made profession of a public employment is bound to the utmost extent of that employment to serve the public." § 103. Express profession of public employment. An advertisement that a person proposes to engage in the business of carrying is sufficient evidence that he is a common carrier, whether the advertisement is a sign on his ofiice ^ or a iLane v. Cotton, 12 Mod. 472, 484 (1701). singate v. Christie, 3 Car. & K. 61 (1850). [107] §§ 104, 105] Eaileoad Eatb Regulation. [Chap. IV notice in a newspaper.^ And so the fact that a carrier has re- ceived a license to carry on business establishesi his position as a common carrier, since the license isi required only for public business.* § 104. By whom the profession must be made. The public profession to carry must be made by the carrier -himself, or some one expressly authorized by him to do it. Thus in a case where persons had been accepted as passengers on con- struction trains of an incomplete railroad by the person in charge of the work, the Supreme Court of Indiana well said:^ " Allen was a superintendent of construction and a civil engi- neer, and it is not shown that he had authority to receive the appellee as a passenger upon a road that had never been opened to the travelling public. The board of directors and the estab- lished rules of the company alone could make the appellant a common carrier for hire and the appellee a passenger. The power was not delegated to Allen, and it was beyond the scope of his authority to convert a construction train into a passenger train. He could not open an imperfect and incomplete road into one for passenger traffic without the consent of his superior of- ficers." § 105. Lighterman. Such a case is that of the lighterman, as was decided in the leading case of Ingate v. Christie.® The defendant was employed 3 Doty V. Strong, 1 Finn. (Wis.) 313, 40 Am. Deo. 773 (1843). i Babcock v. Herbert, 3 Ala. 392, 37 Am. Dec. 695 ( 1842 ) ; Farley v. Lavary, 107 Ky. 523, 54 S. W. 840, 47 L. R. A. 383 (1900); Atlantic City V. Brown, 71 N. J. L. 81, 58 Atl. 110 (1904); Robinson v.^Cornish, 13 N. Y. Supp. 577 (1890); Culver v. Lester, 37 Can. L. J. 421(1901); Gibson v. Silva, Rama-Nathan (Ceylon) 105 (circ. 1850). BEvansville & R. R. R. v. Barnes, 137 Ind. 306, 36 N. E. 1092 (1894), by Dailey, J. 6 3 Car. & K. 61, B. & W. 7 (1850). [108] Chap. IV] Public Profession. [§ 106 by the plaintiffs, who were merchants, to take 100 cases of figs in his lighter from Mills' Wharf, in Thames street, to the " Magnet " steamer, which lay in the river Thames, and then as the figs were on board the lighter, which was proceeding with them to the " Magnet," the lighter was run down by the " Menai " steamer and the figs all lost. It was proved that the defendant had a counting-house with his name and the word " lighterman " on the doorposts of it, and that he carried goods in his lighters from the wharves to the ships for anybody who employed him. Baron Alderson delivered the following opinion : " Everybody who undertakes to carry for any one who asks him, is a common carrier. The criterion is, whether he car- ries for particular persons only, or whether he carries for every one. If a man holds himself out to do it for every one who asks him, he is a common carrier ; but if he does not do it for every one, but carries for you and me only, that is matter of special contract. Here we have a person with a counting-house, ' light- erman ' painted at his door, and he offers to carry for every one." ^ TOPIC B PRIVATE BUSINESS. § 106. Employment in private business. When a person employs a vehicle to convey persons or prop- erty to or from his place of private business, such carriage is not common carriage, even if he incidentally allows other per- sons not having business with him to ride or carries as a matter of accommodation goods for other persons. But though the motive for establishing a route is to accommodate a certain business, if it offers to accommodate all persons who may find it useful, the case is one of public employment. " If all the people have the right to use the road, it is a public use or in- ^ See to the same effect, Liver Alkali Co. v. Johnson, L. R. 9 Ex. 338 (1874) ; Boyers v. Moss, 18 Vict. L. R. 225 (1892). [109] § 107] Eaileoad Eate Eegulation. [Chap. IV terest, although the number who have business requiring its use may be very small." ^ The distinction was forcibly put in the case of Ulmer v. Lime Eock Eailroad : ^ "If the branch track is to be built solely and exclusively for the benefit and accommodation of the railroad company and of the owner of the private business enterprise, it may well be said that it would serve no public purpose and would be of no public use, although the existence of such a track might be of great, but indirect, benefit to the community, by enabling the private enterprise to be carried on, and in thereby giving employment to labor. But the mere fact that the prim- ary purpose of such a branch is to accommodate a particular private business enterprise is by no means a controlling test. The character of the use, whether public or private, is de^ termined by the extent of the right by the public to its use, and not by the extent to which that right is or may be exercised. If it is a public way in fact, it is not material that but few persons will enjoy it. When such a branch track is first constructed, and the right of way necessary therefor is taken, it may in fact be used only for the business of the plant to which it is con- structed, because at that time no other business enterprise may exist in that vicinity to furnish freight for transportation; but in the future other enterprises may spring up, either upon the line or upon the extension thereof, so that a branch track which in the first instance is primarily constructed for the accommoda- tion of one may become of equal accommodation, benefit and use to others." § 107. Private ferries. So where a merely private ferry is established to convey per- sons to and from the premises of a private individual, who may 1 Kettle River R. R. v. Eastern Ry., 41 Minn. 461, 43 N. W. 469, 6 L. R. A. Ill (1889). 2 98 Me. 579, 57 Atl. 1001 (1904). [1101 Chap. IV] Public Peoi-essioi^. [§ 108 refuse to receive any person upon his premises, such a ferry is not carrying on a public employment. Such is a ferry estab- lished to convey persons to a picnic ground ; ^ a wherry regu- larly conveying the laborers of its owner to their work ; * and a skiff which is offered as a free conveyance to persons who will come to the store of its owner for trade ; ^ or a ferry which con- veys customers to his mill,® even if in the boat other persons are sometimes transrported as a matter of accommodation, and give a gratuity to the servant managing the boat.'^ So, where several parties joined to maintain a boat for the purpose of conveying their cattle across a river to a slaughter-house the conveyance was not common carriage.® § 108. Private railroad. In the same way, a railroad constructed and used merely in connection with the conduct of a private business is not a com- mon carrier. So, where a railroad is built to haul logs from the forest to the saw-mill of the owner, it is not a common carrier.* It cannot be seriously contended, said the Circuit Court of Ap- peals, that an article of the State Constitution which dealt with corporations of public improvement and utility, " was intended to, or could be so construed as to, make out of a logging rail- road appurtenant to a saw-mill, constructed wholly on private grounds, and operated for private purposes, a common carrier charged with all the duties and responsibilities incumbent by the laws of the land upon common carriers, and simply because 3People V. Mago, 69 Hun (N.Y.) 559, 23 N. Y. Supp. 938 (1893). 4Tadhunter v. Buckley, 7 L. T. N. S. 273 (1862). 5Shinn v. Cotton, 52 Ark. 90 (1889). 6 Self V. Dunn, 42 Ga. 528, 5 Am. Eep. 544 (1871). 7Littlejohn v. Jones, 2 McMull (S. C.),366, 39 Am. Dec. 132 (1842). 8Flautt V. Lashley, 36 La. Ann. 106 (1884). 9 White V. Kennon, 83 Ga. 343, 9 S. E. 1082 (1889) ; Wade v. Luteher & M. C. Lumber Co., 74 Fed. 517 (1896); Nicolette Lumber^Co. v. People's Coal Co., 26 r.i. Supr. Ct. 575 (1904). [Ill] ,§ 109] Raileoad Eate Regulation. [Chap. IV it i& a railroad, and the owners are incorporated as a business corporation. It seems to us, we might as well hold that a rail- road on a sugar plantation, appurtenant to the sugar-mill, and used for carrying cane thereto, should be declared a common carrier." ^^ So in a Louisiana case it was held that a corporation organ- ized to carry freight and passengers between two srugar planta- tions about five miles distant from one another, and which, it was charged, was not a corporation organized for public pur- poses, but was a combination of individuals, whose sole object was^to foster the private ends of two certain persons named, who owned jointly two sugar plantations, and who wished to transport the sugar cane grown on one of the plantations to the refinery situated on the other, was not, ex necessitate, such a corporation for public improvement as would authorize the ex- propriation of private property for its purposes. ^-^ And a rail- road used in transporting property within a private stock-yard is not a common carrier. ^^ § 109. Private spur tracks. A strictly private spur track leading from private property to the line of a public railroad, over which the public can have no rights is not a common carrier. So in an Illinois case it ap peared that a coal company had a tramway running from one portion of its coal field to another; and it desired to condemn by right of eminent domain a strip of private land in order to connect the tramway with a railroad. The court held that this could not be done. In the course of his opinion Mr. Justice Mulkey said : " It is clear that the use for which the land is JO Pardee, Giro. J., in Wade v. Lutcher & M. C. Lumber Co., 74 Fed. 517, 521, 20 CCA. 515, 41 U. S. App. 45 (1896). Ji Williams v. Judge of Eighteenth Judicial Dist. Ct., 45 La. Ann. 1295, 14 So. 57 (1893). 12 Swift V. Ronan, 103 111. App. 475 (1902). [112] Chap. IV] Public PEOirEssiosr. [§ 109 proposed to be taken in this case is not a public One. The coal, the coal works and the present tramway are in the strictest sense private property, and the public generally have no more interest in them or in the operation of the works including the tramway than they have in any other strictly private business. The same would be equally true after the proposed extension of the tram- way. The extending of it to the railroad would not change its character or the obligations of the company or the public im the slightest degree. Without the consent of the ovsmers of it, there is not a person in the State, outside of themselves, who would have the right to ride upon it on any terms that might be pro- posed, or to have carried upon it a single pound of freight." '* It is immaterial whether gfuch a spur track is to be constructed by the private owner or by the railroad to which access is de- sired. So a petition by a railroad company to condemn land for such a track was refused,^* the court. saying: " Stripped of all the disguises thrown around the case of the petitioner, it is shown that its object is to condemn the land of the defendants for the purpose of enabling it to lay a siding, switch, brancli road, or lateral work from the main track to the Wheeling Steel Works, a few hundred feet distant, for the purpose, as stated in the original petition, ' of transporting freights to and from said steel works over the petitioner's said railroad.' This clearly was for the private accommodation of both the railroad and steel works, and to make the private business of both more profitable. This was not for a public, but was for a private use, and the taking of the property, under these circumstances, would be the taking of private property for private use, which is clearly prohibited." issholl V. German Coal Co., 118 111. 427, 10 N. E. 199 (1886). "Pittsburg W. & K, R. R. v. Benwood Iron Works, 31 W. Va. 710, 8 S. E. 453, 2 L. R. A. 680 (1888). [113] §110] Eaileoad Eate Eegulation. [Chap. IV § 110. Lateral branches. When the railroad itself builds a branch line from its road, primarily to accommodate some individual business, it is never- theless a common carrier over the branch, and the use of the track is open to all vs^ho have occasion to use it as v?ell as to the particular individual for whose benefit it was built.^® The question is usually raised by a petition to take land for this pur- pose by eminent domain. This is universally decided to be per- missible, for the operation of such a branch is a public use.^® As the court said in Chicago & JSTorthwestem Eailway v. More- house:^^ " The taking of land for a spur track to connect with a single industry is a taking for public use, if the purpose of the company is to maintain and operate such track as an integral part of its railway system, so as to serve all who may desire it, and all can demand, as a right, to be served without discrimina- tion." 18 isBulter v. Tifton, T. & 6. R. R., 121 Ga. 817, 49 S. E. 763 (1905); Louisville & Nashville R. R. Co. v. Pittsburgh & K. Coal Co., 23 Ky. Law Rep. 1318, 64 S. W. 969, 55 L. R. A. 601 (1901) ; Kellogg v. Sowerby, 87 N. Y. Supp. 412 (1904); Railroad Comm'rs v. St. Louis & S. W. Ry. (Tex.), 80 S. W. 102 (1904). 16 St. Louis, I. M. & S. Ry. v. Petty, 57 Ark. 359, 21 S. W. 884, 20 L. R. A. 434 (1893) ; Ulmer v. Lime Rock R. R., 98 Me. 579, 57 Atl. 1001 (1904) ; Toledo S. & M. R. R. v. East S. & S. C. R. R., 72 Mich. 206, 40 N. W. 436 (1888) ; Butte A. & P. Ry. v. Montana U. Ry., 16 Mont. 504, 41 Pac. 232, 50 Am. St. Rep. 508, 31 L. R. A. 298 (1895) ; De Camp v. Hi- bernia R. R., 47 N. J. L. 43 (1885) ; Bridal Veil Lumbering Co. v. John- son, 30 Or. 205, 46 Pac. 790, 60 Am. St. Rep. 818, 334 L. R. A. 368 (1896) ; Chicago&N.W.Ry. V.Morehouse,-! 12 Wis. 1, 87 N. W. 849, 88 Am. St. Rep. 918, 56 L. R. A 240 (1901). 17 Supra. 18 In a. Texas case where the right to condemn land for a lateral branch running to several private places of business was refused; the rea- son seems to have been that the charter of the railroad limited it to a certain route, and the desired branch was oil the route. Kyle v. Texas & N. 0. R. R. (Tex. Civ. App.), 4 L. R. A. 275 (1889). [114] Chap. IV] Public Peofession. [§§ 111, 112 § 111. Public spur tracks. It sometimes happens that a spur track is constructed by an individual from his premises to the railroad, but under such circumstances that the use of it is extended to the public. Such a spur track is a public track, and the operator (whether the individual or the railroad) is a common carrier as to the track.^* As the court said in the case of Chicago Dock & Canal Com- pany V. Garrity :-" " We have not regarded the circumstances that they were laid with private funds, and that they termi- nated opposite or within convenient contiguity of a private man- ufacturing establishment, as materially affecting them and giv- ing a private character to their use. All termini of tracks and switches are more or less beneficial to private parties, but the public character of the use of the tracks is never affected by this. If they are open to the public use indiscriminately, and under the public control to the extent that railroad tracks generally are, they are tracks for public use. It may be in such cases that it is expected or even that it is intended that such tracks will be used almost entirely by the manufacturing establishment, yet, if there is no exclusion of an equal right of use by others, and this singleness of use is simply the result of location and con- venience of access, it cannot affect the question." § 112. Industrial' railways. An added importance has accrued to this subject because of the recent invention of a kind of railway known as the " indus- trial " railway. This is a short line of railway, owned by an industrial corporation or by the owners of some business enter- prise, and connecting the factory or the place of business with the main line of some railway. It may amoimt to no more than 19 Agee & Co. v. Louisville & N. Ry. (Ala.), 37 So. 680 (1905) ; Chicago D. & C. Co. V. Garrity, 115 111. 155, 3 N. E. 448 (1885) ; Phillips v. Watson, CS Iowa, 28, 18 N. W. 659 (1884). 20 Supra. [115] § 112] Eaileoad Eate Kegulation. [Chap. IVi a short spur track; but it is organized as an independent rail- way corporation, and the owners of the industrial enterprise are its stockholders. If such a road, however short it may be, is actually operated independently with its own locomotives and cars, it would seem to be an independent carrier, though it is operated for the ex- clusive benefit of the industrial enterprise which owns it; and this is certainly the case where it accepts such general trafiic along its line as may be offered to it. Of such a railway the Interstate Commerce Commission said, by Mr. Commissioner Prouty : " The Illinois JSTorthern Railroad is a common carrier within the first section of the act to regulate commerce. It is incorporated as a railroad company under the laws of Illinois. It actually owns and operates a line of railroad. It maintains a freight station, at which it receives and delivers for the general public considerable quantities of less than carload freight. Its main business is the moving of loaded cars to and from various industries along its line, and in this capacity it serves more than two hundred plants, besides that of the International Har- vester Company. Manifestly there is no reason in law why this railroad may not make joint rates, file joint tariffs and agree upon joint divisions as other railroads do. We are not called upon to decide what the situation might be if this road were a private carrier maintaining switch tracks and switching cars to and from the McCormick works exclusively. The mere fact that this road is to-day entirely owned by the largest individual shipper over it, or that it was originally organized and built for the purpose of doing the work of that shipper, is not, in our opinion, controlling against the legality of t£e transaction be- fore us." ^^ 21 Re Divisions of Joint Eates, 10 I. C. C. Rep. 385 (1904). [116] Chap. IV] Public Profession. [§§ 113, 114 § 113. Tap lines. But if the " industrial railway " is simply a " tap line," not a common carrier operating a service over its rails for all that apply, it cannot pose as an independent carrier and demand the right to enter into pro rating arrangements with succeeding car- riers. The question, whether allowances from the published rate made by the roads west of the Mississippi to logging roads oi " tap lines," as they are called, owned or controlled by the lum- ber mills, constituted departures from published rates in viola- tion of the Act to regulate commerce, was presented for decision by the Interstate Commerce Commission in the case of The Central Yellow Pine Association v. The Vicksburg, Shreveport & Pacific Kailroad,^^ and it was held, that the published rate must be strictly observed ; that the defendants were not author- ized under the law "to grant a division of the rate to the owner of a lumber mill as compensation to him for the cost of bringing his logs to the mill by steam railroad, horse railroad, wagon, or any other means of conveyance ;" and that a common carrier subject to the provisions' of the Act to regulate commerce can " allow a division of rates only to another common carrier which, participating in the particular trafiic to which the rate is applied, is also subject to those provisions." ^^ § 114. Distinction between public lateral branch and private spur. The distinction between the public branch and the private spur appears to lie merely in the facts as to the use which can be made of the road. If it runs for a considerable distance, so that at a future time demands not now in existence may come into being and the road may be of use to a number of persons, 32 10 I. C. C. Eep. 193 (1904). 2. IV powers, it is a common carrier, and a special contract about its responsibility does not divest it of the character." ^'' § 131. Other special classes of goods. If the goods, -while similar in bulk and in manner of use to goods actually carried, are fragile or dangerous, or otherwise require special treatment, a carrier who has never professed to carry them may refuse to accept them as a common carrier. So where an express company had never professed to carry glass as a common carrier, and on the terms required of a common carrier, writ of mandamus to compel the c6mpany to receive and carry glass on such terms was refused.^® And so where the goods are of a dangerous nature, it seems clear that the car- rier may refuse to receive them on the ground that he has never professed to carry goods of tliat kind.-'* For as has been seen many times in the course of this discussion, there are for vari- ous natural reasons different classes of goods, and a practice of taking goods of one class does not establish any profession to take goods of another class. Thus in an early case in Delaware, Tunnel v. Pettijohn,^" a carter who usually carried parcels of moderate size, but who had taken a hogs- head of molasses after first refusing it because of its size, wag held not responsible for it as a common carrier. The grounds of the court were : " There seems to be good reason for distinguishing between this and other kinds of goods, on /' 17 Cited from Hutchinson on Carriers, § 44, and from New York C. E. E. V. Lockwood, 17 Wall. 357, 21 L. Ed. 627 (1873). 18 People ex rel. Walker v. Babeock, 16 Hun (N. Y.), 313 (1818); Toy V. Long Island Railroad, 26 Misc. (N. 'Y.) 792, 56 N. Y. Suppl. 182 (1899). See, also, Pender v. Robbins, 51 N. C. 207 (1858). 19 California Powder Works v. Atlantic, etc., R. Co., 113 Cal. 329, 45 Pac. Rep. 691, 36 L. R. A. 648 (1896) ; Farrant v. Barnes, 11 C. B. N. S. 553, 8 Jur. N. S. 868, 31 L. J. C. P. 137, 103 E. C. L. 553 (1862), per Erie, C. J.; Alston V. Herring, 11 Exch. 822, 25 L. J. Exch. 177 (1856). 20 2 Harr. (Del.) 48 (1836). [138] Chap. IV] Public Profession. [§§ 132, 133 account of its bulk and weight, and it also appears that the de- fendant's cart is too small for such freight." § 132, Obligation to carry all goods of a class. Whatever may have been the rule laid down in some of the English and Canadian cases, it is probable that in this country a carrier who undertakes to carry certain goods of a certain sort must carry all of the same general nature. A wagoner might certainly refuse to carry very bulky goods if he had never professed to carry them,^'' but if a wagoner had professed to carry fruit he could not refuse to carry vegetables, or if he had professed .to carry tables he could not refuse to carry chairs. Everything of the same general nature with the things carried, and readily transported in the same way and by the same means, must be taken. It would hardly be possible in this country to accept the view apparently taken by the Canadian court, that a carrier might carry all other kinds of lumber but refuse to carry cedar lumber.^^ TOPIC F. EEGULAE BUSINESS. § 133. Special agreement. In some kinds of carriage it is necessary to make in each caser a special agreement ; and it has been claimed that this is incon- sistent with common carriage. This seems not necess'arily to be true. If all the terms of the transaction lie in the agreement of the parties it is to be sure rather difficult to find a profession of readiness to serve all. But when further facts show that the carrier is ready and willing to undertake the service for all 21 Tunnel v. Pettljohn, 2 Harr. (Del.) 48 (1836). 22 Rutherford v. Grand Trunk Ry., 5 Rev. Leg. (Can.) 483. supra. See, also, Fish v. Chapman, 2 Ga. 349, 46 Am. Dec. 393 (1847) ; Toy v. Long Island R. R. Co., 26 Misc. (N. Y.) 793, 56 N. Y. Suppl. 182 (1899); Pender v. Robbins, 51 N. C. 207 (1858) ; .Johnson v. Midland R. R. Co., 4 Exch. 367, 18 L. J. Exoh. 366, 6 R. & Can. Cases, 61 (1849). [139] §§ 134, 135] Eaileoad Kate Regulation. [Chap. IV that apply, and that the reason why it is common to make a special agreement in each case is that the individual transact tions are seldom quite alike, because each applicant generally requires a little different service, it is quite possible to regard each transaction as goverened by the law of common carriage. So also, if the only matter requiring agreement is the amount of compensation, and the reason that no regular charges are es- tablished is that the individual transactions are so various in nature that it is impossible for the carrier to frame in advance a tariff of charges, the carrier may be a common carrier.^ The court say of a truckman, holding him a common carrier : " The necessity for a different charge in each case arises, of course, out of the difference of labor in handling articles of great bulk." § 134. Establishment of regular charge. The establishment by a carrier of a regular tariff charge for the carriage of a certain article is evidence that the carrier is a common carrier of that article. So where an express company received a dog to be shipped to a certain place for three dollars, which was found to be the regular charge, the court remarked that " the fact that the company had established regular charges for such freight, tends to show that they were in the transporta- tion business." ^ § 135. Permanent profession. The profession to serve all makes the employment a public one ; and therefore the carrier who holds himself out as ready to carry for all on a particular journey or voyage is at that mo- ment a common carrier, though this is his first journey and he has never yet carried f and this is equally the case though he 1 Jackson A. Iron Works v. Hurlbut, 158 N. Y. 34, 52 N. E. 665 (1S99). 2 Southern Express Co. v. Ashfprd, 126 Ala. 891, 28 So. 732 (1900). 3 Fish V. Chapman, 2 Ga. 349, 46 Am. Dec. 393 (1847) ; Fuller v. Brad- ley, 25 Pa. St. 120 (1855) ; Brind v. Dale, 8 C. & P. 207, 2 M. & Kob. [140] Oliap. IV] Public Profession. [§ 136 does not intend to continue the profession, and makes his offer for the single journey only.* § 136. General practice. in general it may be said that to constitute public profession the business must be carried on upon the basis of indiscriminate service. If the business is carried on upon special arrange- ment made in each particular case, that is proof that the under- taking is private only. Again, if the business is regular, car- ried on by fixed practice, it will generally be held to be upon a public basis*; while if it is casual, undertaken at some special time for some special reason, it is more apt to be held private. An occasional refusal to serve js not conclusive evidence that the business is private, for it may have been a stray instance of illegal refusal to serve in a business that was nevertheless public because of general practice to serve all. And on the other hand if a man has decided upon the undertaking of public business, he is as much in public service in performing his first service for the first applicant as at any later time; though the proof m;iy in such cases be more difiicult. 80, 34 E. C. L. 692 (1837) ; Roussiel v. Aiimais, 18 Quebec Super. Ct. 474 (1900). 4 Steele v. McTyler. 31 Ala. 667, 70 Am. Dec. 516 (1858); Harrison v. Roy, 39 Miss. 396 (1860); Gordon v. Hutchinson, 1 Watts & S. (Pa.) 285, 337 Am. Dec. 464 (1841) ; Moss v. Bettis, 4 Heisk (Tenn.), 661, 13 Am. Rep. 1 (1871) ; Chevallier v. Straham, 2 Texas, 115, 47 Am. Dec. 639 (1847); Haynie v. Baylor, 18 Texas, 498 (1857). ri4ii CHAPTER V. COMMON CARRIAGE INVOLVES COMPENSATION. § 141. Common carriage is compensated carriage. TOPIC A COMPENSATED CARRIAGE. § 142. Carriage is for hire unless it is, otherwise agreed. 143. Pass issued for business reasons. 144. Carrier's services in returning goods compensated. 145. Carriage of baggage is compensated. 146. Baggage carried without compensation. 147. Baggage carried apart from the passenger. TOPIC B GEATUITOtfS AEEANGEMENTS. § 148. Gratuitous carrier liable for negligence. 149. Gratuitous passenger. 150. Carriage of children and servants. 151. Riding by mistake. TOPIC C SPECIAL CLASSES OF PERSONS. § 152. Mail clerks and express messengers. 153. Employes of the carrier. TOPIC D CARRIAGE OBTAINED BY MISREPRESENTATION. § 154. Persons never accepted in a proper place not passengers. 155. Carriage of goods secured by fraud. 156. Stealing a ride. 157. Riding on invalid ticket. 158. Attempt to escape conductor's notice. 159. Riding free by connivance of the conductor. 160. Guest of servant of the carrier. § 141. Common carriage is compensated carriage. The receipt of compensation is a necessary part of the con- ception of common carriage. One who is serving gratuitously [142] Chap. V] Compensation. " [§ 142 is not a common carrier. It would, of course, be outrageous to hold a person in public calling because of any acts of generosity in performing various services for various members of the public gratuitously ; and therefore bind him thereafter to serve all members of the public free. At the same time, if there is in reality compensation for the act, which is apparently done free by reason of its connection with another part of the same trans- action in the course of which payment is given, then it would not be right to relieve the carrier, who is thus actuated by a busi- ness motive, from the liability resting upon those who carry on a public business merely because no separate item of compensa- tion can be referred to the carriage in question. TOPIC A COMPENSATED CAEEIAGE. § 142. Carriage is for hire unless it is otherwise agreed. In the absence of an agreement to the contrary, when a com- mon carrier takes goods to carry they are to be carried for hire.^ In the case of Gray v. Missouri River Packet Company,^ it appeared that plaintiff applied to one Rider, captain of the steamboat " Alice," which was being used by defendants in their business as carriers, to ship his horse and jack, and that he agi'eed to transport them for him. He asked Rider what would be the charge, who said in reply that it would not be much, if anything; and Rider in fact did not intend to charge him any- thing. Notwithstanding this intention, the defendants were held to be common carriers. Mr. Justice Norton said : " We apprehend that if Gray had been sued for the trans'portation of his stock, it would have been no reply to the action for him to have set up as a defence that Rider said when he was applied to for the price that he would not charge him much, if anything. 1 Bastard v. Bastard, 2 Shower (Eng.), 81, B. & W. 283 (1679). See Knox V. Rives, 14 Ala. 249 (1848). 2 04 Mo. 47 (1876). [143] § 142] Eaileoad Kate Eegulation. [Chap. V " After an injury results to property intrusted to a common carrier for transportation, who upon receiving it for that pur- pose declined to fix the price or charge for the transportation, he cannot be allowed to come in and defeat a recovery by saying that at the time of its reception he had a secret intention, unex- pressed to the shipper or consignor, and not agreed to by him, not to charge anything, and that the transportation was gratui- tous and not for hire." So, where the carrier is given goods to sell and bring back the proceeds, he is a common carrier of the money while he is bringing it back. "Although no commission or distinct compen- sation was to be received upon the money, yet, according to the evidence, it appears to be a part of the duty attached to the em- ployment, and in the usual and ordinary course of the business, to bring back the money when the cargo is sold for cash. The freight of the cargo is the compensation for the whole ; it is one entire concern." * A leading case on this subject is Pierce v. Milwaukee Kail- road.* This was an action to recover the value of eight hundred empty grain bags which it was averred that the defendant rail- road was transporting as a common carrier. It was shown at the trial that, as was customary, these bags were being carried back to the original shipper of the grain free ; defendant claimed therefore that it was liable only as a gratuitous bailee. The judgment for the plaintiff was upon the theory that this was compensated carriage, which the upper court upheld. Mr. Justice Paine said : " The company, by establishing such i, custom, makes the proposition to all persons, that if they will become its customers, it will carry their bags both ways without any other compensation than the frefght upon the grain. Per- sons who become its customers in view of such a custom do so 3 Kemp V. Coughtry, 11 Johns. (N. Y.) 107 (1814). Ace. 'Emery v. Hersey, 4 Me. 407, 16 Am. Dec. 268 (1827); Harrington v. McShane, 2 Watts (Pa.), 443 (1S34) ; Taylor v. Wells, 3 Watts (Pa.), 65 (1834). 4 23 Wis. 38, B. & W. 126 (1868). [144] Chap. V] Compensation. [§ 143 witli that understanding. And the patronage and the freights paid are the consideration for carrying the bags. The company, in making such a proposition, must consider that this additional privilege constitutes an inducement to shippers to give it their freight. And it must expect to derive a sufficient advantage from an increase of business occasioned by such inducement, to compensate it for such transportation of the bags. And it ought not to be allov^ed, when parties have becoipe its customers with such an understanding, after losing their bags, to shelter itself under the pretext that the carrying of the. bags was a mere gratuity, and it is therefore liable only for gross negligence. It makes no difference that the custom is described as being to carry the bags free. In determining whether they are really carried ' free ' or not, the whole transaction between the parties must be considered. And when this is done, it is found that all that is meant by saying that the empty bags are carried free is, that the customers pay no other consideration for it than the freight derived from the business they give the company. But this, as already seen, is sufficient to prevent the transportation of the bags from being gratuitous." * , § 143. Pass issued for business reasons. Where a pas's is issued for business reasons the passenger using it is not strictly a gratuitous passenger, but the carrier in transporting him is a common carrier. Thus, a pass issued to officials of another road, in accordance with a custom of rail- roads to exchange passes, is given for a consideration, and the person using it is not strictly a free passenger ; * and the same thing is true of a pass issued to a person to travel over the road on business of the road,^ and of a pass issued to a drover to 6 Ace. Aldridge v. Great Western Ry., 15 C. B. N. S. 582 (1864; semlle.) 6 Steamboat New World v. King, 16 How. (U. S.) 469, 14 L. Ed. 1019 (1853). 7 Grand Trunk Ry. v. Stevens, 95 U. S. 655, 24 L. Ed. 535 (1877) (trav- eling on invitation of the road to show a patent coupling). [145] § 144] Eaileoad Eate Eegulation. [Chap. V travel -with cattle.® In the case of New York Central Eailroad V. Lockwood,' Mr. Justice Bradley said ; " It may be assumed in limine that the case was one of carriage for hire ; for though the pass certifies that the plaintiff was entitled to pass free, yet jjis passage was one of the mutual terms of the arrangement for carrying his cattle." This is further elucidated in Pennsylvania Railroad v. Hen- derson" by Mr. Justice Eead : " As it is absolutely necessary in carrying 'stock that the persons who have charge of them should be car];^ed'by the company, the price paid for the freight in- cludes the cost of transporting the drover, who is not therefore a gratuitous but a paying passenger, and the word free is there- fcre only true so far as that the conductor is not entitled to charge him separately for his passage." § 144. Carrier's services in returning goods compensated. A carriage may be for hire, though no compensation is paid for it specifically, if it forms part of an entire transaction for which compensation is paid, which most commonly happens where the carriage in question consists of bringing back to a shipper some portion of or payment for goods for the carriage of which payment has been made. Such a case was Spears v. Lake Shore & Michigan Southern Railroad. ^^ The plaintiff owned tanks, used for transporting oil, which were fastened to platform cars. The oil was billed to the owner, no mention be- ing made of the tanks; and no freight was paid for the tanks, either full or empty. The tanks and contents were destroyed by accidental fire while on the defendant's line. It was held that 8 New York C. E. R. v. Lockwood, 17 Wall. (U. S.) 357, 21 L. Ed. 627, B. & W. 498 (1873); Flinn v. Philadelphia R. R., 1 Houst. (Del.) 469 (1857) ; Illinois C. R. R. v. Beebe, 174 111. 13, 50 N. E. 1019, 43 L. R. A. 210 (1898) ; Pennsylvania R. R. v. Henderson, 51 Pa. St. 315 (1865). 9 Supra. 10 Supra. 11 67 Barb. (N. Y.) 513 (1876). [146] Ohap. V] Compensation. , [§ 145 defendant was liable as a common carrier, freight being in- cluded in the freight paid for the oil. So, where goods are ship- ped C. O. T>; one charge being made for the entire transaction, the carrier is compensated by the single payment for returning the money, and he is therefore a common carrier of the money. ^^ § 145. Carriage of baggage is compensated. The carrier of passengers is bound to carry with the passenger certain articles of personal use which the passenger must keep with him on the journey. For carrying such baggage along with the passenger the carrier might make a separate charge.^* But it is customary for the carrier to carry mere pers'onal bag- gage without charging an additional sum for it. The carriage is not gratuitous in such a case; the compensation for it is in- cluded in the fare for carrying the passenger.^* The baggage which the company sb carries in consideration of the passenger's fare comprises merely the ordinary personal effects of the passenger, which he will need on his joumey.^^ J2 Zollinger v. The Emma, Fed. Cas. No. 18,218 (1876). isVin. Abr. 220. "Great Northern Ry. v. Shepherd, 8 Ex. (Eng.) 30 (1852); Woods v. Devin, 13 111. 746, 56 Am. Dee. 483, B. & W. 130 (1852); Perkins v. Wright, 37 Ind. 27 (1871); Smith v. Boston & Me. R. R., 44 N. H. 323 (1862) ; Orange County Bank v. Brown, 9 Wend. (N. Y.) 85, 24 Am. Deu. 129 (1832) ; First Nat. Bank v. Marietta R. R., 20 Ohio St. 259, 5 Am. Rep. 655 (1880) ; Runyan v. Cent. R. Co., 61 N. J. L. 537, 41 Atl. 367, 68 Am. St. Rep. 711, 43 L. R. A. 284 (1898). 15 It is obviously impossible to discuss at length the question of what constitutes baggage. The subject can be sufficiently examined in the fol- lowing cases: United States — Hannibal & S. J. R. R. v. Swift, 12 Wall. (U. S.) 262, 20 L. Ed. 423 (1870) ; New York C. & H. R. R. R. v. Fraloff, 100 U. S. 24, 25 L. Ed. 531 (1879). Connecticut — Hickox v. Naugatuck R. R., 31 Conn. 281 (1863). Illinois—Woodav. Devin, 13 111. 746, B. & W. 130 (1852) ; Michigan Cent. R. R. V. Carrow, 73 111. 348 (1874). [147] § 145] Eaileoad Eate Eegulation. [Chap. V In Woods V. Devin/® to quote from one case, an excellent summary of the general law is given by Chief Justice Treat: " The principle of the authorities is, that the term ' baggage ' includes a reasonable amount of money in the trunk of a passenger intended for trav- elling expenses, and such articles of necessity and convenience as are usually carried by passengers for their personal use, comfort, instruction, amusement or protection; and that it does not extend to money, merchandise, or other valuables, although carried in the trunks of passengers, which are designed for dif- ferent purposes. And regard may with propriety be had to the object and length of the journey, the expenses attending it, and the habits and condition in life of the passenger." A more defi- nite rule cannot well be laid down. The remarks of Bunson, J., in Hawkins v. Hoffman,^'' are pertinent. He says : " It is un- doubtedly difficult to define with accuracy what shall be deemed baggage within the rule of the carrier's liability. I do not in- tend to say that the articles must be such as every man deems essential to his comfort; for some men carry nothing, or very little, with them when they travel, while others consult their convenience by carrying many things. Nor do I intend to say that the rule is confined to wearing apparel, brushes, razors, writing apparatus, and the like, which most persons deem indis- Indiana — Ohio & Miss. R. W. Co. v. Nickless, 71 Ind. 271 (1880) ; Staub V. Kendriclc, 121 Ind. 226, 23 N. E. 79 (1889). Kansas — Kansas City F. S. & G. R. R. v. Morrison, 34 Kan. 520, 9 Pac. 225 (18,86). Massachusetts — Connolly v. Warren, 106 Mass. 146 (1870); Blumantlo V. Fitchburg R. R., 127 Mass. 322 (1879). Missouri — McLean v. Rutherford, 8 Mo. 109 (1834) North Carolina — Bland et al. v. Womack, 2 Murphy, 373 (1818). Oregon— Oa.kes v. No. Pac, 20 Ore. 392, 26 Pac. 230 (1891). Wisconsin — Gleason v. Transportation Co., 32 Wis. 85 (1873). England — Hudston v. Midland Ry., L. R. 4 Q. B. 366; Macrow v. Great Western Ry., L. R. 6 Q. B. 121 (1871). 16 Supra. "6 Hill (N. Y.), 586 (1845). [148] Ohap. V] Compensation. [§ 146 pensable. If one has books for instruction or his amusement by the way, or carries his gun or fishing-tackle, they would un- doubtedly fall within the term ' baggage,' because they are usually carried as such." § 146. Baggage carried without compensation. As the baggage carried by the carrier and paid for in the fare is limited to the personal baggage carried -with the passenger, it follows that if the passenger induces the carrier -without further payment to carry something which is not personal bag- gage or to carry it apart from the passenger, the carriage is gratuitous. Furthermore, since the tender of what appears to be baggage for free carriage ordinarily involves a representation that the article tendered is personal baggage going with the pas- senger, it is accepted and carried on that basis, and if it is any- thing else the carrier cannot be held responsible for it in any way. If, therefore, the passenger delivers as baggage to the carrier articles of merchandise or other things not personal baggage, the carrier, taking them as baggage, is not responsible for their loss. " There was no undertaking to carry merchandise, and he had no right to impose his goods subtilely upon the company, and then seek to make the obligation that of a common car- is The quotation is from Scott, J., in Michigan Cent. R. E. v. Carrow, 73 111. ,348 (1874). See, also: United Siates— Humphreys v. Perry, 148 U. S. 627, 37 L. Ed. 587, 13 Sup. Ct. 711 (1893). Georgia — Georgia R. Co. v. Johnson, 113 Ga. 589, 38 S. E. 954 (1901). Indiana— Doj\& v. Kiser, 6 Ind. 242 (1855). Maine — Bluementhal v. Maine Cent. R. Co., 79 Me. 550, 11 Atl. 605 (1887). Massachusetts — Stimson v. Conn. River R. Co., 89 Mass. 83, 93 Am. Dee. 140 (1867); Collins v. Boston, etc., R., 10 Cush. (Mass.) 506 (1852); Jordon v. Fall River R. Co., 5 Cush. (Mass.) 69, 51 Am. Dec. 44 (1849). [149] i§ 146] Kaileoad Kate Kbgtjxation. [Chap. V If, however, the carrier has notice that the articles are mer- chandise and accepts them for carriage, notwithstanding he is a gratuitous carrier he is responsible for any negligent injury to the goods. As Baron Parke said, in Great Northern Railway V. Shepard : ^* " If the plaintiff had carried these articles ex- posed, or had packed them in the shape of merchandise, so that the company might have knovsm what they were, and they had chosen to treat them as personal luggage, and carry them with- out deamanding any extra remuneration, they would have been responsible for the loss. ... If, indeed, they had notice, or might have suspected from the mode in which the parcels were packed that they did not contain personal luggage, then they ought to have objected to carry them." Indeed, under certain circumstances carriers might gladly carry merchandise in this way as a method of increasing their business, and in that case they would be carriers for hire and therefore under the liability of common carriers.^" " If he de- Minnesoio— McKibbin v. Great Northern R. Co., 78 Minn. 232, 80 N. W. 1052 (1899) ; Haines v. Chicago, St. P., M. & 0. Ry. Co., 29 Minn. 160, 43 Am. Eep. 199, 12 N. W. 447 (1882). Mississippi — Miss. Cen. E. Co. v. Kennedy, 41 Miss. 671 (1868). Missouri — ^Rider v. Wabash, etc., R. Co., 14 Mo. App. 529 (1884). New York — Blanchard v. Isaacs, 3 Barb. (N. Y.) 388 (1848); Bell v. Drew, 4 E. D. Smith (N. Y.), 59 (1855). OWo— Toledo, etc., R. Co. v. Bowler, etc., Co., 63 Ohio St. 274, 58 N. E. 813 (1900). Pennsylvania — ^Vemer v. Sweitzer, 32 Pa. St. 208 (1858). Texas — Jones v. Puester, 1 Tex. App. Civ. Cas. 613 (1877). England — Belfast, etc., R. Co. v. Keys, 9 H. L. Cas. 556, 8 Jus. N. S. 367 (1861), 4 L. T. Rep. N. S. 841, 9 Wkly. Rep. 793; Great North. R. Co. V. Shepherd, 8 Ex. (Eng.) 30 (1852). 19 Supra. w United States — Hannibal, etc., R. Co. v. Swift, 12 Wall. (U. S.) 262, 20 L. Ed. 423 (1870) ; Jacobs v. Tutt, 33 Fed. 412 (1888). Arkansas — Kansas City R. Co. v. McGahey, 63 Ark. 344, 38 S. W. 659, 58 Am. St. Rep. Ill, 36 L. R. A. 781n (1897). Illinois — Hamburg Am. Packet Co. v. Gattman, 127 111. 598, 20 N. E. 662 (1889). [150] Chap. V] Compensation. [§ 147 sired to have his merchandise or wares go upon the train with him, it was but just to the carrier he should disclose its* nature and value, and if the company then chose to treat it as baggage, the liability of a common carrier would attach, but not other- wise."^^ And a fortiori when the carrier, knowing the nature of the goods, charges and accepts extra compensation, he is responsible for them as a common carrier.^^ § 147. Baggage carried apart from the passenger. For a similar reason a carrier is not responsible aa a common carrier for baggage sent on by the owner when the owner does not accompany it as a passenger. The baggage which the car- rier undertakes to transport without additional compensation is such baggage as may be carried with the passenger. Of course if the baggage is carried apart from the passenger for the con- venience of the carrier without request of the passenger, or is so carried by agreement between the carrier and the passenger, the carrier is liable ; but otherwise baggage sent before or after the passenger is to be dealt with and paid for as ordinary freight, Kansas— Chicago, etc., E. Co. v. Conklin, 32 Kan. 55, 3 Pao. 762 (1884). Missoim — Minter v. Pao. R. E.., 41 Mo. 503, 97 Am. Dec. 288 (1867). New Torfc— Stoneman v. Erie R. Co., 52 N. Y. 429 (1873). Oftio— Toledo, etc., E. Co. v. Cages, 57 Ohio St. 38, 47 N. B. 1039, 63 Am. St. Eep. 702 (1897). Oregon — Oakes v. No. Pac. R. Co., 20 Ore. 392, 26 Pac. 230, 23 Am. St. Rep. 126, 12 L. R. A. 318 (1891). Teaios— Snaman v. Mo., etc., R. Co. (Tex. Civ. App.), 42 S. W. 1023 (189*). England— Gt. Northern Ry. v. Shepherd, 8 Exch. 30, 21 L. J. Exch. 28G, 7 R. & Can. Cas. 310 (1852). But see Blumantle v. Fitchburg R. R., 127 Mass. 322, 34 Am. Eep. 376n (1879). 2J Scott, J., in Michigan Cent. E. E. v. Carrow, supra. 22Stoneman v. Erie Ey., 52 N. Y. 429 (1873) ; Sloman v. Great Western Ey., 67 N. Y. 208 ( 1876) ; Millard v. Missouri, K. & T. R. R., 86 N. Y. 441 (1881) ; Texas & P. R. R. v. Capps, 2 Wills App. (Tex.) § 34 (1883). [151] § 148] Eailkoad Eate Eegulatiost. [Chap. V and if the passenger presents it and procures it to be carried as baggage, the carrier is not responsible for it.^* In Wilson v. Grand Trunk Eailway/* Chief Justice Apple- ton said : " The fare paid by a passenger for transportation over a railroad is the compensation for his carriage, for the transpor- tation at the same time of such baggage as he may require for hig personal convenience and necessity during his journey. Baggage subsequently forwarded by his direction, in the ab- sence of any special agreement -with the carrier or of negligence on his part, is liable, like any other article of merchandise, to the payment of the usual freight." TOPIC B GEATUITOtrS AEEANGEMENTS. § 148. Gratuitous carrier liable for negligence. While a purely gratuitous carriage cannot make the carrier liable as a common carrier, he is liable, like any gratuitous bailee, for gross negligence.-' 23 Federal Courts— The Elvira Harbeck, 2 Blatehf. (U. S.) 336, Fed. Cas. No. 4,424 (1857). Connecticut — Beers v. Boston & A. R. E., 67 Conn. 417, 34 Atl. 541, 52 Am. St. Rep. 293, 32 L. R. A. 535 (1896). Indiana — Perkins v. Wright, 37 Ind. 27 (1871). Iowa — Warner v. Burlington & Mo. R. R. R., 22 la. 166 (1867). Maine— Gr^Sum v. Boston & M. B. R., 67 Me. 234 (1877); Wilson v. Grand Trunk Ry., 56 Me. 60, 96 Am. Dec. 435, B. & W. 128 (1868) ; Wood V. Maine Central Ry. 98 Me. 98, 56 Atl. 457 (1903). Michigan — Flint & Pere M. Ry. v. Weir, 37 Mich. Ill (1877) ; Marshall v. Pontiac, etc., Ry., 126 Mich. 45, 85 N. W. 242 (1901). New Torfc— Fairfax v. New York Cen. R. R., 37 N. Y. Sup. Ct. 516 (1874) ; Burkett v. New York Cen. R. R., 24 Misc. (N. Y.) 76, 53 N. Y. Supp. 394 (1898). Virginia — Chesapeake R. R. v. Wilson, 21 Grattan (Va.) 654 (1872). 24 Supra. 1 Louisville, etc., R. Co. v. Gerson, 102 Ala. 409, 14 So. 873 (1894) ; Rice V. 111. Cent. R. Co., 22 111. App. 643 (1887); Adams Exp. Co. v. Cressap, 6 Bush. (Ky.) 572 (1869) ; Flint & P. M. R. R. v. Weir, 37 Mich. Ill, 26 Am. Rep. 499 (1877) ; Dudley v. Camden, etc.. Ferry Co., 42 N. J. L. 25, 36 Am. Rep. 501 (1880) ; Coggs v. Bernard, 2 Ld. Raym. 909 (1704). [152] Chap. V] Compensation. [§ 148 As to what constitutes gross negligence there is much differ- ence of opinion. It is commonly assumed that less care is due from a common carrier to one whose goods he carries gratui- tously than toward an ordinary shipper who pays for the car- riage ; and this view is expressed by Mr. Chief Justice Cooley, in Flint & Pere Marquette Railroad v. Weir •? " There can be no question that a railway company which receives property for gratuitous carriage assumes, like any other gratuitous bailee, certain duties in respect to it, and that a suit will lie for a fail- ure to perform these duties. But the obligation in such case is quite different from the obligation of a bailee who, for a consid- eration, received, or promised, undertakes to carry or to per- form any other service with respect to the subject of the bail- ment. In the latter case the terms of the contract, if an express contract was made, will be the measure of the duties to be per- formed ; and in the absence of any express contract the law itself will impose upon the bailee a higher degree of care and watchful- ness than it demands of him who, for the mere accommodation of the bailor, undertakes the charge of his goods. The gratuitous bailee must not be reckless ; he must observe such care as may reasonably be required of him under the circumstances ; but it is not the same care which is required of the bailee who, for his own profit, assumes the duty. This is elementary, and is so reasonable that it requires no discussion. When care is bar- gained for and compensated, something is expected and is -de- mandable beyond what can be required of him who undertakes a merely gratuitous favor." ^ 2 Supra. 3 The following cases discuss gross negligence in gratuitous carriage : California — Fay v. S.teamer New World, 1 Cal. 348 (1850). Kentucky^zi^da.ma Exp. Co. v. Cressop, 6 Bush, 572 (1869). Maine— Knowlea v. R. Co., 38 Me. 55 (1854). New Eampshire — Graves v. Ticknor, 6 N. H. 537 (1834). New York — Beardslee v. Richardson, 11 Wend. 25 (1833) ; Onderkirk v. Bank, 119 N. Y. 263 (1890). [153] § 149] Railroad Rate Regulatiok. [Ctap. V But this view, though' the one commonly expressed, is prob- ably not quite accurate. The gratuitous carrier, to be sure, is not responsible for all losses for which a common carrier is liable ; but where a common carrier takes gratuitously he must carry according to the care he has undertaken. Since he has undertaken to cany the goods alo'ng with those whichi he is car- rying for hire, and in the same way, he is responsible for any neglect to furnish such care as is requisite for carrying on his business. For a gratuitous bailee undertakes to use such skill as he possesses.* In an action against a gratuitous bailee of a horse for an in- jury suffered by the horse. Baron Parke said : ^ " The defend- ant was shown to be a person conversant with horses, and was therefore bound to use such care and skill as a person conversant with horses might reasonably be expected to use. ... In the case of a gratuitous bailee?, where his profession or situation is such as to imply the possesion of competent! skill, he is equally liable for the neglect to use it." § 149. Gratuitous passenger. However this may be decided in the case of gratuitous car- riage of goods, there is no doubt that a person carried gratui- tously by a railroad is a passenger, and is entitled to the same care as any passenger.* North, Carolina — Bland v. Nomach, 2 Murphy, 373 (1818); Pender v. Bobbins, 6 Jones (Law), 207 (1858). England — Nelson v. Mackintosh, 1 Starkie, 237 (1816) ; Booth v. Wilson, 1 B. & Aid. 59 (1817) ; Doorman v. Jenkins, 2 A. & E. 256 (1834). But see Adams Exp. Co, v. Darnell, 31 Ind. 20, 99 Am. Dec. 582 (1869) ; McLean v. RuLlierford, 8 No. 109 (1834); Howard Exp. Co. v. Wile, 64 Pa. St. 201 (1870). ^Shiells V. Blackburn, 1 H. Bl. (Eng.) 158 (1789). BWilson V. Brett, 11 M. & W. (Eng.) 113 (1843). e United States — Philadelphia & R. R. R. v. Derby, 14 How. (U. S.) 468, 14 L. Ed. 502. Illinois — Benner Liverv, etc., Co. v. Busson, 58 111. App. 17 (1894). [154] Chap. V] Compensation. [§ 149 But a carrier who is carrying a passenger gratuitously does not owe him the duty owed by a common carrier ; and though he is obliged to take care even of a gratuitous passenger, still the obligations of the common carrier do not bind him. The ques- tion commonly arises where a passenger riding on a free pass exempts the carrier from liability for injury by negligence. Such an exemption is binding, though in the case of a common carrier it would be void.'' In ISTorthern Pacific Railway, v. Adams,® Mr. Justice Brewer said: " The railway company was not as to Adams a carrier for hire. It waived its right as a common carrier to exact com- pensation. It offered him the privilege of riding in its coaches without charge if he would assume the risks of negligence. He Indiana — Gillenwater v. Madison, etc., R. Co., 5 Ind. 339, 61 Am. Dec. 101 (1854) ; Ohio, etc., R. Co. v. Mickless, 71 Ind. 271 (1880) ; Russell v. Pittsburgh R. Co., 157 Ind. 305, 61 N. E. 678, 87 Am. St. Rep. 214, 55 L. R. A. 253 (1901). Iowa — Rose v. Des Moines Valley R. Co., 39 Iowa, 246 (1874). Maine— Bo3,r v. Me. Cent. R. R., 70 Me. 65 (1879). Maryland — State v. Western Maryland R. Co., 63 Md. 433 (1884). Massachusetts — Todd v. Old Colony R. R. Co., 3 Allen (Mass.), 18, 80 Am. Dec. 49 (1861); Wilton v. Middlese.\: R. R., 107 Mass. 108 (18711; Wilton V. Middlesex R. R., 125 Mass. 130 (1878); Littlejohn v. Fitch. R. Co., 148 Mass. 478, 20 N. E. 103, 2 L. R. A. 502 (1889) ; Doyle v. Fitch. R. Co., 162 Miiss. 66, 37 N. E. 770, 44 Am. St. Rep. 335, 25 L. R. A. 157 (1894). Missouri — Lemon v. Chanslor, 68 Mo. 340, 30 Am. Rep. 799 (1878) ; Buck V. People's St. R., etc., Co., 46 Mo. App. 555 (1891) ; Dorsey v. Atehinson, etc., R. Co., 83 Mo. App. 528 (1900). 'New Yorfc— Perkins v. N. Y. C. R. Co., 24 N. Y. 190, 82 Am. Dec. 2S2 (1862); Carroll v. Staten Island R. Co., 58 N. Y. 126, 17 Am. Rep. 221 (1874). Pennsylvania — Buffalo, etc., R. Co. v. O'Hara, 3 Pennyp. (Pa.) 190, 12 Wkly. Note Cas. (Pa.) 473 (1882). Texas— Gulf, etc., R. Co. v. McGown, 65 Tex. 640 (1886). 'Northern Pac. Ry. v. Adams, 192 U. S. 440, 48 L. Ed. 513, 24 Sup. Ct. 408 (1904) ; Griswold v. New York & N. E. R. R., 53 Conn. 371, 55 Am. Rep. 115 (1885) ; Quimby v. Boston & M. R. R., 150 Mass. 365, 23 N. E. 205, 5 L. R. A. 846, B. & W. 506 (1890). 8 Supra. [155] ;§ 149] Eaileoad Rate Eegulation. [Ghap. V was not in the power of tlie company and obliged to accept its terms. Ttey stood on an equal footing. If he had desired to hold it to its common law obligations to him as a passenger, he could have paid his fare and compelled the company to receive and carry him. He freely and voluntarily chose to accept the privilege offered, and having accepted that privilege cannot re- pudiate the conditions." In Quimby v. Boston & Maine Railroad,® Mr. Justice Devena said : " Certainly the carrier is not likely to urge upon others the acceptance of free passes, as the success of his business must depend on his receipts. There can be no difficulty in the ad- justment of terms where passes are solicited as gratuitous. When such passes are granted by such of the railroad officials as are authorized to issue them, or by other public carriers, it is in deference largely to the feeling of the community in which they are exercising a public employment. The instances cannot be so numerous that any temptation will be offered to careless- ness in the management of their trains, or to an increase in their fares, in both of which subjects the public is interested. In such instances, one who is ordinarily a common carrier does not act as such, but is simply in the position of a gratuitous bailee. The definition of a common carrier, which is that of a person or corporation pursuing the public employment of conveying goods or passengers for hire, does not apply under such circumstances. The service which he undertakes to render is one which he is under no obligation to perform, and is outside of his regular duties. In yielding to the solicitation of the passenger, he con- sents for the time being to put off his public employment, and to do that which it does not impose upon him. The plaintiff was in no way constrained to accept the gratuity of the defendant ; it had been yielded to him only on his own solicitation. When he did, there is no rule of public policy, we think, that pre- vented the carrier from prescribing, as the condition of it, that 9 Supra. [156] Chap. V] OoMPEwsATiow. [§150 it should not be compelled, in addition to carrying the passenger gratuitously, to be responsible to him in damages for the negli- gence of its servants. It is well known that, with all the care that can be exercised in the selection of servants for the man- agement of the various appliances of a railroad train, accidents will sometimes occur from momentary carelessness or inatten- tion. It is hardly reasonable that, beside the gift of free"trans- portation, the carrier should be held responsible for these, when he has made it the condition of his gift that he should not be. Nor, in holding that he need not be under these circumstances, is any countenance given to the idea that the carrier may con- tract with a passenger to convey him for a less price on being exonerated from responsibility for the negligence of his ser- vants. In such a case the carrier would still be acting in the public employment exercised by him, and should not escape its responsibilities, or limit the obligations which it imposes upon him." In several jurisdictions it is held that even in the case o'f a free 'passenger a limitation of liability for negligence is invalid ; but this is on general grounds of public policy, and it is not denied that the carrier is as to such passenger a mere private § 150. Carriage of children and servants. In order that a person may be a passenger it is not neces- sary that the relation of passenger and carrier be established through an agreement and payment of fare made by himself. Jhe agreement may be made and the fare paid by a third person. Such was the case where the owners of slaves paid their passage and shipped them on steamboats to a certain destination. These slaves were held to occupy the position of passengers towards the carriers. ^^ 10 Jacobus V. St. Paul R. R., 20 Minn. 125, 18 Am. Rep. 360 (1873); Gulf C. & S. F. R. R. V. McGown, 65 Tex. 640 (1886). n Boyce v. Anderson, 2 Pet. (U. S.) 150, 7 L. Ed. 379 (1829). [157] §151] Eaileoad Eate Regulation. [Chap. V So, in the case of a young child travelling free with its parent, under a statute or a rule of the company, which permits sucli a child to travel without the payment of fare, the agreement in this case, if any, is made by the person with whom the child is travelling; but the child occupies towards the carrier the posi- tion of a passenger from the time it is received with the adult passenger. -"^ And so a servant whose fare is paid by his master is a passenger. ^^ In short, the relation of passenger and car- rier does not arise, necessarily out of a payment of fare or a contract or obligation to pay it. The relation comes into exist- ence whenever a person is rightfully carried by a carrier as pas- sengers are carried. § 151. Riding by mistake. In the same way one who takes a train intending to pay his fare with a ticket which he bona fide believes to be a good one is a passenger, though in fact the ticket is not good for a passage in that train, because the train is a limited one,^* or because it is a freight train which the passenger bona fide but wrongfully believed, would carry passengers. ■'' One who through mistake gets into the wrong train is to be regarded as a passenger until he learns his mistake and has a chance to leave the train, or decides to stay on the train and pay his fare.-'® 1^ Austin V. Great W. Ry., L. R. 2 Q. B. 442 (1867) ; Littlejohn v. Fitch- burg R. R., 148 Mass. 478, 20 N. E. 103 (1889) ; Whitney v. Pere Mar- quette R. R. (Mich.), 1 L. R. A. (N". S.) 352 (1906). 13 Marshall v. York N. & B. Ry., 11 C. B. 655 (1851) ; Mims v. Seaboard Air Line Ry., 69 S. C. 338, 48 S. E. 269 (1904). "Lake S. & M. S. R. R. v. Rosenzweig, 113 Pa. 519, 6 Atl. 545, 4 Cent. 712 (1886). isBoggeas v. Chesapeake & 0. Ry., 37 W. Va. 297, 16 S. E. 525 (1892). 16 Columbus, C. & I. C. Ry. v. Powell, 40 Ind. 37 (1872) ; Cincinnati, H. & I. R. R. V. Carper, 112 Ind. 26, 14 N. E. 352 (1887) ; Arnold v. Pennsyl- vania R. R., 115 Pa. 13?, 8 Atl. 213, 6 Cent. 630 (1887). [158] Chap. V] Compensation. [§ 152 TOPIC C SPECIAL CLASSES OF PEKSONS. § 152. Mail clerks and express messengers. Mail agents or postal clerks and express messengers require to be carried in a special ear, under special circumstances ; and they are not strictly travellers, since they desire merely to do business on the railroad train. The carrier is therefore not bound to receive them as passengers, and it may make such ar- rangement as it pleases with regard to terms of carriage and liability for injury.* If, however, mail clerks and express messengers are received and allowed to ride in baggage cars without special release of liability, they are entitled to the rights of passengers. They are, to be sure, carried in a different car from ordinary passen- gers, and to the extent to which it is dangerous to travel in such a car instead of the ordinary passenger car, the mail agent takes the risk of injury, but in all other respects the agent has the rights of an ordinary passenger.^ The same thing is true of an express messenger. If he is being carried by the railroad in a special car, under the contract with the express company,' he is 1 Baltimore & 0. v. Voight, 176 U. S. 498, 44 L. Ed. 560, 20 Sup. Ct. 385 (1900) ; Northern Pac. Ry. v. Adams, 192 U. S. 440, 48 L. Ed. 513, 24 Sup. Ct. 408 (1904) ; Bates v. Old Colony R. R., 147 Mass. 255, 17 N. K. 633 (1888); Hosmer v. Old Colony R. R., 156 Mass. 506, 31 N. E. 65i (1892) ; Louisville, N. A. & C. Ry. v. Keefer, 146 Ind. 21, 58 Am. St. Rep. 348, 38 L. R. A. 93, 44 N. E. 796 (1896). But see Pennsylvania R. R. , . Woodworth, 26 Ohio St. 585 (1875); Chamberlain v. Raih-oad, 11 Wis. 238 (1860). 2Collett V. London & N. W. Ry., 16 Q. B. 984 (1851); Arrowsmith v. Nashville & D. R. R., 57 Fed. 165 (1893) ; Cleveland, C. C. & S. L. R3'. v. Ketchara, 133 Ind. 346, 33 M. E. 116, 36 Am. St. Rep. 550, 19 L. R. A. 339 (1893) ; Mellor >•. Missouri Pac. Ry., 105 Mo. 455, 14 S. \V. 758, 10 L. R. A. 36 (1890) ; Nolton v. Western R. R., 15 N. Y. 444, 09 Am. Dec. 623 (1857); Seybolt v. New York, L. E. & St. R. R., 95 N. Y. 502, 47 Am. Rep. 75n (1884) ; Hammond v. North Eastern R. R., 6 S. C. 130, 24 Am. Rep. 467 (1874) ; Norfolk & W. R. R. v. Shott, 92 Va. 34, 22 S. E. 811 (1895). [159] § 153] Kailkoad Kate Regulation. [C'hap. V, a passenger, and is entitled to all the rights of a passenger, ex- cept so far as he accepts a risk of being carried in an express car.* As in the preceding cases, the carrier, in making ar- rangements to liave sleeping-car facilities for the public, may obtain an indemnity contract from the sleeping-car company and an exemption contract from the employes of the sleeper company.* § 153. Employes of the carrier. The question has been much discussed ■whether a servant of the company who is being carried gratuitously is entitled to be regarded as a passenger. If the carriage is directly in connec- tion with his work he is really, while being carried, engaged in his employment and his relation to the carrier is that of servant and certainly not that of a passenger ; as where a workman on a construction or a gravel train is taken from place to place on the road, as his services are needed.® If he is not actually working at his employment, but is being carried to or from the place of employment, by agreement with the company, as an assistance 3 Fordyce v. Jackson, 56 Ark. 594 (1891) ; Yeomans v. Contra C. S. Nav. Co., 44 Cal. 71 (1872); Union Pac. Ey. t. Nichols, 8 Kan. 505, 12 Am. Rep. 475 (1871) (semUe) ; Ky. Cen. Railroad v. Thomas, 79 Ky. 160 (1880) ; Blair v. Erie Ry., 66 N. Y. 313, 23 Am. Rep. 55 (1876) ; Pennsyl- vania R. R. V. Woodworth, 26 Ohio St. 585 (1875) ; Chamberlain v. P. E. R., 11 Wis. 238 (1860). 4McDermon v. Railroad, 122 Fed. 669 (1893); Russell v. Railroad, 157 Ind. 305, 61 N. E. 678, 87 Am. St. Rep. 214 (1901) ; Chicago, R. I. & P. Railroad v. Hamlin, 114 111. App. 141, 215 111. 525, 55 N. E. 332 (1904) ; Blank v. Railroad, 182 111. 332, 55 N. E. 332 (1899). 5 Travelers' Ins. Co. v. Austin, 116 Ga. 264, 42 S. E. 522 (1902) ; Evans- ville & R. R. R. v. Barnes, 137 Ind. 306, 36 N. E. 1092 (1894) ; Gilshannon V. Stony Brook R. R., 10 Cush. (Mass.) '228 (1852); Ryan v. Cumberland V. R. R., 23 Pa. St. 384 (1854) ; Benignia v. Pennsylvania R. R., 197 Pa. 384, 47 Atl. 359 (1900). [160] Chap. V] Compensation. [§ 154 to his work, he would seem equally to be engaged in his employ- ment, and not to be a passenger.® If, however, he receives as a gratuity or in part compensation for his services the right to travel free in the conveyance of the carrier upon his own business then in so travelling he is to be regarded as in all respects a passenger.' ' TOPIC D CAEEIAGE OBTAINED BY MISREPEESENTATION. § 154. Persons never accepted in a proper place not pas- sengers. If, however, a passenger is received by a servant of the car- rier in a vehicle in which he knows that he has no right to ride, and that the conductor has no authority to permit him to ride, 6 Holmes v. Great Northern Ey. (1900) 2 Q. B. 409; Tunney v. Midland Ey., L. E. 1 C. P. 291 (1866) ; Southern Ind. Ey. v. Mesiek (Ind. App.) 74 N. E. 1097 (1905) ; Oilman v. Eastern E. E., 10 Allen (Mass.), 233, 87 Am. Dec. 635 (1865) ; O'Brien v. Boston & A. E. E., 138 Mass. 387, 52 Am. Eep. 27Sn (1885); Manville v. Cleveland & T. E. E., 11 Ohio St. 417 (1860). Though not a passenger, yet being rightfully on the train, he may recover compensation for an injury caused by actual negligence imputable to the carrier, unless he is barred by the fact that the negligence was that of a fellow servant. Evansville & E. E. E. v. Maddux, 134 Ind. 571, 33 N. E. 345 (1893) ; Dobson v. New Orleans & W. E. E., 52 La. Ann. 1127, 27 So. 670 (1900) ; Texas & P. Ey. v. Scott, 64 Tex. 549 (1885). 'State V. Western M. E. E., 63 Md. 433 (1884); Toyle v. Fitchburg E. E., 162 Mass. 66, 37 N. E. 770, 44 Am. St. Eep. 335, 25 L. E. A. 157 (1894); Dickinson v. West End St. Ey., 177 Mass. 365, 59 N. E. 60, 83 Am. Sk Eep. 284, 52 L. E. A. 326 (1901); O'Donnell v. Allegheny V. E. E., 59 Pa. 239, 98 Am. Dec. 336 (1868) ; McNulty v. Pennsylvania E. E., 182 Pa. 479, 38 Atl. 524, 61 Am. St. Rep. 721, 38 L. R. A. 376 ( 1897 ) ; Peter- son V. Seattle Traction Co., 23 Wash. 615, 43 Pac. 539(1900). Pennsylvania E. E. v. Books, 57 Pa. 339, 98 Am. Dec. 229 (1868) which seem to hold that a, servant riding on an employer's pass is not to be regarded as a passenger under any circumstances, must be considered overruled on that point; Higgins v. Hannibal & S. J. R. E., 36 Mo. 418 (1865), which holds that an employe riding free in a baggage car on his own business was not to be regarded as a passenger in the language of a statute giving damages for death, seems opposed to the others cited, and cannot be approved. [161] § 155] Kaileoad Eate Regulation. " [Cliap. V lie does not become a passenger whetlier he pays fare or not; and so where the conductor informs him that passengers are forbidden to ride on a freight train, but he persuades the con- ductor to let him ride nevertheless, he is not a passenger.^ § 155. Carriage of goods secured by fraud. When the carriage of goods is secured by some fraud upon the carrier practiced by the shipper, the carrier does not occupy the position of a common carrier with regard to the goods. Thus, when one shipped a bag of money concealed in a bundle of hay and the money was lost,' the carrier was held to be not responsi- ble for the losB.^ And in similar cases a carrier has been held not responsible for money hidden in package of tea ;' or in boxes with household goods.* Perhaps another ground for resting the decision in cases of the kind just cited is that possession of the money hidden in the package was never taken by the carrier. 1 Indiana — Stalcup v. Louisville, N. A. & C. Ry., 16 Ind. App. 584, 45 N. E. Rep. 802 (1897). Kentucky — Ohio V. Ry. v. Watson, 93 Ky. 654, 21 S. W. 244, 40 Am. St.. Rep. 211, 19 L. R. A. 310 (1893). Maine — Dunn v. Grand Trunk Ry., 58 Me. 187, 4 Am. Rep. 267 (1870). Massachusetts — Powers v. Boston & M. R. R., 153 Mass. 188, 26 N. E. 446 (1891). New York — Eaton v. Delaware, L. & W. R. R., 57 N. Y. 382, 15 Am. Rep. 513 (1874). Tennessee — Washburn v. Nashville & C. R. R., 3 Head (Tenn.) 638, 75 Am. Dee. 784 ( 1 859 ); Louisville & N. R. R. v. Hailey, 94 Tenn. 383, 29 S. W. 367, 27 L. R. A. 549 (1895). Tea;as— Houston & T. C. R. R. v. Moore, 49 Tex. 31, 30 Am. Rep. 98 (1878) ; Gulf, C. & S. F. Ry. v. Campbell, 76 Tex. 174, 13 S. W. 19 (1890). Utah— Everett v. Oregon, S. L. & U. N. Ry., 9 Utah, 340, 34 Pac. 289 (1893). Wisconsin — Lucas v. Milwaukee & St. Paul Ry., 33 Wis. 41, 14 Am. Rep. 735 (1873). 2 Gibbon v. Paynton, 4 Burr. 2298 (1769). 3 Bradley v. Waterhouse, 3 C. & P. 318 (1828). i Chicago & A. R. R. v. Thompson. 19 III. 578 (1858). [162] Chap. V] Compensation. [§ 156 Upon like principles it has often been held that if the goods are tendered in such a shape as to inevitably mislead the carrier in judging their character, then, there is not such acceptance as gives rise to the obligation whicli a common carrier owes a ship- per. Thus, when goods of great value were sent in an ordinary package without declaring their nature, the carrier was not held liable for their value in case of loss.* And the same decision was reached where a box containing a diamond was given a mean appearance by the shipper.^ So, where valuable laces and jewels were packed in ordinary dry goods boxes to look like merchandise the principle was held to apply.'^ And this was even held to extend to a case where valuable clothing was hid- den in bedding.^ On the other hand if there is no apparent design to tender the goods in false dress, the obligation seems to be upon the carrier to inquire the value of the goods,® or their character.^" But this principle obviously has no application to a case where a box containing jewels was marked " glass," ^^ or where a very large sum of money was sent under circumstances indicating very little value. ^^ § 156. Stealing a ride. One who steals a ride upon a vehicle of the carrier, that is, conceals himself, intending to evade fare, is not to be regarded as a passenger,'* and the same thing is true where a person gets SBatson ■/. Donovan, 4 B. & Aid. 21 (1820). 6 Southern Express Co. v. Everett, 37 Ga. 688 (1868). 7 Warner v. Western Transp. Co., 5 Robt. (La.) 490 (1868). 8 Chicago & A. R. R. v. Shea, 66 111. 471 (1873). 9 Phillips V. Earle, 8 Pick. (Mass.) 182 (1829). 10 Merchants' Desp. Co. v. Holies, 80 111. 473 (1875). iiRelf v. Rapp, 3 W. & S. (Pa.) 21 (1841). 12 Oppenheimer v. U. S. Exp. Co., 69 111. 62, 18 Am. Rep. 596 (1873). 13 State V. Baltimore & O. R. R., 24 Md. 94, 87 Am. Dec. 600 (1865) ; Huehlhausen v. St. Louis R. R., 91 Mo. 332, 2 S. W. 315 (1886) ; Chicago, [163] § 156] Raileoad Rate Regulatioh-. [Qhap. V on board the carrier's vehicle, refuses to pay fare or to leave the vehicle, and succeeds in staying on the vehicle by force. In a case of this sort a person entered a stage-coach with a revolver and compelled the driver to allow him to ride without payment of fare. The coach .broke down, and he was injured and sued for damages J but it was held that he was not a passenger and could not recover damages.^* So where a person is riding on a train, having used or in- tended to use a ticket which he knows he has no right to use, and concealing or intending to conceal that fact from the conductor, he is not to be regarded as a passenger, even if the conductor permits him to ride.^^ The consent of the conductor to accept the ticket is not material if the consent was obtained by fraud ; though probably if knowing the facts the-conductor allowed the substitution, the person so allowed to ride would be a passen- ger,^* and clearly, if the carrier habitually permitted such sub- stitution, in spite of the exact terms of the ticket, the person using it in accordance with the custom would be a passenger. ^^ A child travelling with an older person who refuses to pay his fare is not entitled to be regarded as a passenger.-'^ This doctrine seems unassailable, though the English Court of Queen's Bench refused to say that the fraud of the older per- B. & Q. R. R. V. Mehlsack, 131 111. 61, 22 N. E. 812, 19 Am. St. Rep. 17 ;i889); Planz v. Boston & A. R. R., 157 Mass. 377, 32 N. E. 356, 17 L. R. A. 835 (1892) ; Barry v. Union Ry. (N. Y. App. Div.), 94 N. Y. Supp. 449 (1905). HHigley v. Gilmer, 3 Mont. 90, 35 Am. Rep. 450 (1878). 15 Way V. Chicago, R. I. & P. Ry., 64 la. 48, 19 N. W. 82 (non-transfer- able mileage-book issued to another) ; Union Pao. Ry. v. Nichols, -8 Kan. 505 (1871) (fraudulent impersonation of express messenger) ; Toledo W. & W. R. R. V. Beggs, 85 111. 80 (1877) ( non- transferable free pass issued to an- other) . 16 Way V. Chicago, R. I. & P. Ry., 64 la. 48, 19 N. W. 828, 52 Am. Rep. 431 (1884). "Great Northern Ry. v. Harrison, 10 Exch. Rep. 376 (1854). iSBeekwith v. Cheshire R. R., 143 Mass. 68, 8 N. E. 875 (1886). [164] Ohap. V] Compensation. [§ 157 son would prevent the child becoming a passenger.^* And where the older person bona fide fails to pay for the child, though under the rules of the company a fare is due from a child of that age the child has been held a passenger.^" § 157. Riding on invalid ticket. If, for instance, a person is riding on a non-transferable ticket, issued to another, though he succeeds in deceiving the conductor and is accepted by him as a passenger, he is not to be regarded as a passenger, and is not entitled to the rights of one.^^ The business usage of the carrier may in this respect control even the clear language of the ticket, and make it permissible for a mere holder to ride on such a ticket. In an English case a reporter's pass was issued to a newspaper, containing the name of a reporter, and on its face not transferable. There was some evidence that the carrier was in the habit of allowing other re- porters of the newspaper named to travel on such a pass. A re- porter of the newspaper, but not the one named, was injured while travelling on the pass, and sued the railway, and the jury was told, if such a usage existed, to find that the plaintiff was a passenger. This direction was upheld in the Exchequer Cham- ber, Mr. Justice Coleridge saying : " We think the pass-ticket not so clear as to make the other circumstances wholly imma- terial. The defendants might issue tickets in a form which did not permit others to use them, as being not transferable, and yet they might reasonably permit them to be used by other persons belonging to the same department, which permission would be a convenience to the newspaper proprietors, and a matter of in- 19 Blackburn, J., in Austin v. Great Western Ry., L. R. 2 Q. B. 442, 446 (1867). 20 Austin V. Great Western Ry., L. R. 2 Q. B. 442 (1867). 21 Way V. Chicago, R. I. & P. Ry. Co., 64 Iowa, 48, 19 N. W. 828, 52 Am. Rep. 431 (1884) ; Toledo, W. & W. R. R. v. Beggs, 85 111. 80 (1877). [165] § 158] Kailkoad Eate Eegulation. [Chap. V difference to themselves. If the jury -were of opinion that this irregular use of tickets, however worded, was with the knowl- edge and permissi6n of the superintendents of the station, who are placed there to regulate such matters, this would be such evi- dence of a license as would make it wrong to say the plaintiff was a trespasser in the carriage." ^^ § 158. Attempt to escape conductor's notice. It sometimes happens that a person enters a carrier's vehicle prepared to pay fare if it is demanded, but hoping to escape the notice of the conductor and so avoid paying fare. It is hard to see how this form of fraud differs from that of a person riding on a non-transferable ticket issued to another; and the better view would seem to be that such a person is not a passenger until by paying his fare he is received as such by express consent of the conductor. Before being so expressly received, he can make himself out a passenger only by bringing himself within the terms of the invitation ; and no invitation is extended to persons to enter the vehicle and try to " beat " the company. In a New York case, however, this view was not taken. It appeared in that case that the plaintiff had paid her fare, and taken passage on a ferryboat across a river, but on arriving at the other side, instead of leaving'the boat, had crossed back again, without the payment of an additional fare. It was assumed that the fare paid on entering the boat covered only a single passage. It was held that since she did not attempt to conceal herself on the boat she was a passenger on the return trip. The court said: " She remained on the boat ; did not go ashore, so as to pass through the gate at the landing. The employes of the company saw her there, and it was their business to demand her fare, if they intended to charge her. Their doing so would not render her liable to be held guilty of negligence, or of being carried 22 Great Northern Ry. r. Harrison, 10 Ex. 376 (1854). [166] Chap. V] Compensation. [§ 159 gratuitously, so as not to render the company liable for damages arising through negligence on their part."^^ However that may be, it is clear that if the traveller in such a case takes any step to conceal himself from the conductor he will not become a passenger. In one case of this sort it ap- peared that two persons were shipping horses over a railroad, and that by the laws of the road, as they knew, only one person was entitled to be carried free with the horses. A drover's ticket was issued to one of them. The other also entered the stock car with the horses, having no ticket, but afterwards asserted that he was ready to pay his fare upon demand. The conductor would not ordinarily come to a stock car to collect fares from passengers. The court held, and it would seem rightly, that the person riding without a ticket was not a passenger.^* The general question whether a person riding without a ticket but expressing his readiness to pay fare if called upon is a passenger or not is a question of fact. § 159. Riding free by connivance of the conductor. One who is on the carrier's vehicle not by any arrangement with the carrier, but by the connivance of the conductor, for the purpose of selling newspapers or other articles to the passengers, is not in any sense a passenger, and is entitled to little more care than a trespasser.^'* " A newsboy jumping on and off a moving street car to sell his newspapers ; not hailing to stop the car to receive him, nor signaling to stop to allow him to alight ; not asking nor receiving permission, either express or tacit ; not asking nor waiting for leave or license, but jumping on and off under circumstances that clearly indicate no purpose to pay 23 Barnard, J., in Doran v. East River Ferry Co., 3 Lans. (N. Y.) 105 (1870). 24 Gardner v. New Haven & N. K., 51 Conn. 143, 50 Am. Rep. 12 ( 1883 ) . 25 Duff V. Alleghany V. R. R., 91 Pa. 458 (1879); Griswold v. New York & N. E. R. R., 53 Conn. 371, 55 Am. Rep. 115 (1885) ; Padgitt v. Moll, 159 Mo. 143, 60 S. W. 121 (1900). [167] § 160] Eaileoad Rate Eegtjlation. [Ctaip. V fare, and no aim to be transported, but only to avail himself of the presence of persons on the car likely to buy his papers, — is in no seoise a passenger, and the carrier is not under obligation to observe towards him the same degree of care that the law requires to be observed towards a person in the hands of the carrier to be transported. But the law does require of the car- rier, under such circumstances, the exercise of ordinary care."^* So where a person on a train induces the conductor out of charity^^ or by misrepresentation, to allow him to ride free, such a person is not a passenger. " It is manifest that if a person were stealthily, and wholly without the knowledge of any of the employes of the company, to get upon a train and secrete him- self, for the purpose of passing from one place to another, he could not recover if injured. In such a case his wrongful act would bar him from all right to compensation. Then, does the act of the person who knowingly induces the conductor to violate a rule of the company, and prevails upon him to disregard his obligations to fidelity to his employer, to accomplish the same purpose, occupy a different position, or is he entitled to any more rights ? He thereby combines with the conductor to wrong and defraud his employer out of the amount of his fare, and for his own profit." "^ § 160. Guest of a servant of the carrier. One who is riding in the carrier's vehicle, not a^ ordinary pas^ sengers ride, but upon invitation of the carrier's servant, with- out paying fare, is not a passenger ; his relation is with the ser- vant, not with the carrier.^* 26 Berry v. Union Rj., 105 App. Div. 520, 94 N. Y. Supp. 449 ( 1905) . 27 Toledo, W. & W. E. R. v. Brooks, 81 111. 245 (1876). 28 Atchison, T. & S. F. R. R. v. Headland, 18 Colo. 477, 33 Pac. 185, 20 L. R. A. 822 (1893). See, also, Condran v. Chicago, M. & S. P. Ry., 67 Fed. 522, 14 C. C. A. 506, 32 U. S. App. 182 (1895). 29Waterbury v. New York C. & H. R. R. R., 17 Fed. 671 (1883) (riding on engine by consent of engineer) ; Atchison, T. & S. F. R. R. v. [168] Chap. V] Compensation. [§ 160 Thus, where a yardmaster out of hours took an engine and car without permission of the defendant company, and invited per- sons to ride free in the car to a meeting, over a portion of the road not used for passenger trains, he was held not to have even apparent authority to act for the company, and the persons so riding were not passengers.^" And where a party of children were invited by a servant of the carrier to ride on a train which was being shifted through the yard, they were not passengers.^^ In a few cases, however, it has been held that children riding on a vehicle by invitation of a servant of the company are en- titled to be regarded as passengers. Thus, where the driver of a stret car invited children to ride on the front platform, they were held to be passengers ;^^ and where a conductor invited a boy to ride in a freight train (on which passengers were some- times carried) the boy was held to be a passenger.^* But these cases can hardly be supported on this point. The children con- Headland, 18 Col. 477, 33 Pac. 185, 20 L. R. A. 822 (1893) (con- ductor Induced to let plaintiff ride free on freight train) ; Toledo, W. & W. Ry. V. Brooks, 81 111. 245 (1876) (conductor induced to let plaintiff ride free on passenger train) ; Chicago & A. R. R. v. Miohie, 83 111. 427 (1876) (riding on engine by consent of engineer); McVeety v. St. Paul, 'M. & M. Ry., 45 Minn. 268, 47 N. W. 809, 22 Am. St. Rep. 728, U L. R. A. 174 (1891) ; (riding free on freight train) ; Woolsey v. Chicago, B. & Q. R. R., 39 Neb. 798, 58 N. W. 444, 25 L. R. A. 79 (1894) (riding on engine by consent of fireman, to shovel coal) ; Robertson v. New York & E. R. R., 22 Barb. (N. Y.) 91 (1856) (riding on engine by consent of engineer). 30 Chicago, S. P. & 0. Ry. v. Bryant, 65 Fed. 969, 13 C. C. A. 249 (1895). MReary v. Louisville, N. O. & T. Ry., 40 Lt. Ann. 32, 3 So. 390, 8 Am. St. Rep. 497 (1888). 32 Wilton V. Middlesex R. R., 107 Mass. 108 (1871) ; Muehlhausen v. St. Louis R. R., 91 Mo. 332, 2 S. W. 315 (1886); Buck v. Power Co., 108 Mo. 185, 18 S. W. 1090 (1892). 33 St. Joseph & W. R. R. v. Wheeler, 35 Kan. 185, 10 Pac. 461 (1886) ; Sherman v. Hannibal & S. J. R. R., 72 Mo. 62, 37 Am. Rep. 423 (1880), (semble) ; Whitehead v. St. Louis, I. M. & S. Ry., 99 Mo. 263, 11 S. W. 751, 6 L. R. A. 409 (1889). [169] § 160] Kaileoad Eate Kegulation. [Cbap. V cerned were clearly guests of the servant, not of the carrier. However far the apparent authority of a conductor may be held to extend, it cannot cover an invitation to ride free; free car- riage is not the carrier's business. If one riding free by invitation of a servant is not a passen- ger, a fortiori one who by misrepresentation induces the servant to let him ride free is not a passenger;^* and still more clearly one who bribes the servant by a small fee to let him ride without paying the regular fare is not a passenger.^*" 34Condran v. Chicago, M. & S. P. Ry., 67 Fed. 522, 14 C. C. A. 560, 32 U. S. App. 182 (1895). 35McNamara v. Great Northern Ry., 61 Minn. 296, 63 N. W. 726 (1895) ; Janny v. Great Northern Ry., 63 Minn. 380, 65 N. W. 450 (1896) ; Brevig V. Chicago, S. P. M. & O. Ry., 64 Minn. 168, 66 N. W. 401 (1896). [170] CHAPTER VI. ENUMERATION OF THE COMMON CARRIEES. § 171. Varieties of common carriers. TOPIO A CAEEIEES OF GOODS. § 172. Pack carriers. 173. Wagoners. 174. Hoymen. 175. Ships. 176. Canal boats. 177. Steamboats. 178. Railways. 179. Draymen. 180. Transfer companies. 181. Express companies. 182. Dispatch companies. 183. Messenger companies. 184. Towboats. TOPIO B CAEEIEES OF PASSENGERS. i 185. Ferrymen. 186. Stage coaches. 187. Hackmen. 188. Street railways. 189. Passenger elevators. 190. Pleasure railways. § 171. Varieties of common carriers. In the chapters immediately preceding this the principal factors necessary for the establishment of common carriage have been discussed. In this chapter it is thought advisable to enumer- ate the different kinds of common carriers which are recognized as meeting those tests. This seemed necessary as the principal problem for discussion throughout this volume is the regulation [171] §§ 172, 173] Kaileoad Rate Eegxjlation. - [Chap. VI not only of railroad rates, but so far as there are decided cases, of the rates of all common carriers for transportatioii and inci- dental services. In classifying these varieties of common carriers the traditional division is made between carriers of goods and carriers of passengers, but this is obviously not entirely workable since many carriers, and the railways in particular, are usually carriers both of goods and of passengers. TOPIC A CAEEIEES OF GOODS, § 172. Pack carriers. The earliest form of common carriage in England was by means of pack horses. The country roads were not adapted for wheeled vehicles, and the carrier was obliged to carry his goods on the horses' backs in panniers. Such were the- two carriers who appear in the first part of Shakespeare's Henry IV. ^ One of them had " a gammon of bacon and two razes of ginger to be delivered as far as Charing-cross," while the other had tur- keys in hjs pannier. Such also was the carrier who took certain bales to carry to Southampton, and by breaking open the bales and stealing the contents provided a leading case in the law of larceny.^ § 173. Wagoners. As the roads grew better and traffic between different parts of the country consequently increased, goods began to be carried in wagons ; and the common carrier by land was a wagoner or carter. This continued to be the common method of land car- riage of goods down to the invention of railroads, and such car- riers might unquestionably be common carriers.^ 1 Act II, scene 1.' 2 Year Book, 13 Edw. iv, 9, pi. 5 (1473). 3 Georgia.-r-Fish y. Chapman, 2 Ga. 349, 46 Am. Dec. 393 (1847). Illinois.— Tarmsdee v. Lowrtz, 74 III. 116, 24 Am. Rep. 276 (1874). [172] Chap. VI] Enumeeation or' Caeeieks. [§§ 174, 175 § 174. Hoymen. As in the case of land carriage, so in the case of water car- riage, there are carriers who do not ply regularly between fixed termini, but carry for those who employ them anywhere on a certain river or within a certain harbor. Such persons are ordi- nary carriers, at least, though whether they are common car- riers or not may depend upon the nature of their profession. If however the lighterman does not take the goods, but they remain in the control and possession of the owner, the lighterman is to be regarded as merely furnishing the motive power; not taking possession he cannot be technically a carrier.* § 175. Ships. That there was no essential difference between carriage by land and carriage by sea was established at a comparatively early day. Hale v. New Jersey Navigation Company,^ is an excellent summary of the matter. The suit was brought against the defendants, as common carriers, for two carriages shipped on board the " Lexington," to be transported in said boat, for hire, from New York to Boston or Providence. The boat and goods were destroyed by fire, in the Sound ; and a verdict was given for the plaintiff, the defendants excepted to the charge, and claimed that they were not common carriers or sub- Kentucky. — Robertson v. Kennedy, 2 Dana (Ky.), 430, 26 Am. Dec. 468 (1834). Mississippi. — ^Harrison v. Roy, 39 Miss. 396 (1860). Ohio. — Samms v. Stewart, 20 Ohio St. 69, 55 Am. Dec. 393 (1847). Pennsylvania. — Gordon v. Hutchinson, 1 W. & S. (Pa.) 285, 37 Am. Dee. 464, B. & W. 3 (1841). Texas. — Chevallier v. Strahan, 2 Tex. }15, 47 Am. Dec. 639n (1849). England.— Gishomn v. Hurst, 1 Salk. 249 (1710). 4 Liver Alkali Co. v. Johnson, L. R. 9 Exeh. 338 (1874); Ingate v. Christie, 3 C. & K. 61, B. & W. 7 (1850) ; Maring v. Todd, 4 Campb. 225, 1 Starkie, 72 (1815); Dale v. Hall, 1 Wils. Chan. 281 (1750); Trent., etc., Nav. Co. v. Wood, 4 Dougl. 287, 3 Esp. 127, 1 T. R. 28 note (1785). 5 15 Conn. 539, 39 Am. Dec. 398 (1843). [173] § IV 6] Kailkoad Kate Eegulatiobt. [Ciap. VI ject to the rules that govern commoa carriers. Mr. Justice Williams said : " It was long since settled that any man under- taking for hire to carry^the goods of all persons indifferently, from place to place, is a common carrier. Common carriers, says Judge Kent, consist of two distinct classes of men, viz., inland carriers by land or water, and carriers by sea; and in the aggregate body are included the owners of stage-coaches, who carry goods, as well as passengers for hire, — wagoners, teamsters, ca,rtmen, the masters and owners of ships, vessels and all water-craft, including steam vessels and steam towboats be- longing to internal as well as coasting and foreign navigation, lightermen and ferrymen. And there is no difference between a land and a water carrier." * § 176. Canal boats. Transportation over most canals has been largely carried on from the time of their first construction to the present day by canal boatmen who take possession of the goods to be for- warded, store them in their canal boats, keep charge over them 6 United States. — Propeller Niagara v. Cordes, 21 How. 7, 16 L. Ed. 41 (1858); Clark v. Barnwell, 12 How. 272, 13 L. Ed. 985 (1851); The Delaware, 14 Wall. 579, 20 L. Ed. 779 (1871); The Maggie Hammond, 9 Wall. 435, 19 L. Ed. 772 (1869) ; The Gold Hunter, 1 Blatchf. & H. (U. S.) 300, 10 Fed. Cas. 5,513 (1832); The Montana, 22 Blatchf. (U. S.) 372,- 22 Fed. 715 (1884). Connecticut. — ^Hale v. New Jersey Steam Nav. Co., 15 Conn. 539, 39 Am. Dee. 398 (1843) ; Crosby v. Fitch, 12 Conn. 410, 31 Am. Dec. 745 (1838). Georgia. — Brown v. Clayton, 12 Ga. 564 (1853); Fish v. Chapman, 2 Ga. 349, 46 Am. Dec. 393 (1847). Massachusetts. — Hastings v. Pepper, 11 Pick. 41 (1831); XII road. If a railroad was built 30 years ago at a cost of $40,000 per mile, and another one equally as good was built witbin a year through the same territory at a cost of $12,000 per mile, on what principle should it be held that the old road is entitled to 3 1-3 times as much income as the new road ? No guaranty was ever given by the state to the old road that the price of ma- terials and the cost of construction would not decline, or that capital invested in railroads should not be subject to like vicis- situdes as capital invested in other enterprises. Modern im- provements and other causes have continued to reduce the cost of construction of all kinds of new plants, and to reduce the value of old plants, or render them wholly worthless, and the state did not guaranty that those causes should not in like man- ner affect the capital invested in railroads. Then the material question is not what the railroad cost originally, but what it would now cost to reproduce it." § 359. Methods of the Texas commission arriving at replace- ment value. This rule of replacement has been acted upon by other com- missions than that of Minnesota, but not with the sam.e success. In a recent opinion in the Interstate Commerce Commission something is said about the practice of the Texas commission.* "The valuations of the Texas Commission of 1895 were by no means a guess. They were made in great detail, with great pains and with an honest attempt at accuracy. The p'urpose of the valuation was to determine not properly the value of a par- ticular railroad but the cost of reproducing it at that time. Each mile was taken by itself and each item which enters into the cost of constructing a railroad by itself in actual quantities as shown by the profiles of the various roads. The allowances for the different items were liberal. Nothing was, however, al- lowed for the seasoning of the roadbed so to speak, nor for the 3 Rates from St. Louis to Texas Points, 11 I. C. C. Rep. 264 (1904). [350] Chap. XII] Basis of Capital Chaeges. [§ 360 franchise and good will of the railroad. The results arrived at did not perhaps express the value of the properties, but they did express, and with substantial fairness and accuracy, the cost of reproducing those properties at the time of the valua- tion." § 360. The rule held unreasonable by the federal courts. The Minnesota rule having been applied by the Texas Kail- way Commission in fixing railroad rates in that state, the rail- roads filed in the federal court a bill for an injunction against the rates. The rule was held to be an improper and unreason- able one, and the exaction of the rates as fixed by the commis- sion was restrained.* Circuit Judge McCormick ^aid : " It is therefore not only impracticable, but impossible to reproduce this road, in any just sense, or according to any fair definition of those terms. And a system of rates and charges that looks to a valuation fixed on so narrow a basis as that shown to have been adopted by the commission, and so fixed as to re- turn only a fair profit upon that valuation, and which permits no account for betterments made necessary by the growth of trade, seems to me to come clearly within the provision of the Fourteenth Amendment to the Constitution of the^ United States, which forbids that a state shall deprive any person of property without due process of law, or deny any person within its juris- diction the equal protection of the laws. It is true that railroad property may be so improvidently located, or so improvidently constructed and operated, that reasonable rates for carriage of freights and passengers will not produce any profit on the in- vestment. It is also true that many railroads not improvidently located, and not improvidently constructed, and not improvi- dently operated may not be able, while charging reasonable rates for carriage of freight, to earn even the necessary running 4 Metropolitan Trust Co. v. Houston & T. C. R. E., 90 Fed. 683, B. & W. 342 (1898). [351] § 360] Eaileoad Rate Regulatioit. [Chap, XII expenses, including necessary repairs and replacements. And there are others, or may be others, thus constructed and con- ducted, which, while able to earn operating expenses, are not able to earn any appreciable amount of interest or dividends for a considerable time after the opening of their roads for business. This is true now of some of the roads, parties to these bills. At one time or another, and for longer or shorter times, it has been true, doubtless, of each of the roads that are parties to these bills. Promoters and proprietors of roads have looked to the future, as they had a right to do, and as they were induced to do by the solicitations of the various communities through which they run, and by various encouragements offered by the state. The commission, in estimating the value of these roads, say that they included interest on the money invested during the period of construction. This is somewhat vague, but the " period of construction " mentioned is probably limited to the time when each section of the road was opened to the public for business. And even if extended to the time when the road was completed to Denison and to Austin in 1873, nearly twenty years after its construction was begun at Houston, it would not cover all of the time, and possibly not nearly all of the time, in which the rail- road company and its predecessors have lost interest on the in- vestment. The estimate made on behalf of the railroad in this case of the cost to that company and to its predecessor company of the railroad property, and the business of that company as it exists to-day, may not be exactly accurate, — clearly is not ex- actly accurate ; but it seems to me that it is not beyond the fair value of the property, as it is shown to have been built up and constituted, and to exist to-day asi a going, business concern, and that such rates of fare for the carriage of persons and property as are reasonable, considered with reference to the cost of the carriage and the value of the carriage to the one for whom the service is rendered, cannot be reduced by the force of state law ' to such a scale as would appropriate the value of this property in any measure to the use of the public without just compensa- [352] Chap. XII] Basis of Capital Charges. [§ 361 tion to the owners thereof, and would deprive the owners thereof of the equal protection of the law guaranteed by the Constitution of the United States, as cited." § 361. Explanation of the California decisions. Two California decisions appear to hold that the cost of con- struction, as represented by the stocks and bonds outstanding, cannot be shown as bearing on the value of the plant.® The cases did not, however, go quite so far. They are considered and explained by Circuit Judge Morrow in the Federal Court in the Ninth Circuit.^ "The important question is the basis upon which just com- pensation is to be determined. It may be considered as estab- lished that it is the reasonable value of the property at the time it is being used for the public service, but how this value is to be ascertained and what elements are to be included in the esti- mate are still subjects of controversy. In the case of San Diego Water Co. v. San Diego '' it was held that bonded indebtedness was to be disregarded, but this was said with reference to the findings in that case [namely, that the value was in fact a cer- tain amount] . In Redlands L. & C. D. Water Company v. Red- lands * it was held that . . . provision should not be made for the bonded or other indebtedness of the company, or of the interest thereon, but that the fair value of the property neces- sarily used in furnishing water was the basis upon which to de- termine the amount of revenue to be provided by the ordinance fixing rate, and that this basis should be the same whether the works were acquired or constructed by the company with its own resources or with money borrowed from others. It was further said that the amount of the capital stock paid into the 6 San Diego Water Co. v. San Diego, 118 Cal. 556, 50 Pac. 633; Red- lands L. & C. D. Water Co. v. Redlands, 121 Cal. 365, 53 Pac. 843 (1898). 6 Spring Valley Waterworks v. San Francisco, 124 Fed. 574 ( 1903 ) . t Supra. 8 Supra. [353] § 362] Eailkoad Rate Regulation. [Ctap. XII vater company by its stogkliolders, and the amount of its bonded and floating indebtedness and the interest thereon, were imma- terial factors in the question of reasonableness of rates. But in this case there was no averment in the complaint as to the value of the plant, and no showing before the court as to what this value was; and manifestly neither the amount of the capital stock nor the amount of the bonded indebtedness could supply this omission, and the conclusion which the court reached was that, as the value of the plant was the basis upon which the court was to determine the sufficiency of the compensation, it was es- sential to present that fact to the court before the water com- pany was entitled to a judgment that the rates were unreason- able. But neither of these cases go to the extent of holding that in determining the value of the property of a corporation neither the capital stock nor bonded indebtedness can be considered. It is doubtless true that in many cases these elements may be excessive or fictitious, and represent speculative, rather than real and substantial, values. But there may be cases where both stock and bonds represent in the market a present actual value in the property of the corporation, and a value that could not be otherwise very well established. In such a case, what object- tion can there be to giving the evidence such consideration as, under all the circumstances it deserves ? It seems to me there can be none." TOPIC F FBANCHISE AND GOOD-WILL, WHETHER ENTITLED TO BE CONSIDERED. § 362. Value of franchise not considered in estimating rates. It must be clear that in estimating the capital upon which a public service company is entitled to a fair return the value of a franchise enjoyed by the company cannot be considered. The value of the franchise is itself based on the capacity of the com- pany to earn profits ; and it becomes greater when the earnings of the company are increased. If, therefore, a high rate of dn- [354] Chap. XII] Basis of Capital Charges. [§§ 363-364 come could be justified on account of the great value of the franchise, this fact would in turn enhance the value of the fran- chise itself and so justify a still higher charge ; and there would be no limit to the legal charge of the company until the limit of charge which was in fact possible as a matter of business had been reached.-' In one case" there is a dictum that the value of the franchise may be considered in arriving at the proper basis for just compensation ; but it is submitted that the suggestion is unsound. § 363. Value of franchise as basis for taxation. A different question arises when the value of the property of the company is estimated for purpose of taxation. The franchise is owned by the company, is of value, and would be paid for if the whole business were sold ; and it should therefore be taxed.* This is, of course, a tax on the actual value of the franchise as it exists at any particular time; and the imposition of it is quite consistent with the value of the franchise, being subject to diminution by a diminished income as a result of legislation re- ducing rates. § 36'i. Value of franchise when the property is bought. AVhether when the plant of a public service company is taken by a city, by eminent domain or- by contract, compensation is to be made for the franchises of the company is not entirely clear on the authorities. The question should of course be determined according to whether, in view of the purchase or taking, any value rennains in the franchise. Although the company may be 1 In Brunswick v. T. W. Dist. v. JIaine Water Co., 99 Me. 371, 59 Atl. 537 (1904), much the same idea is expressed by Mr. Justice Savage. 2 Spring Valley Works v. San Francisco, 124 Fed. 574 (1903). It may well be tliat if a price is paid for the franchise to the governmental au- thorities granting the franchise that this sum must be accounted a part of the cost of the plant. ^ 3 Brisbane v. Brisbane Tramway Co., 9 Queensland L. J. 67 (1898). [355] § 365] _ Railroad Kate Eegulation. [Chap. XII compelled to submit to statutory rates which make no account of the existence of a franchise, the franchise may nevertheless be of some value. Even when the rates are so limited, the company is still permitted to receive a return on its capital which is greater than that on a government bond ; the ownership of the plant may, therefore, have a certain value which the franchise gives. And if the franchise actually has a value, compensation for it should be made. § 365. Value of an exclusive franchise. If a public service company has obtained from the public au- thorities an exclusive franchise for a term of years, which has been granted in such a way as to form a contract which the State cannot impair, the franchise has obviously a certain value, for the opportunity to make a fair rate of return in a business so safe as this is by reason o.f its monopoly in a ijublic necessity is worth a certain sum in itseK. But no more than this need really be paid even for such an exclusive franchise, no matter what its present profits may be, since the State may at any time reduce its rates to a fair return upon its actual investment. In one case*' a substantial sum was allowed the sellers of a waterworks in a purchase by the city for the imexpired 37 years of a 50-year exclusive franchise, the court saying : " Another important question raised by the exceptions to the master's report is whether or not, in estimating the price to be paid by the town for the property to be conveyed, the exclusive right to maintain water pipes in the streets and highways for the remainder of the term of 50 years ought to be included. There is no question of the right of the town to grant such a franchise conditionally or unconditionally. Pub. Laws, c. 566, in force at the time the contract was made, gave such a power to any town. Neither is there any question that the waterworks have the power to sell 4 Bristol V. Bristol & Warren Water Works, B3 R. I. 274, 49 Atl. 974 (1901). [356] ■ Chap. XII] Basis of Capital Chakges. [§§ 366-367 and convey this franchise if it was given, for, when granted, it was given to George H. Norman, his heirs and assigns." § 366. Value of a non-exclusive franchise. If, however, the company, in case it retained its plant, would be subjected to competition by the city, its franchise would cease to Jiave any value. In Gloucester Water Supply Company v. Gloucester,^ Mr. Justice Loring said: " In determining the true construction of these provisions of § 16, it is important to bear in mind the purpose, which the Legis- lature had, in making the right of the city to supply itself with water conditional on its buying the company's property, in case the company elected to sell it to the city, and in providing that in ascertaining the 'fair value' of that property, it should not be enhanced 'on account of future earning capacity, or future good will, or on account of the franchise of said company.' " It is also plain, so long as a water company has no competi- tor in supplying a town or city with water, it is practically in the enjoyment of an exclusive franchise, although its franchise is not legally an exclusive one. For that reason, the past earnings of this company were not evidence of the 'fair value' of this property. The earnings of a company which is in the enjoyment of N\hat is practically an exclusive franchise are not a criterion of the 'fair value' of the property apart from an exclusive fran- chise. We are of opinion that the evidence of past earnings of- fered by the water company was properly excluded."® § 367- Value of a practically exclusive franchise. When the frarnchise is practically exclusive, it presumably has a value, for which the company must be paid if the plant is taken by eminent domain or is bought under a clause in the 6 179 Mass. 365, 60 N. E. 977 (1901). 6 Citing Newburyport Water Co. v. Newburyport, 168 Mass. 541, 47 N. E. 533 (1897). [357] § 367] Railroad Rate Regulation. [Chap. XII charter.^ The value of this franchise is greater or less accord- ing to the practical possibility of competition; it is greatest if the franchise is legally exclusive, and grows less as the likelihood of actual competition increasesi. This vs^as well discussed by Mr. Justice Savage in Kennebec Water District v. Water- ville.* " The Legislature m|ay at any time, according to its own wisdom, grant to the municipalities within which lihis water system is situated franchises similar to the ones in question It may grant similar franchises to one or more corporations like the Waterville Water Company or the Maine Water Company. ^ It has granted similar franchises to this plaintiii, a mimicipal district, and has even authorized it to take away from the defendant water company all the franchises it needs within the district and Benton and Winslow.-'" But the defendants say that the Maine Water Com- pany was "practically in the enjoyment of an exclusive fran- chise," because it had no competitor, although its franchise may not be legally an exclusive one.-^^ And we say that the fact that the company was doing its business without com- petition may and should be considered by the appraisers when they are valuing the property of the defendant as a going concern. The fact is one of the characteristics of the going business, and may enhance its value. We are considering nowl only the legal situation of the company. There is a difference between a franchise which is practically ex- clusive and one which is actually exclusive, as there is a differ- TMonongahela Nav. Co. v. U. S., 148 U. S. 312, 37 L. Ed. 463, 13 Sup. 622 (1892). 8 97 Me. 185, 54 Atl. 6, 60 L. R. A. 856 (1902). 9 Citing In re City of Brooklyn, 143 N. Y. 596, 38 N. E. 983, 26 L. R. A. 270 (1894); Long Island Water Supply Company v. Brooklyn, 166 U. S. 685, 17 Sup. Ct. 718, 41 L. Ed. 1165 (1897). 10 Citing Kennebec Water District v. Waterville, 96 Me. 234, 52 Atl. 774 (1902). 11 Citing Gloucester Water Co. v. Gloucester, 179 Mass. 365, 60 N. E. 977 (1901). [358] Cliap. XII] Basis of Capital Chaeges. [§ 368 ence between uncertainty and certainty. The distinction is vital in principle, and it may be important in fixing value. Of how much or how little importance it is can only be estimated by the appraisers after hearing the evidence. Again, the charters und^r which the company operates are subject to repeal by the legis- lature. The franchises are not perpetual and irrevocable. It may be that it is extremely unlikely that the Legislature would repeal the <;harters without providing for compensation in some way. The probabilities are fairly open to consideration. But the legal condition exists. It is a factor to be considered for what it is worth."^'* § 368. Physicial adaptation to a growing business. In the case of National Waterworks Company v. Kansas City,-'* the suit was brought by the company to enforce the stat- utory obligation of the city to pay to the company "the fair and equitable value of the whole works." The method of ascertain- ing this value was discussed by Mr. Justice Brewer as follows : " The company insists that the test is to take the income or earn- ings, and capitalize them. The earnings pay 6 per cent, on four millions and a half. In other words, the company has produced a property which earns 6 per cent, on four millions and a half ; and that, it is claimed, is the fair valuation of the property, 6 per cent, being ordinary interest. On the other hand, the city insists that the franchise has ceased, and that basing the value upon earnings is in effect valuing a franchise which no longer exists, and which the city is not to pay for ; that the true way is to take the value of the pipe, the machinery, and real estate, put together into a waterworks system, as a complete structure, ir- respective of any franchise, — irrespective of any thing which the property earns, or may earn in the future. We are not satisfied that either method, by itself, will show that which, under all the 12 See, also, Brunswick & T. W. Dist. v. Maine Water Co., 99 Me. 371, 59 Atl. 537 (1904). 13 62 Fed. 853, 10 C. C. A. 653, 27 L. R. A. 827 (1894). [359] § 369] Eaileoad Rate EEGULATioiir. [Chap. XII circumstances, can be adjudged 'the fair and equitable value.' Capitalization of the earnings will not, because that implies a continuance of earnings, and a continuance of earnings rests upon a franchise to operate the -waterworks. The original cost of the construction cannot control, for 'original cost' and 'pres- ent value' are not equivalent terms. Nor would the mere cost of reproducing the waterworks plant be a fair test, because that does not take into account the value v?hich flows from the estab- lished connections between the pipes and the buildings of the city. It is obvious that the mere cost of purchasing the land, constructing the buildings, putting in the machinery, and li»ying the pipes in the streets— in other words, the cost of reproduction — does not give the value of the property as it is to-day. A com- pleted system of water works, such as the company has, without a single connection between the pipes in the streets a,nd the buildings of the city, would be a property of much less value than that system connected, as it is, with so many buildings, and earn- ing, in consequence thereof, the money which it does earn. Tlie fact that it is a system in operation, not only with a capacity to supply the city, but actually supplying many buildings in the city, — not only with a capacity to earn, but actually earning, — makes it true that 'the fair and equitable value' is something in excess of the cost of reproduction."^* § 369. Value as a going concern. But in discovering present value, the value as a going concern is to be taken. In Gloucester Water Supply Company v. Gloucester, before cited,^° Mr. Justice Loring said: " It is plain that the real, commercial, market value of the property of the water company is, or may be, in fact, greater than 'the cost of duplication, less depreciation, of the different features of the "iiAcc. Spring Valley Water Works v. San Francisco, 124 Fed. 574 (1903); Brunswick & T. Water Dist. v. Maine Water Co., 99 Me. 371, 59 Atl. 537 (1904). 15 179 Mass. 365, 60 N. E. 977, B. & W. 328 (1901). [360] Chap. XII] Basis of Capital Chaeges. [§ 370 physical plant.' Take, for example, a manufacturing plant: Suppose a manufacturing plant has been established for some ten years and is doing a good business and is sold as a going con- cern ; it will sell for more on the market than a similar plant re- produced physically would sell for immediately on its comple- tion, before it had acquired any business." ^® On this point also Mr. Justice Savage well said in Kennebec Water District v. Waterville :^'^ " The defendants, in request 9, ask that in determining the amount to be added to structure value, in consideration of the fact that the system is a going con- cern, the appraisers should consider, among other things, the present efficiency of the system, the length of time necessary to construct the same de novo^ the time and cost needed after con- struction to develop such new system to the level of the present one in respect to business and income, and the added net incomes and profits, if any, which by its acquirement as such going con- cern, would accrue to a purchaser during the time required for such new construction, and for such development of business and income. We think this instruction should be given. These are all proper matters for consideration 'among other things.' They are not controlling. Their weight and value depend upon the varying circumstances of each particular case. Of course a plant, as such, already equipped for business, is worth more, if the business be a profitable one, than the mere cost of construc- tion." § 370. Value of "going business," whether entitled to a return. So far as the value of a "going business" is increased by the mere element of good will, it cannot demand a return from the rates charged. " It is proper here to say that in reaching these conclusions we have not attempted any estimate of the 'going value' of the waterworks as a distinct and severable item in the 16 Citing National Waterworks Co. v. Kansas City, 62 Fed. 853, 10 C. C. A. 653, 2V U. S. App. 165, 27 L. R. A. 827 (1894). "97 Me. 185, 54 Atl. 6, 60 L. R. A. 856 (1902). [361] § 370] Eailroad Rate Eegulation. [Chap. XII calculation. By 'going value' we understand is meant that value which arises from having an established 'going' business. While not the exact equivalent of 'good will,' as applied to ordinary business, it is of a somewhat similar nature, and attaches to the business, rather than to the property employed in such business. The fact that the business is established is, of course, a material fact in ascertaining the value of the plant, and especially is this true where the property is being estimated for the purposes ot sale or condemnation ; but as a basis for estimating profits its sig- nificance is less apparent. The merchant who sells an established i business may properly place a high value on the good will which he relinquishes to the buyer ; but so long as he continues in the enjoyment of the business he has created he does not add the value of the good will to his capital stock in estimating the per- centage of his annual profits."-^^ So far, however, as a going business involves the elements dis- cussed in the last sections, its property is actually more valuable than the mere physical elements of which the plant is composed. The physical connections of its plant, the cost of fitting it for its ^ purpose, the loss of interest on the investment during construc- tion and until the plant is in complete and lucrative operation, all add an actual value to the plant and are properly included in the construction account and form part of the actual capital em- ployed in the enterprise. To this effect is the language of Mr. Justice Savage in Kennebec Water District v. Waterville :^^ " A completed system of waterworks, such as the company has, without a single connection between the pipes in the streets and the buildings of the city, would be a property of much less value than that system connected, as it is, with so many buildings, and earning in consequence thereof the money which it does earn. The fact that it is a system in operation, not only with ai capacity to supply the city, but actually supplying many build-| 18 Cedar Rapids Water Co. v. Cedar Rapids, 117 Iowa, 250, 91 N. W. 1081 (1902). 19 97 Me. 185, 54 Atl. 6, 60 L. R. A. 856 (1902). [362] Cliap. XII] Basis of Capital Chaeges. [§ 371 ings in the city, — not only with a capacity to earn, but actually earning, — makes it true that the 'fair and equitable value' is something in excess of the cost of reproduction.' " § 371. Consideration given to the entrepreneur. The suggestion was thrown out in one opinion of the Inter- state Commerce Commission^" that a certain return upon the ability to conceive and execute the project might be taken into consideration. But in the light of the context, this appears to be no more than a fair return upon the investment. The quota- tion follows : "As already remarked, the Southern Railway is the consolidation of numerous independent railroad properties. It has become through this process of growth a great railroad system embracing to-day a mileage of more than 6,000 miles. In this operation properties which were worthless have been put together to form a valuable whole. The physical condition of those properties has been enormously improved. The facil- ities afforded to their patrons have been increased. The whole territory involved must be benefited by this amalgamation, so far as its physical service is concerned. This enterprise is a perfectly legitimate one. The men who have conceived and ex- ecuted it are entitled to a fair return upon the money which has been actually invested in it. They are entitled, in addition, to a reasonable profit upon the ability to conceive and execute a project of this sort. They have no right to exact a return upon an extravagant capitalization, but whatever has honestly and in good faith and reasonably gone into this enterprise should be protected. On the other hand, the people in this territory are entitled to protection. "^^ 20 Danville v. Southern Ry., 8 I. C. C. Rep. 409. 21 See, also, Metropolitan Trust Co. v. Houston & T. C. R. R., 90 Fed. 683, B. & W. 342 (1898). [363] CHAPTER XIII. EATE OF RETUEN. § 381. Elements in determing a fair return. TOPIC A ESTABLISHMENT OF THE DOCTEINE 03? ADEQUATE EETUEN. § 382. Eates fixed must not produce a deficit. 383. Some return requisite. 384. Adequate return ought to be left. 385. Rates may be reduced provided reasonable return is left. 386. Reasonableness of return a judicial question. 387. Fair rate of return. TOPIC B — ^INTEEEST UPON BONDS. § 388. Interest upon outstanding bonds protected. 389. The rate of return upon investments in general. 390. Rates at which governments can borrow, no criterion. 391. More than current rates of interest not secured to bondholders. 392. Prevailing rate of interest allowed. TOPIC C DIVIDENDS ON STOCK. § 393. Reasonable dividends allowed. 394. Current rates of return. 395. Usual business profit. 396. Rate of return dependent upon locality. 397. Paying dividends dependent upon commercial conditions. 398. Recoupment in prosperous times. 399. No right to raise rates in prosperous times. 400. Creating a fund for payment of uniform dividends. TOPIC D EATE OF EETUEN DEPENDENT UPON THE CHAEACTEE OF THE ENTEEPEISE. § 401. Larger returns in risky enterprises. 402. Hazards of the business considered. 403. Whether the return upon all property should be the same. 404. Rate of interest dependent upon the safety of the investment. 405. Risk by reason of depreciated security not considered. 406. General policy for allowing fair return. [364] Chap. XIII] Rate of Eetltrn. [§§ 381-382 § 381. Elements in determining a fair return. What constitutes a fair rate of return may not be fixed by general rule but is largely a question of the particular case. It depends to a certain extent upon the character of the enter- prise; in established businesses a lower rate should be expected than in new ventures. Again, it depends upon the nature of the security ; upon bonds a lower rate of interest is secured than the percentage payable in dividends upon stocks. These are the principal considerations, but as the discussion advances it will be seen that there are other minor matters to be taken into account. It will make some difference, also, in what manner the matter comes before the court for decision. If the qiiestion is whether a rate fixed by one in a public service is producing an unreason- ably high rate of return, that is one thing. If the question is whether a rate fixed by public authority, either by the Legis- lature directly or by a commission acting in pursuance of legis- lative authority, is unreasonably low, that is another matter. It is obvious that there is all the difference of reasonable al- ternatives between these two aspects of the problem, that eight per cent, might not be too much return by a schedule fixed by the company in one case, while a reduction of a schedule by leg- islation so as not t-o produce more than six per cent, might not be outrageous in the other. TOPIC A ESTABLISHMENT OE THE DOCTEINE OF ADEQUATE EETUEN. § 382. Rates fixed must not produce a deficit. As will be seen, the earlier eases under the Fourteenth Amendment established that the State might regulate the rates of those engaged in public employment. The attention of the court was directed to showing that the power to regulate existed, and practically nothing was said about the limitations upon [365] § 382] Eailroad Rate Eegulation. [Chap. XIII that power.' And indeed the complainants did not adduce evi- dence that the rates fixed by the state were inadequate, but they denied simply that the rates could be regulated at all. But as soon as the power to regulate was once established the point was urged that the power had its limitations, and this the court con- ceded in very guarded language. For example, in the Railroad Commission cases^ Chief Justice Waite said : " From what has thus been said it is not to be inferred that this power of limitation or regulation is itself without limit. This power to regulate is not a power to destroy, and limitation is not the equivalent of confiscation. Under pretense of regulating fares and freights, the State cannot require a railroad corporation to carry persons or property without reward ; neither can it do that which in law amounts to taking private property for public use, without just compensation, or without due process of law." As late as the case of Reagan v. Farmers' Loan & Trust Com- pany* this requisite was not stated unequivocally. In that case Mr. Justice Brewer said : " It is unnecessary to decide, and we do not wish to be understood as laying down an absolute rule that in every case a failure to produce some profit to those who have invested their money in the building of a road is conclus- ive that the tariff is unjust and unreasonable. And yet justice demands that every one should receive some compensation for the use of his money and property, if it be possible without prejudice to the rights of others."* iPeik V. Chicago & N. W. E. R., 94 U. S. 155, 24 L. Ed. 94 (1876);' Chicago, B. & Q. Ry. v. Iowa, 94 U. S. 164, 24 L. Ed. 97 (1870) ; Chicago, M. & St. P. Ry. V. Ackley, 94 U. S. 179, 24 L. Ed. 99 (1876) ; Tilley v. Savannah, F. & W. Ry., 5. Fed. 641 (1881). 2 116 U. S. 307, 29 L. Ed. 636 (1886). 3 154 U. S. 362, 38 L. Ed. 1014, 14 Sup. Ct. 180 (1894). i The cases in the earlier period which required not much more than that the reduction of the rates under legislation should not work confis- cation by producing a deficit in tlie operation of the company were: United States Supreme Court: Munn V. Illinois, 94 U. S. 113, 24 L. Ed. 72, B. & W. 71 (1876), affirming Munn V. People, 69 111. 80; Peik v. Chicago N. W. Ry., 94 U. S. 164, 24 [36G] Ctap. XIII] Rate of Return. [§ 383 § 383. Some return requisite. About fifteen years ago, therefore, the courts had gone no further than to enounce that some return must be left to owners of a railroad, but that any return, however small, was enough. In the much-quoted case of Chicago and Northwestern Railroad V. Uey,*^ Mr. Justice Brewer, then in the Circuit Court, said : " Counsel for complainant urge that the lowest rates the Legis- lature may establish must be such as will secure to the owners of the railroad property a profit on their investment at least equal to the lowest current rate of interest, say 3 per cent. Decisions of the Supreme Court seem to forbid such a limit to the power of the Legislature in respect to that which they apparently re- cognize as a right of the owners of the railroad property to some reward; and the right of judicial interference exists only when the schedule of rates established will fail to secure to the owners of the property some compensation or income from their invest- ment. As to the amount of such compensation, if some com- pensation or reward is in fact secured, the Legislature is the L. Ed. 97 (1876), affirming 19 Fed. 625; Chicago, B. & A. Ry. v. Iowa, 94 U. S. 164, 24 L. Ed. 94 (1876), affirming 5 Fed. 594; Spring Valley Water Works v. Schottler, 110 U. S. 347, 28 L. Ed. 173, 4 Sup. Ct. 4§ (1884), affirming 62 Cal. 69; Railroad Com. Cases, ri6 U. S. 307, 29 L. Ed. 639 (1886), reversing Farmers' Loan & T. Co. v. Stone, 20 Fed. 270; Dow V. Beidelman, 125 U. S. 680, 31 L. Ed. 841, 8 Sup. Ct. 1028 (1888), affirming 49 Ark. 325; Chicago & G. T. Ry. v. Wellman, 143 U. S. 339, 3G L. Ed. 176, 12 Sup. Ct. 400 (1892), affirming s. c. 83 Mich. 592; Budd V. New York, 143 U. S. 517, 36 L. Ed. 384, 12 Sup. Ct. 468, B. & W. 79 (1891), affirming Budd v. People, 117 N. Y. 1, 22 N. E. 670 (1889). Federal Coubts: Wells V. Oregon Ry. & Nav. Co., 15 Fed. 561 (1883) ; Tilley v. Savan- nah F. & W. R. R., 5 Fed. 641 (1881) ; Chicago, N. W. R. R. v. Dey, 35 Fed. 866, 1 L. R. A. 744 (1888) ; Chicago & P. M. & 0. v. Becker, 35 Fed. 883 (1888). State Courts: Arl;ansasSt. Louis & S. F. Ry. v. Gill, 54 Ark. 101, 15 S. W. 18, 11 L. R. A. 452 (1891). Florida— Pensucoln & A. R. R. v. Fla., 27 Fla. 403, 5 So. 833 (1889). 5 35 Fed. 806, 1 L. R. A. 744 (1S8S). [307] § 384] Eailboad Ra.te Kegulation. [Chap. XIII sole judge. The question is then one alone of policy. Whether by reducing the compensation to a. minimum, railroad enter- prises shall be discouraged, or enlarging, encouraged, is a mat- ter for legislative, not judicial determination. Take a kindred matter. It isi within the power of the Legislature to prescribe the rate of interest and to punish by severe penalties the exac- tion of larger than the legal rate. Suppose the Legislature of Iowa should reduce the legal rate of interest to 1 per cent., al- though such legislation would prevent capital from coming into the State, would the courts have power to declare the law un- constitutional ? In like manner, the rulings of the Supreme Court imply that the Legislature may reduce railroad rates until only a minimum of compensation is secured to the owner. The rule, therefore, to be laid down is this: That where the proposed rates will give some compensation, however small, to the owners of the railroad property the courts have no povcer to interfere. Appeal must then be made to the Legislature and the people. Eut where the rates prescribed will not pay some compensiation to the owners, then it is the duty of the courts to interfere and protect the companies from such rates." ® ^ § 384. Adequate return ought to be left. The D'ey case accurately stated the doctrine of the United States Supreme Court at the time it was decided, and for fully ten years it remained practically unquestioned. Eut in 1898, in the important case of Smyth v. Ames,'' a disposition was s'hown to give more protection to the owners of the railroads. It was shown in that case that the regulation complained of might very probably leave some return above all proper charges. Eut this did not'satisfy the court, Mr. Justice Harlan saying:! " What the company is entitled to ask is a fair return upon the! value of that which it employs for the public convenience. Onj 6 See cases cited in preceding section. 7 169 U. S. 466, 42 L. Ed. 819, 18 Sup. Ct. 418 (1898). [368] Chap. XIII] Rate of Returi^. [§ 384 the other hand, what the public is entitled to demand is that no more be exacted from it for the use of a public highway than the services rendered by it are reasonably worth. But even upon this basis, and determining the probable effect of the Act of 1893 by ascertaining what could have been its efiect if it had been in operation during the three years immediately preceding its passage, we perceive no ground on the record for reversing the decree of the Corcuit Court. On the contrary, we are of opinion that as to most of the companies in question there would liave been, under such rates as were established by the Act of 1893, an actual loss in each of the years ending June 30, 1891, 1892 and 1893 ; and that, in the exceptional cases above stated, when two of the companies would have earned something above operating expenses, in particular years, the receipts or gains, above operating expenses, would have been too small to affect the general conclusion that the act, if enforced, would have de- prived each of the railroad companies involved in these suits of the just compensation secured to them by the Constitution. Under the evidence there is no ground for saying that the oper- ating expenses of any of the companies were greater than necessary." * "■ 8 See^ also : United States Supeeme Coubx: San Diego L. & T. Co. v. National City, 174 U. S. 739, 43 L. Ed. 1154, 19 Sup. Ct. 804 (1899), affirming 74 Fed. 79; San Diego L. & T. Co. v. Jasper, 189 U. S. 439, 47 L. Ed. 892, 23 Sup. Ct. 571 (1903), affirming 8. e. 110 Fed. 702. Fedebal Coubts: Cleveland Gas Light Co. v. Cleveland, 71 Fed. 610 (1891); Memphis Gas Light Co. v. New Memphis, 72 Fed. 952 (1896); Southern Pac. Ry. & Railroad Com., 78 Fed. 236, B. & W. 322 (1896); Northern Pac. Ry. V. Keyes, 91 Fed. 47 (1898); Kimball v. Cedar Rapida, 99 Fed. 130 (1900); Louisville & N. Ry. v. M'Chord, 103 Fed. 210 (1900); Haver- hill Gas Light Co. v. Barker, 109 Fed. 694 (1901); Interstate Com. Com. V. Louisville N. R. R., 118 Fed. 613 (1902) ; Spring Valley Water Works V. San Francisco, 124 Fed. 574 (1903); Palatka Water Works v. Palatka, 127 Fed. 161 (1903). [369] § 385] Raileoad Rate Regulation. [Chap. XIII § 385. Rates may be reduced provided reasonable return is left. The present doctrine of the United States Supreme Court, as seen in Stanislaus County v. San Joaquin Canal and Irriga- tion Company,^ is that rates of a public service company may be reduced any amount provided that a reasonable return is left to the owners upon the value of the property devoted to the public use. In that case an ordinance adopted by a board of supervisors fixing water rates was objected to because the result would work a reduction of its rates from eighteen to six per cent. The reply of Mr. Justice Peckham, in the Supreme Court of the United States, to this contention was : " It is not confiscation, nor a taking of property without due process of law, nor a denial of the equal protection of the laws, to fix water rates so as to give an income of six per cent, upon the then value of the property actually used for the purpose of supplying water as provided by law, even though the company had prior thereto been allowed to fix rates that would secure to it one and one-half per cent, a month income upon the capital actually in- vested in the undertaking. If not hampered by an unalterable contract, providing that a certain compensation should always be received, we think that a law which reduces the compensation theretofore allowed to six per cent, upon the present value of the property used for the public is not unconstitutional. There is nothing in the nature of confiscation about it."" State Coubts: California — Spring Valley Water Works v. San Francisco, 82 Cal. 286, 22 Pac. 910 (1890). i^'Jondo— Pensacola & A. R. R. v. Florida, 27 Fla. 403, 5 So. 833 (1899) ; State V. Seaboard Air Line (Fla.), 37 So. 314 (1904). 9 192 U. S. 201, 48 L. Ed. 406, 24 Sup. Ct. 241 (1903). JO To the same effect are : United States Supbeme Co0ET: Spring Valley Water Works v. Schottler, 110 U S. 347, 28 L. Ed. 173, 4 Sup. Ct. 48 (1884), affirming s. c. 62 Cal. 69; Railroad Com. Cases, 116 U. S. 307, 29 L. Ed. 636 (1886), reversing Farmers' Loan & T. Co. v. [370] Chap. XIII] Eate of Ebtuen. [§ 386 § 386. Reasonableness of return a judicial question. In a late case this elementary rule is stated in most emphatic language. It appeared in the case of Palatka Water Works v. Palatka ^^ that an ordinance of the city had reduced rates fifty per cent., and against the enforcement of these new rates an injunction was asked. In granting this Judge Shelby said: " We come to the averment in the bill that the regulation and reduction made by the new ordinance are unreasonable — so unreasonable as to destroy the value of the plaintiff's property. It is shown by the bill, as amended, that the complainant's plant cost about $100,000; that it is worth more than that sum; that its capital stock is $75,000; that its bonded indebtedness, bearing 6 per cent, interest, is $75,000 ; that the average cost of operating the plant is $4,732.86 ; that the average gross receipts for the past three years have been $11,824.20; and that its net income, if its charges are controlled by the ordinance of Au- gust 5, 1903, would be about $2,200. It is also alleged that the new ordinance fixes rates that are grossly unreasonable and unjust, and, if enforced, your orator will not be able to earn a Stone, 20 Fed. 270; Chicago & G. T. Ry. v. Wellman, 143 U S. 339, 36 L. Ed. 176, 12 Sup. Ct. 400 (1892), affirming s. c. 83 Mich. 592; Reagan V. Farmers' Loan & T. Co., 154 U. S. 362, 38 L. Ed. 1014, 14 Sup. Ct. 1047 (1893) ; Covington & L. T. P. R. Co. v. Sanford, 164 U. S. 596, 4L L. Ed. 561, 17 Sup. Ct. 198 (1896), reversing s. c. 20 S. W. 1031; Smyth V. Ames, 169 U. S. 406, 42 L. Ed. 819, 18 Sup. Ct. 418, B. & W. 347 (1898), affirming s. c. 64 Fed. 165; San Diego L. & T. Co v. National City, 174 U. S. 739, 43 L. Ed. 1154, 19 Sup. Ct. 804 (1899), -affirming s. c. 74 Fed. 79; San Diego L. & T. Co. v. Jasper, 189 U S. 439, 47 L. Ed. 892, 23 Sup. Ct. 571 (1903), affirming s. c. 110 Fed. 702. Federal Coubts: ilemphis Gas Light Co. v. New Memphis, 72 Fed. 952 (1890); Spring Valley Water Works v. San Francisco, 124 Fed. 574 (1903). State Couets: Minnesota — State v. Minneapolis & St. L. Ry., 186 U. S. 257, affirming 80 Minn. 191, 83 N. W. 60, 89 Am. St. Rep. 514 (1900). Mississippi — Alabama & V. Ry. v. Railroad Com. (Miss.), 38 So. 356 (1905). "127 Fed. 161 (1903). [371] § 387] Eailroab Kate Regulation. [Chap. XIII reasonable compensation for the services it is rendering and is compelled to render the city and its inhabitants, or a reasonable or any net revenue v^hatsoever upon its investment, nor would it be able to pay the taxes or interest on its bonded indebtedness. Conceding the legislative right to regulate the charges to be made by the complainant for water, such regulation must be within reasonable limits. It could not lawfully go to the extent of depriving the complainant of all income from its investment, and in effect confiscate its property. The power to regulate could not legally be used as the power to destroy. The question of the reasonableness of such regulations is one for judicial ex-' amination and determination.-'^ But the judiciary ought not to interefere with rates established under legislative sanction, where the legislature has the right to act, unless they are plainly and palpably so unreasonable as to make their enforcement equivalent to depriving the complainant of reasonable returns. on its investment; but judicial interference is proper when the case shows an attack upon the rights of property, under the guise of regulating, which will make the plaintiff's property valueless in his hands, by annulling or making inoperative existing con- tracts." 13 § 387. Fair rate of return. According to present ideas therefore a fair rate of return must be left in the generality of cases ; but if an adequate return is left the legislation is of course constitutional, although it be a reduction from the rates formerly in force. Two recent cases will show what degree of regulation is clearly permissible under these rules. In Cedar Rapids Company v. Cedar Rapids ^^ Mr. 12 Citing Covington Road Co. v Sandford, 164 U. S. 578, 17 Sup. Ct. 198, 41 L. Ed. 560 (1896). 13 Citing San Diego Land Co. v. National City, 174 U. S. 739, 19 Sup. Ct. 804, 43 L. Ed. 1154 (1899). See, also. Farmer's Loan & T. Co. v. No. Pacific Ry., 83 Fed. 249 (1897) ; Ball v. Rutland R, R., 93 Fed. 513 (1899). 14 118 Iowa, 234, 91 N. W. 1081 (1902). [372] Cliap. XIII] Eate of Eetuei^. [§ 387 Justice Weaver in dismissing a complaint that a reduction in rates of a water company made by public authority was uncon- stitutional because confiscatory, said : " The testimony, when taken as a whole, and considered in the light of all the proved and admitted circumstances, indicates the present fair value of the company's property to be somewhere from $400,000 to $500,- 000. The total earnings of the works, as charged upon plain- tiff's books, for the year preceding the trial in the district court, were, in round, nmnbers, $59,000, subject, however, to some dis- counts for advance i^ayments. Of this income about one-third is charged to the city and is not affected by the ordinance in con- troversy. The other two-thirds are collected from private con- sumers, and the charges for such service are reduced by the or- dinance in varying proportions. Just the extent which this re- duction will affect the company's earnings it is impossible to prove or predict with certainty, but we see no reason to believe that the total revenue, after making all due allowance for dis- counts, will be reduced below $50,000. The operating expenses charged for the year preceding the trial (being largely in excess of the average in its exi^erience) Mere $23,000, or, including taxes, $28,000. On this basis the net earnings are 5 1-2 per cent. on a valuation of $400,000, or 4 2-5 per cent, on a yaluation of $500,000, or 6 1-2 per cent, on the total amount of capital stock and bonds. Stated otherwise, this will enable the company to pay its interest charge of $7,500, make a dividend of 5 per cent. on its capital stock (including stock issued as dividends), and leave a margin of over $3,000 for contingencies. This estimate of earnings may be very materially reduced, or the estimate of the value of the plant be very materially increased, before the court will be justified in saying that the plaintiff's property is being exposed to destruction or confiscation by an unprofitable schedule of rates." ^^ J5 See accord : United States Supreme Coubt: San Diego L. & T. Co. v National City, 174 U. S. 739, 43 L. Ed. 1154, [373] § 388] Kaileoad Rate Regulation. [Chap. XIII TOPIC B ^INTEKEST UPON BONDS. § 388. Interest upon outstanding bonds protected. It was generally agreed from the very first that whatever might be the right to earn a dividend upon stock, the interest upon the outstanding bonds must be protected. Thus in Chi- cago and J^orthwestem Railway v. Dey, already cited/ Mr. Justice Brewer said : " Whatever individuals may do by private contract to modify existing rates of interest, the legislature has no compulsory power in the matter. While, by reducing the rates, the value of the stockholders' property may be reduced, in that less dividends are possible, — and that power of the legisla- ture over property is conceded, — ^yet, if the rates are so re- duced that no dividends are possible, and especially if they are such that the interest on the mortgage debt is not earned, then the enforcement of the rates means either confiscation, or com- pelling, in the language of the Supreme Court, the corporation to carry persons or property without reward." ^ 19 Sup. Ct. 804 (1899), affirming a. c. 74 Fed. 79; Getting v. Kansas City S. Co., 183 U. S. 79, 46 L. Ed. 92, 22 Sup. Ct. 30, B. & W. 316 (1901), reversing 82 Fed 850 (1897) ; San Diego L. & T. Co. v. Jasper, 189 U. S. 439, 47 L. Ed. 892, 23 Sup. Ct. 521 (1903), affirming s. c. 110 Fed. 702; Stanislaus Co. v. San Joaquin C. & I. Co., 192 U. S. 201, 48 L. Ed. 406, 24 Sup. Ct. 245 (1903), reversing s. e. 113 Fed. 930. Fedebal Coubts: Milwaukee Electric Ry. Co. v. 'Milwaukee, 87 Fed. 577, B. & W. 336 (1898); Metropolitan Trust Co. v. Houston & T. C. R. E., 90 Fed. 683, B. & W. 342 (1898) ; Louisville & X. Ry v. McChord, 103 Fed. 210 (1900) ; Interstate Com. Com. v. Louisville N. R. R., US Fed. 613 (1902) ; Palatka Water Works v. Palatka, 127 Fed. 161 (1903). State Courts: Jl/oine— Brunswick & T. W. Dist. v. Maine Water Co., 99 Me. 371, 59 Atl. 537 (1904). Pennsylvania — Brymer v. Butler Water Co., 179 Penn. 231, 36 Atl. 249, 36 L. R. A. 260, B. & W. 330 (1897); Wilkes-Barre v. Spring Brook Water Co., 4 Lack. Leg. News (Pa.), 367 (1889). 135 Fed. 866, 1 L. R. A. 744 (1888). 2 Interest upon bonded indebtedness was recognized as a fixed charge in: [37i] Ckap. XIII] Eate of Eetuen. [§ 389 § 389. The rate of return upon investments in general. Whatever standards there are in this matter are plainly ex- ternal, and the court will take into account the rate of return upon investments prevailing in business generally. This is well put by Mr. Justice Canty in Steenerson v. Great Northern Eail- United States Supbeme Court: Union Pac. Ry. v. U. S., 99 U. S. 402, 25 L. Ed. 274 (1878), reversing 13 Ct. ol. 401; Spring Valley Water Works v. ScKottler, 110 U. S. 347, 28 L. Ed. 173, 4 Sup. Ct. 48, affirming 62 Cal. 69; Railroad Com. Cases, 116 U. S. 307, 29 L. Ed. 636 (1886), reversing Farmers' L. & T. Co. v. Stone, 20 Fed. 270; Dow v. Beidelman, 125 U. S. 680, 31 L. Ed. 841, 8 Sup. Ct. 1028 (1888), affirming 49 Ark. 325; Chicago & G. T. Ry. v. Wellman, 143 U. S. 339, 30 L. Ed. 176, 12 Sup. Ct. 400 (1892), affirming 83 Mich. 592; Reagan v. Farmers' L. & T. Co., 154 U. S. 362, 38 L. Ed. 1014, 14 Sup. Ct. 1047 (1893) ; Covington & L. T. R. Co. v. Sanford, 104 U. S. 596, 41 L. Ed. 561, 17 Sup. Ct. 198 (1896), reversing 20 S. W. 1031; Smyth v. Ames, 169 U. S. 466, 42 L. Ed. 819, 18 Sup. Ct. 418, B. & W. 347 (1898), affirming 64 Fed. 165; Lake Shore & Mich. So. Ry. v. Smith, 173 U. S. 684, 43 L. Ed. 858, 19 Sup. Ct. 565 (1899), reversing s. c. 114 Mich. 460, 72 N. W. 328; San Diego L. & T. Co. v. National City, 174 U. S. 739, 43 L. Ed. 1154, 19 Sup. Ct. 804 (1899), affirming s. c. 74 Fed. 79; Cotting V. Kansas City S. Y. Co., 183 U. S. 79, 46 L. Ed. 92, 22 Sup. Ct. 30, B. & W. 316 (1901), reversing 82 Fed. 850 (1897); Minneapolis & St. L. Ry. v. Minnesota, 186 U. S. 257, 46 L. Ed. 1151, 22 Sup. Ct. 1901 (1902), affirming 80 Minn. 191, 83 N. W. 60 (1900) ; San Diego L. &, T. Co. V. Jasper, 189 U. S. 439, 47 L." Ed. 892, 23 Sup. Ct. 571 (1903), af- firming s. c. 110 Fed. 702; Stanislaus C. v. San Joaquin C. & I. Co., 192 U. S. 201, 48 L. Ed. 406, 24 Sup. Ct. 241 (1903), reversing s. c. 113 Fed. 930. Fedbkax Codets: Chicago N. W. R. R. v. Dey, 35 Fed. 866 (1888); National Water Works Co. V. Kansas City, 62 Fed. 854, 10 C. 0. A. 653, 27 U. S. App. 165 (1894); Cleveland Gas Light Co. v. Cleveland, 71 Fed. 610 (1891); Memphis Gas Light Co. v. New Memphis, 72 Fed. 952 (1896) ; Milwaukee Electric Ry. Co. v. Milwaukee, 87 Fed. 577, B. & W. 336 (1898); Metro- politan Trust Co. V. Houston & T. C. R. R., 90 Fed. 683 (1898) ; N. Pac. Ry. V. Keyes, 91 Fed. 47 (1898) ; Louisville & N. Ry. v. MeChord, 103 Fed. 216 (1900); Chicago, M. & St. Paul Ry. v. Smith, 110 Fed. 473 (1901); Interstate Com. Com. v. Louisville & N. R. R., 118 Fed. 613 (1902); Louisville & N. Ry. v. Brown, 123 Fed. 946 (1903); Spring Valley Water Works V. San Francisco, 124 Fed. 574 (1903); Palatka Water Works v. Palatka, 127 Fed. 101 (1903) ; Tift v. Southern Ry., 138 Fed. 753 (1905). . [375] § 389] Kaileoad Rate Eoegulation. [Chap. XIII way company,^ and his language is interesting as showing the weight of economic considerations in deciding these questions: "The rate of interest on money and the ordinary rates of income on capital invested have fallen enormously in the, last few years. Everyone knows this, and the court which does not know it is certainly not fit to review the acts of a comjuission that should know it. Prof. Farnham of Yale, in Yale Review for August, 1895 (volume 4, pp. 199-201) gives statistics to prove that since 1873 rates of interest had up to that time fallen 52 per cent. They have fallen greatly since. The London Economist of July 3, 1897 (page 948) states that in Great Britain, within the last six months, large loans have been placed by the cities of Glas- gow, Leeds, and Brighton at less than 2 1-2 per cent, interest per annum, and that the bonds of those cities, drawing that rate of interest, sold above par. Every court ought to know that there is now, and has been for some time, a glut of capital in the world's markets. For a long time the great wars of the world State Coubtst Arkansas—St. Louis & K. F. Ky. v. Gill, 54 Ark. 101, 15 S. W. 18, 11 L. K. A. 452 (1891). Florida — State v. Seaboard Air Line (Fla.), 37 So. 658 (1904). /ZZinois— Chicago v. Rogers Pk. Co., 214 111. 212, 73 N. E. 375 (1905). loica — Cedar Rapids Co. v. Cedar Rapids, 118 la. 234, 91 N. W. 1081 (1902). Maine — Kennebec Water Dist. v. Waterville, 97 Me. 185, 54 Atl. 6, 60 L. R. A. 856 (1902). Michigan — Preston v. Detroit Water Com., 117 Mich. 589, 76 N. W. 92 (1898). Minnesota — State f. Minneapolis & St. Louis Ry., 80 Minn. 191, 83 N. W. 60, 89 Am. St. Rep. 514 (1900). Mississippi — Alabama & \'. Ry. v. Railroad Comm. (Miss.), 38 So. 356 (1905). ' Pennsyl ra Ilia — Brymer v. Butler Water Co., 179 Pa. 231, 36 Atl. 249, .".6 L. R. A. 260, B. & W. 330 (1897). But see Spring Valley W. W. ■i. San Francisco, 82 Cal. 286, 23 Pac. 910 (1890) ; Redlands L. & C. D. Water Co. v. Redlands, 121 Cal. 363, 53 Pac. 843 (1898) ; Steenerson v. Great N. Ry., 69 Minn. 353, 72 N. W. 713, B. & W. 333 (1897). 3 69 Minn. 353, 72 N. W. 713, B. & W. 333 (1897). [376] Chap. XIII] Eate of Return. [§ 300 absorbed the principal portions of the world's surplus capital. This ended in 1871, with the Franco-Prussian war. For more than 20 years after that, enormous amounts of the world's sur- plus capital were absorbed in constructing railroads and other internal improvements. But this capital, imlike that consumed in the wars, earned enormous .amounts of income, which were again added to the world's surplus capital seeking new invest- ments. Modern improvements, resulting in increased produc- tion, and other causes, have, in progressive countries, been ac- cumulating vast amounts of capital. The amount of such capi- tal seeking investment has increased, while the demand for the same has fallen. And, where there are two dollars of idle capi- tal to the one dollar of safe investment, the effect is the same as where there are two workingmen to one job. The amount of hire is reduced. The competition of capital with capital is continually cutting down the profits on investments and the rates of interest on money. This is no new theory." § 390. Rates at which governments can borrow no criterion. What is said in the preceding paragraph must be accepted with some caution. The rates at which governmental bodies can borrow is obviously no criterion in itself. The standard is what the current rate of return is on securities of private companies conducting other businesses of similar character. This was pointed out by the Interstate Commerce Commission, very clear- ly if very briefly :* " In many countries the condiict of trans- portation by railways is undertaken by the government at public expense. The government of the United States could probably borrow what money would be needed to buy or build the rail- ways of this country at from 2 1-2 to 3 per cent. Ought the public to be taxed for the service rendered beyond this rate of interest ? Plainly, no such test ought to be applied. ' This gov- ernment does not undertake that duty, nor does it guarantee any •iRe Advance Freight Rates, 9 I. C. C. Rep. 382 (1903). [377] § 391] Railroad Rate Rcegulation. [Ohap. XIII rate of return upon the money invested. It would be clearly unjust to impose upon the private capital which performs this quasi-government function all the hazard without allowing it some participation in whatever profit may accure." ^ § 391. More than current ratfs of interest not secured to bondholders. But it is disputed whether more than the current rate of in- terest upon enterprises of similar character can be secured to bondholders. In the case of Steenerson v. Great ISTorthern Rail- way Compaxiy ® the courtJ answered the question in the negative, as this extract from the opinion of Mr. Justice Canty will show : " A railroad company is not entitled to a greater income during the acute stages of a panic becau^ rates of interest are temporarily higher during such times. Perman- nent investments do not, as a general rule, bring higher rates 5 To the same effect are : United States Supreme Coubt: Cotting V. Kansas City S. Y. Co., 183 U. S. 79, 46 L. Ed. 92, 22 Sup. Ct. 30, B. & W. 316 (1901), reversing 82 Fed. 850 (1897) ; San Diego L. & T. Co. V. Jasper, 189 U. S. 439, 47 L. Ed. 892, 23 Sup. Ct. 571 (1903), affirming s. c. 110 Fed. 702; Stanislaus Co. v. San Joaquin C. & I. Co., 192 U. S. 201, 48 L. Ed. 406, 24 Sup. Ct. 241 (1903), reversing s. e. 113 Fed. 930. Federal Courts: Cleveland Gas Light Co. v. Cleveland, 71 Fed. 610 (1891); Milwaukee Electric Ry. Co. v. Milwaukee, 87 Fed. 577, B. & W. 336 (1898) ; Chicago, 51. & St. P. Ry. V. Smith, 110 Fed. 473 (1901); Spring Valley Water Works V. San Francisco, 124 Fed. 574 (1903) ; Palatka Water Works v. Palatka, 127 Fed. 161 (1903). State Courts: /oico— Cedar Rapids Co. v. Cedar Rapids, 118 la. 234, 91 N. W. 1081 (1902). Matme— Brunswick & F. W. Dist. «. Maine Water Co., 99 Me. 371, 59 Atl. 537 (1904). Pennsylvania — Wilkes-Barre v. Spring Brook Water Co., 4 Lack. Leg. News (Pa.), 367 (1879). 6 69 Minn. 353, 72 N. W. 713, B. & W. 333 (1897). [3Y8] Cliap. XIII] Rate of Eetuen. [§ 392 of mcome during such times. It would rather seem from these quotations that 4 1-2 per cent, per annum was in 1894 a very reasonable rate of interest on such railroad bonds, and that 6 and 7 per cent, per annum was grossly excessive and unreason- able. If the railway company has made what turns out to be a bad bargain by issuing its bonds for 6 and 7 per cent, interest per annum, that should be its misfortune, and not the misfortune of the public. As before stated, neither the state nor the public has either directly or indirectly guaranteed that rates of inter- est and rates of income would not fall, to the detriment of the railway company." "^ § 392. Prevailing rate of interest allowed. But the prevailing rate of interest upon bonds of like security is to be allowed to bondholders ; and the court will inform itself as to that. Thus when the point was raised in Milwaukee Elec- tric Hallway Company v. Milwaukee ® Judge Seaman in protect- ing the bondholders and others against undue reduction of fares by city ordinance, said: "The interest rate fixed in the bonds issued by the company is 5 per cent. The rate which prevails in this market, as shown by the uncontroverted testimony, is 6 per cent, for real estate mortgages and like securities. If the $5,000,000 basis be adopted, surely a better rate must be af- forded for the risks of investment than can be obtained on se- curities of this class, in which there is no risk. Upon the basis of $7,000,000, which is more logical and just, the 5 per cent, named in the bonds is clearly not excessive, and should be ac- cepted by a court of equity as the minimum of allowance ; and, even upon the defendant's partial showing, the return would be 7 When bond issues do not represent actual investment in the enterprise interest upon such bonds is not protected. Smyth v. Ames, 169 U. S. 466, 42 L. Ed. 819, 18 Sup. Ct. 418, B. & W. 347 (1897), affirming 64 Fed. 165 (1898). 8 87 Fed. 577, B. & W. 342 (1898). [379] § 393] Railroad Eate Regulation. [Chap. XIII less than one-quarter per cent, above that, with the large margin for depreciation left out of account." * TOPIC C DIVIDENDS ON STOCK. § 393. Reasonable dividends allowed. Within the last ten years the general principle has become established that there must be left fo those who conduct a pub- lic enterprise some adequate return on their investment. This newer view was well put in one sentence in New Memphis Gas Light Company v. JSTew Memphis/ thus : " The company has a right to such gross revenue from the sale of gas as will enable it to pay all legitimate operating expenses, pay interest on valid fixed charges, so far as bonds or securities represent an expenditure actually made in good faith,- and also to pay a rea- sonable dividend on stock, so far as this represents an actual in- vestment in the enterprise." Whatthen isreasonable dividend ? In the first place, dividends upon stock where there are outstanding bonds ought be permitted to be somewhat larger than the interest upon the bonds. Since the bonds have a prior lien upon the assets, the risk to the hold- ers of them is much less than to the holders of stock, and the 9 The prevailing rate of interest is the test in the following cases : United States Supkeme Court : Stanislaus Co. v. San Joaquin C. & I. Co., 192 U. S/ 201, 48 L. Ed. 406, 24 Sup. Ct. 241 (1903), reversing s. o. 119 Fed. 930. Fedebal Coubts : Interstate Com. Comm. v. Louisville & N. R. R., 118 Fed. 613 (1902); I-ouisville & N. Ey. v. Brown, 123 Fed. 946 ( 1903 ) ; Spring Valley Water Works V. San Francisco, 124 Fed. 574 ( 1903 ) ; Palatka Water Works v. Palatka, 127 Fed. 161 (1903). State Coubts : Mairae— Kennebec Water Dist. v. Waterville, 97 Me. 185, 54 Atl. 6, 60 L. R. A. 856 (1902). Pennsylvania — Brymer v. Butler Water Co., 179 Pa. 231, 36 Atl. 249, 36 L. R. A. 260, B. & W. 330 (1897) ; Wilkes-Barre v. Spring Brook Water Co., 4 Lack. Leg. News (Pa.), 367 (1899). 172 Fed. 952 (1896). [380] OHap. XIII] Rate of Eetuen. [§393 stockholders should therefore have a higher rate of return be- cause 'of the risk of passing of dividends in bad times or of fore- closure in case of complete failure. But the question remains, what rate of return should be allowed upon stock, and this ques- tion of reasonable dividend depends chiefly upon the current rate of return to those who conduct other businesses of similar char- acter.^ 2 In normal cases a public service company is protected in the payment of a fair dividend. See United States Supreme Coubt: Union Pac. Ry. v. U. S., 99 U. S. 402, 25 L. Ed. 274 (1878), reversing 13 Ct. et. 401; Reagan v. Farmers' L. & T. Co., 154 U. S. 362, 38 L. Ed. 1014, 14 Sup. Ct. 1047 (1893), reversing in part and affirming in part 51 Fed. 529; Covington & L. T. R. Co. v. Sanford, 164 U. S. 596, 41 L. Ed. 561, 17 Sup. Ct. 198 (1896), reversing s. c. 20 S. W. 1031; Smyth v. Ames, 169 U. S. 466, 42 L. Ed. 819, 18 Sup. Ct. 418, B. & W. 347 (1898), nffirming a. c. 64 Fed. 165; San Diego L. & T. Co. v. National City, 174 U. S. 739, 43 L. Ed. 1154, 19 Sup. Ct. 804 (1899), affirming s. u. 74 Fed. 79; Cotting v. Kansas City S. Y. Co., 183 U. S. 79, 46 L. Ed. 92, 22 Sup. Ct. 30, B. & W. 316 (1901), reversing 82 Fed. 850 (1897) ; Minneapolis & St. L. R. R. V. Minn., 186 U. S. 257, 46 L. Ed. 1151, 22 Sup. Ct. 901 (1902), affirming 80 Minn. 191, 83 N. W. 60 (1900); San Diego L. & T. Co. V. Jasper, 189 U. S. 439, 47 L. Ed. 892, 23 Sup. Ct. 571 (1903), af- firming s. c. 110 Fed. 702; Stanislaus Co. v. San Joaquin C. & T. Co., 192 U. S. 201, 48 L. Ed. 406, Sup. Ct. (1903), reversing s. c. 113 Fed. 930. Fedeeal Courts: Cleveland Gas Light Co. v. Cleveland, 71 Fed. 610 (1891) ; Memphis Gaa Light Co. V. New Memphis, 72 Fed. 952 (1896); Southern Pac. Ry. v. Railroad Com., 78 Fed. 236 (1896); Milwaukee Electric Ry. Co. v. Mil- waukee, 87 Fed. 577 (1898); Metropolitan Trust Co. v. Houston & T. C. R. R., 90 Fed. 683 (1898) ; Louisville & N. Ry. v. McChord, 103 Fed. 216 (1900); Interstate Com. Com. v. Louisville & N. R. A., 118 Fed. 613 (1902); Palatka Water Works v. Palatka, l27 Fed. 161 (1903). State Courts: Florida — State v. Seaboard Air Line (Fla.), 37 So. 658 (1904). Illinois — City of Chicago v. Rogers Pk. Co., 214 111. 212, 73 N. E. 375 (1905). Iowa — Cedar Rapids Co. v. Cedar Rapids, 118 la. 234, 91 N. W. 1081 (1902). Maine — Brunswick & T. W. Dist. v. Maine Water Co., 99 Me. 371, 59 Atl. 537 (1904), [381] § 394] Kailkoad Rate Regulation. [Chap. XIII § 394. Current rate of return. What constitutes a fair rate of return must obviously be de- termined by some standard. The current rate of return upon enterprises of a similar character is submitted to be the true basis of fixing the percentage. This is said in the more dis- criminating cases which discuss the problem carefully. Thus in Spring Valley Waterworks v. San Francisco,^ where an or- dinance passed by a board of supervisors would reduce the an- nual net earnings below 4.40 per cent, on the value of the prop- erty necessarily employed in the service, or 3.30 per cent, on its stock after deducting proper charges, its enforcement was en- joined as fixing a rat© so low as to be a taking of private property for public use without just compensation, Judge Merrow said: " The next question to be considered is, what will be a fair and reasonable income for the complainant to receive as a just com- pensation for the public use of its property? A number of bankers have testified as to the usual and custo^mary net income from investments of $10,000,000 and upwards of capital in cor- porations of a quasi-public nature, where judiciously managed. The affidavits of four bankers of long experience and well-known character and standing fix the rate at not less than 7 per cent, per annum, and aver that a net income of less than 1 per cent, per annum from large investments would not be a reasonable or fair return. The affidavits of five bankers of like standing and character and similar experience fix the rate at not less than 6 per cent, per annum, and aver that a net income of less than 6 per cent, per annum for large investments would not be a rea- Minnesota — State v. Minneapolis & St. L. R. R., 80 Minn. 191, 83 N. W. 60, 89 Am. St. Rep. 514 (1900). Mississippi — Alabama & V. Ry. v. Railroad Co. (Miss.), 38 So. 356 (1905). Pennsylvania — Brymer v. Butler Water Co., 179 Pa. 231, 36 Atl. 249, 36 L. R. A. 260 (1897) ; Wilkes-Barre v. Spring Brook Water Co., 4 Lack. Leg. News (Pa.), 367 (1899). 3 124 Fed. 574 (1903). [382] Ciiap. XIII] Eate of Ket-uen. [§ 395 sonable or fair return. The affidavit of one banker of large wealth and experience fixes the rate of net income from such in- vestments at between 4 and 5 per cent, per annum. The weight of evidence is clearly in favor of a rate of not less than 6 per cent, per annum." * § 395. Usual business profit. In any normal case the proprietor of a public service may therefore expect a dividend equal to the current rate of return in enterprises of similar character. It should be borne in mind, however, that public services have in general more assured per- imanence and less danger of ruinous competition than most pri- 'vate businesses. Therefore the cases will be rare where it would ,be justifiable to pay more than 10 per cent, dividends upon stock after deduction of all proper charges. Two illustrations of the way a court may treat the matter ofEhand will illustrate this. In Brymer v. Butler Water Company® the court ~said in review- ing the schedule of a water company, that it is entitled to a rate of return, if the property will earn it, not less than the legal rate of interest ; a return of something over 6 per cent, was held 4 Of the cases cited in the preceding section, see, especially: United States Supeemb Couet: San Diego L. & T. Co. v. Jasper, 189 U. S. 439, 47 L. Ed. 892, 23 Sup. Ct. 571 (1903), affirming s. c. 110 Fed. 702; Stanislaus Co. v. San Joaquin C. & I. Co., 192 U. S. 201, 48 L. Ed. 406, 24 Sup. Ct. 245 (1903), reversing 113 Fed. 930. Fedebal Courts: Cleveland Gas Light Co. v. Cleveland, 71 Fed. 610 (1891); Memphis Gas Light Co. v. Nev? Memphis, 72 Fed. 952 (1896) ; Metropolitan Trust Co. V. Houston & T. C. R. R., 90 Fed. 683, B. & W. 342 (1898) ; Palatka Water Works v. Palatka, 127 Fed. 161 (1903). State Courts: Iowa — Cedar Rapids Co. v. Cedar Rapids, 118 Iowa, 234, 91 N. W. 1081 (1902). Pennst/Zraiiia— Brymer v. Butler Co., 179 Pa. 231, 36 Atl. 247, B. & W. 320 (1897). 5 179 Pa. 231, 36 Atl. 249, 30 L. R. A. 260, B. & W. 330 (1897). [383] § 396] Eaileoad Eate Regulation. [Chap. XIII not unreasonable therefore. In Grand Haven v. Grand Ilaven Water Works,® the court in fixing quantum meruit the value of hydrant service v^hich the city had received from the v^ater com- pany estimated vt^hat the cost of a plant that would furnish ade- quate fire protection would be, and computed that the city was saved the interest and depreciation on that sum, $14,000, which at the rate of 8 per cent, would amount to $1,120 per year. In both of these instances it should be noticed the courts were really considering what rate of return it would be not unreasonable to allow the company to take, not to what rate of return it would be not unreasonable for the state to reduce the company. § 396. Rate of return dependent upon locality. It is a part of the rule under discussion, that the rate of re- turn which the company in question ought to be allowed to re- ceive is that prevailing in the locality where the company is car- rying on its business. This was said in Louisville & Nashville Railway Company v. Brown. ''^ In holding a reduction of rates unjustifiable, Judge Pardee said : " At present, I do not think it necessary to consider exhaustively the question as to how much per cent, of net revenue, based on the actual value of the railroad and equipment, a railroad company is entitled to earn. I think it will be conceded that as long as the rates are reason- able, and do not unjustly discriminate, the company is entitled to earn some amount ; and it seems reasonably clear to me that, if entitled to earn something under the above conditions, it is entitled to earn under the same conditions a compensatory amount equal, at least, to the usual and legal rate of interest in the locality where the railroad it situated. Judging by the busi- ness of the past 19 years, in connection with the showing made on this hearing as to present and future business, I conclude that there is no prospect in the immediate future that the net 6 119 Mich. 652, 78 N. W. 890 (1899). 7 123 Fed. 940 (1903). [384] Chap. XIII] Eate of Betuew. [§ 397 earnings of the complainant's railroads in Florida will approach an amount at all equal to the interest on the value of the said railroads at the usual rate prevailing in Western Florida."* § 397. Paying dividends dependent upon corrimercial condi- tions. To a certain extent the dividends which a railroad com- pany can earn are dependent upon commercial conditions gene- erally. When crops fail or when commercial crises come the gen- eral business of the common carrier inevitably falls off. Even if it should raise its rates very considerably it would be difficult for it to maintain its regular dividends and it is doubtful whether it ought to do so and increase thereby the general dis- tress. This may be pressed too fal", and perhaps the point is overstated in Steenerson v. Great ITarthern Railway,^ where Mr. Justice Canty says : " It is not necessary here to determine just what rate of annual income on the cost of reproducing all of the road except the terminals is the least which the court would uphold before declaring the rates fixed by the commission confiscatory, but we are of the opinion that in such times as ex- isted in 1894 an income of 5 per cent, per annum on such cost is certainly not unreasonably low or confiscatory, and that is as far as it is necessary to go in this case. More especially is this true since it appears from the evidence that in years prior to 8 To the same eflfect are: San Diego L. & T. Co. v. National City, 174 U. S. 739, 43 L. Ed. 1154, 19 Sup. Ct. 804 (1899)", affirming s. e. 74 Fed. 79; Getting v. Kansas City S. Y. Co., 183 U. S. 79, 46 L. Ed. 92, 22 Sup. Ct. 30, B. & W. 316 (1901), reversing 82 Fed. 850 (1897) ; San Diego L. & X. Co. V. Jasper, 189 U. S. 439, 47 L. Ed. 892, 23 Sup. Ct. 571 (1903), affirming s. c. 110 Fed. 702; Stanislaus Co. v. San Joaquin C. & I. Co., 192 U. S. 201, 48 L. Ed. 406, 24 Sup. Ct. 241 (1903), reversing s. c. 113 Fed. 930; Southern Pac. Ry. v. Railroad Com., 78 Fed. 236 (1896); Mil- waukee Electric Ry. Co. v. Milwaukee, 87 Fed. 577, B. & W. 336 (1898) ; Brymer v. Butler Water Co., 179 Pa. 231, 36 Atl. 247, 36 L. R. A. 260, B. & W. 330 (1897); Wilkes-Barre v. Spring Brook Water Co., 4 Lack. Leg. News (Pa.), 367 (1899). 9 69 Minn. 353, 72 N. W. 713, B. & W. 333 (1897). [385] § 398] Raileoad Eate Regulation. [Ohap. XIII 1894 this system of roads had produced some very large amounts of incom.e, sufficient to make extraordinary improvements and betterments in the road, as well as ordinary repairs, to pay large dividends, and accumulate a cash surplus which in 1894 amounted to about $3,500,000. Besides, the Minnesota Eastern Railway Company, which is owned and controlled by the Great ISTorthem Railway Company, had at that time a cash surplus of $1,000,000. The managers of railroads have no right to play with the ' public the game of ' heads we win, tails you lose.' ' When times are prosperous and dividends large, we win. When times are hard and business dull, the public must lose.' " ^* § 398. Recoupment in prosperous times. It is desirable that there should be as few fluctuations as pos- sible in the rates of public service companies, and in particular in the rates of the common carrier. At the same time the busi- ness of the carrier cannot but be affected by the state of com- merce in the country at large. And if the carrier must suffer to a certain extent with others in bad times he ought be allowed to recoup himself to some extent in prosperous times. This is hinted in Metropolitan Trust Company v. Houston and Texas Central Railroad Company,^^ where Mr. Justice McCormick, in holding that the commission ought not to have reduced the rates of the railroad in the way that they did, said : " Promoters and proprietors of roads have looked to the future, as they had a right to do, and as they were induced to do by the solicitation of the.various communities through which they run, and by various encouragements offered by the state." ^* 10 The same idea is expressed in Matthews v. Board of Corp. Commrs., 106 Fed. 7 (1901). 1190 Fed. 683, B. & W. 342 (1898). 12 See, also, Brunswick & T. W. Water Dist. v. Maine Water Co., 99 Me. 371, 59 Atl. 537 (1904). [386] Chap. XIII] Rate of Retuen. [§§ 399-400 § 399. No right to raise rates in prosperous times. In prosperous times business all over the country iiicreases and consequently the amount of traffic carried by the railways increases. Since in the railroad business the law of increasing returns because of decreasing costs has surprising scope, this in- crease of traffic will produce greater profits at the rates formerly established. To a certain extent the carrier may enjoy these increased profits in prosperous times without the obligation to re- duce rates, but the carrier may not increase rates because in pros- perous times the shippers can afford to pay more. This conten- tion was well handled by the Interstate Commerce Commission in one case.^^ " The test of the reasonableness of a rate is not the amount of the profit in the business of a shipper or manufacturer, but whether the rate yields a reasonable compensation for the serv- ices rendered. If the prosperity of the manufacturer is to have a controlling influence, this would justify a higher rate on the traffic of the prosperous manufacturer than on that of one less prosperous. The right to participate in the prosperity of a shipper by raising rates is simply a license to the carrier to ap- propriate that prosperity, or in other words, to transfer the shipper's legitimate profit in his business from the shipper to the carrier." ^* § 400. Creating a fund for payment of uniform dividends. A further suggestion has been made, which deserves consid- eration, that a railroad company, or any public service company, ought to be allowed to set aside in prosperous times a reasonable amount as a surplus out of which it may maintain its dividend 13 Central Yellow Pine Asso. v. Illinois C. R. R., 10 I. C. C. Rep. 505 (1905). "In Tift V. Southern Ry., 10 I. C. C. Rep. 548 (1905), the commission said: "The carriers necessarily and justly participate in the increased prosperity of their patrons in the resultant enlargement of their own business." [38Y] § 401] Eaileoad Eate Eegulation^. [Chap. XIII in less fortunate years. It is the practice of the strongest and best managed railroads and public service companies so to ar- range matters by this process that they may always maintain their uniform dividend. This practice has the sanction of the Interstate Commerce Comission,'^ as the following will show: " But it may be urged that after paying its fixed charges, taxes and dividend out of its net income for the year 1902, it had left but a comparatively small amount. That year was one of pros- perity, and it can hardly be expected that conditions will con- tinue without interruption as favorable. Ought not a railway to be allowed to accumulate, in some form, a surplus during fat years which may tide over subsequent lean years ? To this we would unhesitatingly answer in the afiirmative. In times like the present a railroad company should be allowed to earn something more than a merely fair return upon the investment ; but we also think that it clearly appears that the Michigan Central is doing this." TOPIC D EATE OF EETUEIT DEPENDENT UPON THE CHAEACTEE OF THE ENTEEPEISE. § 401. Larger returns in risky enterprises. It follows from what has just been said that in a risky enter- prise a large return may be demanded. The principle that as large a return is permissible as is obtained in businesses of sim- ilar character covers the case. And the policy to induce people to undertake such services for the benefit of the public requires a larger return for a more risky enterprise. In Brunswick Water District v. Maine Water Company ^ Mr. Justice Savage made the point very clearly indeed : " Those who engage in a public service cannot be put upon quite the same level as those who make mere investments. They are not like the depositors in a savings bank, whose right to draw out is lim- 15 Re Advancea in Freight Rates, 9 I. C. C. Rep. 382 (1903). 199 Me. 371, 59 Atl. 537 (1904). [388] Chap. XIII] Rate of Eetuen. [§ 401 ited to precisely what they have put in, with its earnings. They are, on the contrary, engaged in a business, with the ordinary incidents of a business, with some of the hazards and the hopes of a business. To be successful, they must be wise and prudent, thrifty and energetic. These virtues, if they have them, they impress upon the property, making it more valuable than it otherwise would have been. Is it to be said that they can have no return for skill and good management ? We do not think so. They are entitled to charge reasonable rates. ' Reasonable ' is a relative term, a:nd what is reasonable depends upon many vary- ing circumstances. An equivalent to the prevailing rate of in- terest might be a reasonable return, and it might not. It might be too high or it might be too low. It might be reasonable, owing to peculiar hazards or difficulties in one place to receive greater returns there than it would in another upon the same invest- ment."^ 2 The following eases mention the character of the enterprise as a factor in determining the rate of return: United States Sdpkeme Couet: Getting V. Kansas City S. Y. Co., 183 U. S. 79, 46 L. Ed. 92, 22 Sup. Ct. ,30, B. & W. 316 (1901), reversing 82 Fed. 850 (1897); Stanislaus Co. v. San Joaquin C. & I. Co., 192 U. S. 201, 48 L. Ed. 406, 24 Sup. Ct. 241 (1903), reversing s. c. 113 Fed. 930. Fedebal Couets: Cleveland Gas Light Co. v. Cleveland, 71 Fed. 610 (1891); Milwaukee Elee. Ry. Co. v. Milwaukee, 87 Fed. 577, B. & W. 336 (1898); Metro- politan Trust Co, V. Houston & T. C. R. R., 90 Fed. 683, B. & W. 342 (1898); Louisville & N. Ry. v. Brown, 123 Fed. 946 (1903); Palatka Water Works v. Palatka, 127 Fed. 161 (1903). State Courts: Kentucky — Troutman v. Smith, 105 Ky. 231, 48 S. W. 1684 (1899). Maine — Kennebec Water Dist. v. Waterville, 97 Me. 105, 54 Atl. 6, 60 L. R. A. 856 (1902); Brunswick & T. W. Dist. v. Maine Water Co., 99 Me. 371, 59 Atl. 537 (1904). Minnesota — Steenerson v. Great No. Ry., 69 Minn. 353, 72 N. W. 713, B. & W. 333 (1897). Pennsylvania — Wilkes-Barre v. Spring Brook Water Co., 4 Lack. Leg. News (Pa.), 367 (1899). [389] § 402] Railroad Eate Eegulation. [Chap. XIII § 402. Hazards of the business considered. The hazards of the business are therefore to be considered in determining what is a reasonable rate of return in the particular enterprise in question. An excellent exaniple of this problem is to be found in the case of Canada Southern Railway v. International Bridge Com- pany.'' It was shown in that case that the bridge company at its established charges was earning something like fifteen per cent, upon its investment. The opinion of Lord Chancellor Selbourne alluded to the peculiar risks of the enterprise rather by way of dictum than as the basis of his decision. He said : " It seems to their Lordships that it would be a very extraordinary thing in- deed, unless the legislature had expressly said so, to hold that the persons using the bridge could claim a right to take the whole accounts of the company, to dissect their capital account, and to dissect their income account, to allow this item and disallow that, and, after manipulating the accounts in their own way, to ask a court to say that the persons who have projected such an under- taking as this, who have encountered all the original risks of ex- ecuting it, who are still subject to the risks which from natural and other causes every such undertaking is subject to, and who may possibly, as in the case alluded to by the learned judge in the court below, the case of the Tay Bridge, have the whole thing swept away in a moment, are to be regarded as making unrea- sonable charges, not because it is otherwise than fair for the railway company using the bridge to pay those charges, but be- cause the bridge company gets a dividend which is alleged to amount, at the utmost, to fifteen per cent. Their Lordships can hardly characterize that argument as anything less than pre- posterous." So in Troutman v. Smith,* where proceedings were instituted to compel a ferry to reduce its rates, Mr. Justice Burnam in de- 3L. R. 8 A. C. 723, B. & W. 315 (1883). 4 105 Ky. 231, 48 S. W. 1084 (1899). [390] Chap. XIII] Eate of Retueit. [§ 403 ciding against the application pointed out the risks of the busi- ness. He said: " It is also apparent from the testimony that the proximity of this ferry to the Ohio river renders it more ex- pensive and difficult to operate than an ordinary Kentucky river ferry. Under the statute, the appellant is compelled to execute a bond to pay all damages that may be sustained by any one by reason of negligence or misconduct in the management of the ferry, or from the insufficiency of any boat employed ; and while it is apparent that there is some lack of proportion betvi^een the charges for foot passengers and vehicles, — which was probably the cause of the institution of this proceeding, — it seems to us, when we consider the amount of capital necessarily invested in the business, the cost of conducting it, and the risk and responsi- bility incident thereto, that a net revenue of $600 or $700 per annum is not an exorbitant compensation to appellant. A single accident might result in a liability that would exceed the income derived from the ferry for many years." § 403. Whether the return upon all property should be the same. It is suggested in the case of Steenerson v. Great Northern Hallway Company ® that a difference is to be made in the rate of return to be allowed upon different kinds of property, in the par- ticular case a lower rate upon the real estate constituting the ter- minals of the company. This can hardly be. All the property employed in the enterprise should be taken together and a uni- form rate of return allowed upon it all by the general principles of public service law. However, as the point is a novel one, the opinion of Mr. Justice Canty is quoted. He said : " Let us now consider what in these times is a reasonable income on $14,000,000, invested in these terminals, and $30,000,000, in- vested in the rest of the road. The great value of the real estate covered by these terminals is given to it by anticipating the B69 Minn. 353, 72 N. W. 713, B. & W. 333 (1897). [391] § 403] Railroad Rate Regulation. [Chap. XIII future. Very little of this real estate is in or near to the business center of either city. Most of it is outlying city property and suburban property. It is safe to say that other real estate sim- ilarly situated, in the same portions of St. Paul and Minne- apolis, does not, on an average, yield an income of 1 per cent, per annum above the taxes on the price or valuation at which it is held; and there is, as a general rule, no use to which such property can be put that will cause it to yield any greater in- come. In fact, it is doubtful if the same area of other property along and around these terminals could, on an average, by any use to which it could be put, be made to yield an annual income of 1 per cent, on one-third of the valuation placed on these ter- minals. Again, it is safe to say that in ordinary times, at least, capital could readily be found to buy such property at its market value for the purpose of renting it for 1 per cent, per annum above the taxes on it. In fact, millions have often been invested in such property without any prospect of any income at all from it for many years, and undoubtedly such will be the case again. Such real estate is valued, not on accovint of its present power to produce an annual income, but because it is believed that it will be still more valuable in the future. The owner of such property cannot expect to eat his loaf and still have it. He can- not expect that the property will pay a full-sized annual divi- dend, and at the same time double or treble in value every 10 or 20 years. He expects his dividends to accumulate in the form of increase in value." It may be that there is justification in dis- posing of this case in the way in which Mr. Justice Canty does; for if these great tracts of land are being held at inflated valua- tion full return upon that valuation ought not to be expected.® 6 In a few cases the point has been raised that all of the property be- longing to the public senuce company should not come in for returns upon the same basis. See Cotting v. Kansas City S. Y. Co., 183 U. S. 79, 46 L. Ed. 92, 22 Sup. Ct. 30, B. & W. 316 (1901), reversing 82 Fed. 850; San Diego L. & T. Co. v. Jasper, 189 U. S. 439, 47 L. Ed. 892, 23 Sup. Ct. 571 (1903), affirming 110 Fed. 702; Capital City Gaslight Co. v. Des Moines, [392] Chap. XIII] Kate of Retukn. [§ 404 § 404. Rate of interest dependent upon the safety of the in- vestment. Just what rate of interest a public service company should be allowed to pay upon its bonded indebtedness it is dif- ficult to determine by rule, since the circumstances will be different in different cases. Whatever it is obliged to pay to sell its bonds at par if the negotiations for the issue are con- ducted with good faith would be the test. And that would de- pend upon the stability of the business to the mind of the lend- ers. Public service bonds are sold on the exchanges from as low as a 3 per cent, basis to as high as a 12 per cent, basis, and doubtless will always continue to do so. The suggestion that some fixed standard should be taken, such as the rate paid upon United States, state, or even municipal bonds in the locality in question has no justice in it. That was said very plainly by Mr. Justice Edwards in Wilkes-Barre v. Spring Brook Water Co.,'' when an application was made to him under the Pennsyl- vania statute to order a reduction of rates by a water company which was earning barely 5 per cent., allowing only 1 per cent, for depreciation : "Reference has been made to the interest paid on Wilkes-Barre city bonds and on large sums otherwise safely invested. Such investments are not by any means analogous to investments in water works. Good bonds such as Wilkes-Barre bonds remain intact. They are not liable to change or dimuni- tion in principal. At a time certain the principal is to be paid to the investor to the last cent. If the rate paid on such invest- ments shall determine the percentage of profit to be paid water companies there would be no inducement for anybody to invest money in works of a public nature. It would be much less wearisome to sit down twice a year and cut off coupons from bonds. Enterprise and industrial progress would be at a stand- 72 Fed. 829 (1896); Wilkes-Barre v. Spring Brook Water Co., 4 Lack. Leg. News (Pa.), 367 (1899). 7 4 Lack. Leg. News (Pa.), 367 (1899). [3931 § 405] Railroad Rate Regulation'. [Chap. XIII still. It must be remembered that those who embark in water companies place their property to a great extent in the hands of the public, as do all companies having the power of eminent domain. They must be always ready to supply the public de- mand, and must take the risk of any falling off in that demand. They cannot convert their property to any other use, however unprofitable the public use may have become. While they have a right to manage their property according to their own judg- ment, they are, nevertheless, subject to the supervisory powers of the courts. If the water for any reason becomes unwhole- some, the courts will prevent the collection of the rates, until it becomes reasonably pure. !N^or can the companies charge any rate they please, as if the water plant were a purely private mat- ter. Consumers have a right to appeal to the courts, who have the power to decrease the charges if they are not just and equita- ble. It is evident, therefore, that the rate of interest paid on city bonds is not by any means conclusive as to the return a water company is entitled on its investments."^ § 405. Risk by reason of depreciated security not considered. A very complicated instance of this general problem came up in the case of Steenerson v. Great Northern Railway,® already much quoted. The problem and its solution are thug stated by Mr. Justice Canty in his own words : "An examination of the bond quotations above referred to will show that, where rail- road bonds are amply secured, 4 or 4 1-2 per cent, per annum has been for the last few years rather a high rate of interest. But by reason of the decline in the cost of construction, and the de- 8 Similar language is used in ; Milwaukee Elec. Ry. Co. v. Milwaukee, 87 Fed. 577, B. & W. 336 (1899); Metropolitan Trust Co. v. Houston & T. C. R. E., 90 Fed. 683, B. & W. 342 (1898) ; Louisville & N. N. Ey. v. Brown, 123 Fed. 946 (1903); Palatka Water Works v. Palatka, 127 Fed. 161 (1903); Kennebec Water Dist. v. Waterville, 97 Me. 185, 54 Atl. 6, 60 L. R. A. 856 (1902) ; Brunswick & T. W. Dist. v. Maine Water Co., S9 Me. 371, 59 Atl. 537 (1904). 9 69 Minn: 353, 72 N. W. 713, B. & W. 333 (1897). [394] Chap. XIII] Raileoad Rate Regulation. [§ 406 cline in what is a reasonable rate of income, the bonds of but few railroads are now well secured. Twenty years ago the oost of railroad construction was at least twice as much as at the present time, and a reasonable rate of income on such cost was twice as much as at the present time. Therefore a reasonable amount of net income on the same mile of road (beyond the terminals) was about four times as much then as it is now. For these reasons a large amount of railroad bonds floated years ago, for the full cost of the roads, at high rates of interest, are now very poorly secured. And on the maturity of such bonds, or when an at- tempt is made to reorganize the road on foreclosure, it is found diificult to scale down the amount of indebtedness to a point where the road will, under present conditions, be sufficient se- curity for bonds -drawing a fair rate of interest. These things tend to make the present rates of interest on railroad securities unreasonably high. But should the losses caused by all of these economic changes be borne by the public, or by the owners of the railroad ? There can be but one answer to this question. As we have repeatedly stated, neither the state nor the public have ever guarantied that railroads would always be worth the amount originally invested in them, or that what is a reasonable rate of income would not be less in the future than it was at the time of the investment, and have never guarantied, directly or indirectly, either the interest or principal of railroad bonds. These losses must be borne, not by the public, but by the owners of the rail- road ; and, as against the public, the holders of the bonds have no greater rights than the railroad company itself." § 406. General policy for allowing fair return. According to modern views upon the constitutional guaranties an adequate return upon the true value of the property devoted to the public use by those who conduct a public service ought in all normal cases to be left; otherwise it is conceded that they are in effect deprived of their property without due process of law if their rates are so reduced by public authority as to leave [395] Ckap. XIII] Eate of RETUETf. [§ 406 ao such adequate return. And this is based upon sound public policy. It ought always be plain that those who invest their funds in some public employment are going to get a fair per cent, upon their investment; because unless they are as- sured of this they will employ their money elsewhere, and many enterprises necessary for the public convenience will not be un- dertaken, nor will existing plants be extended. It is, then, not only due consideration for the rights of others who have already invested their money in public service companies, but also an en- lightened selfishness with a view to the future which dictates the policy that a reasonable return upon the value of the property used in the public service shall be held to be protected by the constitution. [396] CHAPTER XIV. OPERATING EXPENSES. TOPIC A ANNUAL CHARGES. § 411. Cost of service to be earned before return on capital. 412. Items in cost of performing service. 413. Net earnings in general. 414. Expense of equipment and maintenance. 415. Cost of rolling stock. 416. Cost of supplies. 417. Salaries of ofiSciala. 418. Estimating labor cost. 419. Loans. 420. Taxes. 421. Losses by accident. 422. Expenditures to get business. 423. Unreasonable expenditures. 424. Improvident expenditures. TOPIC B CONSTEUCTION ACOOTINTS. § 425. Betterments considered. 426. Improvement of existing plant. 427. Replacement considered as repair. 428. Permanent improvements should not be annual charge. 429. New construction should not be charged as an operating expense. TOPIC C ^DEPRECIATION EEQUIREMENTS. § 430. Allowance for depreciation. 431. Renewal of equipment to offset depreciation permissible. 432. Fund for repairs. 433. Authorities refusing to allow depreciation. 434. Sinking fund requirement. 435. Sinking fund for municipal bonds. 436. Amortization of franchises. TOPIC D PAYMENTS MADE TO HOLDERS OF SECTTBITIES. § 437. Whether interest on bonds is properly an annual charge. 438. Dividends payable not classified as an annual charge. [397] § 411] Eaileoad Rate Regulatioh'. [Chap. XIV TOPIC A ^ANNUAL CHAEGES. § 411. Cost of service to be earned before return on capital. Before there can be any question of income on the capital employed, the necessary annual charges must be met by the rates ; and first of all the actual cost of service furnished. This involves the payment of w^ages, and the purchase of current sup- plies. The general principle was concisely statedby Mr. Justice Brewer in Chicago and K'orthwestern Railway v. Dey :^ " Com- pensation implies three things : Payment of cost of service, in- terest on bonds, and then some dividend. Cost of service implies skilled labor, the best appliances, keeping the road-bed and the cars and machinery and other appliances in perfect order and repair. The obligation of the carrier to the passenger and the shipper requires all these. They are not matters which the car- riers can dispense with, or matters whose cost can by them be fixed. They may not employ poor engineers, whose wages would be low, but must employ competent engineers, and pay the price needed to obtain them. The same rule obtains as to engines, ma- chinery, road-bed, etc., and it may be doubted whether even the legislature, with all its power, is competent to relieve railroad companies, whose means of transportation are attended with so much danger, from the full performance of this obligation to the public." And to quote from the same judge in another case:* " It is obvious that the amount of gross receipts from any busi- ness does not of itself determine whether such business is profit- able or not. The question of expenses incurred in producing those receipts must be always taken into account, and only by striking the balance between the two can it be determined that the business is profitable. The gross receipts may be large, but if the expenses are larger surely the business is not profitable. 135 Fed. 866, 1 L. R. A. 744, 2 Int. Com. Rep. 325 (1888). 2 Brewer, J., in Chicago, M. & S. P. Ry. v. Tompkins, 176 U. S. 167, 44 L. Ed. 418, 20 Sup. Ct. 336 (1900). [398] Chap. XIV] Opeeating Expenses. [§ 411 It cannot be said that the rates which a legislature prescribes are reasonable if the railroad company charging only those rates finds the necessary expenses of carrying on its business greater than its receipts."' 3 It is recognized in all cases that deal with the subject that except in the most extraordinary cases, a public service company must be permit- ted to earn enough to pay its operating expenses. See, upon the general' principle : United States Sdpreme Couet: Union Pac. Ry. v. U. S., 99 U. S. 402, 25 L. Ed. 274 (1878), reversing 13 Ct. cl. 401; Spring Valley Water Works v. Schottler, 110 U. S. 347, 28 L. Ed. 173, 4 Sup. Ct. 48, affirming 62 Cal. 69; Dow v. Beidelman, 125 U. S. 680, 31 L. Ed. 841, 8 Sup. Ct. 1028 (1888), affirming 49 Ark. 325; Chicago & G. T. Ry. v. Wellman, 143 U. S. 339, 36 L. Ed. 176, 12 Sup. Ct. 400 (1892), affirming s. c. 83 Mich. 592; Reagan v. Farmers' Loan & T. Co., 154 U. S. 362, 38 L. Ed. 1014, 14 Sup. Ct. 1047 (1893) ; Covington & Lex. T. R. Co. v. Sanford, 164 U. S. 596, 41 L. Ed. 561, 17 Sup. Ct. 198 (1896), reversing s. c. 20 S. W. 1031; Smyth v. Ames, 169 U. S. 466, 42 L. Ed. 819, 18 Sup. Ct. 418, B. & W. 347 (1898), affirming s. c. 64 Fed. 165; Lake Shore & M. S. Ry. v. Smith, 173 U. S. 684, 43 L. Ed. 858, 19 Sup. Ct. 365 (1899), reversing 114 Mich. 460, 72 N. W. 328; San Diego L. & T. Co. V. National City, 174 U. S. 739, 43 L. Ed. 1154, 19 Sup. Ct. 804 (1899), affirming s. c. 74 Fed. 79; Chicago & M. & St. P. v. Tomp- kins, 176 U. S. 167, 44 L. Ed. 418, 20 Sup. Ct. 336 (1900), affirming s. c. 90 Fed. 363 (1898) ; Cotting v. Kansas City S. Y. Co., 183 U. S. 79, 46 L. Ed. 92, 22 Sup. Ct. 30, B. & W. 316 (1901), reversing 82 Fed. 850 (1897) ; Minneapolis & St. Louis R. R. v. Minn., 186 U. S. 257, 46 L. Ed. 1151, 22 Sup. Ct. 901 (1902), affirming 80 Minn. 191, 83 N. W. 60. San Diego L. & T. Co. v. Jasper, 189 U. S. 439, 47 L. Ed. 892, 23 Sup. Ct. 571 (1903), affirming a. c. 110 Fed. 702; Stanislaus Co. v. San Joaquin C. & I. Co., 192 U. S. 201, 48 L. Ed. 406, 24 Sup. Ct. 241 (1903), reversing s. c. 113 Fed. 930. Federal Courts: Chicago N. W. R. R. v. Dey, 35 Fed. 866 (1888) ; Chicago W. P. M. & I. v. Becker, 35 Fed. 883 (1888); National Water Works Co. v. Kansas City, 62 Fed. 853, 10 C. C. A. 653, 27 U. S. App. 165 (1894) ; Memphis Gas Light Co. V. New Memphis, 72 Fed. 952 (1896); Southern Pac. Ry. v. Railroad Comm., 78 Fed. 230, B. & W. 322 (1896) ; Milwaukee Electric Ey. Co. V. Milwaukee, 87 Fed. 577, B. & W. 336 (1898); Metropolitan T. Co. V. Houston & T. C. R. R., 90 Fed. 683, B. & W. 342 (1898) ; No. Pac. Ry. V. Keyes, 91 Fed. 47 (1898) ; Chicago, M. & St. P. Ry. v. Smith, 110 Fed. 473 (1901) ; Interstate Com. Comm. v. Louisville & N. R. R., 118 Fed. 613 [399] § 412] Eaileoad Rate Regulation. [Chap. XIV § 412. Items in cost of performing service. In Chicago, St. Paul, Minneapolis and Omaha Railway v. Becker* the railroad and warehouse commission of Minnesota had made an order fixing a rate for switching the cars of other railroads in its yard in Minneapolis. The railroad brought this bill for an injunction against the enfojcement of the rate, on the ground that the rate established by the commission was not re- munerative. The injunction was granted. Mr. Justice Brewer said : " It is not within the power of the State, directly or in- directly, to put in force a schedule of rates, when the rates pre- scribed therein will not pay the cost of service. In this case the defendant took no testimony, and the complainant's testimony shows that the actual cost of the service, that is, wages of em- ployes, rent of engines, keeping the track in repair, exceeds per car by fourteen cents the amount allowed in the schedule as compensation. In other words, it costs complainant one dollar (1902) ; Louisville & N. Ey. v. Brown, 123 Fed. 946 (1903) ; Spring Valley Water Works v. San Francisco, 124 Fed. 574 (1903); Palatka Water Works V. Palatka, 127 Fed. 161 (1903); Tift v. So. Ry., 138 Fed. 753 (1905). State Coubts: ^ Arkansas— St. Louis & S. F. Ry. v. Gill, 54 Ark. 101, 15 S. W. 18, 11 L. R. A. 452 (1891). California — Spring Valley Water Works v. San Francisco, 82 Cal. 686, 23 Pac. 910 (1890). Florida — State v. Atl. Coast Line et aL (Fla.), 37 So. 652 (1904). Iowa — Cedar Rapids Co. v. Cedar Rapids, 118 la. 234, 91 N. W.^1081 (1902). £:e» the rest of the line or system on such traffic, except the operating expenses on the same, including the additional wear and tear on the rest of the road caused by such traffic. Whether this rule would apply where such a portion of a line or system ceased to be self-sup- porting by reason of some temporary cause, such as an unusual drought or a pestilence, w'e need not consider." It is perhaps fair to point out that in a later portion of the same opinion the court expressed the opinion that the whole system should be entitled to share the prosperity of each con- stituent part of it. [436] Chap. XV] Systems Operated as Units. [§§ 446, 447 § 446. Whole systems should be taken together. Upon the whole it would seem in most cases justifiable for the company conducting a consolidated system to take the atti- tude that the system should be treated as an entirety. This is certainly true when the system serves only one locality wherein the conditions are substantially the same. Thus in Wilkes-Barre v. Spring Brook Water Company et al.,® Mr. Jus- tice Edwards, in reviewing the accounts of a water company to decide whether its rates should be reduced or not, said : "The plaintiff's counsel and one of the witnesses in the form of questions and answers discussed the propriety of charging to the Wilkes-Barre siystem the total cost of the Mill Creek plant and the pipe lines carrying the Huntsville water to collieries outside of Wilkes-Barre without adding to the revenue columns the rates collected from persons outside the city. The conten- tion on the part of the plaintiff is reasonable. All the revenue belonging to a water plant should be accounted for in order to decide whether a company is receiving a fair return on the total cost of the plant." § 447. Rates on different parts of same system apportioned. It has however been held in other eases that the receipts and charges of each part of a system should be considered separ- ately. In San Diego Land and Town Company v. ISTational City,^ where it appeared that a water company was supplying a town and also a large agricultural territority outside the town, the court held that in determining what were reasonable rates for supplying water to the inhabitants of the town the charges should be fixed with a view to yielding a fair rate of interest on the value of that part of the plant referable to the territory embraced in the town, without attempting to make compensa- tion for losses sustained in the distribution of water to the ter- 6 4 Lack. Leg. News, 367 (1899). 7 74 Fed. 29 (1896). [437] § 448] Raileoad Eate Regulation. [Chap. XV ritory outside the town. On appeal to th© Supreme Court of ' the United States this was upheld, and Mr. Justice Harlan said :^ " One of the points in dispute involves the question whether the losses to the appellant arising from the distribution of water to consumers outside of the city are to be considered in fixing the rate for consumers within the city. In our judg- ment the Circuit Court properly held that the defendant city was not required to adjust rates for water furnished to it and to its inhabitants so as to compensate the plaintiff for any such losses. This is so clear that we deem it unnecessary to do more than to state the conclusion reached by us on this point." TOPIC B HOLDING COHPOEATIONS. § 448. Apportionment to constituent companies. Where several railroads, retaining their separate corporate identity and nominally operating their own lines, are really constituent parts of a whole great railroad system, under one management, the income of the whole system must be consid- ered together; and the court in passing upon the rates of the system must determine the reasonableness of the division of in- come between the different roads. In such a case the constituent roads may be controlled through ownership by the principal road of the whole or a majority of the stock, or through a pooling arrangement by which the stock of the subordinate roads is placed in trust to secure the integrity of the system. Such a ease was presented to the court in the case of Steen- erson v. Great ISTorthern Railway.* Ihe Great Northern, itself made up of several leased lines, controlled also several sep- arately inclorporated and nominally independent roads and steamship lines ; it owned all or substantially all of the stock of most of these corporations, and the stock of the rest had been 8 San Diego L. & T. Co. v. National City, 174 U. S. 739, 758, 43 L. Ed. 1154, 19 Sup. Ct. 804 (1899). 169 Minn. 353, 72 N. W. 713 (1897). [438] ChaB. XV] Systems Opeeated as Units. [§ iiS placed in trust. Some of these stocks were credited with large dividends. It was held that, assuming the right to maintain the independence of these roads although they formed part of the system, the court would examine the reasonableness of the division of income between the constituent roads. Mr. Justice Canty said : "The amount of the profits of each depends almost wholly on the character of its dealings with the Great North- ern Company, and is in fact a mere matter of book-keeping in whicb the officers of the latter company divide the joint profits as they see fit. But, so far as the rights of the patrons of the railroad may be prejudiced by any such division, they are not bound by it. When the two contracting parties are in fact one, so that one party is merely dealing with himself, the rights of third parties cannot be concluded by such dealing. And when a party deals with himself in such a case the burden is on him to show that the transaction is a fair and equitable one. The burden was on the Great ITorthern E?.ilway Com- pany, in this case, to show that the division of profits between it and these other corporations was fair and reasonable, and it failed to offer any evidence on that point. The presumption against it is also heightened by the appearance of things. Here are some parts of its railway system and some of these other corporations earning as dividends from 8 to 120' per cent, per annum, and no explanation is given. It is highly commend- able, in the management of this system, that it organized all of these profitable enterprises for the benefit of all of its stock- holders, and not for the benefit of the managers and their fa- vorites, as has been done by railway managers in so many other instances. But the fact that it has organized for the benefit of its stockholders all these profitable side enterprises which feed off this railroad system does not change the presumption as be- tween it and the public, or show that it has been equally fair and disinterested towards the patrons of the road. Here, for in- stance, is the Willmar & Sioux Falls branch, which is a mere feeder of one of the main lines, earning in these dull times a [439] § 449] Eaileoad Kate Kegulatiok. [Chap. XV dividend of 10 per cent, above tlie interest on its bonds, while, as the railway company claims, the main line is earning no dividend at all, or scarcely any. The division of profits in this instance may be fair and reasonable, but it will certainly take evidence to prove that it is." § 449. System taken as a whole. It is questionable, ac least, whether the division of the line into its constituent roads is allowable, whether the earnings and expenses of the whole line must not be lumped together, in spite of the nominal independence of parts of it. This doubt was expressed by Mr. Justice Canty in the case just cited : "It may be a question whether this entire railway system should be thus divided up at all. As appears by the court's findings above quoted, there are a number of other separate railroad corporations whose stocks are owned by the Great Northern Company. The railroad properties of most of these other companies are a part of the Great Northern system. A fair dividend was declared on the stocks of some of these companies, and none at all on the stocks of others. It may be that this whole railroad system is tied together for better and for worse ; that it is immaterial how the management has apportioned the profits between the different parts of the system, and that, for the purpose of determining whether rates fixed by one State are confiscatory, the only division that can be made of the whole system is into the portion which is self-supporting and the portions which are not self-supporting, as before stated; and that, after rejecting the latter portions, it only remains to be determined whethea* the rates thus fixed by the State are com- paratively lower than the rates beyond the State, so that a like reduction of the latter rates to the same comparative level would result in such a deficiency of income as to be confiscatory. On these points we will express no opinion. But, unless sub- stance is sacrificed to form, it may be that the separately incor- [440] Chap. XV] Systems Operated as Units. [§§ 450, 451 porated portions of this railway systemi should not, for the pur- poses of such a case as this, be regarded as separate railroads." § 450. When constituent roads are operated under separate charters. It is held in some cases that the fact that the constituent roads still preserve their original charters and are theoretically operated under them is sufficient to justify the requirement that each shall be treated by itself in rate regulation. Thus in one recent case,^ where the propriety of a reduction in rates or- dered by the railroad commission of Florida was in question, it was shown that the Pensacola & Atlantic division of the Louisville & Nashville Railroad System was in reality a sep- arate corporation. It was shown that the rates enforced would not give an adequate return upon the Pensacola & Atlantic Railroad itself, although the Louisville & Nashville System was shown to be profitable. Upon these facts Judge Pardee granted an injunction to prevent the enforcement of these rates, saying in substance : " The fact that a line of railroad is operated in connection with other lines owned by the same company, but under separate charters, whereby the earnings of such line are increased and its operating expenses reduced, does not prevent its being considered as a separate and independent line for the purpose of determining the reasonableness of rates thereon, fixed by the State; full consideration of the joint operation being given when the road is credited for the in- cr6ated business and reduced expenses." § 451. Systems considered as wholes. Specific illustration of the general matters which have beea discussed under this topic may help to an appreciation of the general problem. In a comparatively recent investigation. Re Advances in Freight Rates,^ upon certain lines, the Interstate 2 Louisville & N. E. R. v. Brown et al., 123 Fed. 946 ( 1903 ) . 3 9 I. C. C. Rep. 382 (1902). [441] § 452] R4.ILEOAD Rate Eegtjlation. [Chap. XV Commeroe reported upon various ones of the principal railroad systems, among them ■ the Lake Shore . & Michigan Southern Kailway, itself a part of a " community of interest." Extracts from this report follow: " Ihe Lake Shore & Michigan Southern, on June 30, 1901, owned a majority of the capital stock of its competitor, the New York, Chicago & St. Louis Railroad Company, a majority of the capital stock of ita connection, the Pittsburg & Lake Erie Railroad Company, almost one-half of the capital stock of the Lake Erie & Western Railroad Company, and $n,224:,000' of the capital stock of the Cleveland, Cincinnati Chicago & St Louis Railway Company, besiides smaller holdings ih, other companies. These stocks had been acquired, in addition to the payment of dividends not less than 6 per cent, for many years, put of net earnings. During the year 1902 it purchased, apparently out of surplus, $4,728^200 of the capital stock of the Indiana, Illinois & Iowa Railroad Company, the entire capital being $5,000,000. " This company after paying 7 per cent, dividend to its stockholders has a siurplus each year sufficient to buy the Con- trol of a very considerable railroad. Before holding that its revenues ought to be further increased, or that the govern- ment ought not to exercise any supervision over those rev- enues, it may be well to oonsidier what the bearing of this pro- cess, continued for half • a century, is to be upon two of the great economical problems before us, namely the distribution of wealth, and the control of the avenues of transportation." § 452. When corporations of diverse characters held. Where, however, a railroad system owns corporations of an- other sort, they would hardly be held to form so integral a part of the system that their receipts and charges should be brought into the siame account. Thus in the case just examined* 4Steenerson v. Gt. No. Ey., 69 Minn. 353, 72 N. W. 713 (1897). [442] Cbap. XV] _ SiysTEMS Opeeated as Units. - [§ 453 the Great Northern Railway owned a steamship line and' a coal company; and it was held that the finances of these corpora- tions should he separately kept, Mr. Justice Canty said: " Even if these separately incorporated portions must be re- garded as one railroad, or a s.ingle system, it is still a question whether the plant of the Northern Steamship Company should he regarded as a part of that system, and it is still more doubt- ful whether the mines or plant of the Sand Coulee Coal Com- pany should be so regarded ; and, if these plants should not be considered a part of the railway system, the Great Northern Railway Company would not have to put into the common pot in this case saich profits of those two concerns as result from a just and equitable division of profits between the railway sys- tem and each of these other plants. But the burden would still be on the railway company in this case to show that it has made such a just and equitable division of such profits, and, as before stated, it has failed to maintain that burden." And on a similar principle, where a grant of land was made to a railroad, taxes on the land and land ofiice expenses were not proper annual charges on the railroad ; the finances of the land ofiice should be kept separate from those of the railroad.^ TOPIC C LEASED LUTES. § 453. Rent of leased roads. Where a bona fide lease of one road to another is made, the operating road ig entitled to include the rent of the leased road in its operating expenses. It is the annual expense of provid- ing its appliances for carrying on its public business, and as such is a proper annual charge against gross income. In the case of Southern Pacific Company v. Board of Railroad Com- missioners,^ where the question involved was the reasonable- ness of the rate established by the Commissioners for the 5 Southern Pacific Co. v. Railroad Comrs., 78 Fed. 236, 272 (1896). 178 Fed. 236 (1896). [443] § 454] Railboad Bate Eegulatiow. [Clhap. XV Southiern Pacific system, it apipeared tKat an annual rental of $600,000 was to be paid by the Soutbem Pacific Oompany to tke California Pacific, a leased road. It was urged that certain fixed' Rate Eegulation. [Qhap. XV however, the betterment is to be maJe at the expens© of the leased road, or where the expense of it diminishes by so much the rent, the betterment is not a proper annual charge of the oper- ating road. It is true that betterments are usually proper an- nual charges; but in this case it is a betterment of the leased and not of the operating road, and can no more be charged against the receipts of the latter road than the official salaries of the leased road. " It is dear, therefore, that, if the railroad was added to or bettered, it was to be out of the income which the Central Pacific Company was entitled, and which would, if not so expended, be paid to it. It is true that the leas© provides for the con- tingency of the payment of such expense by the Southern Pacific Company, but it also provides for its repayment, so that it is not, in any case, a deduction from its revenue. If it be said that the Regan case makes such expenses proper as operating expenses, the answer is, it was competent for the parties to stipulate otherwdse ; and now to hold it a charge on lie Southern Pacific Company would be to restore the liability of the lease as it stood in 1888, and which was altered as far as omissions and explicit enumeration could alter it. Hence it follows that the item of $111,786.71, for betterments and additions to the Central Pacific Company, should not be allowed as an expendi- ture of the Southern Pacific Company."® 6McKenna, J., In Southern Pacific Co. v. Railroad Comrs., 78 Fed. 236, 268 (1896). TOPIC D PECULIAR EXPENSE OF THE PAETICULAB SERVICE. § 457. Special circumstances affecting the particular rate. There may be special circumstances oonneoted with a partic- ular transaction which increases or decreases the cost of ser- vice ; and the efFect. of such circumstances on the rate must be considered. For instance, the expense of constructing a mountain branch may be very much greater than that of build- ing the main line ; or the population served by the company may [446] Chap. XV] Systems Opekated as Units. [§ 458 in places be so sparse as to make the cost of operation very great in proportion to the service demanded. All these circumstances may properly affect the rate charged in those portions of the territory served by the company ; yet it appears unjust to place the whole burden upon such territory, thus accentuate its pov- erty, and place another handicap upon it in the effort to be- come prosperous. Not all the extra cost of service should be placed upon the particular customers. At the same time, many things besides the mere mileage run must be considered in fixing the rates. A uniform mileage rate imposed upon all railroads vi^ould be in reality unequal and unjust. As Mr. Jus)tice Morse said in Wellman v. Chicago & Grand Trunk Railway ■? " If no classification can be made, and the maximum rate must be fixed the same for all, then the law is admitted to operate uneq^ually and unjustly, because some companies are to less expense than others in the same length of road by reason of the nature of the country through which they run ; some have costly terminal facilities, and some have not ; some owe large amounts, and some do not ; and some do a large amount of business, and some do not." § 458. Divisions built through a difficult territory. When a road or part of a road is built through a mountainous country or other countrj which requires expensive construction, the charge may be greater than on other portions of the road or other roads where the cost of construction per mile is less. So where different rates were prescribed for railroads on the lowei and on the upper peninsula of ^lichigan, this difference was held proper. " The distinction between the roads of the upper and lower peninsiilas must be considered, in the absence of any showing to the contrary to be a reasonable one. We are author- ized to take judicial knowledge, for it is a matter of general knowledge, that the cost of building and running railroads in 7 83 Mich. 592, 47 N. W. 489 (1890). [4471 ,§ 459] Eaileoad Rate Eegulation. [C'hap. XV the upper peninsula is much greater than that in the lower^ owing to the marked, physical difference between them in the character and face of the country."^ § 469. Divisions in sparsely populated territory. It is dear that where a division of a railroad runs through a sparsely populated country, so that the amount of business done upon it is comparatively small, and the net earnings are there- fore much below the average of the whole road, the charges may be greater than the charges on the other parts of the road. This was discussed in the case of Ames v. Union Pacific Rail- way^ by Mr. Justice Brewer : " It is, however, urged by the defendants that, in the general tariffs of these companies, there is an inequality; that the rates in Nebraska are higher than those in adjoining States, and that the reduction by House Roll 33 simply establishes an equality between Nebraska and the other States through which the roads run. The question is asked, Are not the people of Nebraska entitled to as cheap rates as the people of Iowa ? Of course, relatively they are. That is, the roads may not discriminate against the people of any one State, but they are not necessarily bound to give absolutely the same rates to the people of all the States; for the kind and amount of business and the cost thereof are factors which de- termine largely the question of rates, and these vary in the several States. The volume of business in one State may be greater per mile, while the cost of construction and of mainten- ance is less. Hence, to enforce the same rates in both States might result in one in great injustice, while in the other it would only be reasonable and fair. Comparisons, therefore, be- tween the rates of two States are of little value, unless all the elements that enter into the problem are presented. It may be 1 Morse, J., in Wellman v. Chicago & G. T. Ry., 83 Mich. 592, 47 N. W. 489 (1890). 2 64 Fed. 165, 188 (1894), cited and approved by Harlan, J., on appeal; Smyth V. Amea, 169 U. S. 466, 42 L. Ed. 819, 18 Sup. Ct. 418 (1898). [448] Ohap. XV] Systems Opeeated as Units. [§ 460 true, as testified by some of the witnesses, that the existing local rates in Nebraska axe forty per cent, higher than similar rates in the State of Iowa. But it is also true that the mileage earn- ings in Iowa are greater than in Nebraska. In Iowa there are 230 people to each mile of railroad, while in Nebraska there are but 190 ; and, as a general rule, the more people there are the more business there is. Hence, a mere difference between the rates in two States is of comparatively little significance." This same line of argument was pithily put by Mr. Justice Cianty in Steenerson v. Great Northern Railway,^ when he asked, " Why should the people of Minnesota and Eastern Dakota be made to pay an income on this idle railroad prop- erty further west?" And in Wellman v. Chicago & Grand Trunk Railway* Mr. Justice Morse said : " A classification according to the amount of business done per mile seems to me to be the fairest and the most reasonable classification, if rail- roads are to be classed at all, in the fixing of the maximum rates." § 460. Way stations. Local shipments are more expensive to handle in proportion to the mileage than long distance shipments, and a greater pro- portionate charge is therefore justified. " The operating ex- penses of a railroad consist of two principal items : (1) Cost of maintenance of plant; (2) cost of conducting transportation. The former item is constant, and can justly be divided bet^veen the different kinds of traffic in proportion to their volume. As to the second item, however, such a division cannot properly be made ; for it is agreed, by all who have had occasion to con- sider the subject, railroad commissioners as well as railroad officials, that the cost of conducting transportation is, relative to income, much higher for local business than for the general business of a road. The causes of this added cost are chiefly 3 69 Minn. 353, 72 N. W. 713 (1897). 4 83 Mich. 592, 47 N. W. 489 (1890). [449] § 461] Eaileoad Rate Regulation. [Ctap. XV three: (1) The shortness of the haul; (2) the lightness of the train loads; (3) expense of billing and handling the traffic.''^ Because a greater charge is made on local than on through business, it by no means follo'WS that all the charge of main- taining a station can be laid upon the business done at that station. If, for instance, a small amount of business is done at a station the rates cannot be made much greater at that station than at a neighboring way station, where three or four times as much business is done. § 461. General requirements may produce particular losses. Consistent with this general conception is the contention sup- ported by some eases that transportation for particular transits may be required to be made according to some general system of rates, producing a fair return for the system as a whole, although it is alleged fliat in a particular instance loss will re- sult. Such were, perhaps, the facts in Missouri Pacific Rail- way V. Smith,® and the court in the majority opinion written by Mr. Justice Battle said : " Appellants further allege that the act of April 4th was unreasonable in fixing the rate for the carriage of a passenger at three cents a mile in this: that the actual cost and expenses of transporting each passenger and his baggage over the Little Rock & Ft. Smith Railway are more than three cents a mile, and that by reason thereof the company operating the road is compelled to transport passengers at a loss. To dispose of this defense, it is snfiieient to quote from the opinion in Railway C(>. v. Gill,'^ as follows: It [railway company] can only claim a profit from the operation of its entire line, and attack as unjust an act that denies it the right 5 Amidon, J.,' in Northern Pac. Ry. v. Keyes, 91 Fed. 47 (1898). Though the decision was reversed on appeal, this point was approved and .rein- forced by the Supreme Court. 6 60 Ark. 221, 29 S. W. 752, 5 I. C. C. Rep. 348. 7 54 Ark. 112, 15 S. W. 18. [450] Chap. XV] Systems Operated as Units. [§ 4iQ2f to fix such rates as -will yield a profit upon its aggregate busi- ness. § 462. Plant adapted for larger population. Where a costly plant is built with the purpose of supplying a large future population, the customers served before the fuU developmeniti of the territory cannot be forced to pay the full expense. The plant must be operated for a fair compensation, even though it results in a loss to the company, and the com- pany must recoup itself, if at all by charging these losses to construction account as part of the expense of establishment. On this question Mr. Justice Holmes, in San Diego Land and Town Company v. Jasper,* said : " The supervisors, in de- termining the rates, assumed that the amount of water available for outside irrigation, apart from the amount used and paid for by National City, was enougb for a little over 6,000 acres, and on that point there is no serious disipute. Then they fixed the rate as if the company supplied this 6,000 acres, although such was not the fact. Of course, the amount actually received for the water actually furnished was correspondingly less than the receipts as estimated by the supervisors! upon their assumption. If there were no force in any of the arguments for the appellees which we have passed by, the result of this mode of estimate might be that the appellant did not get 6 per cent, on the total value of its plant. But here, again, we have to distinguish be- tween Constitution and statute. If a plant is built, as probably this was, for a larger area than it finds itself able to supply, or, apart from that, if it does not, as yet, have the customers con- templated, neither justice nor the Constitution requires that, say, two-thirds of the contemplated number should pay a full return." ® 8 189 U. S. 439, 47 L. Ed. 892, 23 Sup. Ct. 571 (1903). 9 Ace. Boise City I. & L. Co. v. Clark, 131 Fed. 415, 65 C. C. A. 399 (1904). [451] §§ 463, 464] Kaileoad Eate Kegxtlation. [Cibap. XV TOPIC El DIVISION BETWEEN IlfTEESTATE AND INTEASTATE BUSINESS. § 463. Alternative theories of apportionment. Where a road runs through several States, it is quite obvious that in determining the reasonableness of a rate established by one of the States the situation of the whole line must be con- sidered. One of two plans must be adopted : If the income of the whole line is taken as a basis of inquiry, then the possibility of the other States fixing a similar rate must be considered ; or . if, on the other hand, the one rate isi considered its reasonable- ness must be determined by an examination of the capitalization, and income of the road within the particular State. This was pointed out by Mr. Justice Brewer in the leading case of Chi- cago & Northwestern Railway v. Dey ■} " Defendant's road runs through other States ; these States may impose no sdiedule of rates; part of its business is interstate, and only Congress can limit that; so that from the business elsewhere revenues may be earned which will enable it to make up any deficiency in this State. But the invalidity of this schedule does not depend upon legislation or action elsewhere. If this schedule may be put in force here, a similar one may be in Illinois, Minnesota, and other States through which the company's road runs. For some purposes its property in this State is separate and distinct from its property elsewhere, and out of this prop- erty within this State it is entitled to receive some compensa- tion. Eobbing Peter to pay Paul has never received judicial sanction." § 464. Whether State lines are arbitrary. The first alternative that the reasonableness of the rate must be determined upon the assumption that the same rate will be adopted throughout the whole system was that applied in 135 Fed. 866, 1 L. R. A. 744, 2 Int. Com. Rep. 325 (1888). [452] Chap. XV] Systems Opeeated as Units. [_% 465 Steenerson v. Great Northern Railway.^ Mr. Justice Canty said : " It seems to us that there is scarcely any good reason why a railway system should be divided on State lines at all, for the purpose of fixing rates. After rejecting the portions that are not self-supporting, the balance of the system may be considered as a whole ; and, in fixing rates in one State, it will only be necessary to see that, if rates are properly adjusted throughout so as to correspond with the rates thus fixed, the whole of such balance of the system will yield a reasonable in- come on the cost of reproducing the same. In determining what is a proper adjustment of rates between the different por- tions of the system., every case must depend on its own cir- cumstances." § 465. Constitutional requirement for division. The Supreme Court of the United States, however, has adopted the other alternative, and has separated the value of the plant used for merely intra-state business and the net earn- ings from such business, thus determining the reasonableness of the rate fixed by the State. The leading case on this point is Smyth V. Amee.^ Mr. Justice Harlan said in that case: " It is further said, in behalf of the appellants, that the reasonable- ness of the rates established by the ISTebraska statute is not to be determined by the inquiry whether such rates would leave a reasonable net profit from the local business affected thereby, but that the court should take into consideration, among other things, the whole business of the company, that is, all its busi- ness, passenger and freight, interstate and domestic. If it be found upon investigation that the profits derived by a railroad company from its interstate business along are sufficient to cover operating expenses on its entire line, and also to meet interest, and justify a liberal dividend upon its stock, may the legisla- 2 69 Minn. 353, 72 N. W. 713 (1S97). 3 169 U. S. 466, 42 L. Ed. 819, 18 Sup. Ct. 418 (1898) [453] § 465] Eaileoad Rate Eegulatioit. [Cliap. XV: ture prescribe rates for domestic business tbat would bring no reward and be less than the seirvices rendered are reasonably- worth? Or, must the rates for such transportation as begins and ends in the State be established with reference solely to the amount of business done by the carrier wholly within such State, to the cost of doing such local business, and to the fair value of the property used in conducting it, without taking into consideration the amount and cost of its interstate business, and the value of the property employed in it ? If we do not misap- prehend counsel, their argument leads to the conclusion that the State of JSTebraska could legally require local freight busi- ness to be conducted even at an actual loss, if the company earned on its interstate business enough to give it just com- pensation in respect of its entire line and all its business, inter- state and domestic. We cannot concur in this view. In our judgment, it must be held that the reasonableness or unreason- ableness of rates prescribed by a State for the transportation of persons and property wholly within its limits must be deter- mined without reference to the interstate business done by the carrier, or to the profits derived from it. The State cannot justify unreasonably low rates for domestic transportation, con- sidered alone, upon the ground that the carrier is earning large profits on its interstate business, over which, so far as rates are concerned, the State has no control. Nor can the carrier justify unreasonably high rates on domestic business upon the ground that it will be able only in that way to meet losses on its inter- state business. So far as rates of transportation are concerned, domestic business should not be made to bear the losses on in- terstate business, nor the latter the losses on domestic business. It is only rates for the transportation of persons and property between points within the State that the State can prescribe; and when it undertakes to prescribe rates not to be exceeded by the carrier, it must do so with reference exclusively to what is just and reasonable, as between the carrier and the public, in respect of domestic business. The argument that a railroad line [454] Chap. XV] Systems Opeeated as Units. [§ 466 is an entirety; that its income goes into, and its expenses are provided for, out of a common fund ; and that its capitalization is on its entire line, within and without the State, can have no application where the State is without authority over rates on the entire line, and can only deal with local rates and make such regulations as are necessary to give just compensation on local business."* § 466. Methods of division. The method of procedure in such a case is to find what part of the gross receipts is derived from business within the State, and then find the actual cost of doing the business. This cannot be found by taking a proportionate part of the cost for the entire line, since the cost of moving local freight is greater than that of moving through freight. "Additional fuel is consumed at each station where there is a stop. The wear and tear of the locomotive and cars from the increased stops and in shifting cars from main to side tracks is greater ; there are the wages of the employees at the intermediate stations, the cost of insur- ance, and these elements are so varying and uncertain that it would seem quite out of reach to make any accurate comparison of the relative cost. And if this is true when there are two separate trains, it is more so when the same train carries both local and through freight. It is impossible to distribute be- tween the two the relative cost of carriage. Yet that there is a difference is manifest, and upon such difference the opinions of experts familiar with railroad business is competent testi- mony, and cannot be disregarded." The fact that an exact mathematical computation of the cost is impossible is imma- terial ; the cost must be found, as best it may, before the reason- 4 Accord Chicago, M. & St. P. Ry. v. Thompkins, 176 U. S. 167, 44 L. Ed. 418, 20 Sup. Ct. 3.36 (1900), affirming s. c. 90 Fed. 363 (1898) ; Chi- cago, M. & St. P. Ry. V. Smith, 110 Fed. 473 (1901); State v. Atlantic Coast Line et al. (Fla.), 37 So. 652 (1904) ; State v. Seaboard Air Line (Fla.), 37 So. 658 (1904). [455] § 466] Eaileoad Rate Eegui^tiost. [Okap. XV ableness of the local rate can be determined. " There are many things that have to be determined by court and jury in respect to which mathematical accuracy is not possible." ^ In a late ease,* the p'roblem was discussed in this nxanner: " The other issue the respondent has likewise failed to meet. Taking the figures from the brief filed by the respondent, we find that the local business alone produces a net earning of at least 3 per cent, on the total value of the road in Florida, charg- ing against such income the whole of the taxes. "While a State is not permitted to offset local business against interstate busi- ness, and to justify low local rates by reason of the profitableness of the latter, yet the interstate and foreign business may and should be considered in determining the proportion of the value of the property of the company assignable to local business. There is no proper showing of the interstate and foreign busi- ness, so that we may determine on what fraction of the whole value of the property in Florida the company might be entitled to earn an income from local business. There is, however, a showing that the interstate and foreign business is large, and on a proper showing and a proper proportioning of the service be- tween domestic and foreign business this percentage of net in- come would be largely increased- Under the scheme of dis- tribution of the earning of the whole road between the several States through which it runs, a ton of Florida oranges or early vegetables is allowed the same credit as a ton of coal in Vir- ginia, and no more. We have examined with care all the rate cases decided by the Supreme Court of the United States, and see nothing therein to conflict with the views expressed above." 5 Chicago, M. & St. P. Ey. v. Tompkins, 176 U. S. 167, 44 L. Ed. 418, 20 Sup. Ct. 336 (1900), reversing s. c. 90 Fed. 363 (1898). estate v. Atlantic Coast Lins (Fla.), 37 So. 657 (1904). [456] TITLE II. Ebasoitableness of Paeticitlak Rates. CHAPTER XVI. FACTORS OPERATING IN THE ESTABLISHilENT OF PARTICULAR RATES. § 471. Distribution of the burden of the schedule upon different articles carried. TOPIC A. COST OF SEEVICE AS THE BASIS OF BATE MAKING. § 472. Method of estimating cost of service. 473. Basis of proportionate rate the ton-mile cost. 474. Cost of carriage as a factor affecting particular rate. 475. Insufficiency of the principle of the cost of service. 476. Length of haul as a factor affecting a particular rate. 477. Modification of the principle of the length of haul necessary. 478. Volume of traffic as a factor affecting the particular rate. 479. Limitation upon the law of increasing returns. 480. Increased volume of traffic causing increase of cost. TOPLC B VALUE OF THE SEEVICE AS THE BASIS OF EATE MAKING. § 481. What the traffic will bear as a factor affecting particular rate. 482. Essential defects in the principle of charging what the traffic will bear. 483. Making rates compared with levying taxes. 484. Rates may be shown to be unreasonable in themselves. 485. Adjustment between the claims of the company and the patron. 486. Equalization of advantage as a. factor affecting the particular rate. 487. Carriers not obliged to equalize disadvantages. 488. Competition as a factor affecting the particular rate. 489. Conclusion as to proportionate rate. 490. Classification the method of establishing the particular rate. 491. All factors enter into the determining of a particular rate. [457] §§ 471, 472] Kaileoad Eate Eegulation. [Chap. XVI § 471. Distribution of the burden of the schedule upon dif- ferent articles carried. From the point of view of the carrier, as has been seen, it is enough if the schedule as a whole yields a fair return by way of profit. To the individual shipper, however, the effect of the tariff as a whole is quite immaterial. He is interested in a single rate only, that upon the goods which he is shipping; and from his point of view the important thing is that such goods shall pay no more than a reasonable part of the whole necessary return to the carrier. It is necessary, therefore, to consider next the rules for the proper distribution of the whole burden of the charge upon the individual articles carried. To look at the problem from another point of view, the entire schedule of rates having been established, so that the proportion is properly fixed, it will be easy to test the validity of the rates. The araount to be raised by the entire schedule of rates having been determined, according to the principles already examined, the sum of all the particular rates must equal that amount; and this sum is determined by adding the rates received on account of the known traffic at each station. TOPIC A. COST OF SEEVICE AS THE BASIS OF EATE MAKING, § 472. Method of estimating cost of service. In the preceding chapters the total amount of annual receipts which the carrier is justified in taking from its whole business has been discussed. These were, in brief, all annual expendi- tures, including an allowance for depreciation requirements, and in addition the fair capital charges for the year, arrived at by determining what would be a reasonable return upon proper capitalization. A railroad must get this total from its pas- senger traffic and from its freight traffic. The first difficulty is to decide what proportion should be contributed by the [458] C'hap. XVI] Establishment of Rates. [§ 473 passenger traffic and by the freight traffic respectively ; then the same difficulties remain in apportioning to each item of traffic a fair share of the burden. It may be difficult, if not impos- sible, to apportion to each portion of the traffic its proportionate ^ share of the fixed charges with any degree of accuracy, but at the same time, there are certain items in the cost of performing a particular service which should never be left out of accoimt by a railway management in making its rate for that service. Thus an expert railway management ought to be able to estimate with some degree of accuracy the particular expenditures in- volved in moving a carload from one point to another — ^wages, coal, oil and the like. It would be wrong plainly to ignore the cost of service in so far as it may be estimated; for to serve some shippers for less than the special costs of serving them would be plainly unfair to other shippers who would be called upon to make up the deficiency. § 473. Basis of proportionate rate the ton-mile cost. The division of the total charges among the various articles of traffic may be u,pon the basis of the ton-mile ; that is, the num- ber of tons carried multiplied in each case by the num- ber of miles carried. If the sum of the whole amount of freight carried amounts to one hundred thousand ton-miles, and the gross revenue required from freight to two thousand dollars, the average rate of freight will be two cents per ton-mile. If there were no other factors in the problem, therefore, a fair proportionate rate would be the ton-mile average charge. Be- cause, however, of other factors, which cause a difference between commodities with respect to the fair charge for carry- ing them, a uniform ton-mile rate applied to all cases would not result in reasonable particular rates. While it must remain the average rate, each particular rate is likely, in fact, to be pushed above or brought below the average by reason of one or more special circumstances, which must now be briefly considered. [459] § 474] Eaileoad Eate Regulation. [Ctap. XVT § 474. Cost of carriage as a factor affecting particular rate. The cost of carriage is a factor which must in fairness be considered in arriving at a particular rate, since it is obviously fair that for a carriage which is unusually expensive a higher than the average rate should be paid. But while a rough esti- mate of the cost of carriage is to be considered in fixing the par- ticular rate, it will seldom be possible to apportion with any exactness the proportionate share of the burden upon that basis alone. This general problem came up in a rather difficult form in a recent case before the Supreme Court' of Tennessee.-^ The facts in that case were these: A railroad company contracted with a newspaper publisher, agreeing to run a special early morning train carrying only the newspapers of the publisher, in con- sideration of the publishing company guarantying to it a certain revenue from the operation of the train. This train became one of its scheduled trains, and was advertised as such. It was con- trolled exclusively by the company, and all the revenue derived from its operation in the carrying of passengers and freight was its property. The court held that notwithstanding the provisions of the contract the railroad must accept the newspapers of the plain- tiff. Upon the troublesome question as to how much the plaintiff must pay for the service, the court had interesting sug- gestions. The substance of what was decided on that point was that since the railroad company was bound, under its duty as a common carrier, to carry any freight properly tendered to it, neither the railroad nor the house contracting for the service could impose, as a condition of acceptance and delivery of goods tendered, an obligation to share the burden of establishing the service voluntarily assumed by the contracting house. 1 Memphis News Publishing Co. v. Southern Railway Co., 75 S. W. 841 (1904). [460] Chap. XVI] Establishment of Eates. [§ 474 Upon the point of the compensation to be required of the petitioning company, the court found it difficult to state certain rules, expressing their conclusions thus': First, we think it would be impracticable to state an account which would do equal justice to the parties. While it would be easy to ascertain the amount of money expended and the value of the service ren- dered in fostering this train by cross complainant, yet it would be impossible to ascertain the value of the advantages de- rived by it from this enterprise. Certainly the worth of this advantage should be taken into account. Second, If bound to contribute at all, we think the Morning News Publishing Com- pany could only be required to do so to the extent of its propor- tional part of the same, all other shippers who had availed themselves thereof being equally liable to contribution.^ 2 The cost of a particular service was held an important factor in mak- ing a particular rate in the following cases, among others: United States Supreme Coukt: Chicago & G. T. Ry. v. Wellman, 143 U. S. 339, 36 L. Ed. 176, 12 Sup. Ct. 400 (1892), affirming 83 Mich. 592, 47 N. W. 489; Minneapolis & St. L. R. R. V. Minnesota, 186 U. S. 257, 46 L. Ed. 115, 22 Sup. Ct. 901 (1902), affirming 80 Minn. 191, 83 N. W. 60 (1900). Fedebal Coubts: Chicago, St. P., M. & 0. Ry. v. Becker, 35 Fed. 883 (1888) ; Interstate Com. Com. v. Leigh V. Ry., 49 Fed. 177 (1892); Interstate Com. Com. V. Leigh V. Ry., 74 Fed. 784, appeal withdrawn, 82 Fed. 1002, 27 C. C. A. 681 (1897) ; No. Pacific Ry. v. Keyes, 91 Fed. 47 (1898) ; Interstate Com. Com. V. Louisville & N. Ry., 118 Fed. 613 (1902) ; Louisville & W. Ry. v. Brown, 123 Fed. 946 (1903); Tift v. Southern Ry., 138 Fed. 753 (1905). State Coubts : California — Redlands L. & C. D. W. Co. v. Redlands, 121 Cal. 363, 53 Pac. 843 (1898). Florida — State v. Seaboard Air Line (Fla.), 37 So. 657 (1904). Maine— Kennebec Water Dist. v. Waterville, 97 Me. 185, 54 Atl. 6, 60 L. R. A. 856 (1902). Massachusetts — Fitchburg Ry. v. Gage, 12 Gray (Mass.) 393, B. &. W. 350 (1859). — Minnesoto— Steenerson v. Gt. Northern Ry., 69 Minn. 353, 72 N. W. 713 B. & W. 333 (1897). See §1 508-514 infra. [461] § 475] Eaileoad Eate Regulation. [Chap. XVT § 475. Insufficiency of the principle of the cost of service. But cost of service is not the decisive factor in determining a railroad rate, even if it could in all cases be fairly approxi- mated. Indeed, it is doubtful whether it would of itself form any fair test for the fairness of a particular rate. For, in the 5rst place, it must always be impossible to arrive at the cost of a particular carriage. ISTo goods, as a practical matter, are car- ried by themselves under such circumstances that an exact com- putation can be made of the cost of carriage; all that can be said is that the carriage of some goods is known to be more ex- pensive than that of others. In the second place, even if such a computation were possible it would not necessarily be fair to make a shipper pay the exact cost of carriage of each shipment. To do so would make the freight vary according to the circum- stances of each journey ; no man could know what he must pay for any particular shipment, and for similar carriages of the same article two shippers would pay very different charges. Fairness requires that the charge shall be uniform for a certain article carried over a certain route, although the exact cost of carriage may at one time be very much greater than at another. The exact cost of carriage, therefore, or such approximation to it as may be possible, can never be used as the sole or the deter- mining factor in a particular rate. But while the cost of car- riage cannot be used by itself to determine a particular rate, neither should it ever be neglected. Considered along with other factors, it should in a general way tend to raise or to lower a particular rate. Inteestate Commebce Commission. Thurber & N. Y. C. & H. R. R. R., 2 Int. Com. 742, 3 Int. Com. 473 (1890); New Orleans Cotton Exchange v. Illinois C. R. R., 2 Int. Com. 777, 3 Int. Com. 534 (1890) ; Farrar v. East Tenn. V. & G. R. R., 1 Int. Com. 76; 1 Int. Com. 480 (1888) ; Brockway v. Ulster & D. R. R., 8 Int. Com. 21 (1898); Gustin v. Atchison T. & S. F. R. R., 8 Int. Com. 277 (1899); Hilton Lumber Co. v. Wilmington &. W. R. R., 9 Int. Com. 17 (1901) ; Re Proposed Advances in Freight Rates, 9 Int. Com. 437 (1901). [4G2] Chap. XVI] Establishment of Rates. [§ 476 § 476- Length of haul as a factor affecting a particular rate. The first and most obvious fact which affects the rate is the length of carriage. The further goods are carried, the less, gen- erally speaking, the charge per mile will be, since certain fixed and terminal charges must be paid once and only once no matter how long the haul. As these charges must be paid out of the rate, it is clear that the more miles the goods are carried the less the amount of the &xed charges which must be added to the rate for each mile. " It is a familiar rule in the transportation of freight by railroads, and has become axiomatic, that while the aggregate charge is continually increasing the further the freight is carried, yet the rate per ton per mile is constantly growing less all the time, unless there be exceptional conditions modifying this rule. In consequence of the existence of this rule the increase of the aggregate charge continues to be less in proportion every hundred miles, arising out of the character and nature of the services performed and the cost of the service ; and thus it is that staple commodities and merchandise are enabled to bear the charges of transportation from and to the most dis- tant portions of our country." * 3 Farrar v. East Tenn., V. & G. E. R., 1 Int. Com. Eep. 764, 1 Int. Com. 487 (1888). Length of haul is plainly an important factor in establishing particular rates; in the following citations this point is emphasized: United States Supreme Coukt: Texas & P. Ry. v. Interstate Com. Com., 162 U. S. 197, 40 L. Ed. 940, 16 Sup. Ct. 666 (1896) ; East Tenn., V. & G. Ey. v. Interstate Com. Com., 181 U. S. 45 L. Ed. 719, 21 Sup. Ct. 516 (1901). FeDEBAL COUKTS: Interstate Com. Com. v. Louisville & W. R. R., 73 Fed. 410 (1896); Matthews v. Board of Corp. Comm'rs., 106 Fed. 7 (1901); Interstate Com. Com. v. Louisville & N. R. R., 118 Fed. 613 -(1902) ; Tift v. South- ern Ry., 138 Fed. 753 (1905). State Courts: Florida— State v. Seaboard Air Line, 37 So. 658 (1904). Zentuciri/— Louisville & W. Ey. v. Com., 21 Ky. L. Rep. 232, 51 S. W. 154 (1899). [463] § 477] Railroad Kate Regulation. [Chap. XVI § 477. Modification of the principle of the length of haul nec- essary. In a case of this sort,* Mr. Commissioner Bragg siaid : " The length of the haul is however only one factor in the prohlem; and its effect may be modified or entirely neutralized by other considerations. The natural check, so to speak, on the operation of length of haul is the difficult character of the country through which the longer haul is carried on, making operation more ex- pensive, and thus neutralize the advantage derived from the longer haul. '^ " The conditions of transportation are very unfavorable. The cost of transportation is much greater. The volume of business is light. Local rates graded according to distance are largely a result of the situation. The subject of comparing rates in one portion of "the country with rates in another, and rates upoin one line with rates upon another operated under substantially different circumstances and conditions, has re- peatedly been before us, and we have uniformly held that they do not constitute a fair basis of comparison." For this or some similar reason, the rule that the rate per ton- mile diminishes in proportion to the length of the haul must continually be modified by other cireumstanoes of various sorts. " The rule that the rate per ton per mile must be less for the greater distance is one of the tests by which the rates can be care- fully scanned in themselves. It is, however, like looking at them with a microscope. It ignores all other tests except that Minnesota — State v. Minneapolis & St. L. R. R., 80 Minn. 191, 83 N. W. 60 (1900). Mississippi— Alaba.ma. & V. Ry. v. Com., 38 So. 356 (1905). Interstate Commekce Commission: New Orleans Cotton Exeh. v. Cincinnati, N. 0. & T. P. R. R., 1 Int. Com. 764 (1888) ; Business Men's Assoc, v. Chicago & N. W. R. R. 2 Int. Com. 48, 2 Int. Com. Rep. 73 (1888) ; Trammell v. Clyde S. 8. Co., 4 Int. Com. 120, 5 Int. Com. 324 (1893) ; Cordele Machine Shop v. Louisville & N. R. R., 6 Int. Com. 361 (1895) ; Hilton Lumber Co. v. Wilmington & W. R. R., 9 Int. Com. 17 (1901). [464] Chap. XVI] Establishment of Rates. [§ 478 which it alone furnishes. It ignores all surrounding circum- stances and conditions and every factor of every kind and de- scription that enters into the making of the rate, no matter how compulsory or imperious that factor may be. It serves in itself a valuable purpose, not only as a close test of what a rate really is, but also as a basis in the cases to which it can be made to justly apply as a rule ; but to determine the reasonableness and justness of a rate, all surrounding circumstances and conditions, and the factors which enter into the making of the rate, if there are any that are compulsory or imperious, must be considered as well as the rights of the shipper." * § 478. Volume of traffic as a factor affecting the particular rate. As the volume of trafSc increases, the particular rate tends to diminish. All fixed charges, and other expenses (like station expenses, salaries, and even to a certain extent wages, which are the same whether much or little freight is carried), must be paid largely out of the freight rates, and the greater the traffic, the less each separate article must bear. It is a general principle, therefore, that a large volume of traffic tends to lower the partic- ular rate. This fact is the basis of a theory sometimes held, which may be described as the law of increasing returns. Traf- fic to a certain amount is necessary, at a given rate, to pay fixed charges and operating expenses ; when that amount of traffic is obtained, further shipments will net a profit even if they pay a low rate. It is therefore inferred that fairness permits a higher charge upon the goods which must be carried, and a lower charge to attract additional traffic, which might not otherwise be ob- tained. This theory, however, if pressed to its logical result, will result in unfairness. Neither the cost to the carrier nor the value to the shipper is affected by such considerations. The 4 Bragg, Com. in Business Men's Assoc, v. Chicago, S. P., M. & 0. R. R., 2 Int. Com. Rep. 41, 47, 2 I. C. C. Rep. 52 (1888). [465] § 479] Eaileoad Kate Eegulatiox. [Cliap. XVI imf airness is obvious of any rule which would result in an arbi- trary difference of charge to two persons requiring identical service; it would not satisfy the shipper who had first offered goods for shipment to be told that his competitor, who had of- fered goods afterwards was given a lower rate because the law of diminishing costs justified the making of a lower rafe to the second corner.^ § 479. Limitation upon the law of increasing returns. That the law of increasing returns cannot be carried too far in rate making has been pointed out many times by those who deal with this question from the legal standpoint. The general caution with which this principle is admitted may be seen by a quotation from the Interstate Comm-erce Commission: "In many parts of the country railways charge less for transporta- 5 Volume of traffic as aflfecling rail making is mentioned oftentimes, see for examples: United States Supreme Codet: Lake Shore & M. S. v. Smith, 173 U. S. 684, 43 L. Ed. 858, 19 Sup. Ct. 565 (1899), reversing 114 .Mich. 460, 72 N. W. 328; Minneapolis & St. L. R. R. V. Minnesota, 186 U. S. 257, 46 L. Ed. 1151, 22 Sup. Ct 901 (1902), affirming 80 Minn. 191, 83 N. w. 601. Federal Courts: Interstate Com. Com. v. Lehigh V. Ry., 74 Fed. 784, appeal withdrawn 82 Fed. 1002, 27 C. C. A. 681 (1897) ; Atlantic & P. Ry. v. U. S., 76 Fed. 186 (1896) ; Metropolitan Trust Co. v. Houston & T. C. R. R., 90 Fed. 683, B. & W. 342 (1898); No. Pacific Ry. v. Keyes, 91 Fed. 47 (1898); Matthews v. Board of Corp. Comm'rs, 106 Fed. 7 (1901). State Courts: Florida — Pensaeola & A. R. R. v. Florida, 27 Fla. 403, 5 So. 833 (1889). Minnesota — Steenerson v. Gt. Northern Ry., 69 Minn. 353, 72 N. W. 713, B. & W. 333 (1897). Mississippi — Alabama & V. Ry. v. Railroad Com. (Miss.), 38 So. 356 (1905). North Carolina — No. Car. Corp Com. v. Atlantic C. L. Ry. (N. C), 49 S. E. 191 (1904). Interstate Commerce Commission : National Hay Assn. v. Lake S. & M. S. Ry., 9 Int. Com. 264 (1902) ; Re Advances in Freight Rates, 9 Int. Com. Rep. 382 (1902). [406] Chap. XVI] Establishment of Rates. [§ 479 tion to a more distant tlian to a nearer intermediate point. For example, the carload rate on bar iron is 75 cents from T^ew York to Los Angeles, while to Ash Fork, an intermediate point upon the Santa Fe road, nearly 500 miles east of Los Angeles, the rate is $1.90. Carriers justify this adjustment of rates by which Ash Fork is charged two and one-half times as much as is Los Angeles, although the traffic to the latter point passes through the former, by saying that water competition fixes the rate at Los Angeles, and that although the rate is unreasonably low there is some profit in the movement. The railroad itself must be constructed and maintained, with its station-houses and its operating force. These general expenses must be in- curred at all events. Any traffic not otherwise coming to the road which pays something above the cost of moving, including rent of engines and cars, cost of fuel and labor, adds to the gross revenues without correspondingly increasing operating expenses. "The Commission does not sanction the extent to which this principle is often pressed in the m^aking of relative rates ; cer- tainly it does not approve the relation of rates established in the example above cited. There are many limitations to the appli- cation of the principle. Additional traffic in reality adds to those expenses which are not in theory affected. It costs more to maintain the track and keep up the operating force of a rail- road when transacting a heavy than when doing a light business. The general expenses are higher. Increased tonnage speedily finds its way into the construction account ; still up to a point at which traffic can be handled to advantage increase in tonnage at the same rate not only increases gross receipts proportionately, but increases net receipts in a still greater proportion. Within the last few years there has been a remarkable growth in railroad tonnage, and it is quite conceivable that this may add sufficiently to the net income without any advance in the price of transpor- tation. The statement of the above law of increasing returns assumes, of course that the items which enter into operating ex- [4G7] § 480] Haileoad Rate Eegulation. [Cliap. XVI penses continue the same. In fact, with increase in traffic has corne enhanced cost of almost every item which makes part of the operating expense of a railroad. It is plain that this disadvan- tage might entirely offset the other advantage. Manifestly the problem admits of no a 'priori solution. The only reliable an- swer is from the observance of actual results."® § 480'. Increased volume of traffic causing increase of cost. In one case the curious position was taken that rates must be raised because the increase in traffic required a large amount of new construction. In reply to this position the Interstate Com- merce Commission said:''' "It appeared from the testimony that offerings of traffic are at present extremely large ; that all lines are taxed to their utmost capacity, and that some have found it absolutely impossible to handle the amount presented. This is requiring enormous out- lay in the providing of additional track facilities and the fur- nishing of additional equipment ; and. it is said that rates ought to be increased in view of this large increase in traffic, and the incident expenditures required. "The idea that increased traffic should raise rates is certainly a reversion of previous notions upon that subject. The first class rate from Chicago to ITew York is 75 cents per hundred pounds, and the distance is one thousand miles. The corre- sponding rate from Chicago to the Missouri River, one-half the distance, is eighty cents. Rates generally in western territory are higher than those in trunk line territory, and it has com- monly been understood that this was due to the greater dens- ity of traffic in the latter section. 'Without doubt this increased demand upon railways is requiring the expenditure of large amounts, but there is nothing in this which would justify an 6 Re Proposed Advances in Freight Rates, 9 I. C. C. Rep. 382 (1902). 7 Re Proposed Advances in Freight Rates, 9 I. C. C. Rep. 38, 427 (1902). [468] Chap. XVI] Establishment of Rates. [§ 481 advance of rates so long as that expenditure will add proportion- ately to the earning capacity of the properties." * TOPIC B VALUE OP THE SEBVICE AS THE BASIS OF SATE MAKING. § 481. What the traffic will bear as a factor affecting partic- ular rate. It is often urged in discussion of the railway rate problem that it is justifiable to make rates according to what the trafficwill bear. This again is a factor in the situation undoubtedly ; for the management in order to get business enough to carry on its service with economy and profit must make some concessions to the low grade commodities which it will inevitably recoup from the high grade freight. And yet this is clearly a principle which can only be justified under strict limitations. These are well discussed by the Interstate Commerce Commission in the quota- tion which follows •} " There was the further suggestion running through the testi- mony of all the witnesses that, after all, a rate was purely a traffic question which could be properly estimated only by traffic and commercial conditions. The real question was said to be, Will the traffic bear these higher rates ? One witness distinctly affirmed that no rate was unreasonable under which traffic would move freely, and that since it was for the interest of the carriers to move traffic, there was no probability that these rates were unreasonable, or that unreasonable rates would ever be imposed. "This idea contains a half truth. With respect to some kinds of traffic the statement is correct. It is for the interest of the railway to create business upon its line, and in the legitimate pursuit of that interest it fosters industries by the making of rates which would not otherwise be put in force. Such rates 8 See, also, South Yorkshire v. Midland Ry., 10 Ry. & C. T. Gas. 28 (1862). iThe quotation which follows is from Re Proposed Freight Rates, 9 I. C. C. Rep. 382 (1902). [4C9] § 482J Railboad Rate Eegulatiokt. [Chap. XVI are applied to the opening of stone quarries, the mining of coal, the carrying of raw material to the factory, and even of the fin- ished product from the factory. These rates do not always add that much to the total consumption or to the total production, but rather determine at what point the commodity shall be pro- duced; and when once the differentials between different mar- kets of consumption and supply have been determined, as at present they generally are in this country, any general increase in rates would not correspondingly limit, or any general decline quicken, the total movement of traffic. Still, the tendency of low rates is to stimulate business and in case of many rates the self-interest of carriers m^y be safely relied upon to prevent unjust exaction."^ § 482. Essential defects in the principle of charging what the traffic will bear. Any aonsiderable concession to the principle of charging what the traffic will bear is dangerous. The public service company is acting primarily for the benefit, not for the ex- ploitation of the public. To allow a carrier, for instance, to charge what the traffic will bear is to foster a continual increase of railroad rates. The problem was concisely and unanswer- ably stated and discussed by Mr. District Judge Speer in the case of Tift V. Southern Rail way. ^^ In this case the Southeast- ern Ereight Association, an association including the defendant railways, had raised the freights on lumber from Georgia to the Northwest. At first shipments almost ceased; but with a re- 2 Charging what the traffic will bear is not held a, proper basis for rate making by the judicial courts. See Tift v. Southern Ey., 138 Fed. 753 (1905) ; Brunswick & T. W. D. v. Maine Water Co., 919 Me. 371, 59 Atl. 537 (1904). And the railroad commissioners give it little scope. See Re Rates on Food Products, 3 Int. Com. Rep. 98 (1890); Re Advances in Freight Rates, 9 I. C. C. Rep. 382 (1902). See §§ 523-529 infra. 3 138 Fed. 753 (1905). [470] Chap. XVI] Establishment of Rates. [§ 483 vival of business they began again; and the fact of the large shipments was relied upon to show that the new rates were not unduly high. The court said : " A great demand for yellow pine lumber had grown up in all sections. Builders felt them- selves obliged to have it, whatever the price, and whatever the rate, and large shipments were made on the advance rates. This is plainly enough shown by the numerous supplemental aflfidavits offered by the complainants and received as evidence. This, however, was in no sense ascribable to the action of the Southeastern Freight Association in imposing thig rate, but was despite that action. It in no sense relates to the reasonable- ness or unreasonableness of the rate. And it should not be for- gotten that while the business of the lumbermen was recuper- ating the treasuries of the railroads were all the while receiving a proportionate increment from the unreasonable increase of rates which they had imposed. They have no right to graduate their charges in proportion to the prosperity which comes to industries whose products they transport. With equal reason they might demand an increase of rates for the transportation of cotton with every increase in the value of our great staple. Indeed, to concede the principle for the fixation of rates upon which the railroads through the medium of the Southeastern Freight Association have acted in this case would concede their power to levy for no better service augmentation of tolls for every increase of profit in every line of endeavor won by the enter^ prise, sagacity, and industry of the American people. It is superfluous to add that a government of law, and not of men, will never tolerate such domination and control of the trade, manufactures, and commerce of the American people." § 483. Making rates compared with levying taxes. It is a common statement in the discussion of rate making that the situation is the same as in the levying of taxes. This may be used as a figure of speech but it is loose talk at best. There is a certain truth in the principle of charging more [471] § 484] Eaileoad Bate Eegulatiost. [Chap. XVI against valuable goods than against cheap go(^s, as has been conceded ; but that the carrier can, in analogy to taxation, . throw the burden upon, the more valuable goods and relieve the cheaper goods in direct proportion to their respective values cannot be admitted. The duty of the carrier is to. move all goods at a reasonable price for the service rendered, a matter not to be determined upon any ad valorem basis. The wrong to the public in making what the goods will bear the basis of rates is well pointed out in the succinct quotation which fol- lows : " It is not a question of what the traffic will bear, but rather of what the public should bear. Conditions are such that this rate can be advanced as between the people who pay it and the stockholders who receive it. Is the advance right? Every question as to the reasonableness of a rate may present itself in two aspects. First, is the rate reasonable, estimated by the cost and value of the service, and as compared with other commodities? second, is it reasonable in the absolute, regarded more nearly as a tax laid upon the people who ultimately pay that rate? The considerations which determine the first of these aspects are of but little weight in determining the second. Every such inquiry involves the idea of some limit beyond which the capital invested in railways ought not to be allowed to tax other species of property. What is that limit, and how can it be fixed?"* § 484. Rates may be shown to be unreasonable in them- selves. Occasionally a case will come up when the competition be- tween the principle of protecting the carrier in its fair return and the principle that no more than a reasonable charge should be exacted from the shipper is not a difficult issue to decide. For sometimes the unreasonable character of the charge ex- acted will be so a,pp'arent that the case for the shipper will be unaffected by the most skillful argument for the carrier. Thus 4 Re Advances in Freight Rates, 9 I. C. C. Rep. 382 (1902). [472] Ohap. XVI] Establishment op Bates. [§ 484 in one ease under examination by the Interstate Commerce Conunission,*'^ the railroad company met the charge that the rate establisihed was unreasonable by attempting to show that they were earning no more than a fair return. But tiie Com- mission, in bolding for the complainant, seized upon the obvi- ous fact that the rates were plainly unreasonable in themselves. On that point it was said : " In the fiscal year which had just closed when this proceeding was commenced, the average rate received by the railway companies of the United States for hauling one ton of freight one mile, was less than 1 cent. The average received by the railway companies, including the defendants, operating in the territorial group composed of the States of Arkansas, Missouri, Kansas, parts of tlie States of Colorado and Texas, and Indian and Oklahoma Territories, and part of the Territory of New Mexico, was less than 1.2 cents. The Eureka Springs Railway Company received more than 10 cents per ton per mile, which is about nine times the average amount received by the railway companies operating lines in said States and Territories so grouped, because of similarity of, or in respojt to, density of population, topog- raphy and nature of the country, character of industries served by railways, and other characteristics aifecting the question of the cost and reasonable compensation for railway service."^ 4a Gary v. Eureka Springs Ey., 7 I. C. C. Rep. 286 (1897). B A rate unreasonable in itself to the person served cannot stand. See : Unitbd States Supbeme Coubt: Union Pac. Ry. v. Goodridge, 149 U. S. 680, 37 L. Ed. 896, 13 Sup. Ct. 970 (1893), affirming 37 Fed. 182; Covington & L. T. R. Co. v. Sandford, 164 U. S. 596, 41 L. Ed. 561, 17 Sup. Ct. 198 (1896), reversing 20 S. W. 1031; Smyth v. Ames, 169 U. S. 466, 42 L. Ed. 819, 18 Sup. Ct. 418, B. & W. 347 (1898), affirming 64 Fed. 165; Minneapolis & St. L. R. R. ,. Minnesota, 186 U. S. 257, 46 L. Ed. 1151, 22 Sup. Ct. 901 (1902), affirm- ing 80 Minn. 191, 83 N. W. 60. Fedeeal Courts: Wells v. Oregon Ry. & H. Co., 15 Fed. 561 (1883) ; Interstate Com. Com. V. Louisville & N. R. R., 118 Fed. 613 (1902). State Courts: [473] § 485] Eaileoad Eate Eegulation. [Ckap. XVI § 485. Adjustment between the claims of the company and the patron. It may be that a public service company cannot obtain a fair return on its investment vi^ithout charging more than a fair amount for the particular service. This will not usually hap- pen: there will usually be some ground left between the limit of reasonable return and the limit of value of the service. As Mr. Justice Savage said in Kennebec Water District v. Water- ville :« " In some of the cases to which we have referred, it is sug- gested that there may be instances where these two principles will clash, — where public service rendered at rates not higher than the service in itself is worth may produce less than a fair income, or no net income at all. But we assume that it is un- necessary to discuss this question here, for neither upon the face of the bill and answer, nor in the requests for instructions, nor in the arguments of counsel, is there any suggestion that what will be reasonable rates for the public in this case will not also be reasonable rates for the company." Where, however, the question is approached from the opposite standpoint, and the court has found that a schedule of rates charged by the company does not of itself bring in more than a reasonable return to the company, it may be necessary to cut down this maximum permitted rate by considering the rights of the individual served. That is, in determining what are reason- able rates, the fact that a road earns little more than operating California — Spring Valley W. W. v. San Francisco, 82 Cal. 286, 23 Pac. 910 (1890). Maine — Kennebec Water Dist. v. Waterville, 97 Me. 185, 54 Atl. 6, 60 L. R. A. 856 (1902). See §§ 515-521, infra. Interstate Commeeob Commission: New Orleans C. Ex. v. Cincinnati, N. 0. & T. P., 2 Int. Com. Rep. 289, 2 I. C. C. Rep. 375 (1899) ; Cary v. Eureka Springs Ry., 7 I. C. C. Rep. 286 (1897). 6 97 Me. 185, 54 Atl. 6, 60 L. R. A. 856 (1902). [474] Chap. XVI] Establishment of Rates. [§ 486 expenses is not to be overlooked, but cannot be made to justify grossly excessive rates. Thus, wherever there are more roads than the business at fair rates vfill remunerate, they must rely on future earnings for a return of investments and profits.'^ § 486. Equalization of advantage as a f.actor affecting the particular rate. A theory of fixing rates which appeals to many economists, which is in fact a modification or special application of the rule for charging what the traffic will bear, is the theory that rates should be so fixed as to equalize the advantage of shippers and thus establish the conditions of business for the good of the whole country. It is in substance a sort/ of legal protection to strug- gling industries. Thus if wheat cannot be raised in Wyoming as cheaply as in Iowa, the rates from Wyoming to the seaboard should be correspondingly reduced; unless indeed it does not seem to the rate-fixers to be for the country's good that wheat should be raised in Wyoming. A practical objection to this doc- trine will at once appear. It calls on the private individuals who happen to have power over rates to act in such a way as to subserve the public good, rather than their own advantage ; and thus without election as legislators and without the responsibil- ity of office, to perform one of the most difficult of legislative functions. Nor is it practically possible to fix rates entirely or principally on this theory. As Mr. Commissioner Veazie well said: " The complainants have advanced the theory that the Com- mission in fixing these relative rates should be governed by com- mercial considerations wholly, independent of the cost of car- riage. It was said by Mr. Squire, one of the complainants, in his testimony, that railroads should make just relative rates so TNew Orleans Cotton Exch. v. Cincinnati, N. 0. & T. P. R. Co., 2 Int. Com. Rep. 289, 2 I. C. C. Rep. 375 (1888) ; Rice v. Western New York & P. R. Co., 2 Int. Com. Rep. 298. [47.5] § 487] Eailboad Eate Regulation. [Chap. XVI that both parties could live, and that the product rate should be higher than the live-hog rate, even if the cost of transporting the two articles be the same, which is not the case. It is to this the- ory that the complainants have very largely directed the atten- tion of the Commission. A rate which is based upon this theory would have to vary in the case of the live hogs with every change in the market price of the animals in the western markets. " Eates for the transportation of property should be arrived at and based so far as practicable upon permanently continuing, fixed facts and conditions. The fluctuations of the markets of the country are so frequent, especially as to competitive articles, and oftentimes unexpected, that commercial considerations alone would not furnish a sufficiently stable and fixed rule for guid- ance in making a rate which ought to remain substantially per- manent through all fluctuations. Upon this point so strenuously urged by the complainants that carriers should adjust their rates in a way to produce equality between the competitors in all markets, it must be apparent that it would be a useless task for the Commission, even if it had the power, to attempt to accom- plish such a result. It would involve a careful research into all the circimistanees surrounding the business of each locality, as questions of rent, rates of taxation, cost of labor, and many other things which suggest themselves. The evident result would be that there would have to be as many differently constructed rates as there are different localities." * § 48'7. Carriers not obliged to equalize disadvantages. But while the equalization of advantage cannot be a chief factor in rate-fixing, it may legitimately be considered as one of the subordinate factors tending to lower the particular rate, and may be taken into account with the other factors enumerated in this chapter.® 8 Squire v. Michigan Central Ry., 3 Int. Com. Rep. 515, 4 I. C. C. Rep. 611 (1891). 9 Equalization of advantages is discussed in §§ 538-542, infra. [476] Cihap. XVI] Establishment of Eates. [§ 488 It is plain that a railroad company may have nothing to do with the principle of equalization, and shippers whose original disadvantages remain have no legal redress. " The complain- ants introduced considerable testimony to show the cost of pro- ducing corn and wheat in northwest Iowa, for the purpose of demonstrating that at the present rate it was not possible for the farmer in that section to embark in this industry at a profit. Very little has been said in reference to this aspect of the case upon the argument, and probably very little could be consistently said. If the farmer cannot, in a given locality, raise and ship produce to market at a profit upon the existing freight rate, that is usually no reason why the carrier should be compelled to accept less than a reasonable sum for its service." ^** § 488. Competition as a factor affecting the particular rate. But while the "law of increasing returns " cannot be pressed too far, it contains an element of truth which may be considered in fixing a particular rate. If traffic may be acquired by a spe- cially low rate which would otherwise be lost, to acquire the traffic would benefit rather than burden other traffic of a difi'er- ent kind, since if under the law of increasing returns it is re- munerative, the profit thus earned will tend to diminish the rates charged on the remaining traffic. On this ground competi- tion may be considered as a factor in fixing rates. If a carrier is carrying goods from two stations, at one of which there is com- petition, the rate at the station where the competition exists may fairly be reduced, so far as is absolutely necessary to secure the traffic, provided the reduced rate remains a remunerative one under the law of increasing returns. If the rate were not reduced, ex hypothesis the traffic would be lost, and the profit realized upon it must be exacted from the non-competitive traf- fic ; if on the other hand the rates were reduced equally all over 10 Prouty Com. in Grain Shippers' Assoc, v. Illinois Cent. R. E., 8 I, C. C. Rep. 158 (1899). [477] § 489] ' Railroad Eatb Regulation. [Cliap. XVI the road, the carrier could not earn a fair return from his whole schedule, since we are assuming that the necessary competitive rate is so low as to be profitable only as a result of the law of in- creasing return. The same result will follow if the competi- tion affects not a particular station but a particular class of goods. It is therefore always fair even to the shipper who does not get the benefit of the competition to consider competition as a factor in reducing the rate."^ § 489. Conclusion as to proportionate rate. As a result of these considerations, the conclusion may be drawn that a proportionate rate must be establi^shed for each article of traffic. This rate will be fixed according to the share of the entire burden of charge which ought reasonably to be borne by that particular article. In determining the reasonable share of the burden to be borne by an article, various considera- tions must be weighed, and the rate when finally established will be determined as a result of all such considerations. It must be clear, therefore, that the establishment of the particular rate is not, like the establishment of the general schedule of charges, a matter which can be tested by a mathematical formula. The division of rates among the particular commodities involves judgment and experience; it is not an exact division, but only the closest possible approximation to fairness. Thus in speaking of the requireiaent of tlie Federal Inter- st.ate Commerce Act of 1S,S7, section 1, tliat rates should be rea- sonable and just, the Interstate Commerce Conunission has said : " The Avords ' reasonable ' and ' just ' as used in the Stat- ute, as applied to rates, are each relative terms. They do not mean to imply that the rates upon every railroad engaged in interstate commerce shall be the same or even about the same. The conditions and circumstances of each road surrounding the traffic and which enter into and control the nature and character 11 Competition as a factor is discussed in §§ 530-537, infra. [478] Chap. XVI] Establishment of Rates. [§§ 490, 491 of the service performed by the carrier in the transportation of property, such as the cost of transportation, which involves vol- ume or lightness of traffic, expenses of construction and of opera- tion, competition in some respects of carriers not subject to the Lave, rates made by shorter and competing lines to the same points of destination, space occupied by freight, value of freight and risk of carriage to carrier, all have to be considered in deter- mining whether a given rate is ' reasonable ' and ' just.' " ^^ § 490. Classification the method of establishing the particu- lar rate. The division of rates is accomplished by the classification of all articles into certain groups, and then fixing the rate for each group. In classification, as will be seen, all the factors which have been discussed are considered; and it is by af- fecting the classification that such factors usually influence the particular rate. The classes having been esitablished, it is necessary next to determine the difference of rate between the classes, which may be effected by establishing a certain propor- tion between the various class rates. Finally, it remains to fix the charge according to the length of journey ; and this may be done by fixing the rate between individual stations, or by grouping the stations, and fixing the rate with reference to an entire group. § 491. All factors enter into the determining of a particular rate. A particular rate thus is a resultant of many factors. While there are certain economic forces which must be recognized as playing a legitimate part in the establishment of a particular rate, it is the office of the law to interfere to prevent the work- ing out of these forces in an oppressive way. For experience 12 New Orleans Cotton Exchange v. Illinois Cent. R. R., 2 Int. Com. Rep. 777, 3 I. C. C. Rep. 534 (1890). [479] § 491] Railroad Rate Regulation. [Ohap. XVI has shown that the regulation of rates cannot be safely left to natural processes, but the law must often be called upon to pre- vent the distribution of the burden of rates in a disproportion- ate manner. But in a conservative handling of the rate prob- lem, these economic conditions are taken into account and al- lowed some scope. Thus in one proceeding in passing upon rates upon corn, the Interstate Commerce Commission said : ^^ "What part of the whole burden of maintaining the roads must the corn pay ? How much shall be apportioned to com and agricultural products and how much to the machinery used ? How much on the necessaries and comforts used ? We think no better rule applicable to the matter under investigation than that applied by railroads themselves, in accordance with which rates are^o adjusted as to secure the largest interchange of commodities. This rule is approved by its frequent applica- tion in the movement of western grain through the voluntary action of the roads. Put such a rate on corn as will encourage and warrant its movement if such a rate ia fairly remunerative. While rates should not be so low as to impose a burden on other traffic they should have reasonable relation to cost of production and the value of the transportation service to the producer and shipper. In the carriage of the great staples which supply an enormous business, and which in market value and actual cost of transportation are among the cheapest articles of commerce, rates yielding moderate profit are both justifiable and necessary. The rates which we have determined upon as reasonable have been arrived at on this basis." URe Rates upon Food Products, 3 Int. Com. Rep. 93 (1890). [480] CHAPTER XVII. LEGAL LIMITATIONS UPON MAKING PARTICULAR RATES. TOPIC A CERTAIN LIMITATIONS FUNDAMENTAL. 500. Rates must be fair to the company and to the public. 501. Limitations within which rates must be made. 502. Unreasonable regulation forbidden. 503. Value of the services constitutes maximum limit of charge. 504. Company cannot make unreasonable rates. 505. Reasonable rates not necessarily profitable. 506. Company cannot justify exorbitant profits. 507. Application of these principles to passenger fares. TOPIC B BASING RATES UPON COST OF SEEVICE. 508. Difficulties in dividing joint costs. 509. Cost of service different for different railroad systems. 510. Cost of service different for different parts of the same system. 5n. Cost of service estimated from special expenditures in moving goods. 512. Rule of proportionality in sharing costs. 513. Law of decreasing costs. 514. Cost of service a principle applicable to passenger fares. TOPIC C RATES REASONABLE IN THEMSELVES. 515. External standards of reasonableness. 516. The carrier is entitled to reasonable compensation. 517. Current rates for other transportation. 518. Evidence inadmissible unless conditions are similar. 519. Comparison of rates between different localities unjustifiable. 520. Discussion of Cotting v. Kansas City Stock Yard Company. 521. Discussion of Canada Southern Railway v. International Bridge Company. 522. Principles of usual rates peculiarly applicabb to passenger fares. [481] § 500] Eaileoad Eate Eegulation. [Chap. XVII TOPIC D EATES BASED UPON VALUE OF SERVICE TO THE SHIPPEE. § 523. What the, traffic will bear. 524. Legal limitations upon this pfinciple necessary. 525. Limit of value of service not necessarily limit of charge. 526. Traffic will continue to move at unfair rates. 527. Worth of the service to the individuals served taken as a whole. 528. Cost of obtaining a substitute for the service furnished. 529. Cliarging what the traffic will bear hardly applicable to passenger fares. TOPIC E EATES DICTATED BY COMPETITION. § 530. Rates m.-vy be made to meet competition. 531. Policy for permitting competitive rates. 532. Competitive rates may be made low enough to hold business. 533. Rates must not be reduced by competition below a remunerative basis. 534. Standard rate among competing lines. 535. Competition not a ground for raising rates. 536. Absence of competition does not justify increase in rates. 537. Competition justifies differences in passenger fares only to a cer- tain extent. TOPIC F EATES DESIGNED TO EQUALIZE ADVANTAGES. § 538. Limited operation of the principle of equalization at law. 539. Relative rates need not be adjusted from a commercial standpoint. 540. Business situation should not be ignored altogether. 541. Rates should not equalize differences in value. 542. Passenger fares slightly affected by the principle. TOPIC A CEETAIN LIMITATIONS FUNDAMENTAL. -§ 500. Rates must be fair to the company and to the public. The fundamental principle as to the reasonableness of a par- ticular rate is that it should be fair compensation for the ser- vice rendered. There are, therefore, limits within which the railroad company must act in fixing its rates. The company must have reasonable compensation; but the shipper must not be charged more than a reasonable price. The compensation, [482] Chap. XVII] Legal Limitations. [§ 501 in order to be reasonable, must be fair to both parties.^ It is not enough that the whole schedule shall bring in a fair return to the company ; the particular rate fixed for carriage must be in itself no more than a reasonable amount for the customer to pay under the circumstances, for the service rendered him. The question of reasonableness involves the element of reason- ableness both as regards the company and as regards the public.^ § 501. Limitations within which rates must be made. Stated in more accurate terms, the law requiring fair com- pensation has two distinct sides. It is desirable that the car- rier should receive the full cost to it of performing the service. It is desirable, also, that the shipper should not pay more than the value of the service to him. These two limitations are 1 Harlan, J., in San Diego L. & T. Co. v. National City, 174 U. S. 739, 43 L. Ed. 1154, 19 Sup. Ct. 804 (1899) ; Brewer, J., in Cotting v. Kansas City S. Y. Co., 183 U. S. 79, 46 L. Ed. 92, 22 Sup. Ct. 30 (1901). 2 See §§ 281, 289, 291, 292, 295, 441, 455, supra, and cases cited in the footnotes to those sections. The best discussion of the general principles is in: United States— Smyth v. Ames, 169 U. S. 466, 42 L. Ed. 819, .18 Sup. Ct. 418, B. & W. 347 (1898), affirming 64 Fed. 165; Minneapolis & St. L. R. R. V. Minnesota, 186 U. S. 257, 46 L. Ed. 1151, 22 Sup. Ct. 901 (1902), affirming 80 Minn. 191, 83 N. W. 60; Southern Pacific Ry. v. Railroad Commrs., 78 Fed. 236, B. & W. 322 (1896); Metropolitan Trust Co. v. Houston & T. C. R. R., 90 Fed. 683, B. & W. 342 (1898); Matthews v. Board of Corp. Commrs., 106 Fed. 7 (1901); Interstate Com. Com. v. Louisville & N. R. R., 118 Fed. 613 (1902) ; Tift v. Southern Ry., 138 Fed. 753 (1905); Interstate Commerce Commission v. Chicago G. W. Ry., 141 Fed. 1003 (1905). ArioMsos— Missouri Pac. Ry. v. Smith, 60 Ark. 221, 29 S. W. 752 (1895). Florida — State v. Seaboard Air Line (Fla.), 37 So. 658 (1904). Massachusetts — Fitcliburg Ry. v. Gage, 12 Gray (Mass.), 393, B. & W. 354 (1859). Mississippi — Alabama V. Ry. v. Railroad Commrs. (Miss.), 38 So. 356 (1905). Minnesota — Steenerson v. Gt. Northern Ry., 69 Minn. 353, 72 N. W. 713 (1897). Xorth Carolina — Corporal^ion Commission Railroad, 139 N. C. 126, 49 S. E. 191 (1905). [483] § 502] Eailkoad Rate Eegulation. [Chap. XVII obviously at the extremes within which in normal cases rates must be made. " The cost of service, while recognized as an important ele- ment in classification and rates, is not alone controlling. On that basis some articles, on account of relation of commercial value to cost of service, though furnisihing a large volume of traffic, would not be carried at all, and others of high com- mercial value would have a very low rate without increasing tonnage. " Another element of the highest importance, and that can- not be disregarded, is the value of the service to the article carried. This is a factor that largely determines the classifi- cation and rates the article will bear in the transactions of com- merce, and necessarily qualifies the influence of other factors in the distribution of charges with the view to average reason- able revenue." * § 502. Unreasonable regulation forbidden. The company performing the service should be protected, as has been seen in former chapters, in getting as a rea- sonable return for its services, the cost of those ser- vices as a minimum. This, however, cannot always be done; in such a case the utmost protection pos'sible must still be given to the company. The balance of inter- ests was well stated by the Interstate Commerce Com- mission thus : " It is vitally important to the development of this country that the service performed by our railways should be efiicient and complete. The wealth invested in these enterprises should be sacredly protected, and no unnecessary burden should be imposed in the way of public supervision. But it is equally important that the rates charged for the service should be just ; and, in view of the monopolistic conditions under 3 Schoonmaker, Commissioner in Thurber v. N. Y. C, 2 Int. Com. Rep, 742, 3 I. C. C. Rep. 473 (1891). [484] Chap. XVII] Legal Limitations. [§ 503 which these rates are now made, the public has no protection save by regulation by the Government." * § 50'3. Value of the services constitutes maximum limit of charge. The value of the services to the customer constitutes the limit of charge which the company is permitted to make. Consider- ing all the circumstances, if the services have a certain value to the consumer and no more, the carrier must charge no more. " The elemental principles thus far noted may be summarized as, on the one hand, the right of the company to derive a fair in- come, based upon the fair value of the property at the time it is being used for the public, taking into account the cost of main- tenance or depreciation, and current operating expenses; and, on the other hand, the right of the public to have no jliore ex- acted than the services in themselves are worth. " While the company is entitled, so far as this case shows, to a fair return upon the value of the property used for the pub- lic at the time it is being used, the public (that is, the custom- ers) may demand that the rates shall be no higher than the ser- vices are worth to them, not in the aggregate, but as individuals. The value of the services in themselves is to be considered, and not exceeded. These views seem to be consonant with reason. They are also established by the highest judicial authority in our country." ^ ■» Re Proposed Advances in Freight Rates, 9 I. C. C. Rep. 382, 437 (1903). 5 Savage, J., in Kennebec Water District v. Waterville, 97 Me. 185, 54 Atl. 6, 60 L. R. A. 856 (1902), citing Smyth v. Ames, 169 U. S. 466, 18 Sup. Ct. 418, 42 L. Ed. 819 (1898) ; San Diego Land & Town Co. v. Na- tional City, 174 U. S. 739, 19 Sup. Ct. 804, 43 L. Ed. 1154 (1899) ; Cov- ington & L. T. R. Co. V. Sanford, 164 U. S. 578, 17 Sup. Ct. 198, 41 L. Ed. 560 (1896). [485] § 504] Kaileoab Eate REGULATiorr. [Ohap. XVII § 504. Company cannot make unreasonable r.ates. The requirement that no person may be charged more than a reasonable rate may be insisted upon although the result is that the company does not get a fair return from its schedule as a whole. Those who undertake a public employment enter upon a business affected with a public interest, which justifies the State in demanding that the rates charged shall be reasonable to the public. A test case upon this point was Missouri Pacific Railway v. Smith,® where maximum rates were fixed by the Legislature which the plaintiff railway company claimed would cut off all the profits of their business. The court held that this was not fatal to the constitutionality of the legislation; Mr. Jusitice Thomason saying : " The additional fact that the traffic and business of the road, when operated according to the act of April 4th, and no passen- ger was charged exceeding 3 cents a mile, would not pay the interest on the debts of the railway company and the expenses of operating the road, does not show that the maximum passen- ger rate of 3 cents a mile is unreasonable. Rates of transporta- tion sufficient to enable the road to realize a sum large enough to defray current repairs and expenses and pay a profit on the rea- sonable cost of building the road and equipping it, ought to be reasonable. The earnings of a road might be sufficient for this purpose, and yet not large enough to pay expenses and interest on its debts. Large and unnecessary debts might have been contracted through extravagance, enormous salaries, and mis- management, exceeding the cost of building and equipping the road, and bearing a rate of interest amounting to more than a a reasonable profit on the capital necessary, when judiciously expended, to construct and equip the road. Like some individu- als as to their business, railway companies can reach a point through extravagance, losses and mismanagement, when no rea- 660 Ark. 221, 29 S. W. 752 (1895). [486] Ohap. XVII] Legal Limitations. [§ 505 sonable rate of profit -will enable them to maintain their roads and pay the interest upon their debts, and when failure and a sale of the road to other parties become inevitable." ^ § 505. Reasonable rates not necessarily profitable. In another case * of much the same sort, much the same lan- guage was used, Mr. Justice Carter of Florida saying: " The returns attempt to question the reasonableness of the rates estab- lished by the Railroad Commissioners. They contain certain alle- gations that the rates are not just and reasonable, but these gen- eral allegations are qualified by other statesments that the rates, if enforced, will not afford a reasonable income, or in fact any net income over and above the reasonable cost of constructing and maintainingsaid railroads. The original return goes further, and includes with the cost in construction and maintenance the pay- ment of fixed charges, which counsel admitted in argument means taxes and interest on outstanding bonds. The vice in this method of pleading lies in the fact that the question of rea- sonableness is made to depend upon the capacity of the rates to yield a net income over and above the cost of constructing and maintaining the road and the payment of fixed charges, whereas circumstances may exist under which rates are reason- able which do not afford a net income above the cost of operation and taxes, or the cost of operation, taxes and fixed charges. The returns set forth a few elements entering into the question as to what constitutes a reasonable rate, and attempt to make these elements controlling; whereas the conditions surrounding the operation of the road may deprive them of controlling force." 7 See the discussion of this- principle in §§ 484-485, supra, and cases cited therein. 8 State V. Seaboard Air Line, 37 So. 314 (Fla.), (1901)', per Carter, J. [487] §§ 506, 507] Eailroad Rate Regulation. [Cb/ap. XVII § 506. Company cannot justify exorbitant profits. On the other hand, it is certain upon fundamental principles that the company cannot justify exorbitant profits by urging that the rates are reasonable in themselves. At first impression this has seemed to some persons unjust to the company; but it should be remembered that the company is still allowed a fair return upon its reasonable capitalization, which is all the right that those who have entered upon these enterprises have by es- tablished law. If it is found that rates may be reduced to a point which seems below the reasonable standard and yet pro- duce a fair return, the company has no legaLgrievance if it is not permitted to charge higher rates. To quote a specific illus- tration : " The rate per ton mile, while often instructive, is not by any - means a fair index of a reasonable rate. The cheapest traffic is frequently the most profitable to the carrier. For the year ending June 30, 1901, the average receipts per ton mile upon all kinds of traffic over the Chesapeake & Ohio System, embracing about 1,500 miles, was 3.88 mills. The percentage of opera- ating expenses was 62.87 — much below the average of the whole United States and among the very lowest. Its net earnings were $3,656 per mile, equivalent to 6 per cent, interest on $60,000 per mile — just about the average capitalization of all our railroads. This example is referred to as showing that business may be profitably done at astonishingly low rates. Indeed, it is usually a question, not of the absolute rate, but of the. conditions under which the traffic is handled." " § 507. Application of these principles to passenger fares. A railroad commonly maintains two distinct services as it is generally a common carrier of both passengers and goods. Of coursei the most important part of its business, from an eco- nomic point of view, is its freight traffic, but the passenger 9Ke Proposed Advances in Freight Rates, 9 I. C. C. Rep. 382, 396 (1902). [488] Chap. XVII] Legal Limitations. [§ 508 business is by no means so inconsiderable a factor as some writers would lead one to think. A railroad company can cer- tainly estimate from experience what proportion of its receipts may be expected from its freight and what from its passenger traffic. What proportion of the expense of operation is at- tributable to freight traffic and what to passenger traffic is very difficult to approximate; but here, again some of the special costs of handling passenger business may be known and in the roughest manner possible the fixed charges can be apportioned to the respeetive items in pToportion to their volume. It is not claimed that this is in the least exact, but it is submitted that by some such computations it may be told whether the railroad is charging outrageous passenger fares, throwing upon this class of its business unreasonable burdens. TOPIC B BASING RATES UPON COST OF SERVICE. § 508. Difficulties in dividing joint costs. It is practically impossible, as has been admitted, to divide accurately to each item of traffic its proportionate share of the total expenditures — capital charges and operating expenses. The expenditures constitute joint costs for all the items of traffic; and the result is that it cannot be said with any degree of accuracy that a certain shipment has cost so much to trans- port. But this is more particularly true of apportioning capital charges than it is of estimating expenses of movement. And upon the whole, it is not altogether impossible to say of a par- ticular rate that it is much greater than the cost of performing the service. This possibility is discussed in the sections which immediately follow.^ " It is manifestly quite as important on public grounds that the citizens who furnish a carrier with business from the pur- suits in which they are engaged should not be oppressed with 1 Cost of service as a delivering factor in railroad rates is discussed in §§ 472-480, siiijra. See the cases cited in the notes to those sections. [489] § 509] Raileoad Eate Regulation. [Chap. XVII rates that are disastrous to their pursuits, as that a carrier should not be required to perform its service at a loss. The pub- lic good requires that benefits as well as burdens sihall be justly distributed, and that one interest shall not profit unduly at the expense and to' the serious prejudice of another. This is the 8.pirit of the Law. A carrier has the peculiar advantage of be- ing able to apportion its aggregate expenses upon its whole busiiness, but a grower of fruit, or of grain, or a manufacturer, cannot do so. The product he markets must alone bear the transportation expense, and if this is excessive and deprives him of any return upon his investment or from his labor or skill, his business is ruined and a public injury is sustained. The equitable rule doubtless is that rates should bear a fair and reasonable relation to the antecedent average cost of the traffic as delivered to the carrier for transportation, and the average market price the freight will command, or, as it is termed, the commercial value of the property." ^ § 509. Cost of service different for different railroad sys- tems. It must be obvious from all that has been said, that cost of service is a relative matter, different for different railroad sys- tems. Upon some systems there will be grades, upon others none. Some are great systems with all the economies of large businesses, while others may conduct small systems through spiarsely settled territory. To quote a specific instance from an opinion of the Interstate Commerce Commission : " Tested by these rules, a rate may be a very reasonable and just rate on one railroad and not reasonable and just on another. For example, a rate that would be reasonable and just on the New York Ctentral & Hudson River Railroad may be so low that it would force the Minneapolis & St. Louis Railway into bankruptcy in less than thirty days ; and a rate that might be reasonable and 2 Delaware State Grange v. New York, P. & N. R. R., 3 Int. Com. Rep. 654, 561. [490] Ghap. XA'II] Legal Lijiitations. [§ 510 just on the Minneapolis & St. Louis Kailway might be so high that if attempted to be enforced on the ^Xew York Central & Hudson River Railroad for thirty days it would practically de- stroy the business of the latter. This diversity is most observ- able in the different portions of the country, as, for instance, between lines of railroad in the Southern States or the States of the far west, on the one hand, and ih.e railroad lines of the Middle and Eastern States on the other. Where, however, rail- road lines reach the same common points, are located in the same territory, and compete with each other, as well as with other lines for the business of that territory, their rates are, in general much the same, and this is one of the necessities of the situation. Even among the rail carriers where there may be occasional differences in rates that will be found substan- tially justified by the different circumstances and conditions under which the lines are operated." ^ § 510. Cost of service different for different parts of the same system. The point that the cost of service may be different for dif- ferent parts of the same system was insisited upon in Interstate Commerce Commission v. Lehigh Valley Railroad Company.* It appeared in that case that the Interstate Commerce Com- mission, upon complaint of a shipper, had adjudged a certain rate upon coal unreasonable. The Commission based its finding upon its deductions from the annual report of the defendant company that the average cost of carrying a ton of coal from the Lehigh anthracite regions to Perth Amboy was 85 cents. Judge Acheson held that this was an inadequate basis to justify tlie finding that the particular rate in question was un- reasonable; he said: "If the explanation thus given by the counsel for the Commission is a correct statement of the method 3 New Orleans Cotton Exchange v. Illinois Cent. R. R., 2 Int. Com. Rep. 777, 3 I. C. C. Rep. .'5,34 (1S90). •74 Fed. 784, appeal withdrawn, 82 Fed. 302, 27 C. C. A. 681 (1897). See ante, §§ 457, 461. [491] § 511] Eailkoab Eate KEGULATioiir. [Chap. XVII pursued by the Commission in making its estimate of 85 ^ cents, then, in our judgment, that method is without justifica- tion. For, having adopted an estimated average rate of rev- enue, namely, $1,495, from each ton of coal carried over the 149 miles from the Lehigh and Mahanoy regions to Perth Am- boy, the Commission assumed that the expenses' of the trans- portation of coal over this particular branch of the defendant's railroad system was necessarily only the average cost of the car- riage of all coal upon the defendant's entire system. The as- sumption which thus underlies the Commission's estimate is unwarrantable. Merely because the cost of carriage of all coal upon the defendant's entire railroad system from all points of shipment to all destinations was 56 per cent, of the gross re- ceipts from all coal is no reason for concluding that upon a particular line or part of the system the cost of carriage bears the same ratio to the coal receipts from that particular line or part" § 511. Cost of service estimated from special expenditures in moving goods. To a certain extent the entire expense of transporting may be judged from the sums expended in moving the goods. When the average amounts expended in moving quantities of a given com- modity is known, a standard is established by which it may be seen whether there is not a full return to the railroad of the en- tire cost attributable to the transportation of these goods. This method of demonstration was used with good effect in one re- port by the Interstate Commerce Commission upon the conten- tion of the trunk lines that it would be necessary for them to raise the rate on grain, which was 17 1-2 cents from Chicago to iN'ew York, as that rate was unremunerative. The quotation which follows will show how the Commission came to its conclu- sion that the rate yielded a fair return to the carrier : " As bearing upon this, certain testimony given in the pres- ent investigation by the traiSc manager of the Lake Shore & [492] Chap. XVII] Legal Limitations. [§ 511 Michigan Southern Railway as to the cost of moving grain over hii3 line is interesting and instructive. He testified that the standard train upon the Lake Shore road consists of 50 cars, con- taining 80,000 pounds per car; that the time occupied in haul- ing this train from Chicago to Buffalo would be 36 hours, and that the cost of movement, including labor of trainmen, coal consumed, oil and waste, rent of engine and of cars, would ap- proximate $260. He gave the items making up this total, which need not be repeated here. The traffic manager of the ISTew York Central Company was unable to give the corresponding figures from Buffalo to ISTew York, but it appeared that a standard lo- comotive would haul, with the assistance of a helper at one or two points, this train, or an even heavier train, from Buffalo to New York in approximately the same time and at approxi- mately the same expense, the distance being about 100 miles less. The total train expense, therefore, of moving this traffic from Chicago to ISTew York would be $520, while the total revenue derived from it, at 17 1-2 cents per 100 pounds, would be $7,000. " This estimate of cost does not of course include the entire expense of moving that train-load of grain between those points. The terminal charges are entiTely ignored, and these are often heavy. Nothing is allowed for maintenance of way, nor for those other expenses of operation which are chargeable in a measure upon all traffic, but which cannot in the nature of things be exactly apportioned. Again, a part of these cars must be returned empty; still the items which are taken into account, namely ; labor of trainmen, cost of fuel, oil and waste, renewals and repairs of engines and cars, make up nearly one-half the operating expenses of the railroad systems under consideration, and it is impossible not to feel, after every allowance has been madcj that this traffic, moving under the circumstances and con- [493] §§ 512, 513] Eaii-eoad Kate Eegulation. [Chap. XVII ditions and in the quantities that it does, yields to these carriers a very handsome profit." ^ § 512. Rule of proportionality in sharing costs. As an abstract matter the fairest way to determine the cost of any particular service would be to apportion rateably the total disbursements of every sort to the various items of traffic and so to arrive at proportionate rates. Theoretically, perhaps, any other method is less just to all concerned. In determining what is a reasonable rate for services rendered, it is hardly proper to take the road as existing and as maintained, with its track and terminal equipments, salaries and all other expenses, and to re- gard as the total cost of any particular service merely the in- creased expense necessary to add to its business the service in question; truly the cost of that service ought to include its fair share of the interest on investments and of the general ex- penses.* § 513- Law of decreasing costs. It has been pointed out, however, in all discussions of the railroad problem by economists that the fixed expenses, which constitute so considerable a proportion of the disbursements by a railroad, are to a very large extent independent of the amount of its traffic carried.'^ Therefore additional business will always be done at a decreasing relative cost. The net income rises as the business expands, and the law of increasing returns is again demonstrated. This may be shown in a simple formula if it be assumed only one-half of the expenditures of a railroad varies with the traffic. " If it costs x to deal with 1,000,000 units of traffic, 5,000,000 units will cost not ^x, but 1-2 a; + 5 Prouty Commissioner in Re Advances in Freight Rates, 9 I. C. C. Rep. 382, 397 (1903). cDalton v. Boston & A. R. Co., 1885, Mass. Ry. Com. p. 130. 'Noyes: American Railroad Rates, p. 19. [-194] Chap. XVII] Legal Limitations. [§ 514 (l-2a; X 5) = 3x." ® How far it is possible to justify by this economic law the making of differences in freight rates is dis- cussed in several places later in this volume. This rule seems to have been applied in a case before the Eng- lish Commission.® _ This was an application to determine the amount of the remuneration to be paid per annum by the Post- master-General to the Waterford Railway Company for the con- veyance of mails on their railway: (1) By certain special or notice trains required to be run on notice from the Postmaster- General. (2) By certain ordinary or agreed trains timed by agreement with the Postmaster-General. It was held, that the remuneration for carrying the mails ought not to include any sum directly representing the capital cost of providing the rail- way ; and, further, that the definite sum to be paid should be of sufficient amount — (1) To give the railway companies payment for the mails at their ordinary parcels rate, less a rebate of one- third of it, in consideration of the usual terminal services in connection with parcels being done in the case of the mail par- cels by the Postmaster-General; (2) To make up to them, when required, the gross receipts of the notice trains to 5s. per train mile; (3) To compensate them for possible decrease of the receipts of agreed trains due to their times of running be- ing partly fixed to meet postal requirements, the allowance un- der this, head to be a " substantial " one. § 514. Cost of service a principle applicable to passenger fares. Cost of service is plainly a principle in rate making to be ap- plied to passenger fares as well as to freight rates. It cannot be more scientifically done in one case than in the other, but it is always a matter to be inquired into. Various considerations SAcworth: Elements of Railway Economies, p. 50. 9 The Waterford, Limerick and Western Ry. Co. v. Postmaster-General, 11 R. & C. T. Cas. 77. [495] § 514] Eaileoad Rate Eegulation. [Qhap. XVII affecting the cost of passenger service are suggested in the ex- tract from an opinion by the Interstate Commerce Commis- sion ^° which follows, which held not invalid a fare at 3.826 cents per mile between Savannah and Charleston : " This railway be- tween Savannah and Charleston runs mostly through swamp lands and crosses a number of rivers. From Savannah it runs parallel with the Savannah River, crossing it to the South Car- olina side ; the other streams crossed are the Coosawhatchie, the Salkehatchie, the Ashepo and the Edisto. Five or more draw- bridges are operated. The road had eight miles of trestling, but, by filling in, the trestle mileage has been reduced to four. On account of the swamps and rivers, the construction of the road involved more, than ordinary cost, and unusual expense is re- quired to maintain it in a good state of repair. The section traversed by the line "is unhealthy, much of it is uninhabitable, and the population is made up almost entirely of colored per- sons. They have little patches of land, and some are employed in rice cultivation. Up to about three years ago phosphate mines in that region were worked extensively, but that industry has been abandoned to a considerable extent, because, it is sug- gested, of the discovery of phosphate rock in Tennessee, Florida, and other localities. There is one fertilizer factory located on the line, about 35 or 40 miles south of Charleston. There are no places of importance between the termini of this road, and the counties in South Carolina penetrated by the line (not in- cluding Charleston County) number 28 persons to the square mile as against 34 1-2 to the square mile throughout the whole State. After leaving Chatham County, which includes Savan- nah, the road passes through Effingham County, Ga., which has about 13 persons to the square mile." M Savannah B. of F. & T. v. Charleston & So. R. R., 7 I. C. C. Rep. 601 (1898). [496] Chap. XVII] Legal Limitations. [§§ 515, 516 TOPIC C RATES EEASONABLE IN THEMSELVES. § 515. External standards of reasonableness. To a certain extent there are external standards as to what constitutes a fair rate in that community for a given service, so that it might often be possible to say of a particular rate de- manded by a particular public service company that it was rea- sonable or unreasonable in itself. Where there are such stand- ards the rate which the company has established to meet its own policies or necessities must yield something. But does it follow that if the rates of a certain company are no higher than these standard rates that it may justify any profits however large which may result from its business ? It would seem that this is a situation where one or the other of the fundamental limita- tions upon a public service company must be applied, since the public is entitled to protection in either case. Thus no public service company, whatever its necessities, can charge the public more than reasonable rates ; while if it is making exorbitant div- idends it is not open to it to urge that its rates are not above the ordinary. These propositions, it is obvious, require the further discussion which they receive in the sections which follow. § 516. The carrier is entitled to reasonable compensation. The carrier is entitled to reasonable compensation for his services ; and if there is no agreement as to the amount he may recover what the services are worth. Indeed, as has been seen, the conception of common carriage involves the receiving of compensation; and the presumption therefore is that the ser- vices of the common carrier are always for hire. This was said succinctly in the leading case of Bastard v. Bastard,* the whole report of which follows : " Case against the defendant as a common carrier, for a box delivered to him to be carried to B. and lost by negligence. Williams moved in arrest of judgment, 12 Shower, 81 (1679). [497] § .517] Eaileoad Eate Regulation. [Chap. XVII for that there was no particular sum mentioned to be paid or promised for hire, but only pro mercede rationahiU; resolved ■well enough, and judgment given pro plaintiff; for perhaps there was no particular agreement, and then the carrier might have a quanium meruit for his hire, and he is therefore as chargeable for the loss of the goods in the one case as the other." § 517. Current rates for other transportation. It would seem that while not the legal measure of proper charge, the current rates for other transportation within the same territory by the company in question or by other com- pianies performing similar services, is evidence which will fur- nish a test for the value of the particular services in question. This was one of the strongest arguments brought forward in the " Naval Stores Case," ^ to show that the Savannah rates were themselves unreasonable. A part of the language of Judge Speer on this point is quoted to show this method of testing the reasonableness of rates : " The commission furnishes a tabulated statement which af- fords much light for the proper determination of the contro- versy. This shows the ratea on uncompressed cotton between numerous points, not on the Pensacola & Atlantic, and Savan- nah and New Orleans, respectively. The distances vary from 425 miles, from La Grange to New Orleans, to 1,173 miles, from River Junction to New York. The rates in the tables vary from 45 to 65 cents per 100 pounds, and yet the rate from all stations on the Pensiacola & Atlantic to Savannah is 66 cents. It is true that some of these rates are from competitive points, but many are from strictly local stations like those on the Pensacola & Atlantic. It also appears from this table that rates on the principal railway lines in the cotton region are materially less than the rates' charged from Pensacola & At- lantic stations to Savannah. From 22 local stations in Ala- 2 Interstate Com. Com. v. Louisville & N. Ry., 118 Fed. 613 (1902). [498] CSiap. XVII] Legal Limitations. [§ 518 bama on the Louisville & Nashville the distances to New Orleans range from 265 miles to 411 miles, the rates range from 50 to 60 cents. From 19 stations on the Seaboard Air Line, in North Carolina, South Carolina, and Georgia, the dis- tances to Norfolk range from 366 to 573 miles, and the rates range from 41 to 49 cents. From 13 stations on the Seaboard Air Line in Georgia the distances to Wilmington, N. C, range from 267 up to 413 miles, and the rates range from 38^ to 48 cents. From 19 local stations on the Southern Railway in South Carolina, Georgia, Alabama, and Mississippi the dis- tances to Norfolk range from 434 miles to 1,054 miles, and the rates range from 38 to 61 cents. This comparative statement might be extended. In every instance the average distance on the roads last mentioned to the point of destination is much greater than the average distance from Pensacola & Atlantic stations to Savannah, and yet the rate is invariably much less. We find that it costs more to ship cotton from Eiver Junction to Savannah, 259 miles, than it does to ship cotton from Sneadsi, a station on the Pensacola & Atlantic, 6 miles from River Junction, to New York, a distance of 1,173 miles, or from the most distant point in Mississippi to Norfolk, 1,154 miles. The facts ascertained by the commission and Herein set forth are of the highest significance. In the absence of satisfactory reply by the respondents, they must control the action of the court." ^ § 518. Evidence inadmissible unless conditions are similar. This comparison cannot be made, however, without consid- ering dissimilar conditions'; and conditions may be so dissim- ilar that no comparison would be proper. Thus in the case of Hooper v. Chicago, Milwaukee and St. Paul Railway,* Mr. Justice Kinne said : " Evidence was admitted as to the charges 3 See, also, Freight Bureau v. Cincinnati, N. O. & T. R. Ry., 6 I. C. C. Rep. 195 (1894) ; Evans v. Union Pacific Ry., 6 I. C. C. Rep. 521 (1896). 4 91 Iowa, 639, 60 N. W. 487 (1894). [499] § 519] Eailboad Kate Eeguxatiow. [Clbap. XVII made by defendant in other States, but the court excluded evidence as to rates charged by other companies in other States and other roads in this State. The questions asked touching these matters were very numerous, and cannot all be set out here. In each case, however, the offered testimony wasi prop- erly excluded because it was not shown that the circumstances and conditions were substantially the same as to the road in- quired about as in the case at bar. One or two questions^will serve to illustrate : ' Will you state to the court the rates that were being charged at that time in the different States of the Northwest on the different roads V ' State what was the charge of the different roads in Iowa for the transportation of lime in 1888.' It requires no argument to show that the charges for carrying a like commodity on another road in Iowa or else- where Would have no tendency to show the reasonableness of defendant's charges for a shipment of lime from Maquoketa to Siioux City, Iowa, unless the circumstances which must be taken into consideration in fixing the rate inquired about are sub- stantially the same as those applying to the road in controversy. The proper foundation for the introduction of such evidence, even if admissible, was not laid." " § 519. Comparison of rates between different localities un- justifiable. The rule and its limitation were well stated by the Interstate Commerce Commission when in a certain case ® it was con- fronted by its finding in a previous proceeding.'' The Commis- sion said : " In support of the allegation that the charges com- plained of were 'unjust, unreasonable, and extortionate,' com- plainant's counsel in their brief direct attention to the order of the Commission in the Food Products case, investigated in 5 Compare Interstate Com. Com. v. Louisville & N. Ey., 73 Fed. 409 (1896). SMorrell v. Union Pae. Ry. et al., 6 I. C. C. Rep. 121 (1891). 7 Food Product Case, 3 Int. Com. Rep. 93, 4 I. C. C. Rep. 48 (1890). [500] Ctap. XVII] Legal Limitations. [§ 520 1890 by this Commission and to the rate of charges in force over the Northern Pacific lines from Pendleton, Oregon, to Seattle, Washington. The Food Products case involved charges on freight carried from Kansas and Nebraska points to Chicago. The conditions upon which these charges are based are so unlike the conditions affecting transportation in Oregon and Washington that the reasonableness of the grain rate from Kansas or Nebraska to Chicago affords no safe criterion for charges between Pullman, Washington, and Portland, Oregon. Transportation rates in force on lines of rival companies or on different branches or lines of the same company have a bearing upon and are entitled to consideration in connection with the question of reasonable charges for transportation services ren- dered under like conditions. § 520. Discussion of Cotting v. Kansas City Stock Yards Company. There is a certain opposition to the views put forward in this chapter shown in the dicta in the opinion of Justice Brewer when he delivered the judgment of the court in Cotting V. Kansas City Stock Yards Company.* This was a bill in equity to enjoin the enforcement of a statutory rate for the use of the defendant's stock-yards. The court said : " The State's regulation of his charges is not to be measured by the aggregate of his profits, determined by the volume of business, but by the question whether any particular charge to an individual dealing with him is, considering the service ren- dered, an imreasonable exaction. In other words, if he has a thousand transactions a day, and his charges in each are but a reasonable compensation for the benefit received by the party dealing with him, such charges do not become unreasonable be- cause by reason of the multitude the aggregate of his profits is large. The question is not how much he makes out of his volume 8 183 U. S. 79, 46 L. Ed. 92, 22 Sup. Ct. 30, B. & W. 316 (1901). [501] § 520] Eaileoad Eate Eegulatiow. [Ghap. XVII of business, but whether in each particixlar transaction the charge is an unreasonable exaction for the services rendered. He has a right to do business. He has a right to charge for each separate service that which is reasonable compensation therefor, and the legislature may not deny him such reasonable compensation, and may not interfere simply because out of the multitude of his transactions the amount of his profits is large. Such was the rule of the common law, even in respect to those engaged in a quasi-public service, independent of legis- lative action. In any action to recover for an excessive charge, prior to all legislative action, who ever knew of an inquiry as to the amount of the total profits of the party making the charge ? Was not the inquiry always limited to the particular charge, and whether that charge was an unreasonable exaction for the services rendered ?" It is necessary to point out the dangers in the language used in this case. The idea is put forward that what a public service company is entitled to is a reasonable profit upon each transac- tion if it can get that by charging no more than the service is worth to the patron. Suppose it were granted that a railroad company could make seven per cent, profit upon each shipment handled by it over and above every cost apportionable to that shipment, it would have indefensible results. A great railroad system might make dividends of many hundreds of per cent, while a small road was losing money in its operations. What each railroad is properly entitled to is gross receipts from all traffic sufiicient to pay a fair return upon its reasonable capitalization, provided it may do so without charging outrageous rates; to this extent the large system and the small system are alike be- fore the law. Whatever economies there may be in large scale operation belong to the public which authorized the business upon that scale subject to the established law that those who con- duct it should have no more than a fair return upon their invest- ment. [502] C!ha.p. XVII] Legal Limitations. [§ 521 § 521. Discussion of Canada Southern Railway v. Interna- tional Bridge Company. ■^he same rule appears to have been the basis of decision of the Judicial Committee of the Privy Council in the case of Canada Southern Railway v. International Bridge Company.^ This was a suit in which the railroad claimed that the bridge company was charging it too high a toll for the trans- portation of passengers across the bridge, the toll charged being ten cents for each passenger. Lord Selborne said : " It certainly appears to their Lordships that the principle must be, when reasonableness comes in question, not what profit it may be rea- sonable for a company to make, but what it is reasonable to charge to the person who is charged. That is the only thing he is concerned with. They do not say that the case may not be imagined of the results to a company being so enormously dis- proportionate to the monej' laid out upon the undertaking as to make that of itself possibly some evidence that the charge is unreasonable, with reference to the person against whom it is charged. But that is merely imaginary. Here we have got a perfectly reasonable scale of charges in everything which is to be regarded as material to the person against whom the charge is made. One of their Lordships asked counsel at the bar to point out which of these charges were reasonable. It was not found possible to do so. In point of fact, every one of them seems to be, when examined with reference to the service ren- dered and the benefit to the person receiving that service, per- fectly unexceptionable, according to any standard of reasonable- ness which can be suggested." In this case the court pointed out a necessary limitation of the rule ; if the income of the company from the rates is so great as to give an unreasonably great profit to the company upon all its operations, it will be inferred that the rates, though prima facie reasonable, must be too high. Thus in the ITiagara Gorge 9 8 App. Cas. 723, B. & W. 315 (1883). [503] § 522] Eaileoad Eate Kegulation. [Qhap. XVII case, while fifteen per cent, was not an unduly high rate of profit for so hazardous an investment, one hundred per cent, would doubtless have proved that the individual rate was too high, even though it was reduced neither by competition nor by the limit of desire of the traveller. So in the Kansas City Stockyards case. While eighteen and one-half cents seemed in itself reasonably cheap for the care and feeding of an animal, and was so where the net profit was less than five per cent., the finding might have been different if the seemingly reasonable individual rates had in the aggregate brought in a net profit of fifty per cent. §' 522. Principles of usual rates peculiarly applicable to pas- senger fares. The principle of permitting the railroads under ordinary circumstances to charge usual rates of fare is particularly useful in dealing with the validity of passenger fares. There are cer- tain standards of what will constitute a not unreasonable charge per mile for a passenger in most communities which it can hard- ly be shown to be unreasonable to maintain. Thus in one pro- ceeding ■'*' the Interstate Commerce Commission said : " We cannot find upon this record that $1.10 is an unreasonable charge from Niagara-on-the-Lake to Buffalo. This is a branch line of the defendant and the case does not show density of traf- fic, nor the circumstances under which the passenger service is .performed. It simply appears that a rate of 3 cents per mile is imposed. While lower rates are in force in many parts of the United States, it is also true that there is hardly any section of the country in which a rate as high as 3 cents per mile is not charged for a local service of this distance. The fact that a rate of 85 cents is made during the summer season to meet com- petition via Lewiston is not controlling, nor is the further fact that the ITew York Central under compulsion of law establishes a rate of 2 cents per mile from Lewiston to Buffalo. We do not 10 Cist V. Michigan Central Ry., 10 I. C. C. Rep. 217 (1904). [504] Ghap. XVII] Legal Limitations. [§ 523 find that this rate is reasonable ; we simply fail to find that it is unreasonable, as there is no evidence in the record upon -which an intelligent judgment can be formed. This is a most unsatis- factory disposition of the question, and if the case were of wider application, or the subject of more general complaint, it would be our duty to proceed on our own motion to develop the necessary facts." TOPIC D EATES BASED UPON' VALUE OF SEEVICE TO THE SHIPPEE. § 523. What the traffic will bear. It is sometimes suggested that the value of the service to the customer is " what the trafiic will bear," ^ that is, what he will be willing to pay rather than lack the carrier's service. In one sense, the service is worth what one will pay for it. This is the rule which always appeals to the company as fair and just. And indeed this consideration has some place in every philosophy of rate making; although it is submitted that it is a dangerous principle which may often operate to the disadvantage of the public unless it is much modified in many cases. So necessary is some such principle felt to be by traffic managers that it will always be found to be continually employed in rate making; and this is one of the prime causes for the necessity of govern- mental revision, for the protection of the public, of the rates established by the carriers. The real truth of this matter seems to be that the policy of charging what will produce the largest volume of business is fundamental in private businesses, but often opposed to the law governing public businesses. "Another reason assigned by the carriers for these advances in grain rates was difference in traffic conditions. It was said that competi- tion was less active, and that rates could therefore be maintained. We think that herein is found a substantial reason why these 1 Charging what the traffic will bear has been discussed to some extent elsewhere. See §§ 481-482, supra. [505] §§ 524, 525] Eailboad Rate Eegulatioi^. [Chap. XYII rates could be advanced and maintained; whether it be also a reason why they should be is another matter." ^ § 524. Legal limitations upon this principle necessary. It is urged sometimes that this principle of charging what the traific will bear contains its own safeguards ; for if more is charged than the value of the service to the shipper shipments will cease, and traffic managers, realizing this, as they are in close touch with the situation, will never intentionally or per- manently charge more than the transportation is worth to the goods carried. The answer to this seems to be that many shippers will pay for the transportation of most goods more than - the true value of the transportation if that is necessary in order to get their goods to market. They will shift this undue burden upon the consumer if they can, and if not they will be obliged to forego a part, or in extreme cases all, of their legitimate profit in order to get their products sold at all. The quotation in the next sentiences brings this out. "It is clear, therefore, that the mere fact of the need of additional revenue to meet increased expense does not justify the advance in the rate on lumber. It is said by the witness above referred to that lumber was selected because it was thought lumber would ' hear the oAvcmce.' This excuse for selecting lumber is based upon the erroneous idea, hereinbefore alluded to, that any rate is justifiable under which ' the traffice will move.' " * § 525. Limit of value of service not necessarily limit of charge. It is clear, at any rate, that the charge is not necessarily lim- ited to the advantage which the customer derives from the service. Thus where farmers in the west were shipping their grain for sale to the eastern markets, and they complained of the 2 Re Proposed Advances in Freight Rates, 9 I. C. Ecp. 382, 391 (1903). 3 Tift V. Southern Ry., 10 I. C. C. Rep. 548, 686 (1904). [506] Clhap. XVII] Legal Limitations. Ti 525 freight rates because after paying the rates they could not al- ways realize the cost of production, the Interstate Commerce Commission held that the freight rates could not be so limited that the shipper should always be able to realize a profit, while they also held that the charges should have a reasonable relation to the cost of production and the advantage obtained by the producer from the shipment.* This was an inquiry instituted in accordance with a vote of the Senate into the reasonableness of railroad charges on food products. Mr. Commissioner Mor- rison said : " The preamble and resolution of the Senate and the resolution which led to their adoption imply that to be rea- sonable the rates on food products must be such as to enable the products to be marketed at actual cost of production. This basis or limit of compensation for transportation services will hardly stand the test of fair dealing. It would compel thosewho invest in or operate railroads td assume and bear the losses resulting from the improvidence, mismanagement or unprofitable employment of others. There are many considerations other than the cost of such transportation service which enter into the prices of all com- modities, and while railroad charges may influence such prices they do not make or control them. To the extent that excessive rates contribute to unremunerative prices the roads may justly be held responsible for them and to that extent only. There is an excellent clay in jSTebraska for making bricks, a useful and creditable industry. Bricks are much needed in New York. The people of Nebraska have a right to make them as well as a right to have them shipped to New York at reasonable rates. But it might be that when such reasonable rates were deducted from the price received the remainder would be less that the " actual cost of production." That would not necessarily make the rates unreasonable. Unfortunate it may be, but still of necessity the claims of the shipper must wait upon the rights 4 In re Rates and Charges on Food Products, 3 Int. Com. Rep. 93, 4 I. C. C. Rep. 48 (1890). [507] § 526] Kaileoad Rate Eegtjlation. [Chap. XVII of those whose services he employs and whose property he uses. The employees who run the train may have neither brick, corn nor railroad investment, but they must be paid for their services. The road must be repaired and bridges mended. Actual and honest investment must receive fair reward. AH this must be paid before the profits or actual cost of producers are paid unless the services and property of others are to be appropriated to the use of those who for the time may be engaged in an unprofitable business or disadvantageously located industry. We think it is true that at the prices which have at times prevailed since the gathering of the last crop corn from the most distant fields could not be marketed at actual cost of production and pay reasonable rates. But the evil cannot be remedied without taking the services or property of men engaged in one business or employ- ment and transferring them to those engaged in other employ- ments. To make such transfer is a prerogative not to be exer- cised by any tribimal." § 526. Traffic will continue to move at unfair rates. From a legal point of view it is a conclusive answer to the economic argument, that people will continue to ship goods even at unfair rates : " The volume of movement is not limited by an advance in the charge for carriage. During the year 1901 about fifty millions of tons of anthracite coal were prodiiced and con- sumed in the United States. If the price of that coal had been 25 cents per ton higher to the consumer than it actually was, this would not probably have very much reduced the amount of con- sumption, although an addition of that much per ton to the freight ■ate would have increased the net revenues of carriers over twelve million dollars ; representing on a four per cent, basis, if made permanent, three himdred million dollars of capital. These very grain rates before us furnish an excellent illustration. The advance of 2 1-2 cents per hundred pounds from Chicago to New [508] Chap. XVII] Legal Limitations. [§ 527 York amounts to 5 cents a barrel on flour. Eates west of Chi- cago have also been advanced, and the total added cost from the grain field to the consumer upon the Atlantic seaboard would be from 10 to 15 cents per barrel. Assuming that the entire additional expense were charged against the consumer, it is hardly conceivable that this increase in price would produce a material effect upon the quantity of flour transported and con- sumed. " When, therefore, these traffic managers met in ISTew York and determined to advance these rates, they simply laid upon the people of this country a tax of 2 1-2 cents per hundred pounds. If they were entitled to it, that action was justified; otherwise it was unjustified. The fact that the traffic still moves, that people still eat flour and corn-meal, does not by any means conckisively show that the rate is reasonable. As we have already said, the reasonableness of every rate may be pre- sented in two aspects: First, is it reasonable as tested by cost of service, by comparison with other rates, with respect often to commercial conditions ? Second, is it reasonable as a tax im- posed by a public servant for the performance of a quasi-public duty ?" » § 527. Worth of the service to the individuals served taken as a whole. Some excellent distinctions are taken in a recent case ® as to the methods of arriving at the value of the service to the person served by a public service company; and it is pointed Out that what is sought is the worth to the individuals served taken as a whole of such service as they are receiving from a company such as that which is serving them. This shows the true test BRe Proposed Advances in Freight Rates, 9 I. C. C. Rep. 382, 434 (1904). 6 Brunswick & T. W. Dist. v. Maine Water Co., 99 Me. 371, 59 Atl. 537 (1904). [509] § 527] Eaileoad Eate Eegulation. [Chap. XVII of the value of the service to the person served to be far from what the person in question will pay rather than go without service. As this is a matter not often discussed with discrim- ination a considerable quotation is extracted. Mr. Justice Sav- age said : " When the worth of the water to a consumer is esti- mated, we are not limited to the value of water itself, for it is an absolute necessity. Its value has no limit. Water, speaking abstractly, is priceless ; it is inestimable. To sustain life it must be had at any price. And in this respect a public water service differs from all other kinds of public service. In estimating what it is reasonable to charge for a water service — that is, not exceeding its worth to the consumers — water is to be regarded as a product, and the cost at which it can be produced or dis- tributed is an important element of its worth. It is not the only element, however. The individuals of a community may with reason prefer to pay rates which yield a return to the money of other people higher than the event shows they could serve themselves for, rather than make the venture themselves, and risk their own money to lose in an uncertain enterprise. It was said by us in the Waterville case that the investor is en- titled to something for the risk he takes, and it is not unreason- able for the customer to be charged with something on that ac- count. That is one of the things which make up the worth of the water to the customer. The same element enters always into the relations between producer and consumer. But such a con- sideration as this last one must always be treated with caution. The company is only entitled to fair returns, in any event, and " fair " to the customer as well as to itself. In the as- pect now being considered, the worth of a water service to its customers does not mean what it would cost some one individual or some few individuals to supply themselves, for one may be blessed with a spring, and another may have a good well. It means the w^rth to the individuals in a community taken as a whole. It is the worth to the customers as individu- [510] Clhap. XVII] Legal Limitations. [§ 528 als, but as individuals making up a community of water takers." ^ § 528. Cost of obtaining a substitute for the service fur- nished. In at least one case the suggestion was made that the cost to the consumer of obtaining the service for himself was the true criterion. In Grand Haven v. Grand Haven Waterworks,* the court was obliged to determine the proper amount to be allowed by the city for water furnished by the defendant company. The court held that in the absence of definite evidence of the value of the services, the company should be allowed what the city had been saved by the water furnished, which was found to be eight per cent, upon the amount necessary to build a plant which would furnish the water. The Court said : " Down to the fall of 1897, when the city commenced to extend its own waterworks, the city had an inadequate plant for fire protection — worth, as testified by the witnesses, about $6,000. The deficiency of the city's plant was supplied by the defendant, substantially. It appears by the testimony of an expert called by the complainant that the cost of a plant which would furnish adequate fire protec- tion would be about $20,000. It would appear, therefore, that the city was saved the interest and depreciation on $14,000, which, at the rate of 8 per cent., would amount to $1,120 per year." The cour&e of the court in this case is cer- tainly open to criticism. The rule adopted gives to tbe company all the profit on the transaction, leaving the con- sumer no better off than if he had supplied the water for him- self. Yet there was presumably a considerable profit in the transaction ; at least, such would ordinarily be the case. A fair share of this profit ought to be extended to the consumer. 'See, also, San Diego L. & T. Co. v. Jasper, 189 U. S. 439, 47 L. Ed. 892, 23 Sup. Ct. 571 (1903); Kennebec Water District v. Waterville, 97 Me. 185, 54 Atl. 6, 60 L. R. A. 856 (1902). 8 119 Mich. 652, 78 N. W. 890 (1899). [511] § 529] Eaileoad Eate Regulation-. [Qhap. XVII In the ordinary case, sucli a rule would be prohibitive. A farmer, a thousand miles from market, could not afford to pay as freight on his grain what it would cost him to build a railroad or to cart his crops to market; nor could a person who desires to cross a river pay a bridge company by way of toll what it would cost him to get across on his own account. Such a basis of compensation is certainly unreasonable to the customer.' § 529. Charging what the traffic will bear hardly applicable to passenger fares. Charging what the traffic will bear has obviously very little scope in justifying differences in passenger fares. Plainly rich men cannot be charged more than poor, nor men with important engagements more than people who have no business interests; but then these would be forbidden as personal discriminations. However, the principle has some operation in making up a schedule of passenger fares for a railroad system. Thus sub- urban fares for a considerable zone around a large city are placed at considerably lower rates per mile than for long dis- tance runs. The real reason is that a heavy passenger traffic to suburban points could not be developed at the average mileage rate for the system. So long, as this is a remunerative business it would seem that it is better for the whole traffic that these concessions should be made. In one case before the Inter- state Commerce Commission'" it was said: "The granting of commutation rates for suburban travel is quite general and such rates are defens.ible on various grounds. They tend to benefit the public by permitting and inducing residence at con- siderable distance from the plaCe of occupation, thus aiding the territorial growth of cities and relieving their congested districts. So far as they have that effect such rates in turn benefit the railways by securing business that otherwise would 9 See Canada Southern Ry. v. International Bridge Co., L. R. 8 App. Cas. 723, B. & W. 315 (1883). loSprigg V. Baltimore & O. Ry., 8 I. C. C. Rep. 443 (1900). [512] Clhap, XVII] Legal Limitations. [§§ 5S0, 531 not exist and revenue not otherwise obtainable. Ordinarily, the price of commutation tickets, the conditions upon which they are sold, and the distance from a given city to which com- mutation rates shall be extended, are matters within the dis- cretion of the carrier." TOPIC E KATES DICTATED BY COMPETITION. § 530. Rates may be made to meet competition. Within the many limitations which are discussed throughout this book a railroad company may miake such rates as it is necessary for it to make to meet competition. A great deal of transportation is conducted under competitive conditions, the shipper having an alternative route by which he may get his goods to market. Under such circumstances railway rates be- tween the competitive points will inevitably tend to be lower than between points where there is no competition. To a cer- tain extent the public is rejoiced to see lower rates from what- ever cause, and it will in an ordinary case be unquestioned that the carrier may make his competitive rates as low as is neces- sary to get the business. But this statement is subject to certain limitations, some of which will now be discussed, but most of which are discussed more fully in later chapters.^ § 531. Policy for permitting competitive rates. The policy of this matter seems to be to permit the making of rates to meet competition even if proportionately they seem preferenial, in order that competition may be possible, which it could not be without this permission.' This is very acutely said by Lord Hersehell in Phipps v. London & J^orth Western Railway Company :^ "Suppose that to insist on absolutely equal rates would practically exclude one of the two railways from the traiBc, it is obvious that those members of the public who are in the neighborhood where they can have the benefit of this competition would be prejudiced by any such proceedings. 1 See Chapter XIX and Chapter XXV, infra. 2(1892) 2 Q. B. 229. [513] § 532] Eaileoad Eate Kegulatioet. [Chapr XVII And further, inasmucli as competition undoubtedly tends to diminution of charge, and the charge of carriage is one which ultimately falls upon the consumer, it is obvious that the public have an interest in the proceedings under this Act of Parlia- ment not being so, used as to destroy a traffic which can never be secured, but by some such reduction of charge, and the destruc- tion of which would be prejudicial to the public by tending to in- crease prices." § 532. Competitive rates may be made low enough to hold business. Without going into the many problems as to local discrimina- tion, the result largely of statutory provisions and their con- struction, which are discussed later, it may be pointed out briefly that it is a general principle recognized in all of those cases that it is permissible to make the competitive rate low enough to get business and to hold it. In order that the language of the judges may be seen, one case is selected from this long list for quotation. In that case^ the reasonableness of relative rates to Montgomery, Ala., and Troy, Ala., was in question. The court pointed out that competition operated in fixing the Montgomery rate: " There are many more railway lines ruiming to and through Montgomery, connecting with all the distant markets. The Ala- bama River, open all the year, is capable if need be of bearing to Mobile, on the sea, the burden of all the goods of every class that pass to or from Montgomery. When the rates to Montgom- ery were higher a few years ago than now, actual active water line competition by the river came in, and the rates were re- duced to the level of the lowest practical paying water rates; and the volume of carriage by the river is now comparatively small, but the controlling power of that water line remains in full force, and must ever remain in force, as long as the river remains navigable to its present capacity. And this water line 3 Interstate Com. Com. v. Ala. Midland Ry., 69 Fed. 227, 74 Fed. 715, 41 U. S. App. 4.53. See Chapters XXV and XXXVIII, infra. [514] Clhap. XVII] Legal Limitations. [§533 affects, to a degree less or more, all the shipments to or from Montgomery from or to all the long distance markets. It would not take cotton from Montgomery to the South Atlantic ports for export, but it would take the cotton to its points of ultimate destination, if the railroad rates to foreign marts through the Atlantic ports were not kept down to or below the level of profit- able carriage by water from Montgomery through the port of Mobile, The volume of trade to be competed for, the nimiber of carriers actually competing for it, a constantly open river present to take a large part of it whenever the railroad rates rise up to the mark of profitable water carriage, seem to us, as they did to the Circuit Court, to constitute circumstances and condi- tions at Montgomery substantially dissimilar from those at Troy." § 533. Rates must not be reduced by competition, belovsr a remunerative basis. This principle permitting the carrier to make in particular instances low rates to meet competition has its limitations; it will not justify the making of rates which will not be remuner- ative, as that must result in throwing undue burdens upon others. '" The principle of relative justice applied is that when a carrier, by reason of competitive conditions, or for other rea- sons, serves certain localities at very low rates, the concessions made must not subject other localities or other patrons dependent on the same carrier to undue or unreasonable prejudice or disad- vantage, but there must be an equitable adjustment of rates so that there is no unjust discrimination between competitors in like pursuits. '' There may be cases in which a carrier legitimately en- gaged in serving some territory is compelled by some new and aggressive competition to reduce normal and reasonable rates to retain business for its line, and where corresponding reductions at points not affected, or less affected, by destructive competition, [515] § 534] Raileoad Eate Eegulatiow. [Qhiap. XVII might be unreasonable. But when a carrier voluntarily enters a field of competition where, by reason of a disadvantageous route, or the rigor of the competitive conditions, remunerative rates cannot be charged, and its service to a portion of its patrons is unprofitable, it accepts the legal obligation that its service shall be impartial to all who sustain similar relations to the traffic, and from whom the service itself is not substantially dis- similar. As was said in Re Chicago, St. P. & K. C. R. Co.,* ' If they (carriers) deliberately proceed to destroy each other, the law must take care that in doing so they injure as little as possible individuals and communities dependent upon them for transportation facilities.' This is the plain requirement of the Statute, and it is in accordance with obvious principles of justice." ® § 534. Standard rate among competing lines. Where a competitive situation has become established by presence of various competing lines performing the same service to the community, it tends to become settled between the com- petitors what shall be the standard rates and what differentials shall be allowed from these rates. The standard rate might be that established by the shortest and otherwise best located road, but it would not be fair in reducing rates all over the territory involved to reduce all rates to the lowest margin of profit fair to that particular road, for other roads could not meet that rate without ruin, it may be. On the other hand it would be bad public policy to permit as an artificial standard what the most circuitous and worst located road might need to make a good profit. As in most problems of rate making the result must be some compromise. This was pointed out by the Interstate Com- 4 2 Int. Com. Rep. 137, 2 I. C. C. Eep. 231. 5 Sehoonmaker, Com. in Manufacturers & Jobbers* Union v. Minneapolis & S. L. R. R., 3 Int. Com. Rep. 115, 1 I. C. C. Rep. 227 (1890). [516] Chap. XVII] Legal Limitations. [§ 535 merce Commission in one of its investigations,® the Commission saying : " It might be manifestly unfair to select a single advantageous line and make that the standard. We have seen that grain can be transported under actual conditions by the Lake Shore and the New York Central Railroads from Chicago to New York at a cost less than that by most other routes. It would be hardly just to these other routes to compel the putting in of a rate upon that line which was reasonable with respect to it alone and which had no reference to its competitors. Upon the other hand, it would be equally unfair to the public if the most expensive line were made the standard. The Southern Railway carries grain to some extent to Norfolk, Virginia. The distance is fully as great ; and the rate less than to New York. Its operation is ex- pensive; its tonnage comparatively light; its net earnings per mile only about $1,700. A rate to the seaboard which upon any fair basis of compensation to investment would be reasonable for that company would be extravagantly high for the trunk lines. To permit such a rate would be to impose upon the general pub- lic the payment of an exorbitant charge." § 535. Competition not a ground for raising rates. There are occasional cases where a road has urged the pres- ence of competition as a ground for raising rates. To put one case ^ in the language of the Interstate Commerce Commission which passed upon it : ■'* Previous to the summer of 1887, grain and other freights destined to Portland from points further east, including Pullman, passed over the lines of the Oregon Railway & Navigation Company. In 1887 and 1888 the Northern Pacific Railroad Company extended its lines west to Tacoma, thence to Portland, and east to Pullman and other points in the grain growing region in southeastern Washington, and over its lines so 6 Re Proposed Advances in Freight Rates, 9 I. C. C. Rep. 382, 425 (1902). 7 Morrell v. Union Pacific Ry., 8 Int. Com. Rep. 181, 6 I. C. C. Rep. 121 (1893). [517] § 536] Eaileoad Eate Eegulation. [Obap. XVII extended the JSTorthern Pacific Company took from Pullman and other points a considerable part of the wheat and other freights which would otherwise have been carried over the road of the Oregon Railway & Navigation Company. The defendants urge this diversion of Pullman and other trafiic from their lines in jusification of higher transportation charges than would be rea- sonable if there was no competition for Pullman business. Com- petition, or a division of business as the result of building a second road where previously but one existed, should justify lower rather than higher charges." The conclusion of the Commission is undoubtedly the proper way of dealing with such a case, but the reason is not quite ob- vious. It is plain that there is always some waste in all compe- tition which makes a certain additional cost to be borne by the traffic because of the additional fixed charges by reason of un- necessary duplication of plant. But more than this, perhaps, is the increased cost of transportation by reason of decrease in the volume of trafiic, consequent upon the division of the busi- ness among the competing lines. And yet the principle of value of the service to the shipper seems to come into play here ; for the service is worth no more to the shipper whether there be one line or three. § 536. Absence of competition does not justify increase in rates. To the extent that competition becomes more remote the power to raise rates to any amount that the traffic will bear in- creases until a point is reached jvhere there is no virtual com- petition and then that power becomes absolute; but as has been seen already in this chapter, the public needs the protection of the law of the land in this situation, for the economic limitation leaves scope for gross oppression. It is therefore plain law that the absence of competition does not justify an increase in rates. The elimination of railroad competition by the aggrega- [518] Clhap. XVII] Legal Limitations. [§537 tion of large systems has been the characteristic fact in railroad history during the last twenty-five years ; and indeed within the last ten years there has been a. further extra-legal consolidation of many of these systems by communities of interest, until today there are a comparatively few groups. " Such unification of railway control permits advances in rates and a maintenance of rates "which has never before been possible. It' carriers are entitled to larger returns, these increases are proper, and should be permitted; otherwise they should be checked. It cannot be accepted without careful consideration that all this vast increa'se in traffic, all these notable economies in railway operation are to result in the permanent imposition of higher transportation charges." * § 53Y. Competition justifies differences in passenger fares only to a certain extent. Competition dictates particular rates in passenger schedules to a certain extent, but the differences between stations by this process are not made glaring. It is true that between competi- tive points fares are kept down, but this tends to shrink the whole schedule relating to intermediate stations. Even the most extreme cases are usually those where the long haul between competitive points is charged relatively less than the short haul, or in some cases where the short haul is made as high as the long haul ; but if a railroad attempted to charge more for a short haul than for a long haul it would hardly be possible to make the public accept a difference of this sort. The general opera- tion of competition upon passenger fares is to keep all down to a lower level. The matter of joint through rates, discussed at another place, gives more scope to -the doctrine that particular rates may be lowered to meet competition. Thus the part of a through passenger rate apportioned to one of several railroads as its share may often be less than the rate which that railroad 8 Re Proposed Advances of Freight Rates, 9 I. C. C. Rep. 382, 437 (1902). [510] § 538j^ Eaileoad Eate Eegulatiost. [diap. XVII makes between its own termini to its own passengers; as these joint through rates may he reduced to meet competition this difference is justified. TOPIC P BATES DESIGNED TO EQUALIZE ADVANTAGES. § 538. Limited operation of the principle of equalization at law. This topic as to the limitations placed by the law upon making rates designed to equalize advantages is again one that will re- ceive attention later when the construction to be placed upon statutory provisions forbidding local discrimintions is brought up. But it seems appropriate to point out in this place that it is a principle in rate-making subject to all of the limitations which have been brought out in this chapter, and that it has therefore a very limited operation. However much this theory may have appealed to some economists who have applied their theories of what is for the best interests of society to the railroad problem, it has' very little weight with the lawyers who have had to do with the question.^ " It is not the duty of a carrier to regulate markets. If by reason of competition in transportation or the condition of mar- kets a carrier sees fit to move traffic at very low rates in order to participate in the business, that may be done and often is done, but that is a very different matter from compelling it to reduce all its rates to equalize competition between shippers from different fields of supply and by different and unrelated routes." ^ 1 See §§ 486, 487, supra. 2 Schoonmaker, Com. in Rice v. Western N. Y. & Pa. R. R., 2 Int. Com. Rep. 298 (1888). [520] Chap. XVII] Legal Limitations. [§ 539 § 539. Relative rates need not be adjusted from a commer- cial standpoint. It is sometimes maintained by a shipper of one product "which is competitive with another product that the rates should be adjusted so as to equalize the standing of the competitors. This has been argued before the Interstate Commerce Commis- sion with gn;at insistence several times, but never with real suc- cess. Thus in one case * the contention was made that the rates upon live stock and dressed beef should be so adjusted that a packer in one part of the coimtry might compete upon equal terms with a packer in another part. The commission in its opinion pointed out that this was not a basis upon which the car- rier could be compelled to make rates, if indeed the railroad ought ever to act upon such a principle to any extent. " It is evident, therefore that relative rates cannot be ad- justed from a purely commercial standpoint. In saying this it is not to be understood that the increased value of the product is not legitimately to be taken into account in fixing the rate, which is altogether a different proposition from that advanced by the complainants that the rates should be such as to equalize the standing of diiferent producers in the business in the re- spective markets of the country. " We are of opinion that in the fixing of relative rates upon articles strictly competitive, as these are, the proper relation should be determined from the cost of the service, and if the difference in this respect between two competitive articles can be ascertained, such rate should be fixed for each as corresponds to the cost of service. This is fair to the carrier, and we believe the manufacturer has a right to demand of the companies that such a relation of rates as to these articles should be main- tained." 3 Squire v. Michigan Central Ry., 3 Int. Com. Eep. 315, 4 I. C. C. Rep. 611 (1891). [521] § 540] Eaileoad Eate Regulation. [Qhap. XVII § 540. Business situation should not be ignored altogether. The same question was again raised- and elaborately considered by the Interstate Commerce Commission in the case of Chicago Live Stock Exchange v. Chicago Great Western Railway.* The railroads had again made the same rate on live stock and its products. It was shown that in some respects the cost of carry- ing one was lower — in other respects, the cost of carrying the other. Mr. Commissioner Fifer said: " Another very important factor is the relation existing be- tween the articles transported. If the relation is remote, such as that between flour and silk, a change of a few cents per hundred pounds in the rates charged for transporting one of them may not affect traffic in the other ; but if the relation is close, such as that between raw material on the one hand and goods manufac- tured from that material on the other, a slight change in the ad- justment of transportation charges between the two articles may be sufficient to close manufacturing plants at some points and increase the output of plants located elsewhere. And it is be- cause of this difference that some discriminations made by car- riers are justifiable under certain circumstances. " The competition between live stock and the products of live stock is very severe both in the markets of purchase and in the markets of sale, and live stock raised in the vicinity of the Mis- souri River is now and for many years has been transported to and slaughtered at different points in territory lying between that river and the Atlantic Seaboard. Packing houses at these different points have been established and maintained imder rates of transportation which, generally speaking, have not been higher, while in many instances they have been lower, on the live stock than on the products ; and the principle governing this adjustment, namely, that the rates on raw material shall not be greater than on the products of the material, has been applied in nearly all cases of a similar nature." 4 10 I. C. C. Rep. 428 (1905). [522] Chap. XVII] Legal Limitations. [§§ 541, 542 § 541. Rates should not equalize differences in value. The railroad cannot by its rates equalize qualities of the same article between different producers. In McGrew v. Missouri Pacific Railway,® the defendant contended that as coal from its mines at Rich Hill has less value for domestic purposes than Myrick coal it might equalize such difference in value by making a lower rate on Rich Hill coal. The complainant's cost of min- ing coal at Myrick is nearly 50 cents a ton more than it costs defendant to mine its coal at Rich Hill. The Commission, however, held that this difference in quality woiild not justify a difference in rate. Mr. Commissioner Prouty said : " If differ- ence in quality is to be equalized in favor of the defendant, why should not difference in cost of mining be equalized in favor of the complainant ? When this complainant acquired his mine he knew that the value of this coal was greater for domestic pur- poses than that of Rich Hill, and the price of his mine may well have been fixed in view of that fact, but such an adjustment of rates as that put in force by the defendant entirely eliminates this element of value and might destroy the worth of com- plainant's property. If any such process of equalization is per- missible defendant may absolutely dictate the comparative value of every mine and industry upon its road ; and that such rates should be examined with closest scrutiny when resorted to by the carrier in its own favor." § 542. Passenger fares slightly affected by this principle. Passenger schedules are usually made upon a mileage basis; there is little attempt in making them up to minimize the dis- advantages of distances. But the principle is applied to a very limited extent by the railroads ; for example, suburban stations are sometimes grouped in zones. The principal illustration of this policy, if it be such, of equalizing passenger fares is the five cent fare customary in American mimicipalities for transporta- 5 8 Int. Com. Rep. 630 (1900). [523] § 542] Kaileoad Kate Kegulation. [CSiap. XVII tion in street cars whether the passenger rides for one block or ten miles. By this policy most land within a metropolitan district is brought within the benefit of this uniform fare, whatever may be its distance from the commercial centres. In justifying a consolidation of street railways one judge said : * " As a result, a.t the time the ordinance was adopted, the mile- age of tracks increased from the previous aggregate of 110 milea to 142 miles, reaching every section of the city, with shorter and better routes, and furnishing 38 transfer points, with a uni- versal transfer system, — a feature of especial value to the public, as a single fare of five cents gives a maximum length of ride more than double the old arrangement." 6 Milwaukee Electric Ry. v. Milwaukee, 87 Fed. 577, B. & W. 336 (1898). [524] CHAPTER XVIII. CLASSIFICATION OF COMMODITIES. TOPIC A METHODS OF CLASSIFICATION. . I 551. The meaning of classification. 552. The necessity of classification for -a proper distribution of the burden. 553. The necessity of classification for convenience in rate fixing. 554. The history of classification in the United States. 555. Uniformity of classification attempted. 556. Classification necessarily imperfect. 557. Classification not unduly minute. 558. Extra class divisions. 558. Commodity rates. 560. Method of classification. 561. Interpretation of the classification sheet. TOPIC B GENEEAL PEINCIPLES IN CLASSIFYING. § 562. Influences determining classification. 563. Adjustment of business to established classification. ' 564. Classification according to manufacturer's representations. 565. Classification of various goods. 666. Difference between forcing classification on railroads and justifying classification by railroads. TOPIC C BASIS OF CLASSIFICATION : COMPAEISON OF COMMODITIES. § 567. The reasonableness of a particular rate involves reasonableness of classification. 568. Classification not determined by consideration of rate on a par- ticular commodity. 569. Elements in comparison of commodities. 570. Comparison of similar things. [525] Railroad Rate Regulation. [Chap. XVIII S 571. Vegetables for table use. 572. Perishable articles of food. 573. Groceries. 574. Articles shipped in glass. 575. Forest products. 576. Dry goods. 577. Comparison of unlike things. 578. Differences between commodities. TOPIC D CONVENIENCE IN HANDLING. § 579. Classification based on nature and size of package. 580. Shipiffent in small packages. 581. Shipment in form more convenient for handling. 582. Shipment in form permitting greater car load. 583. Classification based on volume of business. 584. Large volume of traffic in a certain commodity. 585. Volume of traffic in general considered. 586. Perishable freight. 587. Traffic handled in special trains. 588. Special equipment not necessary for the traffic. 589. Less than usual care required. TOPIC E VALUE OF THE GOODS. § 590. Value of the goods as an element in determining classification. 591. Difference between values justifies difference in classification. 592. Different classification of anthracite and bituminous coal. 593. Market value rather than intrinsic value. 594. Differing value of same kind of freight. 595. Low value of goods as reducing classification. 596. Value of the commodity not of the greatest importance. TOPIC E CAR LOAD BATES. § 597. Different classification and rating between car load and less than car load lots. 598. Difference in classification not essential. 599. Minimum carloads. 600. Minimum carload regulations, 601. Mixed carloads. 602. Car loaded by several shippers. 603. Train loads. [526] Chap^XVlII] CLASSiFiCATioisr. [§§551,552 TOPIC G DIFFEEEXCE IN EATE BETWEEN CLASSES. I 604. General principles governing dififerences between classes. 605. Low grade commodities may be carried at rates relatively low. 606. High grade commodities should not be overcharged relatively. 607. Differences between the classes should not be disproportionate. 608. Principles upon which rates for different commodities should be made. 609. Reasonableness tested by comparison. 610. Differences between similar commodities ought not to be very slight. TOPIC A METHODS OF CLASSIFICATION. § 551. The meaning of classification. Carriers have from time immemorial divided the articles carried by them into classes. The articles are classified in such a way as to bring together into one class such articles as can fairly be subjected to the same charge for carriage. A rate is then fixed for each class; not a difficult matter, since it has been found quite practicable to make the number of classes small. This division of all possible articles of transportation into a few large classes as a basis for fixing the rates of carriage is what is -known as classification of freights. It has been said * that classification was first" adopted on the English toll-roads and canals; and an interesting early schedule of canal tolls shows a rough classification. But it is probable that the neces- sity of the case forced a more or less crude classification upon carriers as soon as carriage became a business. For, as will be explained, fairness to the shipper and the convenience of the carrier both require a classification of commodities as the basis of rate-fixing § 552. The necessity of classification for a proper distribu- tion of the burden. Different articles require such different care in carriage that it would be unjust to fix a single rate that should apply to all 1 Noyes American Railroad Rates, 5, 65. [527] § 553] Raileoad Rate Regulation. [Chap. XVIII articles carried. If a uniform rate were fixed for each pound carried, lead would be more expensive to ship than live stock; and if the rate were proportioned to bulk, a diamond would be carried more cheaply than fence-posts. It is necessary in order to distribute fairly among the shippers the burden of the entire schedule of rates to graduate the charge according to the nature of the article carried. " Classification is recognized as a neces- sary method of adjusting the burdens of transportation equitably upon the various articles of traffic, in view of differing circum- stances and conditions, and but for the necessity of such adjust- ment, considerations based alone on weight and distance of haul would probably determine rates, except as modified by competi- tion. This method, while securing practical uniformity, would probably deprive many articles which are now important factors in commerce of the benefit of transportation to distant points." ^ § 553. The necessity of classification for convenience in rate fixing. So many varieties of articles are carried by a modern carrier that it is a practical impossibility to consider each article by itself and fix a separate rate for its carriage. It is impossible even to enumerate all the articles that may be offered for trans- portation; still more so to frame a schedule showing an inde- pendent rate for every such article, and convey information of the schedule to every freight agent in such a form that he can quickly and accurately state a rate to the shipper. No modern carrier doing a large business, and especially no 'modern rail- road, has undertaken to make rates without classification. The attempt to frame separate rates " has proved to be so cumber- some and inconvenient that the arrangement of freight into classes is deemed by the roads an essential part of rate-making, and is so treated by the Act to regulate commerce, which re- ZMcDill, Com. in F. Schumacher Milling Co. v. Chicago, R. I. & P. R, Ry., 6 I. ,C. C. Rep. 61, 66 (1893). [528] Chap. XVIII] Classification. [§§ 554, 555 quires that the schedule of charges which every carrier must keep open to the public ' shall contain the classification in force.' " 3 § 554. The history of classification in the United States. Before the passage of the Interstate Commerce "Act each rail- road company had its own classification of commodities, and fixed its own rates; subject to occasional modification by pools and trafiic agreements with connecting or competing roads. Upon the passage of the Act the inconvenience of this system be- came so obvious that partially successful efforts were made to bring about a uniform classification. The railroads operating in the northeastern part of the United States agreed upon a classi- fication known as the Official Classification; those operating in the southeastern part of the United States agreed on a separate classification known as the Southern; and those in the west agreed on the Western Classification. The boundaries between the territory covered by these classifications respectively are formed by the Potomac, the Ohio, and the Mississippi Rivers.* These classifications now prevail throughout the country." § 555. Uniformity of classification attempted. Various attempts have been made to secure one uniform classi- fication throughout the country; and to this effort the Inter- state Commerce Commission has lent its aid. "The Commission has sought as far as practicable to secure the establishment •1 Coxe V. Lehigh Valley R. R., 3 Int. Com. Rep. 460, 4 I. C. C. Rep. 559 (1891). * This general statement requires some modification in detail. Thus goods shipped west from Chicago take the Western classification at once. On the Pacific slope the Western classification is modified. And every railroad, as will be seen, may make " commodity " rates for certain ar tides outside the elassifi^cation, and thus each road may to a certain extent make an independent rate. 6 See Thurber v. New York C. & H. R. R. R., 2 Int. Com. Rep. 742, 3 I. C. C. Rep. 473 (1890). [529] § 556] Kailboad Rate E^gulation. [Chap. XVIII throughout the country of a uniform classification of freight, be- lieving it to be to the interest and advantage cf both carriers and shippers." * But although at one time the effort seemed on the point of success, nothing came of it. It is doubtful vrhether it will ever become possible to frame one uniform classification. The differences of classification are in fact due to fundamentally different conditions in the three great divisions of the country ; differences in density of popula- tion, in nature and purpose of traffic, in cost of construction and maintenance, vyhich necessarily influence to some extent the classification of articles carried. Until there is greater uni- formity of conditions, identity of classification is unlikely, and if secured would probably operate unjustly. " While the nearest approximation to uniformity of classifi- cation is desirable, all agree that great caution should govern attempts to bring it about. The Commission has said, ' to force it at once was undesirable,' and ' while one dealer might be great- ly benefited another might be ruined,' and that ' the final adjust- ment of a uniform classification must necessarily be the arrange- ment of a number of compromises.' And it was said in Pyle v. East Tennessee, Virginia & Georgia Railroad Co.'' .that occa- sional inequalities of rate, and slight and occasional differences in the rates charged would not prove that the whole system is wrong and that ' when comparison is attempted to be made of classification and rates, different conditions of transportation cannot be ignored.' " ® § 556. Classification necessarily imperfect. It is obvious, of course, that the fewer the classes created the more imperfect the classification will necessarily be. Since the Yeomans, Com. in Duluth Shingle Co. v. Duluth, S. S. & A. Ey., 10 T. C.C. Eep. 489, 505 (1905). 7 1 Int. Com. Rep. 770, 1 I. C. C. Rep. 473 (1888). 8 McDill, Com. in F. Schumacher Milling Co. v. Chicago, R. I. & P. R. R,, 6 I. C. C. Rep. 61, 67 (1893). [530] Chap. XVIII] Classification. § 556 very nature of classification is the grouping together of differ- ent things, it is not possible to secure exact accuracy of treat- ment for all the varieties included in the class ; and the fixing of rates in this method therefore involves compromise, and can at best only approximate correctness.*^ As the Interstate Com- merce Commission has said, in the most exhaustive case on this subject (IS^ational Hay Association v. Lake Shore & Michigan Southern Railway) : " The making of railroad tariffs is simplified by classifying the great number of articles commonly offered for transporta- tion and fixing rates for the different classes instead of making a separate rate for each commodity. In a classification such as the Official, which contains but six general classes, it is mani- festly impossible to bring together in each class only such arti- cles as resemble each other in the elements of character, use, value, volume, bulk, weight, risk and expense of handling, which have so often been referred to as governing conditions in freight classification. Besides these general considerations affecting classification, competition is often an important factor. Such competition includes not only that between carriers, but also that of a commodity produced in one section with the same com- modity produced in another section, and sometimes the competi- tion of one kind of traffic with another. " Necessarily many articles must appear together in a class which bear little relation to each other in all these respects, though some may be of like character while differing in bulk or in value, others have similar bulk while varying largely as to weight or volume, and still others present similarity in one or more of the elements mentioned, but have no common relation as to others. The best that can be done under such a scheme of classification is to place two or more articles possessing general 9 Proctor & Gamble Co. v. Cleveland, Cin. & Chicago & St. L. Ey., 3 Int. Com. Rep. 131, 4 I. C. C. Kep. 87, per Veazie, Com. (1890). [531] § 567] Railroad Rate Regulatioit. [Chap. XVIII similarity in the same class, and where an article^ is not ana- logous to any other to put that article in the class containing commodities which are most nearly related to it in general char- acter and other essential respects." *" § 557- Classification not unduly minute. No classification can be so minute as to conform to the differ- ing varieties and conditions of traffic ; and to separate different grades or densities of the same article into different classes with varying rates, even if it could be accomplished, woiild go far to defeat the real purpose of classification. If the rate on an article is reasonable to those who ship the great bulk of that article in the form in which it is commonly prepared for trans- portation, that rate does not become unreasonable to the shipper x)f a small quantity of the same article merely because the ship- ment is prepared in an uncommon form, and one which affords tthe carrier a greater profit per hundred pounds. This is particu- larly true when the preparation of that article in the more prof- itable form would impose some degree of hardship upon a large majority of shippers because of its greater expense or for other leasojis ; and accordingly in the case of the Planters' Compress Company v. Cleveland, Cincinnati, Chicago & St. Louis Rail- way ^^ the Interstate Commerce Commission held that cotton compressed in a round bale, in which form it could be handled much more easily and occupied much less space than in the ordinary bale, was not necessarily for that reason entitled to a lower classification. And the Commission commended the rail- 109 I. C. C. Rep. 264, 306 (1902). This case was overruled by the Cir- cuit Court of the United States, Interstate Com. Com. v. Lake Shpre & M. S. Ry., 134 Fed. 942 (1905), on the ground that although the commission might declare classification unreasonable it might not direct what clas- sification the commodity should take. This decision was upheld by an evenly divided court in the United States Supreme Court without opinions, 202 U. S. 613 (1906). "11 I. C. C. Rep. 382 (1005). [532] Cbap. XVIII] Classification. [§ 558 roads for placing in the same class all window shades, whether mounted or unmounted. ^^ It would seem that the classification should be no more minute than could be described in a reasonable general rule. This view was expressed by Mr. Commissioner Shoomacher in the case An- drews Soap Company v. Pittsburgh, Chicago & St. Louis Kail- road :^^ " A matter so extensive and difiicult as classification o£ freights must evidently be mainly governed by general rules. This is indispensable to any system of classification at all. The alternative is a rate for every commodity separately, instead of a class rate for articles of enough similarity in some controlling features to be classed together." § 558. Extra class divisions. The standard classification, which contains five or six classes, while sufficient for ordinary commodities, does not and in the nature of things cannot cover exceptional cases, and especially cases of especially difiicult carriage. In order to cover such ex- ceptional cases, it is the custom to give certain commodities a rating above the first class, such as "double first class rates," or even higher. Furthermore, there is a continual tendency to differentiate commodities, and to seek a means of giving to some article a rate which falls between two successive class rates. This tendency has resulted in the creation of intra-class ratings ; such as a rate " forty per cent less than third class." This tendency is of course opposed in its fundamental principle to the whole theory of classification, and if given play enough would soon put an end to the system on which present rates are based ; and it is there- fore not to be commended as a general expedient. If it seems 12 Veazie, Com. in Page v. Delaware, L. & W. R. R., 6 I. C. C. Rep. 148, 168 (1894). But see Interstate Com. Com. v. Delaware, L. & W. R. R., 64 Fed. 723 (1894). 13.3 Int. Com. Rep. 77, 4 I. C. C. Rep. 41 (1891). [533] §§ 559, 560] Kailroad Kate Regulation. [C'liap. XVIII necessary in any particular case, it is probably because the dif- ference in rates of the two classes concerned is unduly great. § 559. Commodity rates. But besides the extra-class rates proper, every road has spe- cially low rates for some staple commodities, below the lowest class rates, which are known as commodity rates. The prin- ciple on which such rates are established is doubtless a sound one. The articles which are granted commodity rates are staples of comparatively low value, like grain, lumber, and salt, moving in great quantities over roads of which they form a large part of their traffic. A granger road, carrying great quantities of grain in bulk, is in an entirely different position as to traffic in grain from a road in another part of the country carrying small quantities from time to time to the small consumer; and while the traffic of the latter road can be classified, that of the former requires special treatment. Each road, therefore, may estab- lish commodity rates in such cases ; subject to the limitation that the rate must not be unduly low, so as to cause a loss. A com- modity must not be carried at such unremunerative rates as will impose burdens upon other articles transported to recoup loss incurred in carrying that commodity.^* § 560. Method of classification. Classification in the United States, as matters are ordered to-day, is made by a committee appointed by the railroads oper- ating within the terrritory for which the classification is to be prepared, who meet from time to time to prepare or revise the classification sheet. Classifications' are adopted by this com- mittee by majority vote, and are then published ; and when pub- lished are binding on all the roads concerned. The printed 14 Anthony Salt Co. v. Missouri Pao. Ry., 4 Int. Com. Rep. 1, 5 I. 0. C, Rep. 299 (1892). [534] Chap. XVIII] Classification. [§§ 561, 562 schedule containing the classification of all articles for carriage is called the classification sheet. § 561. Interpretation of the classification sheet. The classification sheet becomes a document of interest to the public, and shippers are at once entitled to the benefit of its terms. It is therefore a document to which the carrier cannot give such an interpretation as it desires. The interpretation is subject to the rules governing writings in general, and the car- rier is bound by the classification sheet according to its ordinary legal interpretation. " The classification is supposed to inform the persons engaged in that business in what classes the articles they handle are placed for transportation purposes, and it would fail to do this if instead of employing terms of designation in the sense famil- iar to themselves it made use of them in a sense fixed upon by persons engaged in an occupation altogether different, and which might to an expert in their own business be strange and mis- leading." ^^ TOPIC B GENEEAL PEINCIPLES OF CLASSIFYING. § 562. Influences determining classification. In Grain Shippers' Association v. Illinois Central Railroad ^ Mr. Commissioner Prouty thus described the process by which classification of freights has been accomplished : " In ideal traffic conditions certain elements would be taken into account in establishing a freight rate. These, among others, would be the value of the commodity, the bulk of the commodity, the cost of service, the volume of traffic, etc. Under these conditions the witnesses rather thought that value might be a pretty important 15 Cooley, Chairman, in Hurlburt v. Lake Shore & M. S. R. R., 2 Int. Com. Rep. 81, 2 I. 0. C. Rep. 122 (1888). 18 I. C. C. Rep. 158 (1899). [535] § 563] Eaileoad Rate Regulation. [Chap. XVIil factor in determining the freight rate. Under actual condi- tions, while an attempt was made to regard these various con- siderations, as a rule the controlling influence was competition. What ever traffic managers would be glad to do, at the present time they do not, and perhaps cannot, consider in the making of rates much beyond actual competitive conditions. Originally these various factors entered to an extent into the freight rate, and under their operation schemes of rates and classifications were built up. Those classifications and class rates serve in a measure as the basis of rates at the present time, having been gradually modified by the action of competitive forces. Taking those as a basis, the trafiic manager to-day obtains for his com- pany all he can without much reference to any system upon which rates ought to be constructed. He gets usually the best rate possible, without inquiring any further than he may find it convenient what in fact justifies that rate." Following the same line of thought, Mr. Commissioner Vea- zie, in Proctor & Gamble Company v. Cincinnati, Hamilton & Dayton Railway,^ pointed out, in speaking of the classification committee, that, " It should not be overlooked that their training has been largely from the railroad standpoint and on this ac- count their error, if either way, is more liable to be in favor of high rates. That they should always be exactly right is more than any earthly tribunal ever attained." § 563. Adjustment of business to established classification. Since the classification of freights is the result of long ex- perience, and business has become adjusted to it, the classifica- tion and rates will not be disturbed unless it is made clear that there is some tangible inequality involved and a fairer adjust- ment of rates is shown. As TVlr. Commissioner Prouty said in Grain Shippers' Association v. Hlinois Central Railroad:* 23 Int. Com. Rep. 131, 4 I. C. C. Rep. 87 (1890). 3 8 I. C. C. Rep. 158 (1899). [530] Chap. XVIII] Classification. [§ 564 " Every article referred to by the complainants except live stock has been substantially the same since the Act to Regulate Com- merce took effect. During all this time, and probably during a much longer time, traffic conditions and conmiercial conditions have been adjusting themselves to this relation of rates. Cer- tainly this relation should not be disturbed until some intelligent opinion can be formed as to what should take the place of it. It is not enough to know that the present conditions are not ideal. It must further appear that something better is attain- able." § 564. Classification according to manufacturer's represen- tations. In determining the true classification of goods offered for carriage the carrier may act upon the shippers' representations as to the nature of the goods. This was neatly brought out in a ease where a manufacturer claimed that his soap, which was ad- vertised extensively as toilet soap, should be classed not as toilet soap but as laundry soap.* He claimed that his soap was a cheap soap, and competed in the market with laundry soap ; but as it had been extensively advertised as toilet soap it was neces- sary to call it toilet soap in order to have the benefit of the ad- vertising. The Commission held that the railroads were right in classifying the soap according to the representation of its manu- facturer. Mr. Commissioner Schoomacher said: "And this is the attitude of the case in hand. The Commis- sion is asked in the case of a particular article to order that its classification shall not be governed by what it purports to be but by what it is claimed to be in fact. An order of this kind would necessarily be general and apply in other cases. Besides, its ef- fect would be to discriminate against the other articles which the one in question purports to resemble in quality and uses. 4 Andrews Soap Co. v. Pittsburgh, C. & St. L., 3 Int. Com. Rep. 77, 4 I. C. C. Rep. 41 (1891), per Schoomacher, Commissioner. [537] § 565] Railroad Rate -Regulation. [Chap. XVIII " If, for example, an order were made that because a par- ticular variety of soap represented to be a toilet soap by its manufacturer has in fact no higher market value, or quality superior, to soap classified as laundry or common soap, therefore it must be classified and carried as laundry or common soap, the manufacturers and shippers of other toilet soaps would very probably complain that undue preference and advantage are given to manufacturers benefited by such an order, and ques- tions would be likely to constantly arise to determine the rela- tive value of toilet soaps and of laundry soaps. The Commis- sion is unable to see how it can properly or justly require car- riers to analyze the freight offered to them, to ascertain its qual- ity and its actual value, when those are claimed to differ from its trade designation and the price paid by the consumer. A rule of that kind would be altogether impracticable. The public is entiljled to truthful representations respecting goods offered for sale. If an erroneous representation is essential to the sale of a commodity it is not inequitable that some burden should be a necessary consequence. " When a manufacturer describes his article to the public for the purpose of making a market for it, he also so describes it for purposes of carriage, and'it seems as reasonable that the carrier- should have a right to accept the manufacturer's representation concerning his product as that the public should be influenced by it in the purchase of the article." § 565. Classification of various goods. In Myer v. Cleveland, Cincinnati, Chicago & St. Louis Rail- way ® the complainant, a manufacturer of hats, objected to the classification of hatters' furs as double first class. The Commis- sion, comparing hatters' furs with the other articles classed in the same way, found that none of them " affords as desirable traffic as the one under consideration, and in only three or four 6 9 I. CO. Rep. 78 (1901). [538] Chap. XVIII] Classification. [§ 565 instances is their any approach to this." Comparing with arti- cles in the first class, they concluded that " but very few of theii are as desirable freight as hatters' furs and fur scraps and cuttings, and that none of them are more so. JSTo special reasons were shown why these two commodities should pay a higher rate than other similar commodities." In reply to this, the carrier contended that " one commodity should not be compared with another unless the two are competitive; hatters' furs cannot therefore be tested by dry-goods or boots and shoes," and counsel argued that the main element in the determination of a classifi- cation is " value of the service," or " what the traffic will bear." Mr. Commissioner Prouty, however, refused to follow this argument, saying : " Mr. Gill, Chairman of the Official Classi- fication Committee, speaking both as a witness and as counsel for the defendants, asserts that the main element in the determina- tion of a classification is ' value of service,' or ' what the trafiic will bear.' " There is undoubtedly much, we do not find it necessary to now inquire how much, truth in this contention of Mr. Gill; but it cannot be admitted that those are the only considerations to be observed. It has been repeatedly claimed by carriers and repeatedly held by the Commission that in the forming of a classification bulk, value, liability to damage, and similar ele- ments affecting the desirability of the trafiic should be consid- ered, and that analogous articles should ordinarily be placed in the same class.* " Manifestly in determining what freight rates shall be borne by different commodities an attempt should be made to obtain a fair relation between those commodities, and a classification which utterly ignores all considerations of this kind or which 6 Warner v. New York C. & H. R. R. Co., 4 I. C. C. Rep. 3Z, 3 Int. Com. Rep. 74 (1892) ; Harvard Co. v. Pennsylvania Co., 4 I. C. C. Rep. 212, 3 Int. Com. Rep. 257 (1892) ; Page v. Delaware, L. & W. R. Co., 6 I. C. C. Eep. 548 (1894). [539] § 566] Kaileoad Eate Regulation. [Chap. XVIII utterly fails to give due weight to such considerations is unjust and unreasonable." § 566. Difference between forcing classification on railroads and justifying classification by railroads. In the discussion of classification it is to be noticed that the question is not what classification the judges would make if they were acting as a committee to frame a schedule ; the question is rather whether the classification adopted by the carrier can be justified. In the cases in which classification is discussed, therefore, the court has to determine not whether it could im- agine a better classification, but whether it should overthrow the adopted classification as clearly unreasonable. This was well expressed by ]\Ir. Chairman Knapp in Planters' Compress Company v. Cleveland, Cincinnati, Chicago & St. Louis Rail- way:^ "It seems plain that a distinction should be drawn between the legal obligation of carriers and the discretion which they may rightfully exercise. We do not doubt that it would be law- ful for these defendants and other carriers to establish carload and less than carload rates on cotton, with a reasonable difference between the two rates and a reasonable minimum which would secure to shippers the lower carload rates ; but it does not follow that they are bound to do so, much less that they can be required to establish a differential based upon an unusual carload mini- 7 U I. C. C. Rep. 382, 409 (1905). 8 Prouty, Com. dissenting, seems to agree on this point (p. 411): "In view of the wide limits within which carriers may properly regulate their own business we should perhaps hold that these defendants may apply the same rate to the transportation of cotton, compressed or uncompressed, in carloads or in less than carloads." [540] Chap. XVIII] Classification. [§ 567 TOPIC C BASIS OF CLASSIFICATION : COMPAEISON OF COMMODITIES. § 567. The reasonableness of a particular rate involves rea- sonableness of classification. It is the recognized legal duty of the carrier so to classify traffic and fix charges thereon that the burdens of transportation shall be reasonably and justly distributed among the articles they carry. ^ That is the governing principle of a freight classi- fication, and it arises under the obligation imposed upon carriers by the statute not to charge unreasonable or unjust rates or to impose any unjust discrimination or undue prejudice in any respect whatsoever. It is evident therefore that even in cases where the need of additional revenue is apparent the carrier cannot arbitrarily select some one or more articles upon which to apply higher rates regardless of the relation which such arti- cle or articles bear to other commodities commonly offered for transportation.^ A general advance or dimunition of all freight rates involves a question only of the reasonableness of the re- turn from the whole tariff schedule; and even an advance of rates for a whole class of commodities involves principally only a question of the reasonableness of the rate as a whole. But if the rate charged upon a particular commodity is in question, the decision involves a comparison with other commodities. It must be determined whether the commodity is properly classified in comparison with other commodities. " If the defendant carriers had advanced all of their class rates, in case of complaint against the increased rate upon any particular article the reasonableness of such higher charge 1 Page V. Delaware, L. & W. R. R., 4 Int. Com. Rep. 525, 6 I. C. C. Rep. 148 (1894); Myer v. Cleveland, C. C. & S. L. Ry., 9 I. C. C. Rep. 78 (19011 ; National Hay Assoc, v. Lake Shore & JI. S. Ry., 9 I. C. C. Rep. 264, 304 (1902). 2 Clements, Com. in National Hay Assoc, v. Lake Shore & M. S. Ry., supra. [541] § 568] Raileoad Rate Regulation. [Chap. XVIII might well have been the principal question ; but what these de- fendants did on January 1, 1900, was to increase the classifica- tion rating and consequently the rates upon numerous commodi- ties selected by them from the classification, including hay and straw, and by such action they laid themselves open to the ad- ditional charge of having subjected such higher rated traffic and those interested in it to undue prejudice and unjust discrimina- tion." 3 § 568. Classification not determined by consideration of rate on a particular comniodity. While as a general principle it is clear that each shipper in the case of any particular shipment is entitled to a rate no greater than is reasonable for that shipment, it is equally true that if a shipper complains of the classification of the goods he offers for shipment the justice of his complaint cannot be determined by considering merely the effect of such classification on the rate charged for the particular shipment in question. Classification by its very nature involves the relation of one commodity to all others; and comparison with other commodities is therefore es- sential to any scheme of classification. "An attempt to reform a classification by a selection of iso- lated cases and single classes, and changing them without a study of the entire scheme, would be dangerous. The entire effect of a proposed change can only be known by comprehend- ing the relation of each particular article or class to the combined scheme. Therefore a complainant asking a change in classifica- tion, as in this case, with reference to a single group of articles, should be required to show a case of unjust discrimination or wrong done to procure a change." * 3 Clements, Com. in National Hay Assoc, v. Lake Shore & M. S. Ey., 9 I. C. C. Rep. 264, 304 ( 1902 ) . See Interstate Com. Com. v. Lake Shore & M. S. Ry., 134 Fed. 942 (1905). 4 F. Schumacher Milling Co. v. Chicago, E. I. & P. E. E., 6 I. C. C. Eep. 61, 67 (1893). [542] Chap. XVIII] Classii-ication. [§ 569 In the Window Shade case,° at the rehearing before the In- terstate Commerce Commission it was insisted that if the rates involved in the complaint against the classification of window shades are not shown to be unjust and unreasonable in them- selves, — that is, practically without reference to rates charged by the roads on other conmiodities, — they ought not to be re- duced. The Commission, however, held that " rates must bear just relation to each other as well as be reasonable per se." ® The aim of the investigation, the Commission added, " is not to ascertain how high classification or rates the affected indus- tries will stand; the purpose of such investigations is to deter- mine the duties of carriers and the rights of shippers and the public under the law." § 569'. Elements in comparison of commodities. Freight classification is based upon the relations which com- modities bear to each other in such respects as character, use, bulk, weight, value, tonnage or volume, risk, cost of carriage, ease of handling and controlling conditions caused by competi- tion.^ It will be noticed that all these considerations, except the last, are concerned with the nature of the commodity itself; either its material qualities or its use. They affect either the cost or risk of carriage to the carrier, or the value of carriage to the shipper. It is plain therefore classification is a method of rate making based upon all the principles governing the estab- 5 Page V. Delaware, L. & W. R. E., 6 I. C. C. Rep. 548, 556 (1894). 6 Citing Eau Claire Board of Trade v. Chicago, M. & St. P. R. Co., 4 Int. Com. Rep. 65, 5 I. C. C. Rep. 264 (1892) ; James v. Canadian P. R. Co., 4 Int. Com. Rep. 274, 5 I. C. C. Rep. 612 (1893); Raymond v. Chicago, M. & St. P. R. Co., 1 Int. Com. , Rep. 627, 1 I. C. C. Rep. 230 (1887); Boards of Trade Union v. Chicago, M. & St. P. R. Co., 1 Int. Com. Rep. 608, 1 I. C. C. Rep. 215 (1887). 7 Proctor & Gamble Co. v. Cincinnati, H. & I. Ry., 9 I. C. C. Rep. 440, 482 (1903). [543] §§ 570, 571] Eaileoad Eate Regulation. [Cliap. XVIII lishment of particular rates ^ which have been discussed in the preceding chapter. § 570. Comparison of similar things. The comparison commonly instituted is that between similar things, for the purpose of placing them in the same class. Thus the following articles have upon comparison been ordered placed in the same class: rasins and dried fruit;* rye or barley and wheat ;^" envelopes for correspondence and merchandise en- velopes;" cowpeas and seed-grain.^^ § 571. Vegetables for table use. Celery was compared with other vegetables for table use, and it was concluded that it should be classified with such vegetables rather than with perishable fruits. " It is a matter of general knowledge that during recent years, and especially since the change in- classification mentioned in the complaint, celery has come into much more common use. Its production has greatly increased and its market value has de- clined. It certainly is no more a table luxury than some of the vegetables which have a lower class in the Western Classifica- tion. As varied or qualified by the foregoing, lie facts stated in the petition are found to be true, and we hold that the complain- ant is entitled to the relief claimed. " For that portion of its line over which the Western Classi- fication is in force the Wabash road should class celery with cauliflower, asparagus, lettuce, green peas, string beans, oyster 8 See Grain Shippers' Asso. v. Illinois Central R. E., 8 I. C. C. Rep. 158 (1897). 9 Martin v. Southern Pae. Ry., 2 Int. Com. Rep. 1, 2 I. 0. C. Rep. 1 (1889). 10 Cannon Falls F. E. Co. v. Chicago, G. W. R. R., 10 I. C. C. Rep. 650 (1905). nWolf Brothers V. Allegheny Valley R. R., 7 I. C. C. Rep. 40 (1897). l2Swaffield v. Atlantic Coast Line, 10 I. C. C. Rep. 281 (1904). [544] C'hap. XVIII] Classification. [§ 572 plant, egg plant, and other vegetables enumerated in Class C of that classification, rather than with berries, peaches, grapes, and other fruits specified in Class III. thereof, and the defendants should transport celery from Tecumseh to Kansas City at no higher rate per carload than they charge for carrying a carload quantity of any of said vegetables named in Class C aforesaid."'* § 572. Perishable articles of food. Eggs were held properly classed with fruit and other perish- able articles of food in the case of Brownell v. Columbus, Cin- cinnati & Midland Railway.'* Mr. Commissioner McDill said: " The egg is a delicate and perishable commodity. Though methods adopted for its preservation retard the decomposition to which it is subject, they do not prevent the article from taking on that musty and strong flavor so often noticed in ' stored eggs.' While not as perishable as the small fruits mentioned, yet, con- sidering the delay which is necessary in the accumulation of sufficient lots for sale or sending to market, its inherent liability to early decay, and the fact that ' fresh eggs ' are commonly held to be an indispensable food article in every household, it must be deemed sufficiently perishable to be classed with articles of that character. In the official classification eggs, any quantity, are classed as low as berries in carloads, fruit in carloads, not otherwise specified, and butter and cheese in any quantity; and they are given a lower class than poultry, game, peaches, or oysters, not in the shell. These commodities, though diverse in character, are all perishable food products and particularly subject to deterioration after short lapses of time and under climatic influences. Considered as a perishable article eggs cannot be deemed to have an unfavorable classification ; they are classed lower than some, and no higher than any, of the articles above mentioned." 13 Veazie, Commissioner, in Tecumseh Celery Co. v. Cincinnati, J. & M. Ey., 4 Int. Com. Rep. 318, 5 I. C. C. Rep. 663 (1893). 14 4 Int. Com. Rep. 285, 5 I. C. C. Rep. 638 (1893)'. [545] § 573] E,AiLEOAD Rate Regulation. [Chap. XVIII § 5T3. Groceries. A comparison of soap with other articles commonly sold by grocers was thus made by the Commission : " The fifth class of the Official Classification contains over 2,000 articles, and in- cludes soap and many other grocery articles, such as canned fruits and vegetables, candles, cabbage, pickles, potatoes, pump- kins, parsnips, squash and turnips, chicory, citron, lemon and orange peel, desiccated cocoanut, coffee, fruit butters, jelly, sauce, soap and washing powders, macaroni, vermicelli, flour paste, mustard, olives, pickle or brine, soups and broths, sugar, syrup and tapioca. ]^umerous other articles sold by grocers or in general stores are also in the fifth or higher classes. " Although soap is most desirable traffic for the carriers, it is not a species of traffic which like hay or grain moves in very large aggregate quantities, nor is it so low in value as to call for the lowest class rating on that account. It is a widely manufactured article sold with other general merchandise, and, unlike the prin- cipal food staples which move in greatest volume from the West to the East, it is shipped from the factory in all directions and meets the products of other factories in all markets. The soaps of l^ew York and Chicago manufacturers sell in Cincinnati iii competition with complainant's products, and the latter in turn are sold in Chicago as well as ISTew York and other extreme east- ern cities and towns. This condition is more or less common to other general merchandise articles which are produced in various parts of Official Classification territory. Without some showing of discrimination against soap in its classification as compared with other articles of the same general character, or any special distinction appearing in favor of soap in either volume, value or controlling commercial considerations, we are unable to find simply because it is a desirable article of traffic for the roalroads in the matter of earnings and ease of handling that it is unjust to retain it in class 5 with other articles of like character, some [546] Chap. XVIII] Classification. [§§ 57-4, 575 of which are equally as attractive as soap from the standpoint of car revenue."^® § 574. Articles shipped in glass. A comparison of articles shipped in glass was made, i^pon complaint of the proprietor of a patent medicine who desired a lower classification. The Commission said : " By this classifi- 3ation it takes the rates of the other kinds of property in the class. These consist largely of articles in glass packed like the bitters in boxes for transportation. Among theip are : acids, apple or fruit butter, bromine, cider, coffee condensed, drugs and medicines, honey, ink, liquors or liquids, milk food, oils, paints, pickles, prunes, syrup, and a variety of others. There is no apparent in- justice in classifying the bitters with such articles. And a rate that is reasonable for the class is reasonable for an article prop- erly included in the class. The petitioners suffer no injustice, therefore, peculiar to themselves, from the classification of their goods. If the classification, of their bitters should be changed the same reasons would compel a like change of a large number of similar articles." ^* § 575. Forest products. Forest products not entirely manufactured have been com- pared and placed in the same class. Thus lumber and railroad ties should have the same classification;^''^ so box shocks should be classified with lumber, laths and shingles ;^^ and hub blocks should be classed with lumber instead of with wagon materials. ■'® 15 Proctor & Gamble Co. v. Cincinnati H. & T>. Ry., f) I. C. C. Rep. 440 (1903), per Knapp, chairman. See Thurber v. N. Y. C. & H. R. R. R., 2 Int. Cora. Rep. 742, 3 I. C. C. Rep. 473 (1890). 16 Myers v. Pennsylvania Co., 2 Int. Com. Rep. 403, 2 I. C. C. Rep. 573 (1889). " Reynolds v. Western N. Y. & P. Ry., 1 Int. Com. Rep. 688, 1 I. C." C. Rep. 393 (1888). "Michigan Box Co. v. Flint & P. M. R. R., 6 I. C. C. Rep. 335 (1897). 19 Hurlbut V. Lake Shore & M. S. Ry., 2 Int. Com. Rep. 81, 2 I. C. C. Rep. 132 (1888). [547] § 576] Eailroad Eate Regulation. [Chap. XVIII Shingles were compared with other lumber products, and it was held that they should be in the same class. " Generally speaking the demand for and use of shingles as building mate- rial are quite as important and general as for any other lumber product, and the necessity is equally as great that such product shall be charged only a reasonable and equitable rate for its- transportation. Shingles being put up in bundles for shipment the work of handling is facilitated so that no more, and perhaps even less, labor is required than for the handling of many other lumber products classed with and charged the same transporta- tion rate as lumber, such as laths, shooks, sawdust, box and moulding material and other stuff of the regular dimensions. The weight of shingles that can be loaded in a car will also com- pare favorably with the above named and many other lumber products taking the lumber rate. ISTo testimony has been sub- mitted as to the relative values of these various products, but it may be assumed safely, that shingles are worth as much per car- load as the average of articles taking the lumber rate. 'So claim has been made that there is any greater risk in shipping shingles than any other article included in the lumber classification." ^^ § 576. Dry goods. "Window shades and various articles of dry goods were thus compared : "In the elements of bulk, weight and value, several of the dry-goods articles described in the table set out in the sixth finding as taking third class rates have greater similarity to a 23-dozen -case of finished shades than exists between such a case of shades and the first-class articles mentioned in that table. There is, however, little analogy in uses or character between window shades and the dry-goods articles referred to. With the exception of lace curtains, these articles are dry- goods in the piece ; and lace curtains are in the category of orna- mental house furnishings, while the window shade is regarded as zoYeomana, Com. in Duluth Shingle Co. v. Duluth, South Shore & At- lantic Ry., 10 I. C. C. Rep. 489, 504 ( 1905 ) . [548] Chap. XVIII] Classificatiois . [§ 577 a household necessity. But the fact that both shades and lace curtains are in the first class, the latter many times more valu- able, is an element to be noted, though against this it must be considered that many incongruities are unavoidable when the carriers undertake, as they do by the Official Classification, to divide the great mass of freight articles into practically six classes; and the desirability of simplicity in the classification is a feature which should not be overlooked. The items of sim- ilar bulk and weight, less value and risk of carriage, and import- ant volume of traffic, are all in the direction of giving to win- dow shades a classification as low as that which is provided for window hollands."^^ § 577. Comparison of unlike things. Unlike things may be compared tO' determine the correctness of the classification of one of them. With so few classes into which all commodities must be placed, it is obviousi that not all articles in a single class will be similar in theii nature; and unlike things may after comparison be held to belong in the same class. More commonly, because of the unlikeness, they will be held properly to be placed in different classes. Thus in the important case of Tift v. Southern Railway,"^ the railroad attempted to institute a comparison between the classification of lumber and that of oranges, pineapples, water- melons, peaches and other fruit, rosin, turpentine, pyroligneous products, cotton seed oil, and cotton factory products. The obvious difference was, however, pointed out by the Commis- sion. " Lumber is much less valuable per weight than most, if not all, the above articles and its volume is many times greater. The larger portion or nearly all of the above articles are what are termed perishable and, therefore, involve greater risk and greater cost in handling than lumber. The rates on lumber. 2J Veazey, Com. in Page v. Delaware, L. & W. R. R., 4 Int. Com. Rep. 525, 6 I. C. C. Rep. 148, 170 (1894). 22 10 I. C- C. Rep. 548 (1905). [549] § 578] Kaileoad Rate Eeg-ulation. [Chap. XVIII therefore, should be not only not as high as, but materially less than, the rates on those articles." Similarly, upon a comparison, it was held that there was such dissimilarity as to justify a different classification of bricks and ice,^^ of soap and hay,^* of cowpeas and fertiliz- ers,.^^ of low grade steam coal and more costly domestic grades,^® of salt and grain,-^ of patent medicines and lager beer,^* of flour in barrels and breakfast foods in packages.^* § 578. Differences between commodities. When articles are plainly different in character, they are rightly put in different classes. In a case where it was at- tempted to compare salt and grain ^ the Cbmmission said: " There is no sufficient similarity between salt and grain to make a comparison in any degree instructive. Salt moves in quantities sufficient to supply the entire demand, from widely separated points of production to common intermediate points of consumption. Grain moves, as a rule, in one direction only to the general markets of the world and the demand is prac- tically unlimited. The markets for grain will usually absorb the entire supply and the lowering of rates on grain inures largely to the producer of grain. A reduction in salt rates to the interior of Iowa and Missouri could not liave such an effect. The market is necessarily limited. Disturbing rates would, as we have shown, lead to corresponding reductions as to the other 23Fitehburg R. E. v. Gage, 12 Gray (Mass.), 393, B. & W. 354 (1859). 24 Proctor & Gamble Co. v. Cincinnati H. & D. Ey., 9 I. C. C. Eep. 440 (1903). 2BSwaffield v. Atlantic Coast Line, 10 I. C. 0. Eep. 281 (1904). 26 Com. V. Louisville & N. E. E. (Ky.), 68 S. W. 1103 (1905). 27 Anthony Salt Co. v. Missouri Pacific Ey., 4 Int. Com. Eep. 1 (1892). 28 Myers v. Pennsylvania R. R., 2 Int. Com. Eep. 403, 2 I. C. C. Eep. 573 (1889). 29 Schumacher Milling Co. v. Chicago, E. I. & P., 6 I. C. C. Rep. 61 (1895). 1 Anthony Salt Co. v. Missouri Pac. Ey., 4 Int. Com. Eep. 1, 43 (1892). [550] Ciiap. XVIII] Classification. [§ 579 competing field, so that a reduction will not give any profit or any greater market in the end to the Kansas pro- ducers. ISTatural causes and forces ought to have full sway. The public mind has qondemned what it has believed to be the attempt of railway managers to interfere with them. Commis- sions and other bodies in regulating transportation should, as far as possible, avoid the same error." But if the difference is not great, an identical classification will not be disturbed. So where a railroad placed milk and cream carried in bottles, in the same class, the Commission said •? " That it makes no lower charge on milk than on cream may be open to some criticism, but its rate on milk is already reasonably low, and we do not feel inclined to disturb its schedule on that account. No order will now be entered as against that company." TOPIC D CONVENIENCE IN HANDLING. § 579. Classification based on nature and size of package. It seems to be true as a general principle that a shipper should be left free to ship in such package as suits his conveni- ence, and therefore that a classification based on kind or size of package is improper. So where the carriers attempted to class- ify eggs carried in " returnable cases," that is, cases substan- tially built and comparatively expensive, lower than eggs car- ried in cheaper cases, though as a matter of fact the cheaper cases served their purpose equally well and caused no additional trouble or expense to the carrier, the Interstate Commerce Com- mission held the proposed classification invalid. A shipper, the Commission said, should not be subjected to unnecessary restric- tions as to the kind of case he should use.* 2 Milk Producers' Assoc, v. Delaware, L. & W. R. R., 7 I. C. C. Rep. 173 (1896). 3 Rhode Island E. & B. Co. v. Lake Shore & M. S. Ry., 4 Int. Com. Rep. 512, 6 I. C. 0. Rep. 176 (1894). [551] §§ 580, 581] Eaileoad Eate Regulation. [Okap. XVIII § 580. Shipment in small packages. So an attempt to give a higher rating to goods commonly shipped in small packages seems not to be proper. In the ease of Page V. Delaware, Lackawanna & Western Eailroad, when first before the Interstate Commerce Commission,* the distinc- tion between the classification of window shades and that of un- cut hoUands was justified by the carriers by the fact, among, others, that hollands were seldom shipped in small packages, while shades were frequently so shipped. The Commission, how- ever, pointed out that very little additional labor was involved in handling the same weight in small and in large packages; the comparatively light 25-pound package may be easily and quickly handled, while a case weighing approximately 500 pounds is a heavy and cumbersome article. And they finally decided that, considering the rule of charging for one hundred pounds on shipments of less weight, the ease with which small packages containing non-breakable material can be handled, the fact that the carriers do not make a distinction in classifica- tion between small and larger packages, and that mathematical exactness in rating is impracticable, the single circumstance of frequent shipment in small packages should not outweigh the reasons for a change in window shade classification to third class. § 581. Shipment in form more convenient for handling. Where the form of package results in a saving of expense to the carrier by reason of greater convenience of handling, a higher classification for the less convenient form of shipment will be justified. This question was considered in the case of the Trades League of Philadelphia v. Philadelphia, Wilming- ton & Baltimore Railroad.^ In that case it appeared that iron pipe fittings shipped in cases from northern points to southern 4 6 I. C. C. Rep. 148, 172 (1894). 6 8 I. C. C. Rep. 368 (1899). [552] Chap. XVIII] Classification. [§ 581 territory took second-class rates, but if shipped in casks, barrels or kegs a special iron rate, lower than the sixth-class rate, was applied on any quantity. The barrel package was cheaper than the case, except when the quantity was insufficient to fill a bar- rel; but when that happened a keg could be used for packing, with but little inconvenience or additional expense, and the lower special iron rate was thereby secured. The choice was wholly with the shipper to pay the higher rate on fittings in cases or the lower rate on fittings in kegs or barrels. Such a classifica- tion did not operate of itself to aid dishonest shippers in under- billing goods of greater value, and the opportunity for false bill- ing would not be lessened by giving the special iron rate to pipe fittings packed in cases. ISo ground of distinction appeared in this respect between pipe fittings and numerous other articles included in the special iron list and taking higher rates when packed in boxes, and reclassification of all these other commodities was not warranted by the facts in this case. It was held that the defendant carriers had not exceeded the limits of their discre- tion in placing iron pipe fittings packed in eases in a higher class than iron pipe fittings packed in kegs or barrels, and that such action was not unreasonable or otherwise in violation of the Act to Kegulate Commerce. The Commission pointed out that " the barrel package is preferably used in the ordinary course of business because of its comparative cheapness. Even at the same or approximately equal rates boxes would not ordinarily be used, except when the quantity to be separately packed is insufficient to fill a barrel. In such a case the goods can be placed in a keg without much inconvenience or additional expense, and it can hardly be con- sidered burdensome to require that kind of package if shippers desire to forward small lots at the special iron rate. The carrier offers that rate to all persons and on all quantities, provided the articles are sent in packages of barrel form; otherwise a higher rate is charged. The lower rate is not allowed for some [553] § 582] Eaileoad Eate Regulation. [Cliap. XVIII exceptional or expensive mode of shipment, but on the package long in general use and apparently favored by shippers irre- spective of rates, because of its suitability for the purpose and the low cost for which it can be procured. As the choice is wholly with the shipper it cannot be a hardship for him, under the circumstances disclosed, to pay the higher rate when he elects to pack his goods in cases." Upon the same ground the Commission held that milk shipped in cans, by which method it could be carried more cheaply, ought, other things being equal, to have a lower rating than milk carried in bottles." And the Court of Civil Appeals of Texas even held invalid a contract to carry hogs at the same rate in single-deck cars as in double-deck. '^ § 582.' Shipment in form permitting greater car load. On the same principle it would seem that if goods are so com- pactly shipped that more can be carried in a single car, a lower classification should be given them. This was claimed by the complainant in the case of the Planters' Compress Company v. Cleveland, Cincinnati, Chicago & St. Louis Railway.* The complainant offered for carriage round bales of cotton so closely compressed and in such a form that twice as much cotton could be loaded and carried in a single car as could be loaded and carried in the ordinary form. While, as was pointed out, this did not increase the total amount of cot- ton carried, it certainly decreased the expense of carrying such total amount. JSTotwithstanding this fact, the majority of the Commission held that the complainant was not entitled to a 6 Milk Producers' Protective Assoc, v. Delaware, L. & W. R. R., 7 I. C. C. Rep. 92, 169 (1897). VHouston & T. C. R. R. v. Dumas (Tex. Civ. App.), 43 S. W. 609 (1897). 8 11 I. C. C. Rep. 382 (1905). See, however, Railroad Commission of T. V. Houston & T. C. Ry., 16 Tex. Civ. App. 129, 40 S. W. 1052 (1897). [554] Chap. XVIII] Classification. [§ 583 lower classification. The most important argument in favor of the decision is that the method of compression was expensive and was not open to everyone, and that it was there- fore improper to give an advantage to the comparatively- few shippers who could use it. This argument is sound, and is probably sufiicient to justify the decision ; and it has no bearing, of course, on the point now under discussion. The arguments by which the majority of the Commission supported their further opinion that a classifioation based on the greater facility of shipment in round bales was not required are hardly con- vincing. § 583. Classification based on volume of business. I A difference in classification based on the amount of a ship- ment, or the number of shipments, where the amount does not lead to any economy of management on the part of the carrier, is not justifiable. Thus a difference of classification of surgical chairs and sewing machines, based on the fact that few surgical chairs and many sewing machines are offered for carriage, is im- proper.* Mr. Commissioner Bragg said in such a case : " The mere fact that one article, for example, sewing ma- chines, is shipped ' in greater quantities ' than surgical chairs, when each as a rule is shipped in less than carload quantities, and of no large difference in bulk, weight and value, and of no apjireeiable difference in expense of handling and of haul, that this alone should constitute in itself any reason why the former should enjoy lower rates or classification than the latter, mere- ly for the reason that they are shipped ' in greater quantities,' is a doctrine to which we cannot give our assent. In such a case mere quantity, not measured by a recognized unit of quantity adapted to carriage and lessening the expense of handling and carriage, cannot be allowed to affect rates in 9 Harvard Co. v. Pennsylvania Ry., 3 Int. Com. Eep. 257, 4 I. C. C. Rep. 212 (1890). [555] § 584] Raileoad Eate Regulation. [Chap. XVIII the transportation of property. The small dealer is entitled to jnst and reasonable rates on his product, as much so as many and large dealers, and any discrimination between them in rates based upon the idea that the one class of persons makes many shipments while the other makes but few is unjust and unrea- sonable luider the Act to Regulate Commerce. It is a discrim- ination in favor of one kind of traffic as against another in the vita] matter of rates, and is unlawful. " The same doctrine found in occasional loose judicial dicta, to the effect that a carrier imder such circumstances may make ' concessions ' in rates in favor of a ' large as against a small quantity of freight,' or of a ' party ' of a given number of per- sons, as against a ' single person,' upon the idea that there is ' a wholesale and retail principle ' involved in it, is a doctrine at war with the fundamental purpose of the Act to Regulate Com- merce, which has for one of its main objects the protection of the weak as against the strong, and destroys the establishment of proportional equity and justice. These dicta, if given full effect, would undermine this fundamental purpose, and give to combinations and schemes for securing advantages over single individuals a power that would shut out all small competition and put the weak at the mercy of the strong at every turn where railway transportation became a matter of moment in business transactions." § 584. Large volume of traffic in a certain commodity. But though such a difference as that just esamined will not justify a difference in classification, the case is entirely ditter- ent where the volume of traffic in a certain commodity is so great as to justify a certain special method of handling it. Thus the enormous traffic in grain in the west justiiies a special classifi- cation for it; and so the vast traffic in lumber in Georgia should be considered in the classification of that commodity.^" So the MTift V. Southern Ey., 138 Fed. 753 (1905). ,[566] Chap. XVIII] Classification. [§§ 585, 586 great volume of sliipments of flour as compared with other cereal products justifies a lower classification of flour. ^' § 585. Volume of traffic in general considered. The volume of traffic which may be considered, as has been seen, is the entire traffic in the commodity in question. It is not permissible to consider the amount of traffic furnished by a single shipper. As Mr. Commissioner Schoonmacher said in the case of Warner v. New York Central & Hudson River Rail- road : ^^ " The volume of traffic implies only the extent to which a particular article has become a subject of transporta- tion, and does not imply that a large shipper of the same or like traffic can have any advantage over a shipper of smaller quan- tities. Like traffic of large shippers and of small shippers must have the same classification for carloads and the same for less than carloads." § 586. Perishable freight. It is obvious that perishable freight may be placed in a higher class than non-perishable goods of the same general na- ture. It requires special care in the carriage, greater speed, and special equipment, and the risk of loss to the carrier is greater. The transportation of fruit is of this nature, and a high special classification is permissible. In a case which involved the classi- fication of bananas, the Commission said : " The kind of service required in the transportation of bananas is a somewhat exact- ing one. While not usually carried under refrigeration, a spe- cial ventilated car is needed. They must be handled with great expedition and in point of fact the Southern does transport them from Charleston to Richmond and Lynchburg and inter- 11 Schumacher Milling Co. v. Chicago, R. I. & P. R. R., 6 I. C. C. Rep. 61. See, to the same effect, Knapp, Chairman, in Proctor & Gamble Co. v. Cincinnati H. & D. Ry., 9 I. C. C. Rep. 440 (1903). 12 3 Int. Com. Rep. 74, 4 I. C. C. Rep. 32 (1890). See Chapter XXII. [537] § 587] Eaileoad Eate Regulation. [Chap. XVIII mediate points by an express freight service which approximates a passenger schedule, The liability to damage is considerable, and it appears that claims for damage are frequently made." '^ So in the case of melons, the Commissioner said: " Melons being perishable, rapid transit and prompt delivery are of the first importance and where the carrier renders a special service a higher rate than for the carriage of ordinary freight is war- ranted. The defendants furnish special trains for the melon trafBc and undertake to make quick movement and speedy de- livery." ^* § 587. Traffic handled in special trains. This general subject was considered at length in connection with the classification of peaches carried to market on special trains. The complaint was made by shippers of peaches from Delaware to New York. The traffic was moved in separate trains from other freight, and at a high rate of speed. The freight moved, according to the evidence, at about 28 to 30 miles an hour, which did not include the time at stations. Notwith- standing the speed at which the trains were moved, the time re- quired to reach Jersey City from the Peninsula was 12 hours and upwards. Eespondents estimated the cost of movement of this traffic at about double that of ordinary freight. Empty cars in this trade were returned at the same rate of speed. They carried no return loads. Cars used for general freight ordin- arily carry return loads and make slow time, and the usual earnings of such a car are five dollars a day. The Commission held that the peculiar needs of this service, requiring the with- drawal of cars for a period of two months or more from other service, the special fitting up of the cars for the carriage of the freight, the high rat© of speed at which the trains are run in order to make early delivery at the markets, the greater wear w Gardner v. Southern Ry., 10 I. C. C. Rep. 342 (1904). " Loud V. South Carolina Ry., 4 Int. Com. Rep. 205, 5 I. C. C. Rep. 529 (1892). [558] Chap. XVIII] Classification. [§ 588 and deterioration to the cars, tracks and bridges by the in- creased rate of speed and the return of the cars empty, also at high speed, justifies a considerably higher rate than for ordinary freight." i'^ The Commission said that the most material feature in fixing the rating was the speed ; which was not confined to the loaded cars, but also included the return of the empty cars, and was therefore a service in both directions. Other peculiar elements of equipment and service were pointed out as justifying the special classification. " The expense of fitting up the cars specially for the service is an item for which the carrier is fairly entitled to remuneration. The fitting up is necessary to no other traffic but is peculiar to this traffic, and is laid aside when the cars are taken out of this business. A very small addition to the rate will, however, compensate for this expense. The with- drawal of the cars from other service except while lying idle is perhaps not a feature of controlling importance. A car is usu- ally put in service by a carrier where it will earn most revenue, and can only be-in service at one place at the same time, and not in two or more places. But the loss of revenue from ears while being fitted for this service, and again fitted for their usual ser- vice, and while reserved for this business, is fairly a part of the carrier's expense, and a legitimate item to enter into the rates. The loss from the return empty of the cars is also a legiti- mate consideration." § 588. Special equipment not necessary for the traffic. If, however, the carrier provides a special equipment not because it is required by the nature of the traffic, but for its own convenience, or to attract patronage in competition with a rival, the fact that the article is thus carried does not justify high classification. This was held in the ease of oranges. In the case of the Eailroad Commission of Florida v. Savannah, 15 Delaware State Grange v. New York, P. & N. E. R., 3 Int. Com. Rep. 554, 2 I. C. C. Rep. 309 (18S8). [559] § 588] Eaileoad Eate Regulation. [Ghap. XVIII Florida & Western Railroad ^® it appeared tkat the transporta- tion of oranges received special care and attention from the defendants. Cars and steamers were ventilated ; trains were run on fast schedules which limited the number of cars and increased the consumption of coal, and extra accommodations and employes were provided at shipping, junction and ter- minal points. Moreover, most of the cars engaged in this traffic by the all rail lines returned empty, and the cars carrying oranges north were not loaded to their full capacity, the average load not exceeding nineteen thousand pounds. The service, therefor was more expensive than that rendered in connection with ordinary freight. Nevertheless, the Commission found that oranges were not perishable, and that this special care was unnecessary to their preservation; and thereupon held that it would not justify a high classification. The Commission said : " It does not appear that the rapid service and special agencies employed in the carriage of oranges are necessarily required by the nature of the commodity. While spoken of as ' perishable ' in the testimony of the carriers, it is evident that this characterization is correct only to a limited extent. As is well knovsm, oranges in considerable quantities are shipped by rail across the continent, and brought here also in numerous cargoes by slow vessels from the Mediterranean and other countries. It is an exceptionally hardy fruit and well adapted to long transportation. The shipment is made in pack- ages of convenient size for safe and rapid handling, while in weight, as compared with bulk, it furnishes a relatively high tonnage for the space occupied. In general desirability as freight it differs widely from those more delicate and short lived products which must be speedily consumed after they are gath- ered, and which, from their inherent qualities, are ordinarily rendered valueless by accident or delay in transit. Therefore, the special facilities provided by the defendants for the trans- 16 3 Int. Com. Rep. 688, 5 I. C. C. Rep. 13 (1891). ,[560] Chap. XVIII] Classification. [§ 589 portation of perishable freight can hardly be claimed, so- far as the orange traffic is concerned, to have been added to their gen- eral equipment solely because that traffic of necessity demanded high-speed trains and unusual conveniences of delivery. The more probable reason is found in the competition between the different lines and their desire to secure a business so important in volume and so desirable in character." ^'^ § 589. Less than usual care required. Conversely, where the commodity requires less than ordinary care that fact is to be considered in lowering its classification. In Denison Light & Power Company v. Missouri, Kansas & Texas Railway,^* the question was as to the proper classifica- tion and rating of coal. Mr. Commissioner Prouty said : "Coal is among the most desirable kinds of traffic. The reasons for this have been several times stated by the Commission and need not be repeated here in detail. The cost of receiving, transporting and delivering that commodity is less than in case of almost any other article of freight. Its value is not great, the hazard of loss in transit is insignificant, it is an article of universal necessity in daily life, and as a steam fuel it furnishes the basis of many other industries. Coal rates in this country are usually highly competitive, and this fact, together with its desirability as traffic, and the large quantities which are moved have produced on the average a very low late." Similarly in Tift v. Southern Railway, both before the Cim- mission ^® and in the Circuit Court/" stress was laid on the fact that lumber could be carried without special equipment on any car to justify a low rating for that commodity.^' 17 Railroad Com. of Florida v. Savannah, F. & W. R. R., 3 Int. Com. Rep. 688, 700, 5 I. C. C. Rep. 13 (1891.) 18 10 I. C. C. Rep. 337 (1904). 19 10 I. C. C. Rep. 5 (1904). ■20 138 Fed. 753 (1905). 21 Ace. Central Y. P. Assoc, v. Illinois C. Ry., 10 I. C. C. Rep. 505 (1904). [561] §§ 590, 591] Eailroad Eate EeCxUlatioit. [Cliap. XVIII TOPIC E VALUE OF THE GOODS. § 590. Value of the goods as an element in determining classification. The element of value in the commodity transported forms a proper consideration to be taken into account in the establish- ment of rate, since the greater the value the greater the carrier's liability as an insurer of freight, and the greater, therefore, the risk to the carrier in the transportation. Since the risk is greater, the cost of carriage increases by the amount of com- pensation for the greater risk ; and it is therefore proper to give more valuable goods a higher classification than less valuable goods.^ But the increased rating given to articles because of greater value must be not much more than is proper for the increased risk ; when value is brought in as an element in classification, the classification cannot, nevertheless, be determined arbi- trarily. " Value is undoubtedly an element which should be considered in the fixing of rates. It is often a most important element, but plainly cannot be made an arbitrary standard inde- pendent of all other considerations." ^ § 591. Difference between values justifies difference in classi- fication. So where two similar articles are compared, a difference in classification may be justified merely because of a difference in value. Thus where a complaint was made because other cereal products were given a higher classification than flour, the Com- mission said : " The question presented by complainant is, whether the other cereal products exceeding flour in value, the 1 Howell V. New York, L. E. & W. R. R., 2 Int. Com. Rep. 162, 2 I. C. C. 272 (1888); Interstate Commerce Comm. v. Delaware, L. & W. R. R., 64 Fed. 723 (1894). 2 Prouty, Com. in Grain Shippers' Assoc, v. Illinois Cent. R. R., 8 I. C. C. Rep. 158 (1899), [562] Cliap. XVIII] Classification. [§ 592 highest G8.2 per cent, the lowest 9.1 per cent., and giving an average excess in value of 33.4 per cent., should take the same classification, and therefore the same rate, as flour, values alone being considered ? " It is a conceded rule of classification that value, on ac- count of enhanced risk and ability to pay a greater proportion ..of the aggregate return upon investment, may justify a higher classification, and in view of this rule the difference in values here shown is sufficiently great to justify the conclusion that the comparison as to value alone furnishes no sufficient reason for a classification with flour." ^ And upon the same prin- ciple, when it was claimed that a different classification on milk and cream, carried in the same sized can, could not be reason- able, the Commission pointed out that the element of value in the commodity transported forms a proper consideration to be taken in to the account in the establishment of a rate, and justified the difference because of the great difference in value between, milk and cream.* § 592. Different classification of anthracite and bituminous coal. Upon the ground of difference in value a different classifica- tion of bituminous and anthracite coal has been justified. Thus in the case of Cox Brothers & Co. v. Lehigh Valley Railway,^ Mr. Commissioner Morrison said : "The grounds upon which we are asked to find these two coals to be the same freight, a like kind of traffic, is that they are loaded, unloaded and transported in the same way and substantially at the same expense to the carrier, and are largely used for the same purposes, though one half or more of the anthracite is used for domestic purposes. SMcDill, Com. in Schumacher Milling Co. v. Chicago, R. I. & P. R. R., 6 I. C. C. Rep. 61 (1895). i Howell V. New York, L. E. & W. R. R., 2 Int. Com. Rep. 162, 2 I. C. C. Rep. 272 (1888). 6,3 Int. Com. Rep. 460, 4 I. C. C. Rep. 535 (1891). [563] I 593] Eaileoad Kate Regulation. [Chap. XVIII " Ordinarily there is no better criterion for reasonable charges than that which is in proportion to the service rendered ; and if the cost and expense of the carrier was the only test of a reason- able charge the claim might well be made that all coals should be <5lassed together as one freight and be subject to the same trans- portation charges. " Carriers in making separate classifications, or rates for dif- ferent coals, take into consideration, not only the expense of transportation, but the value of the freight and worth of the transportation to the shipper; the exceptional qualities which fit the more valuable anthracite for domestic and special uses and cause its large consumption in less distant markets; the :shorter distance from the mines to the principal markets render- ing the transportation proportionately more expensive, and the necessity for so apportioning the transportation charges between the anthracite of different sizes and values that the more valu- able may bear the greater charge." § 593. Market value rather than intrinsic value. It is not the cost to the manufacturer or the intrinsic value of the product that is considered in determining classification, but the value in the market; both because that would furnish the measure of the carrier's liability in case of loss, and because that is the only value which the carrier can know. This doctrine was applied to justify the higher classification of patent medi- cines as compared with ordinary bottled liquors. In the case of Warner v. New York Central & Hudson River Railroad ® the complainant insisted that the classification of his remedies should be the same as that of ale, beer and mineral waters. This contention he based on two general grounds. One was that the mode of packing, the convenience in handling and the risks in transportation were substantially the same. The other was that the intrinsic value of the remedies was no greater than thieintrin- sic value of the other articles with which he claimed they should S3 Int. Com. Rep. 74, 4 I. C. C. Rep. 32 (1890). [564] § 594] Raileoai) Rate Regulation. [Chap. XVIII be classified. He claimed that while the market value of the remedies was about four times greater than that of mineral water and the other articles, about three-fourths of the market value was the result of skill in advertising the remedies. Mr. Commissioner Schoonmaker said : " Whatever the fact may be in the case of these medicines, it can hardly be expected of carriers that they should disregard the market value of the articles they carry, and what their manufacturers give the pub- lic to understand concerning them, and enter upon the diiScull and expensive task of an analysis of freight to ascertain its in- trinsic value as distinguished from its market value. If a rule of this kind were possible and should be generally applied, it would result in most injurious consequences to some of the most important articles of commerce of large actual value, but on account of their abundance, of low market value, such as grain and other food products, coal and lumber. " The value of an article to a manufacturer is the price it commands, and it seems only reasonable that carriers should take into account the market value, a thing generally known and easily ascertained, as one of the considerations in arranging their classiiications and fixing the rates that a commodity should bear. It is not seen how the relations that any specific com- modity should bear to other commodities for classification pur- poses can be arrived at in any other practicable way. The wide difference in the market value of ale, beer and mineral water on the one hand, and the remedies of the complainant on the other hand, is, so far as can be seen under the evidence in this case, a reasonable ground for a difference in the classification of these respective articles." § 594- Differing value of same kind of freight. As has been seen,' classification is not to be made too minute ; and in general a difference of value between articles of the T Ante, § 557. [5C5] Ciiap. XVIII] Classification. [§ 594 same kind does not lead to a different classification based on value. Thus, flour or cotton or silver ore vyould have the same classification, without regard to quality and value^ To this there are some exceptions; thus in the official classification a difference is, or was, made in the classification of electrotype plates, engravings, paintings and pictures, statuary/ bronze or metal, and stereotype plates, where the limitation of value is based upon the net invoice and required to be so expressed in the shipping receipts by shippers. The classification also con- tains rules restricting to specified sums the valuation of live stock; marble or granite; ore: — antimony, calamine, copper, lead, silver, tin, or mica, such valuation to be stated by the fcLipper in the shipping order or receipt; and the class rate is given only where the value is so restricted. But in general it would not be permissible to make a difference between articles of the same kind merely because of value. On this ground the Interstate Commerce Commission adhered to its former ruling that window shades should be placed in the same class with shade cloths, in spite of a contrary opinion in the Circuit Court of the United States, where Mr. Justice Wal- lace had said : " The order of the Interstate Commerce Com- mission which the court is now asked to enforce prohibits the railway carriers, the parties respondent, from charging any greater compensation for the transportation of window shades of any description- — whether the cheap article, worth $3.00 per dozen, or the hand-decorated article, worth $10.00 per pair — than the third-class rate, the rate charged for the transporta- tion of the materials used in making window shades. Such an order, in my judgment, ignores the element of the value of the service in fixing the reasopable compensation of the carrier, and denies him any remuneration for additional risk." But even in the face of this opinion the Interstate Commerce Commis- sion still ■ held its ground, saying : " The elements of bulk, weight, value, and character are main considerations in deter- mining approximately what freight articles are so analogous [566] Ciiap. XVIII] Classification. [§§ 595, 596 as to entitle them to the same classification. Other considera- tions may also enter into the question, but in this case, where the comparisons made on these bases indicate the propriety of a like class for hoUands or shade cloth and window shades made therefrom (the great mass of shades at least), such other mat- ters must be deemed to have only minor weight and import- § 595. Low value of goods as reducing classification. Value has been considered heretofore as leading to a higher classification, by increasing the risk; but if the value of the goods is very low, this fact will tend to reduce the classifica- tion, because the value of transportation to the shipper will thereby be reduced. Thus in the shipment of low-grade lumber from southern points the fact that the value of the lumber at the mills was less than the freight was pointed out as a reason for reducing the classification and rate.® § 596. Value of the conunodity not of the greatest import- ance. In a recent opinion of the Commission ^^ the bearing of the value of hay upon its classification was considered. It ap- peared to be the view of all parties that the value of the goods carried was important chiefly on the question of the danger of loss and the amount of the insurance risk. The Commission said : "The element of risk is not regarded by the carriers them- selves as having much bearing on this controversy. Few claims for loss or damage of hay in transit are made upon ihe carriers. The testimony on their behalf was to the effect that in estimat- 8 Compare Page v. Delaware, L. & W. R. E., 6 I. C. C. Rep. 548 (1896), with Interstate Com. Com. v. Delaware, L. & W. R. R., 64 Fed. 723 (1894). 9 Tift V. Southern Ry., 10 I. C. C. Rep. 548 (1903). M National Hay Assoc, v. Lake Shore & M. S. Ry., 9 I. C. C. Rep. 264 (1902). See Interstate Com. Com. v. Lake Shore & M. S. Ry., 134 Fed. 942 (1905). [567] § 597] Eaileoad Kate Regulation. [Chap. XVIII ing the proper rating of a commodity the higher value of that commodity as compared with the value of other articles, par- ticularly in the lower classes, would not be deemed to consti- tute such additional risk in transportation as to warrant a higher classification solely upon that account. In other words, greater risk because of much higher value is one of the matters to be considered in fixing a classification, but it is not considered controlling upon articles not specially liable to damage in transportation. The value of articles most strongly affects de- termination of rates for their transportation in that the value of the service to the shipper is generally greater upon the more costly products. Some illustration of this is shown by the classi- fication of cotton piece goods in the Official Classification as 15 per cent, less than second class, while dry goods generally are in first class, and numerous other examples might be given. The value of hay and straw is low as compared with that of other coarse food products, and is greatly below the value of flour and the finer grades of grain products. It is also greatly less per carload than that of most, if not all, other articles in the fifth class." TOPIC F CAB LOAD BATES. § 597. Different classification and rating between car load and less than car load lots. A fundamental principle in all classification is that one rate shall be given when the goods are carried in carload lots, and a much higher rate when they are carried in less than carloads. This difference is legally proper. ^ If a carload can be handled as a unit, in loadings transporting, and delivering, the cost to the carrier is obviously much less ; and furthermore there is no waste through hauling a partly empty car, as must necessarily happen in many cases where less than carload lots are shipped. 1 Harvard Co. v. Pennsylvania Ey., 3 Int. Com. Rep. 257, 4 I. C. C. Rep. 212 (1890). See, generally, Chapter XXIII. [50S] Chap. XVIII] Classification. [§§ 598, 599 The difference between carload and less than carload rates must be a reasonable one. It must not be so wide as to be de- structive to competition between large and small dealers, espe- cially upon articles of general and necessary use, and which, under existing conditions of trade, furnish a large volume of business to carriers.^ § 598. Difference in classification not essential. It is not necessary in the ordinary case that this difference should be made. If in any case the carrier chooses to carry goods in less than carload lots at the same rate as carload lots, the shippers of carloads cannot complain.^ As Mr. Commis- sioner McDill said in Brownell v. Columbus & Cincinnati Mid- land Railway :* " That less than carload lots of eggs can be shipped at the carload rate is, in our judgment, a concession to the less than carload shipper which, under its already low classification and the other circumstances surrounding the egg traffic, does not work unjust discrimination to the shipper of eggs in carloads." § 599. Minimum car loads. The carload rate necessarily involves some standard for de- termining what shall constitute a carload ; and this is usually estiabli&hed by fixing a minimum weight of the commodity as a carload. This must of course be fixed reasonably, and must not exceed the weight that can properly be loaded in the car pro- vided. "A carrier in defining a carload and fixing the rate should furnish a car adapted to carry properly the quantity designated, and not put the shipper to any expense to fit up '2 Thurber v. New York C. & H. R. R. R., 2 Int. Com. Rep. 742, 3 I. C. C. Rep. 473 (1890). 3R. R. ,. AYeld, 96 Tex. 394, 73 S. W. 529. 4 4 Int. Com. Rep. 285, 5 I. C. C. Rep. 638 (1893). [569] § 600] Eaileoad Eate Regulation. [Chap. XViil the car. This expense would seem to be in excess of the tariff rate and unlawful." ^ " It would manifestly be unjust, under any rule as to mini- mum loads or otherwise, to charge for weight not carried in a car which the carrier has furnished and in which on account of its size and the nature and bulk of the freight the required minimum cannot be loaded. There may of course be some ex- ceptions to such a rule in cases where the freight is extremely light in weight in comparison with its bulk, and of such char- acter as to forbid close packing, but it has proper application to general freight which is usually capable of being shipped in bulk or in bales or boxes." ^ § 600. Minimum car load regulations. Like other regulations minimum arrangements should be as uniform as possible. If they are unduly numerous, the chief advantages are lost. This was well brought out before the In- terstate Commerce Commission '' in one proceeding where ship- pers complained of numerous minimum carload weights being enforced to their prejudice and disadvantage. It appeared that the railroad in question had four minimum carload weights for corn, as follows : (a) The capacity of the car on shipments to Indianapolis; (b) 4,000 pounds less than car capacity on shipments to Cincinnati and other points; (c) the capacity of the car ordered when such order cannot be complied with, but this only on application to the superintendent, thus entailing more or less delay and at times loss to shippers; (d) a general minimum of 28,000 pounds. The Commission said: "Other roads in the same section of country do not enforce a sliding scale of minimum weights depending upon capacity of cars 5 Schoonmaker, Com. in Rice v. Western N. Y. & P. R. R., 2 Int. Com. Rep. 298, 2 I. C. C. Rep. 389 (1888). 6 Clements, Com. in National Hay Assoc, v. Lake Shore & M. S. Ry., 9 I. C. C. Rep. 264, 305 (1902). 7 Suffern, Hunt & Co. v. Indiana, D. & W. Ry., 7 I. C. C. Rep. 255 (1897). [5Y0] Chap. XVIII] Classification. [§§ 601, 602 furnished by themselves. One of them, as shown in the find- ings, disregards a like rule, which it claims to have in effect, whenever it thinks the shipper is entitled to relief. Kules for minimum weights which cannot be invariably enforced, or which, if so enforced, are plainly prejudicial to any class of shippers, are not to be regarded as lawful." § 601. Mixed car loads. Mixed earloads of articles of the same class and the same general nature should receive carload rates. So a mixed car- load of celery and cauliflower, vegetables entitled to the same classification, should receive carload rates.* Any classification which interferes with the reasonable freedom of the shipper in this respect is improper. " Examination of the tariff providing for mixed carloads of green fruit shows that bananas and pineapples may go as a mixed carload, and that lemons and bananas mixed take the carload rate; and that pineapples may be mixed in a carload with almost any other kind of fruit therein specified except lemons and oranges. As bananas and pineapples may be mixed and lemons and bananas may be mixed, it is difficult to see why the complainant is not correct in contending that lemons, ba- nanas and pinapples may be mixed in one carload and carried at the carload rate, and yet technically lemons and pineapples cannot be forwarded together in a carload and receive the benefit of the carload charge under the present classification." * § 602. Car loaded by several shippers. It has been said that a difference in rate for a solid carload of one kind of freight from one consignor to one consignee, and STecumseh Celery Co. v. Cinoinnati, J. & M. Ry., 4 Int. Com. Rep. 3 IS, 5 I. C. C. Kep. 663 (1893). 9 Clements, Com. in Roth v. Texas & P. Ry., 9 I. C. C. Rep. 602, 605 (1904). [571] §§ 603, 604] Eailboad Eate Regulation. [Clliap. XVIII a carload quantity from the same point of shipment to the same destination consisting of like freight or freight of like character from more than one consignor to one consignee, or from one consignor to more than one consignee, is not justified hy the difference in cost of handling.-'** Much of the saving effected hy carload transportation for a single shipper to a single consignee would equally be effected by this sort of shipment, but it is certainly somewhat more ex- pensive to the carrier, since it involves or may involve addi- tional trouble in connection with the loading or delivery, as the case may be. It would probably not be a case where the carrier could be forced to grant carload rates. ^^ § 603. Train loads. While lower carload rates are based on a real saving in cost of transportation, the same thing cannot be said, at least to the same extent, of train-load rates; and such rates are not gener- ally permissible.^^ But in England it is held that under cer- tain circumstances lower rates may be given for shipments in train loads.-'* TOPIC G DIFFEEENCE IN EATE BETWEEN CLASSES. § 604. General principles governing differences between classes. It remains to point out formally what has been assumed throughout this chapter that there are great differences between the rates payable for transportation for the same distances upon goods in different classes. There is no fixed percentage 10 Thurber v. New York C. & H. R. R. R., 2 Int. Com. Rep. 742, 3 I. C. C. 473 (1890). 11 See § 270, supra, and cases cited, especially Buckeye Buggy Co. v. Cleveland, C, C. & St. L. Ry., 9 I. C. C. Rep. 620 (1903). 12 Paine v. Lehigh Valley R. R., 7 Int. Com. R. 218 (1S97). 13 Nicholson v. Gt. Western Ry., 4 C. B. N. S. 366. [572] Chap. XVIII] Classification. [§ 005 for differentiation even of the six classes usually established; still less is there any definite rule for the differences to be made between commodities with extra class rating. But it is matter of common knowledge that there are great differences between rates payable by the different classes, the highest class usually paying for the same transportation many times what is paid by the lowest class. All that can be said in general is that the principles as to rate making apply here as elsewhere and that the burden must be thrown upon the various classes without outrageous disproportion. The principles governing this mat- ter were summarized by the Massachusetts Railroad Commis- sion thus : " Where the Board is asked to recommend to a cor- poration a reduction of its freight tariff in respect to a particular commodity, it is necessary for the petitioner to prove at least one of three propositions : (a) That the charge by the corporation re- spondent in regard to the commodity in question is excessive as compared with the charge made by other companies ; or (b) That the charge is excessive as compared with the charges of the same corporation for other commodities of like bulk and weight ; or (c) That exceptional' reasons exist, which would al- low the corporation to transport the commodity in question with a fair profit at rate unusually low.^ § 605. Low grade commodities may be carried at rates rela- tively low. To go to one extreme, low grade commodities may be carried at rates relatively very low indeed. Provided that the rate is re- munerative, the other classes cannot complain that the rate is disproportionately low, since unless such a rate were made the traffic would not be got and the higher classes would lose the benefit. To quote the Interstate Commerce Commission: " While some of the relatively low rates on low class commodi- ties, including iron and steel, are lower because* of competition 1 Freetown v. New Bedford & T. E. E., 1871, Mass. Ry. Com. 115. [573] § 606] Eaileoad Rate Kegulation. [Chap. XVIII by water than they would otherwise be, the general compara- tively low rating applied to them is largely due to the character of such commodities, the use to which they are put, the demand for them in large quantities throughout the country, their sus- ceptibility of movement at less cost and risk to the carrier than high class and more valuable freight, and other like conditions. It is to the interest of the carriers as well as the public, that their rates be low enough, if not below a remunerative point, to permit the general movement and distribution of these com- modities in general demand in large quantities for construction, building, manufacturing, and other purposes. Reasonable free- dom of such movement and distribution stimulates the growth and development of the country and thereby promotes all in- terests. The general prevalence of such lower rates on this character of freight is due to the carriers' usual policy of mak- ing rates that will fairly permit the traffic to move, if of such value that it will bear reasonable charges. Rates on steel rails and other low grade freights of the character stated, yielding per ton per mile the average received on all freight, would be un- just. The value of the goods, the cost of the service, the degree of risk to the carrier, among other considerations, have im- portant bearing upon the relation of rates on different kinds of traffic as well as the reasonableness of the rate on a specific article." ^ § 606. High grade commodities should not be overcharged relatively. On the other hand, just because high grade commodities will stand a rate relatively very much higher, it is not justifiable to charge them outrageously disproportionate rates. This was set forth in a most striking manner in one report of the Interstate Commerce Commission, where it said : " Fur hats, for example, move at first class rates, and six dozen of these ready for ship- 2 Colorado Fuel & Iron Co. v. So. Pacific Ey., 6 I. C. C. Eep. 489 (1895). [574] Chap. XVIII] Classification. [§ 607 ment weigh, approximately, 100 pounds. The cost of trans- porting that 100 pounds from New York, where these hats are manufactured, to Chicago, is 75 cents, or about 1 cent per hat. Evidently the number of hats worn in the city of Chicago would not- be appreciably diminished if this freight rate wei'e to be doubled. If such hats were manufactured both at New York and at Baltimore, and the rate from New York were to be in- creased, while that from Baltimore remained the same, this might shut up the New York factory; or, if the rate were too high, the establishment of a factory in Chicago might be in- duced ; although this would not be true in case of hats, since the raw material, which moves at the same rate, originates on the Atlantic Seaboard. Probably the first class rate throughout all OflBcial Classification territory could be advanced 50 per cent, without appreciably reducing the volume of traffic." ^ § 607- Differences between the classes should not be dispro- portionate. The principle to be deduced from the cases which have just been discussed is that the differences in rates between the clasies in a classification should not be disproportionate. Thus in one case before the Interstate Commerce Commission,* in compar- ing commodities, it was said : " Now, the first class rate from Chicago to New York is 75 cents, and the business which moves upon that rate is entirely less than a carload. If it costs these lines four times as much to handle that business as it does to handle grain in carloads, it must follow that this first class rate is not materially better than the grain rates imder considera- tion." In an early Massachusetts casie,^ where a question as to the difference in rating between bricks and ice was made, the court 3 Re. Advances in Freight Rates, 9 I. C. C. Rep. 382 (1902). 4 Re Advances in Freight Rates, 9 I. C. C. Rep. 382 (1902). CFitehburg Ry. v. Gage, 12 Gray (Mass.), 393, B. & W. 354 (1859). [575] § 608] Eailboad Eate Regulation. [Okap. XVIII said : " They (shippers) contended and offered to prove at the hearing before the auditor, that while the plaintiffs were trans- porting the ice they were at the same time hauling over the same portion of their road various quantities of bricks for other par- ties; that ice and bricks were of the same class of freight, and that ice was as low a class of freight as bricks in regard to the risk and hazard of transportation ; and that while they charged the defendants fifty cents per ton for the transportation of ice, ■they charged other parties. only twenty cents per ton for a like service in reference to bricks. The defendants (carriers) con- tended that they were entitled to maintain their claim upon two grounds : First, under the provisions in the plaintiffs' act of in- corporation; and, secondly, upon the general principle that as common carriers they were bound and required to transport every species of freight of the same class for any and all parties at the same rate of compensation; and that they had therefore no right to charge any greater sum for the transportation of ice than that for which they had actually carried bricks for other parties. Neither of the claims was sustained by the auditor, and he accordingly rejected the evidence offered in support of them. In both particulars we think his ruling was correct." § 608. Principles upon which rates for different commodities should be made. In one investigation the Interstate Commerce Commission went into the relative rates upon different comcmodities to de- termine whether they were justifiable. Comparing some, they said : " Dressed beef loads aboiit 22,000 pounds to the car. Re- frigeration is necessary, and this requires a car of peculiar con- struction and of unusual weight — about 36,000 pounds. The ice and salt weigh, approximately, 5,000 pounds, making in the aggregate for the entire load, 63,000 pounds, of which but 22,- 000 pounds are paying freight. At 45 cents a hundred this would amount to $99 per car. Packing-house products, or pro- [576] Ctap. XVIII] Classification. [§ 609 visions, load somewhat heavier than dressed beef, on the average about 30,000 pounds. This, upon a basis of 30 cents, would yield a revenue of $90 per car. The average loading of grain cars upon standard lines at the present time is probably 66,000 pounds. It was said by all witnesses inquired of that grain is now loaded to the full capacity of the car. Within the last three years railroads have added largely to their equipment of freight cars, and the addition has been almost entirely in cars of large capacity. The traffic manager of the Michigan Central testified that the cars upon his system are from 60,000 to 80,000 pounds capacity. A grain load of 65,000 pounds would yield $113.75, as against $99 for dressed meats and $90 for provisions. The total weight of the grain and car would be greater than either the dressed beef or provisions, but testimony in previous cases showed that in the operation of these railways the tendency is to regard the loaded car as the unit; a train-load, consisting of a certain number of cars without much reference to the loading of those cars." * § 609. Reasonableness tested by comparison. Where the same rate was given to the class containing finished cheap bedroom sets of furniture and to another class containing unfinished sets of the same sort, which were of less value and could be packed in smaller bulk, it was held that the failure to make a distinction in rates was unfair; and upon consideration the rate on the unfinished class was fixed at eighty-five per cent, of that on the finished furniture.'' Upon similar principles a classification which puts into dif- ferent groups " steam coal," which is coal that can be used only for manufacturing purposes, and soft or lump coal, which is of higher value and is used for domestic purposes, is proper.* 6 See Re Advances in Freight Rates, 9 I. C. C. Rep. 382 (1902.) 7 Potter Mfg. Co. v. Chicago & G. T. R. R., 4 Int. Com. Com. 223, 5 I. C. C. Rep. 514 (1892). SMcGrew v. Missouri Pac. Ry., 8 I. C. C. Rep. 630, 641 (1894). [577] § 610] Kaileoid Kaie Regulation. [Ckap. XVIII § 610. Differences between similar commodities ought to be very slight. In one proceeding ^ before the Interstate Commerce Commis- sion the complainant claimed that beans and tomatoes should go in the same class, and that the defendant railway, by putting beans in the second class at a rate of 70 cents per hundred, while tomatoes went third class at a rate of 44 cents per him- dred, had discriminated against the complainant as a shipper of beans. The Commission said : " An exact classification is impossible. Unless the number of classes is infinitely increased there must always be articles in respect to which it will be very difficult to determine into which of two classes they should fall. If the elements which fix the class are substantially the same in case of two articles, then those articles should, as a matter of law, be classified alike, and to put one in one class and another in an- other class would be a discrimination and a violation of the act, no matter what the purpose of doing it might be. It appears here that beans and tomatoes are both shipped in peck boxes and that the defendant's agent at Verona was accustomed to re- ceive and bill the same number of boxes for one hundred pounds whether of beans or of tomatoes, so that the complainant, as a shipper of beans, was obliged to pay 70 cents for transporting eight boxes of his commodity to East St. Louis while the ship- per of tomatoes was only obliged to pay 44 cents for transport- ing eight boxes of his commodity, the nominal weight being the same and the value about the same. If this were all there was of the testimony we might hold that beans ought to be rated third class with tomatoes, but the defendant's testimony tends to show that beans are more perishable, and it appears, in part from the complainant's testimony as well as that o:*^ the defend- ant, that tomatoes are in fact heavier than beans. ■"' 9Rea V. Mobile & O. Ey., 7 I. C. C. Rep. 43 (1896). M See, also, Harvard Co. v. Pennsylvania Co., 3 Iijt. Com. Pi.ip. 257, 4 I. C. C. Rep. 212 (1890). [578] CHAPTER XIX. LENGTH OF TRANSPORTATION. § 621. General standard of comparison the ton mile. TOPIC A FACTOES MODIFYING THE TOIST-MILE HATE. § 622. Mileage rate tends to decrease inversely with the distance. 623. Equal mileage rates impractical. 624. Rates are in rough proportion to distance normally. 625. Different cost of service; heavy grades. 626. Competition modifying distance rates. 627. Comparison of through rates and local rates. 628. Difference in charge for carriage in opposite directions. 629. Lovy back freights justifiable. 630. Creation of a market by preferential rates. 631. Equalizing manufactures in different localities. 632. Passenger fares generally on a mileage basis. TOPIC B GEOUPING OF STATIONS. § 633. The system of grouping. 634. Grouping by reason of competition in the articles transported. 635. Grouping must be reasonable. 636. When uniform rate to a group of stations is justifiable. 637. Basing points established. 638. Basing points justified. TOPIC C THBOUGH BATES. § 639. Carriers may combine in a joint rate. 640. The entire rate must be reasonable. 641. Share of separate carrier as evidence of unfairness of entire rate. 642. Through rate need not be a reduced rate. ,643. Through rate may be given although transit is broken. 644. Certain objections to the practice of giving privileges in transit considered. 645. Rebate on reshipment. 646. A through arrangement necessary to justify such privileges. 647. Dangers in giving privileges in transit. 648. Through passenger accommodations. [579] § 621] Eailkoad Kate Regulation. [Chap. XIX TOPIC D EXPORT AND IMPORT EATE. § 649. Export and import rates considered. 650. Import rates may be regulated by competition. 651. Export rates regulated by competition. 652. Foreign competition justifies only necessary difference in rate. 653. Limitations upon making export and import rates. § 621. General standard of comparison the ton mile. If all conditions were equal, the rate of carriage would nat- urally vary according to the distance carried, and would be measured by a charge of so much per ton for each mile ; or, as it is generally, expressed, by a ton-mile rate. This is obviously a fair method of determining a rate where the conditions are identical; and as a theoretical dectrine it is well accepted that in the absence of other influences distance is a controlling ele- ment in determining a rate.^ As a practical matter, however, other influences are never absent; some factor exists in every case to modify the com- parison and to prevent the application of the ton-mile rate. The establishment of a ton-mile rate as a standard does indeed bring rates down to the narrowest point of scrutiny, and for that purpose is valuable ; but it excludes consideration of other cir- cumstances and conditions which enter into the making of rates, no matter how compulsory or imperious they may be, and it cannot, therefore, be accepted as controlling in determining the reasonableness of rates.^ 1 Eau Claire Board of Trade v. Chicago, M. & S. P. R. E., 4 Int. Com. Eep. 65, 5 I. C. C. Rep. 265, 290 (1892) ; Hill v. Nashville, C. & S. L. R. R., 6 I. C. C. Rep. 343, 358 (1896); Freight Bureau v. Cincinnati, N. 0. & T. P. Ry., 7 I. C. C. Rep. 180 (1897). See, generally, Chapter XXV. ^ ■2Gustin V. Atdiison, T. & S. F. R. R., 8 I. C. C. Rep. 277 (1899) ; Board of Railroad Comrs. v. Atdiison, T. & S. F. R. R., 8 I. C. C. Rep. 304 (1899); Business Men's Assoc, v. Chicago, S. P., M. & I. R. R., 2 Int. Com. Rep. 41, 2 I. C. C. Rep. 52, 67 (1890) ; Manufacturers & J. Union v. Minneapolis & S. L. R. R., 3 Int. Com. Rep. 115, 4 I. C. C. Rep. 79 (1890) ; Hilton Lumber Co. v. Wilmington & W. R. R., 9 I. C. C. Rep. 17 (1901). [580] Chap. XIX] Length of Tuanspoetation. [§ 622 TOPIC A FACTOES MODIFYING THE TON-MILE BATE. § 622. Mileage rate tends to decrease inversely with the dis- tance. It is a familiar rule in the transportation of freight by rail- roads and has become axiomatic that while the aggregate charge is continually increasing the further the freight is carried, yet the rate per ton per mile is constantly growing less all the time. In consequence of the existence of this rule the increase of the aggregate charge continues to be less in proportion every hun- dred miles after the first, arising out of the character and nature of the service performed and the cost of service; and thus it is that staple commodities and merchandise are en- abled to bear the charges of transportation from and to the most distant portions of the country.^ The reason for this rule is that the cost of railway transportation is made up of the expense of the two terminals and the intermediate haul, and the terminal expenses are the same whether the haul be long or short. A few miles, or even a considerable number of miles, of additional haul may in some instances of long distance transportation be practically of very little importance, and the aggregate rate therefore may be very little affected by the addir tional mileage.* As a result of this rule of diminishing mileage, local rates on one road cannot reasonably be compared with through rates on other roads in the same region." 3 New Orleans Cotton Exch. v. Cincinnati, N. 0. & T. P. R. R., 2 Int. Com. Rep. 289, 2 I. C. C. Rep. 375 (1888) ; Farrar v. East Tenn. V. & G. R. R., 1 Int. Com. Rep. 76, 1 I. C. C. 480 (1888) ; Board of Trade of Troy V. Alabama Midland Ry., 6 I. C. C. Rep. 1 (1893). 4McMorran v. Grand Trunk Ry., 2 Int. Com. Rep. 604, 607, 3 I. C. C. Rep. 252 (1889) ; Hilton Lumber Co. v. Wilmington & M. R. R., 9 I. C. C. Rep. 17 (1901). 5 Imperial Coal Co. v. Pittsburgh & L. E. R. R., 2 Int. Com. Rep. 436, 2 I. C. C. Rep. 618 (1889). [581] §§ 623, 624] Eaileoad Eate Eegtjlatiok. [CHap. XIX § 623. Equal mileage rates impractical. The effects of an absolutely equal mileage rate, which must prevent its adoption as a practical system of charges, were thus stated by a committee of the British Parliament.* "(a) It would prevent railway companies from lowering their fares and rates so as to compete with traffic by sea, by canal, or by a shorter or otherwise cheaper railway, and would thus deprive the public of the benefit of competition and the company of a legitimate source of profit, (b) It would prevent railway companies from making perfectly fair arrangements for carrying at a lower rate than usual goods brought in large and constant quantities, or for carrying for long distances at a lower rate than for short dis- ■ tances. (c) It would compel a company to carry for the same rate over a line which has been very expensive in construction, or which, from gradients or otherwise, is very expensive in work- ing, at the same rate at which it carries over less expensive lines. In short, to impose equal mileage on the companies would be to deprive the public of the benefit of much of the competition which now exists or has existed, to raise the charges on the public in many cases where the companies now find it to their interest to lower them, and to perpetuate monopolies in carriage, trade, and manufacture in favor of those routes and places which are nearest and least expensive, where the varying charges of the company now create competition. And it will be found that the supporters of equal mileage, when pressed, often really mean, not that the rates they themselves pay are too high, but that the rates which others pay are too low." § 624. Rates are in rough proportion to distance normally. The Interstate Commerce Commission early announced the principles which it held fundamental in dealing with this ques- 6 Stated in a note to Ransorae v. Eastern Counties Ry., 1 Eng. Ry. & Can. Traf. Cas. 63 (1857). [582] Chap. XIX] Length of Teanspoetation. [§ 625 tion. Thus in one opinion '' it was said in substance : " The doctrine that transportation charges should be proportioned to the distances between diflferent points, where those distances are greatly dissimilar, has never been advocated by the railroads or recommended by the Commission. While distance is an ever- present element in the problem of rates and not infrequently a controlling consideration, the general practice of rate making is opposed to the principle of exact proportion, and there is no opportunity for its application under present conditions. Where all the distances brought into comparison are considerable, and the differences between them relatively small, there should be substantial similarity in the respective rates unless other modi- fying circumstances justify disparity. " That rates should be fixed in inverse proportion to the nat- ural advantages of competing towns with the view of equalizing ' commercial conditions,' as they are sometimes described, is a proposition unsupported by law and quite at variance with every consideration of justice. Each community is entitled to the benefits arising from location and natural conditions, and the exaction of charges unreasonable in themselves or relatively unjust, by which those benefits are neutralized or impaired, contravenes alike the provisions and the policy of the statute." § 625. Different cost of service; heavy grades. A difference in the ton-mile rate may be justified by varying cost of service on different parts of the line. Thus a higher ton- mile rate is justified on a haul which includes heavy grades.* 7 Eau Claire Board of Trade v. C. M. & S. P. Ey., 4 Int. Com. Rep. 6.5, 5 I. C. C. Rep. 264 (1892). 8 Rice V. Western N. Y. & P. R. R., 2 Int. Com. Rep. 319 (1888) ; Brock- way V. Ulster & T>. R. R., 8 I. C. C. Rep. 21 (1898) ; Bellsdyke Coal Co. V. North British Ry., 2 Ry. & Can. Tr. Cas. 105 (1875); Nitshill Coal Co. V. Caledonia Ry., 2 Ry. & Can. Tr. Cas. 39 (1874). [583] § 626] Raileoad Kate Kegulatiokt. [Chap. XIX The imiform mileage rata may also be modified by the prox- imity of fuel to one portion of the road.^ In New Orleans Live Stock Exchange v. Texas & Pacific Railway/* a nate on cattle in carload lots was attacked as too high. The defendant's road had a heavy grade on the western portion, but a very easy grade on the eastern portion; only 30 cars could be handled on the western portion, while on the east- ern portion 60 cars could be handled. The defendant claimed therefore that the most economical method of carrying would be to run only half as many freight trains over the eastern portion ; but as cattle trains must go directly through, this could not be done in the case of cattle.. The Commission said, however: " The defendant seems to claim that it ought to be allowed to charge a higher rate because if it sends this live stock through in proper time it cannot consolidate its trains at Boyce; but it is a novel idea that the rate should be advanced because the cost of operation over a part of the line is decreased, and it certainly costs less per mile to haul the same train from Boyce to New Orleans than from Fort Worth to Marshall." § 626. Competition modifying distance rates. It is well settled that under the Interstate Commerce Act competition may be considered in fixing the particular rate,'^ and if it may be considered under the Act, a fortiori it may in- fluence the rate at common law.'^ And indeed competition be- 9 New Orleans Cotton Exch. v. Illinois Cent. R. R., 2 Int. Com. Tiep. m, 3 I. C. C. Rep. 534 (1890). 10 10 I. C. C. Rep. 327 (1904). 11 Texas & P. Ry. v. Interstate Commerce Com., 162 U. S. 197, 40 L. Ed. 940, 16 Sup. Ct. 666 (1896); East Tennessee V. & G. Ry. v. Interstate Commerce Com., 181 U. S. 1, 45 L. Ed. 719, 21 Sup. Ct. 516 (1901) ; Inter- state Commerce Com. v. Louisville & N. R. R., 73 Fed. 410 (1896); Rice V. Western N. Y. & Pa. R. R., 2 Int. Com. Rep. 389 (1888) ; Gardner & Southern Ry., ]0 I. C. C. Rep. 342 (1904) ; Phipps v. London & N. W. Ry. [1892], 2 Q. B. 229. 1'2 Under the Kentucky constitution, however, competition will not jus- [584] Chap. XIX] Length of Teais^spoktation. [§ 627 tween railways is one of the most important factors in determin- ing the rate between points which are connected by other rail- ways or which have access to water routes. From an economic point of view the railroad is justified in making any reduction to competitive points that is necessary to get business, provided that it does not place its rates below remuneration for the costs of handling the competitive trafilc. But while a through rate to a competitive point is commonly found to be relatively less than the local rates, the difference which the law will permit must not be unreasonable. This general problem is discussed elsewhere. It is enough, therefore, to give at this place one of the important limitations upon making a through rate less than a local rate. An intermediate local rate should never exceed the through rate to the terminus of the line plus the local rate back to the intermediate point. -"^ § 627. Comparison of through rates and local rates. It is often hard for the courts to justify a startling dispropor- tion between through and local rates. Thus in one case the court expressed much surprise at such differences, saying : " The tariff rate for coal per ton from Duluth to the first station south of Minneapolis (Hopkins), about 9 miles, and on defendant's line of road, was $1.75. To l^orwood, a trifle over 40 miles from Minneapolis, it was $2.50. It was the same to the stations south- erly, 21 in number; the one most southerly being Boyd, 153 miles distant from Minneapolis, or about 112 miles beyond E'er- wood. That is, the rate agreed upon was the same per ton in car- load lots, whether it was transported to a station 40 miles south of Minneapolis, or to another station 152 miles distant. And of tify a diflference in rates. Louisville & N. R. R. v. Com., 20 Ky. L. Rep. 1380, 43 L. R. A. 541, 46 S. W. 707, 20 Ky. L. Rep. 1102, 47 S. W. 210, 20 Ky. L. Rep. 1394, 43 L. R. A. 549, 47 S. W. 598 (1898) ; Louisville & X. R. R. f. Com., 21 Ky. L. Rep. 232. 51 S. W. 164 (1899). 13 Martin v. Southern Pae. Co., 2 Int. Com. Rep. 1, 2 I. C. C. Rep. 1 (18SS). [585] § 628] Raileoad Kate Regulation. [Ciap. XIX tins agrt-ed rate it AA'as stipulated by the railway companies tliat thu carrier from Duluth to Minneapolis should receive $1 per ton, distance 162 miles. We refer to these figures for the pur- pose of calling attention to what is evidently a fact, that the defendant was either carrying coal to Boyd at a loss, or was collecting too much tariff per ton on the same article transported to .N"orwood." " § 628. Difference in charge for carriage in opposite direc-. tions. There is no reason for requiring the same charge for carriage between the same points in opposite directions.^ ^ Various factors which properly enter into the rate may be different in the two cases. In a case ^^ where a higher rate was charged for the eastward than for the westward carriage^ Mr. Commissioner Clements said : " The claim is, in substance that the rate of $350 eastward is unreasonable in view of the fact that the rate over the same line and between the same points westward is only $263. This fact alone is relied upon to support tiie charge. The two rates have no necessary connection or relation, and the fact that a rate over a road or line in one direction is materially higher than the rate on the same class of traffic over the same road or line and between the same points in the opposite direc- tion does not, as in case of hauls over the same line in the same direction, establish prima facie the unreasonableness of the higher rate. This would appear to be especially true where the hauls are of as great length as those now under consideration. It is moreover in evidence, as remarked above, that the ' west- bound movement of the traffic termed " emigrants' moveables " W State V. Minneapolis & St. L. Ry<, 80 Minn. 191, 83 N. W. 60 (1900). See, also, Interstate Com. Com. v. Western & A. R. R., 88 Fed. 186, 93 Fed. 83, 35 C. C. A. 217 (1900). i5Macloon v. Boston & M. R. R., 9 I. C. C. Rep. 642 (1903). 16 Duncan v. Atchison, T. & S. F. R. R., 6 Int. Com. Rep. 85, 102, 4 I. C. C. 385 (1893). [586] Ohap. XIX] Length of Teanspoetation. [§§ 629, 630 is double the east-bound movement/ and the goods shipped west as ' emigrants' moveables ' are ' materially lower in value ' than those shipped east. It may be conceded that the much greater volume of the traffic moved west than east is to some extent attributable to the lower rate west, but the tide of emigration is naturally from a comparatively old and thickly populated coun- try like the east to a new and sparsely settled country like the west. No evidence as to the unreasonableness of this rate in itself hasi been offered." In this case it will be noticed that the reason given for justi- fying the greater rate eastward was the fact that the volume of traffic was less. It is characteristic of the inexact character of rate-making that this fact might also justify a lower rate, if the railroad chose to make it. § 629. Low back freights justifiable. Thus, where in the direction of lighter traffic a railroad is carrying many empty cars, it will be justified in lowering the rate in order to fill the cars. " When the preponderance of freight is so largely in one direction that the supply of empty cars exceeds the demand for return loads at full rates, it is not unlawful to encourage business by affording transportation on less profitable terms." ^^ Of course this making of low back freights is subject to the limitation that the rate must not be so low as not to recoup the railroad for the additional expenses in hauling back loaded cars which must receive due protection during transit. § 630. Creation of a market by preferential rates. Only to a certain extent thp carrier may be allowed to favor a new town, and thereby create a new market and stimulate com- " James v. East Tennessee V. & G. R. R., 2 Int. Com. Rep. 609, 3 I. C. C. Rep. 225 (1889) ; New Orleans Cotton Exch. v. Illinois Cent. R. R., 2 Int. Com. Rep. 777, 3 I. C. C. Rep. 534 (1890) ; Macloon v. Boston & M. R. R., 9 I. C. C. Rep. 642 (1902) ; Hewins v. New York, N. H. & H. R. R., 10 I. C. C. Rep. 221 (1904). [587] § 631] Eailboad Eate Regulation. [Chap. XIX petition. " The Louisville & Nashville insists that the nearby market of Pensacola is entitled to all of this great advantage. It claims that the lower rates to Pensacola were necessary to create a market there for these stores, and, further, that the carriage to Pensacola is only part of its haul on the great major- ity of the shipments, while on shipments to Savannah it can only have the short haul to River Junction, where it must turn the traffic over to one of its connecting roads. Whatever differ- ence in rates may have seemed necessary at the outset to create a demand in the Pensacola market, it is apparent now, after sev- eral years' trial, that the rates to Savannah as compared with the Pensacola rates give an unwarranted advantage to Pensa- cola. In endeavoring to build up a nearby market at Pensacola, and so furnish these products with a market in addition to the one existing at Savannah, the Louisville & Nashville was acting in the interest of producers of and dealers in naval stores on its Pensacola & Atlantic division. It went beyond this, however, and so controlled the adjustment of rates to the two markets as to give Pensacola a practical monopoly of the trade. A carrier cnnnot lawfully establish and maintain an adjustment of rates which in practice prevents shippers on its line from availing themselves of a princi'pial market which they have long been using, and confers a substantial monopoly upon a new market in which, for reasons of its own, it has greater interest. That is what has been done in this case." '® § 631. Equalizing manufactures in different localities. To a certain extent also, but subject to many limitations dis- cussed elsewhere, a railroad management may equalize the ac- cess of manufacturers in different nearby localities to their sources of supply so that all may compete upon equal terms in common markets. That this tends to promote distribution of manufacturing industries, which has its advantages, may be 18 Savannah Bureau of Freight & Transportation v. Louisville & N. R. R., 8 I. C. C. Rep. 377, 404 (1900), affirmed in 118 Fed. 613 (1902). [588] Ohap. XIX] Length of Tkanspoetation. [§ 632 admitted, but the extent to whicli the common carrier may be permitted to play the part of a beneficent despot is a question. Yet the courts do not insist too much upon a mileage basis where the advantages of equalization are plain and the results are more or less fair to all concerned. In one such case it ap- peared that the Allegheny Valley Railroad crosses the Pennsyl- vania Railroad at Allegheny Junction. To compete more successfully with the river transportation, the Allegheny Valley Railroad carried crude oil to the refineries at Pittsburgh, and the manufactured product back to Allegheny Junction, at a uniform rate, thus giving to the refiner at Pittsiburgh as favor- able terms as if located at Allegheny Junction, and thereby securing a uniform rate on oil from the oil regions to the sea- board. It was held that to deny the rigjit to make such an arrangement would be an unwarranted interference with the management of the business of the railroad, and deprive the public of the benefit of the competition to which it is justly entitled. 1* § 632. Passenger fares generally on a mileage basis. No such principles generally prevail in establishing paS' senger fares — these are usually made upon a mileage basis, and do not decrease inversely with the distance as in freight rates. This was brought out in a remarkable case before the Interstate Commerce Commission,^" where the through inter- state rate was found to be more than the combined local intra- state rates. The Commission expressed no great disapprobation of this, saying simply: "From the local passenger tariff and distance table in effect on the Charleston & Savannah Railway on and after September 1, 1896, it appears that interstate pas- senger fares between Savannah and South Carolina points com- mence with 3 cents per mile to or from Sand Island, S. C, 20 WMunhall v. Pennsylvania R. R. Co., 92 Pa. St. 150 (1879). ■20 Savannah Bureau v. Charleston & Savannah Ry., 7 I. C. C. Rep. 601 (1898). [589] §§ 633, 634] Eaileoad Eate Ebgulatiost. [CKap. XIX miles from Savannali, and with slight variations increase with distance up to a mileage rate of 3.86 cents to Fetteressa, 105 miles from Savannah and 10 miles from Charleston. The mile- age rate between Savannah and Charleston, as stated above, is 3.826 cents. While in freight service the general rule is that the rate per ton per mile should decrease as distance increases, in passenger service a single mileage rate for all distances is often found to prevail. It is unusual to find either freight or pasisenger rates per mile increase with distance." TOPIC B GEOUPING OP STATIONS. , § 633. The system of grouping. The railroad might make a separate rate for each station on its line, so that a charge must be established for each possible combination of two termini. This is the natural rule, and not an unreasonable one. But for various reasons it has become usual to group together for the purpose of fixing rates a num- ber of neighboring stations, and make a uniform charge for any station in the group. So common has this practice become, that it is often looked upon asi natural; and one city has sometimes demanded as a right that it should be grouped with a neighboring city. For instance, Omaha applied to the Interstate Commerce Commis- sion to be grouped with Council Bluffs (which is situated at the other end of a long and expensive bridge over the Missouri River), and to be given identical rates from Iowa points. The Commission held that there was no legal right to have stations grouped, and that a difference in rate was justified.^ § 634. Grouping by reason of competition in the articles transported. Grouping is often justified in order to preserve competition in commodities carried to market where a strict mileage rate would 1 Commercial Club of Omaha v. Chicago & N. W. Ey., 7 I. C. C. Rep. 380 (1897). [590] ' Ohap. XIX] Length of Transpoetation. [§ 635 give too great an advantage to the commodities produced at the nearest point to the market. Upon broad grounds of public policy, this is permitted in order to best develop the resources of the country. Upon these principles it was held reasonable to group all the mines in a certain locality, such as the Lehigh anthracite coal region.^ The principles upon which this is done are well set forth in the following quotation : " Occasions have arisen when the competition of business interests, as urgent in its stress and as imperative in its demands as competition be- tween carriers, has been relied upon by shippers as siufBcient to constrain the grouping of rates from different points. A con- siderable extent of territory containing a large number of mines, quarries, or manufacturing establishments, has frequently been given identical freight rates upon the ground that otherwise the more distant points would be driven from the market and thus important industries might be ruined, resulting indirectly in serious loss of revenue to the road. This argument has even been pressed to the extent that manufacturers, for example, 150 miles from a common terminus, have claimed that they should receive the same rate given to others only 50 miles from the same point." * § 635. Grouping must be reasonable. While grouping is permissible in a proper case, it must never- theless be reasonable ; and if distant points are grouped without some peculiar reason justifying it, the rate to the nearest of the grouped points must be deemed unreasonable.* Even when grouping is resorted to in order to preserve com- petition in commodities, as where railroads entering ISTew York grouped the stations which supplied the city with milk, it was 2 Coxe V. Lehigh Valley R. R., 3 Int. Com. Rep. 460, 4 I. C. C. Rep. 53.5 (1891). 3 Walker, Com. in Howell v. 'New York, L. E. & W. R. R., 2 Int. Com. Rep. 162, 2 I. C. C. Rep. 272 (1888). estate V. Minneapolis & S. L. Ry., SO Minn. 191, 83 N. W. 60 (1900). [591] § 636] Eailroad Kate Regulation. [Chap. XIX held that it would be unreasonable to make a uniform rate for all milk stations to New York, but reasonable to establish zones at proper intervals by which all milk from stations up to a certain distance, say 40 miles, should pay the same rate, then all milk originating in the' zone from 40 miles to 60 miles a slightly higher rate, and so on.^ The Commission thus in effect com- promises with the principle under discussion. It will not allow the natural advantages of nearby sources of supply to be alto- gether eliminated; on the other hand it will permit relatively slight differences between the different zones ; and, as one notes, it will permit grouping all the stations within the zones at a flat rate whether say 41 miles or 59 miles. § 636. When uniform rate to a group of stations is justifi- able. Although it may be conceded that a slightly greater profit will be made on a traffic passing to the nearest grouped point than to the furthest point, the difference, if the stations are properly grouped, will not be sufficient to make the arrange- ment illegal. It is clear that the grouping must be so managed that the rate to the nearest point will not be unreasonable in itself, and the rate to the furthest point will be remunerative. These general principles are well set forth in the quotation which follows : " It is said by way of argument that there is an inherent in- justice in carrying the product of one locality at a less rate than that of another which lies nearer to the common market, because in that case the nearer shipper pays a part of the expense of transporting the freight of his rival a longer distance upon the 5 These were substantially the facts and the decision in Milk Producers' Assoc. V. Delaware, L. & W. R. E., 7 I. C. C. Rep. 92 (1897). In Howell V. New York, L. E. & W. R. R., 2 Int. Com. Rep. 162, 2 I. C. C. Rep. 272 (1888), the Commission had held an arrangement for a flat rate not necessarily unreasonable even if it incuded all milk brought to New York from stations within 200 miles. [592] C!hap. XIX] Length of Teansportation. [§ 637 same train. This result does not necessarily follow, however. In cases where the rate is sufficiently high to afford a reasonable profit upon each portion of the traffic by itself, there are no losses upon the longer portion of the route to be made up by overcharges upon the remainder. Although the product of the most distant locality may yield a substantially less measure of profit than that of the nearer, nevertheless the traffic which pays the least profit to the carrier may pay its own entire transporta- tion expense, and perhaps a good deal more. In that event there is nothing in its transportation which is saddled upon other communities, and the smaller profit which is made from the longest haul helps to support the facilities which the carrier is enabled to maintain for the common benefit of the entire route covered. In the present case it will not be contended by com- plainants that the milk business from even the most distant stations is done at any loss to the roads." ® § 637. Basing points established. Instead of grouping stations about a competitive point and charging a uniform rate, the prevailing custom now is to fix a certain rate to the competitive point (called the baaing point), and to fix rates to other points in the group by adding in each case to the basing rate the local rate from that point to the sta- tion in question. Such a combination rate is on the face of it unreasonable, and it will be closely scrutinized ;'' and the competitive rate to the basing point plus the local is at any rate the extreme limit of charge. After the passing of the Interstate Commerce Act, which was at first believed to prevent the reducing of a rate for a long 6 Walker, Com. in Howell v. New York, L. E. & W. R. R., 2 Int. Com. Rep. 162, 175, 2 I. C. C. Rep. 272 (1888). ITrammell v. Clyde S. S. Co., 4 Int. Com. Rep. 120, 5 I. C. C. 324 (1894); Cordele Machine Shop v. Louisville & N. R. R., 6 I. C. C. Rep. 361 (1895) ; Gustin v. Atchison, T. & S. F. R. R., 8 I. C. C. Rep. 277 (1899) i Board of Trade v. Central of Ga. Ry., 8 I. C. C. Rep. 142 (1899). [593] § 638], Eailuoad Eatb Regulation. [Chap. XIX haul below that for a shorter haul included in it, competitive' points were grouped with a number of intermediate points, so that the carrier might compete without reducing his charge below intermediate charges. Since it has been decided that a carrier might in case of competition reduce the charges for a long haul below those for a short haul, this has become unnec- essary, and the competitive points are now made basing points. § 638. Basing points justified. The Supreme Court of the United States * has held that the Southern siystem of " basing points " is legal. Rates to non- competitive Georgia towns were arrived at by taking the Atlanta rate and adding to it the local rate back. The result of this was to make a higher rate in each case for the shorter haul ; but all the rates were lower than they would be if the nearest com- petitive point to the west, Montgomery, had been taken as the basing point. The court upheld the rates, Mr. Justice White saying : " When the situation just stated is comprehended, it results, that the complaint in effect was that a method of rate making had been resorted to which gave the places referred to a lower rate than they otherwise would have enjoyed. In this situation of affairs, we fail to see how there was any just cause of com- plaint. Clearly, if, disregarding the competition at Atlanta, the higher rate had been established from New Orleans to the non- competitive points within the designated radius from Atlanta, the inevitable result would have been to cause the traffic to move from New Orleans to the competitive point (Atlanta), and thence to the places in question, thus bringing about the same rates now complained of. It having been established that com- petition affecting rates existing at a particular point (Atlanta) produced the dissimilarity of circumstances and conditions con- templated by the 4th section of the act, we think it inevitably 8 Interstate Commerce Com. v. Louisville & N. R. R., 190 U. S. 273, 4T L. Ed. 1047, 23 Sup. Ct. 687 (1903). [594] Cliap. XIX] Length of Teanspoetation. [§ 639 followed that the railway companies had a right to take the lower rate prevailing at Atlanta as a basis for the charge made to places in territory contiguous to Atlanta, and to ask, in addi- tion to the low competitive rate, the local rate from Atlanta to such places, provided thereby no increased charges resulted over those which would have been occasioned if the low rate to Atlanta had been left out of view. That is to say, it seems in- controvertible that in making the rate, as the railroads had a right to meet the competition, they were authorized to give the shippers the benefit of it by according to them a lower rate than would otherwise have been afforded. True it is, that by this method a lower rate from New Orleans than was exacted at LaGrange obtained at the longer distance places lying between LaGrange and Atlanta, but this was only the result of their proximity to the competitive point, and they hence obtained only the advantage resulting from their situation. It could be no legal disadvantage to LaGrange, since, if the low competitive rate prevailing at Atlanta had been disregarded, and the rate had been fixed Vidth reference to Montgomery, and the local rate from thence on, the sole result would have been, as we have previously said, to cause the- traffic to move along the line of least resistance to Atlanta, and thence to the places named, leaving LaGrange in the exact position in which it was placed by the rates now complained of." TOPIC C THEOUGH BATES. § 639. Carriers may combine in a joint rate. It is permissible for two carriers to combine upon a joint through rate over both lines, which shall be less than the sum of their separate rates.^ In other words, it is entirely proper that two carriers should combine to form a single route, join in one haul, and name a single rate for the haul. It is not only iSt. Louis Hay & Grain Co. v. Illinois Cent. E. E,., 11 I. C. C. Rep. 486 (1905). See, generally, Chapter XXXI. [595] § 640] Raileoad Kate Eegulation. [Chap. XIX permissible, but extremely desirable, that this should be done; and the lower through rate thereby secured is quite justifiable. " The through rate is almost universally less in proportion to distance than the local rate; the carriers can afford to make it lower ; if they were compelled to measure the one by the other, there would be no inducement to form through lines and shippers would be annoyed by having to deal with a succession of local roads instead of with one road acting for all. But if the through rate is less in proportion than the local, some of the car- riers, if not all of them, must accept for their division of the through rate a sum less than the local rate. This is very mani- fest. It is well known, also, that many influences affect the making of a through rate that may not bear at all, or if at all in less degree, upon the local rates. This is especially the case when there are competitive lines reaching points for which the through rate is made or through which the transportation is to be had. Such competition may in some cases force the making of a through rate which will barely pay the cost of moving the freight." ^ § 640. The entire rate must be reasonable. The shipper or consignee has no direct interest in the way a joint rate is divided between the carriers, nor in the amount of the division received by each carrier. The entire through rate is what interests the public, and in so far as a carrier gives up a part of its fair division for the sake of obtaining business the public is not concerned.''' It is clear, of course, that the entire rate must not be so low as to be unremunerative, and thus burden the local traffic* As the rates for long distances cannot be exactly compared 2Lippman v. Illinois Cent. E. R., 2 Int. Com. Eep. 414, 2 I. C. C. 384 (189f>). 3 Re Proposed Advances in Freight Rates, 9 I. C. C. Eep. 382, 433 (1903). < Lippman v. Illinois Cent. R. R., 2 Int. Com. Eep. 414, 2 I. C. C. Rep. 584 (1889). [596] Ohap. XIX] Length of Tbanspoetation. [§§ 641, 642 with those for short distances, the proportion received by one carrier out of a long distance through rate is not necessarily the measure of its share of a joint rate over a materially shorter distance ; though it may be considered in determining the right- ful relation of the two rates.^ § 641. Share of separate carrier as evidence of unfairness o* entire rate. Although in the case of a joint rate it is the entire rate, and not the proportionate part which each carrier receives on the division, which directly interesits the shipper, yet that division is not without significance in determining what are reasonable rates for the whole distance on the lines in question ; and he is entitled to inquire into such division when he complains that the joint rate is unlawful, for the amount so received by the different carriers may throw light upon the reasonableness or justice of the aggregate charge." But plainly a railroad may charge more for transporting a local passenger between the two termini than it receives for transporting a through passenger over the same distance, in the division of the through rate with other railroads. '^ § 642. Through rate need not be a reduced rate. While the fact that a through route extends over two rail- roads may lead to a lower rate than if it were over a single line, it may justifiably have the opposite effect ; the rate may be 5 Clements, Com. in Colorado F. & I. Co. v. Southern Pac. Co., 6 I. C. C. Rep. 488, 513 (1895). Aco. Daniels v. Chicago, K. I. & P. Ry., 6 I. C. C. Rep. 458 (1895). sParkhurst v. Pennsylvania R. Co., 2 I. C. C. Rep. 1.31, 2 Int. Com. Rep. 78 (1888) ; Railroad Commission v. Savannah, F. & W. R. Co., 5 I. C. C. Rep. 13, 3 Int. Com. Rep. 688 (1891) ; Trammell v. Clyde S. S. Co., 5 I. C. C. Rep. 324, 4 Int. Com. Rep. 120 (1892); Warren-Ehret Co. v. Central R. R., 8 I. C. C. Rep. 598 (1900). 7 Union Pacific Ry. v. United States, 117 U. S. 355, 29 L. Ed. 920, 6 Sup. Ct. 772 (1880). [597] § 643] Kaileoad Kate Regulation. [Chap. XIX justifiably lower between two termini when the route is over a single road than when it is over two roads. Thus' in a case before the English Comnussion/ for discrimination in rates from one point to another as between two roads, one route was six miles over the A. railway, and seventy miles over two other roads ; the other route wag the same six miles over A. railway and seventy-three miles over a single other railway. It was held that the cheaper route over the single railway was justified since two hauls were more expensive than a single haul for the same distance. Though not increased because of the joint carriage, the rate may well be maintained at the sum of the local charges of the carriers ; and no objection can be raised to such a rate. No one has a right to demand that the through rate be a reduced rate.® § 643. Through rate may be given although transit is broken. A very important feature in modern railroading is the per- mission given to the owners of goods in transit to have the ad- vantages of the through rate upon paying a very small additional premium, although the transit is interrupted for a time to do something to the commodities in question at some intermediate point, to prepare them for market, or even to entirely change their form by manufacture of some sort. Thus the railroads not uncommonly grant the privilege of cleaning in transit, of bagging in transit, of compressing in transit, and of milling in transit. As was pointed out in one case by the Interstate Commerce Commission : ^° " Shippers are not entitled as a matter of right to mill grain in transit and forward the milled product under ' 8 Corporation of Birmingham v. Manchester S. & L. Ey., 10 Ry. & Can. Tr. Cas. 62 (1897). 9 King V. New York, N. H. & Jt. R. R., 3 Int. Com. Rep. 272, 4 I. C. C. 251 (1890). 10 Koch V. Pennsylvania Ry., 10 I. C. C. Rep. 675 (1905). [598] Chap. XIX] Length of Transpoetatiow. [§ 644 the through rate in force on the grain from the point of origin to the place of ultimate destination/^ but allowance of the privi- lege by a carrier to shippers in one section must be without wrongful prejudice to the rights of shippers in another section served by its line. Considering the defendants as a single line, the granting of transit milling west of Pittsburg and denying it to millers at Harrisburg is not necessarily unlawful. The con- ditions on the Pan Handle in Ohio and Indiana may be very different from the conditions in eastern Pennsylvania, and it does not follow that the allowance of transit privileges in the former territory requires as a matter of law the like allowance in the latter territory. But these differences have not been shown nor their bearing explained by the testimony in this pro- ceeding." §' 644. Certain objections to the practice of giving privileges in transit considered. The most thorough discussion of this problem of privileges in transit is in an opinion of the Interstate Commerce Commis- sion ^^ in regard to the practice of " floating cotton," the essen- tial transportation feature -of which was carrying the cotton to a compress, receiving it again in the compressed state, and trans- porting it to destination at the through rate in force from the point of origin. It was held that the carrier may, as part of a contract for through shipment, allow the cotton to be stopped off for the purpose of grading and compression; but the privilege enters into and becomes part of the service covered by the rate, and should be specified in the published tariffs. The Com- mission said in substance that this cotton is in no possible construction at the compress point for any other purpose than a temporary one in transit; and that although an indis- pensable element in every through shipment would seem to be 11 Diamond Mills v. B. & M. E. E., 9 I. C. C. Eep. 311 (1902). I'ZRe Alleged Unlawful Eates for Cotton, 9 I. C. C. Eep. 121 (1899). [599] §645] Eaileoad Eate Regulation-. [Chap. XIX a contract for such through service, an agreement between the parties at the inception of the carriage that the freight was to go to some destination beyond to be designated later was enough. Meeting certain arguments against the practice, the Commission said: " It is said that the identical cotton does not pass over the en- tire route, but that substitution takes place at the compress point. This is certinly true. If a carload of cotton leaves Hernando for Boston, it is quite probable that no single bale of that cotton ever goes to Boston. If the car in which it came to Grenada reaches that destination it is practically certain that it will be. filled with other cotton, but is this in any way material ? Every pound of Hernando cotton finally goes to some point beyond Grenada. It is true that a bale of cotton raised at Grenada may go from Grenada to Boston, by this process of substitution, at the Hernando rate, but in that event a corresponding amount of cotton from Hernando must go to some point upon the Grenada rate. However it may be in theory, there can be in fact no dis- crimination. Grenada cotton is bought upon and has the benefit of the Grenada rate, and cannot possibly obtain the benefit of any other rate, and Hernando cotton must go to a point beyond Grenada upon some published rate." § 645. Rebate on reshipment. A through rate may be established, not by uniting on a single rate for one entire haul over two roads, but by charging the sep- arate rate on the goods to the junction point, and then, upon the goods being there reconsigned and reshipped over a second road, paying a rebate on the charges of the first or of the second road. This is sometimes allowed when the goods are taken by the con- signee at the junction point and there held for a considerable time, for the purpose of awaiting a favorable turn of the market. Such reconsigned articles may in a proper case obtain a re- bate, thus resulting in maintaining lower rates ; but the rate may [600] Ohap. XIX] Length of TEAwspoETATioiir. [§ 646 lawfully remain higher than the through rate, and the incoming road may give a rebate which leaves its net rate higher than its proportion of a through rate. " The service of the carrier in handling reconsigned hay is more expensive as a general rule, if not invariably, than the service performed in cases of through shipment, while' the reconsignment privileges in question must be of substantial value to the dealers at East St. Louis. In no instance shown does the difference appear to be unreasonable or otherwise in violation of the regulating statute. The circum- stance that the reconsignment rate is sometimes the same as the proportion of the through rate does not warrant an inference of illegal conduct, or support the charge of unjust discrimina- tion." 1** § 646. A through arrangement necessary to justify such priv- ileges. These privileges are only applicable to shipments intended from the outset to be throiigh shipments. Thus in one proceed- ing before the Interstate Commerce Commission,^* it appeared that the practice was to ship grain from points west of Kansas City to Kansas City upon the local rate. When this rate was paid an exjiense bill was delivered to the person paying it. If this expense bill was afterward delivered to a carrier leading eastward from Kansas City, that carrier would transport a cor- responding amount of grain forward to Chicago, or any eastern point, not at the rate from Kansas City, but at the balance of the through rate from the original point of shipment. It was not at all requisite that this second lot of grain should be the original lot. Of this scheme the Interstate Commerce Commission said : " The iirst question arising upon these facts would seem to be, Were the shipments under this practice through shipments, and isKnapp, Chairman, in St. Louis Hay & Grain Co. v. Illinois Cent. R. R., 11' I. C. C. Rep. 486, 494 (1905). "In the Matter of Alleged Unlawful Rates, 7 I. C. C. Rep. 240 (1897). [601] § 647] Eaileoad Kate Rbgulatioit. [Cbap. XIX for that reason entitled to the through rate which they received ? It is difficult to understand how they can be so treated. Ap- parently they had not a single incident of a through shipment, but upon the contrary the transportation from the point of origin to Kansas City was in every respect local. The rate was local. There was nothing upon any paper connected with the transaction which indicated that the grain was to be carried beyond Kansas City. As a matter of fact there was no defi- nite piirpose upon the part of its owner to carry it beyond. If it did finally go further, there was no present idea as to what point it would go. It might be consumed at Kansas City. It might be sent forward to Chicago. It might be transported to Liverpool. The object of the owner of the grain was simply to take it to Kansas City for the purpose of disposing of it there, without any thought as to its ultimate destination. When the grain was unloaded and put upon the market at Kansas City, it was not, in any possible construction, there temporarily in transit upon a through shipment. It had reached its destina- tion. It had become Kansas City grain. When it was shipped out it must take the Kansas City rate, and the fact that it had come from a point farther west was no reason for giving it a different rate." § 647. Dangers in giving privileges in transit. Loose practice in giving rebates on reconsigned goods may lead to a state of affairs which results in discrimination. Thus in St. Louis Hay & Grain Company v. Illinois Central Kail- road, ^^ a practice was shown of giving a rebate on reconsigned hay at East St. Louis. This reconsigned hay is carried at fixed rates provided for that purpose which are lower than local rates from East St. Louis, and do not depend upon the origin of the traffic. To secure a reconsignment rate the shipper is required to furnish evidence by expense bills that the hay forwarded, or 15 11 I. C. C. Rep. 486 (1905). [602] C!hap. XIX] Length of Teanspoetation. [§ 618 an equivalent tonnage of that article, has paid a local rate to East St. Louis. As the volume of hay currently received at that point exceeds materially the amount reshipped, on account of the large local consumption, there is usually if not always a surplus of expense hills and consequently no great difficulty in meeting the condition on which reconsignment rates are allowed. In point of fact these rates are applied to practically all reship- meuts. The Commission expressed the opinion that this mis- use of the reconsignment rate was illegal.''* § 648. Through passenger accommodations. That special through arrangements may be made was well brought out in a refcent complaint disposed of by the Interstate Commerce 'Commission. Defendant had numerous through daily trains between New York and Boston on which the through parlor car fare was one dollar ; on all tranis from intermediate points the parlor car fare was 50 or 75 cents according to dis- tance, and on three trains the parlor car rate was one dollar to any intermediate point. Complaint was made that the charge of one dollar to intermediate points constitutes unlawful dis- crimination. The Commission said: " We further find that the number of trains and parlor cars on which the lower parlor ear rates to intermediate points are allowed, together with the hours at which such trains leave the respective terminals and arrive at intermediate stations, are reasonably sufficient for the accommo- dation of the public. Taking all the circumstances into account, including due provision for through passengers, it is not per- ceived that any real hardship or injustice results from the dol- lar charge to all points on the three trains in question. The defendant furnishes adequate parlor car accommodations at the lower rates for local and short-distance passengers, and the discrimination against such passengers by reason of the dollar 16 See, also, Re Alleged Unlawful Rates, 7 I. C. C. Rep. 240 (1897) ; Re Rates and Practices of Mobile & 0. R. R., 9 I. C. C. Rep. 373 (1903). [603] ,§§ 649, 650] Railroad Eate Regulation. [Chap. XIX rate to intermediate points on three of defendant's trains is not undue or unreasonable. In the interest of through passengers the defendant had the right to make the regulation in question. In the case of Cleveland, C. C. & St. Louis K. Co. v. Illinois,^^ after discussing several cases called to its attention, the Supreme Court said : ' With no disposition whatever to vary or qualify the cases above cited, neither the conclusions of the court nor the tenor of the opinions are opposed to the principle we hold to in this case, that, after all local conditions have been adequately met, railways have the legal right to adopt special provisions for through traffic' "^^ TOPIC D EXPOET AND IMPOET EATE. § 649. Export and import rates considered. When the destination of goods shipped or their originating point is outside the country, so that the entire haul compre- hends a partial haul within and a partial haul outside the country, it has been insisted that there could be no difference in charge between cases where goods were shipped to or from the port, and cases where that was a port of export or import and the haul was only partially within the country. It would seem that the ordinary principles governing through rates and local rates should apply to the situation and that a lower pro- portionate rate might therefore be given to the goods designed for export or coming as imports as compared with goods s'hipped to or from the port. " § 650. Import rates may be regulated by competition. The question was first definitely settled in connection with the New Orleans import rates. The Texas & Pacific Railway Company made in 1892 through rates from Liverpool and other foreign ports to San 17 177 U. S. 514, 44 L. Ed. 868, 20 Sup. Ct. Rep. 722 (1904). iSHewins v. New York, N. H. & H. R. R., 10 I. C. C. Rep. 221 (1904). [604] Ohap. XIX] Length of Teanspoetatioh. [§ G50 Francisco, Cal., the carriage being by steamship from Liver- pool to New Orelans, and by railway over the lines of the Texas & Pacific Company, in connection with those of the Southern Pacific Company, to San Francisco. The amount of these through rates was less, sometimes not more than one third of the rates charged by the Texas & Pacific Company for trans- porting similar traffic from jSTew Orleans to San Francisco. It might happen that for carrying the same merchandise in the same car from New Orleans to San Francisco the rail carrier would not receive more than one sixth as much when the mer- chandise was imported through the port of ISTew Orleans as if it had originated or been manufactured at that point. The reason for this was alleged to be that the through rate from Liverpool to San Francisco was determined by the price of transportation either by sailing vessel around Cape Horn, in the case of certain kinds of commodities, or by steamship and rail across the Isthmus of Panama, in the case of other com- modities. The Texas & Pacific insisted that these through rates were absolutely fixed, and that it must either take the traffic at that figure or abandon it altogether. The Interstate Commerce Commission held that as a matter of law, foreign competition could not be considered, and ordered the Texas & Pacific, and other roads concerned in the snme litigation, to desist from allowing the discriminating rate.-' This order the Texas & Pacific Company refused to obey; the matter was taken to the courts, and finally to the Supreme Court of the United States.^ The Supreme Court reversed the ruling of the Commission on the point of law. The court held that conditions abroad as well as conditions existing in the United States should be considered ; that the interest of the carrier and the consuming community as well 1 New York Board of Trade v. Pennsylvania R. R., 4 I. C. C. Rep. 447, 3 Int. Com. Rep. 417 (1891). 2 Texas & Pacific Ry. v. Interstate Commerce Commission, 162 U. S. 197, 40 L. Ed. 940, 16 Sup. Ct. 666 (1896). [605] § 651] Eailboad Eate Regulation. [CHap. XIX as the producing community must be taken into account; and that there was no hard and fast rule which prohibited the carrier, in furtherance of its own interest and the interests of its patrons, from accepting a less sum for the transportation of imported merchandise from the port of entry to an interior point than it charged for the transportation of domestic mer- chandise between the same points. Regarding the whole charge, from originating point to destination as a single through charge, therefore, there is nothing in the law to prevent the domstic carrier from receiving as his share of the through charge less than his local charge for the same haul.® § 651. Export rates regulated by competition. In the same way it is clear that export rates may be regulated by competition, and that the inland portion of a through export rate may reasonably be less, in a proper case, than the rate for the same haul when the traffic terminates at the exporting port. This was thoroughly considered by the Interstate Commerce Commission in the case of Kemble v. Boston & Albany Rail- road.* In that case it appeared that the inland rate from Chicago to Boston was! two cents higher than the rate from Chicago to New York; but the export rate to the two ports was the same. This was managed by allowing a rebate of two cents on goods which after arriving at Boston were actually shipped abroad. The Commission held the practice legal; Mr. Commissioner Prouty saying : " Taking Chicago as the point of origin, Liverpool as the point of destination, and grain, which is the most important item of export, as the subject of traffic, it is evident that grain can pass from Chicago to Liver- pool, either through the port of New York or through the port of Boston, and that in so doing it is transported to such port by rail and from such port by ship. It is also evident that it 3 See, to the same effect, Mansion House Assoc, v. London & S. W. Ry., 9 Ry. & Can. Tr. Cas. 20 (1895). 4 8 I. C. C. Rep. 110 (1899). [606] Ohap. XIX] Length op TEANSPOETATioiir. [§ 652 will choose the route by which it can go the most cheaply. Investigations in other cases before the Commission show that a difference in the freight rate of between one-fourth and one-eighth of a cent per bushel determines the route by which grain shall be exported. ISTow, the ocean freights from Boston and New York are substantially the same. It follows, there- fore, that the inland rate must also be the same. It has been decided that a differential of substantially 2 cents per hun- dred pounds may be properly made on domestic grain against Boston, but if the export rate were 2 cents higher to Boston than to New York, no traffic would move through the port of Boston. The object of these two rates, therefore, is to equalize the export rate between the ports of Boston and New York. The export rate to Boston is not in reality a Boston rate at all, but is in essence the inland division of a through rate through that port to foreign ports. That the inland carrier may receive in such case for its division a sum less than the domestic rate has been, as we have just seen, determined by the Supreme Court of the United States; hence the thing accomplished by the making of these two rates is not, as a matter of law, illegal." § 652. Foreign competition justifies only necessary difference in rates. But while foreign competition may be considered in iixing the inland share of the through rate, the difference thus justi- . fied between the inland and the export or import rate is only such difference as is necessary to meet the competition. The Supreme Court in Texas & Pacific Railway v. Interstate Com- merce Commission ^ distinctly pointed out that this was a question of fact to be determined in each case, and a question which was not raised in the actual litigation. " The questions whether certain charges were reasonable or otherwise, whether certain discriminations v/ere due or undue, were questions of 5 162 U. S. 107, 40 L. Ed. 940, 10 Sup. Ct. COO (1896). [607] § 653] Kaileoad Eate Kegulatioh-. [CWp. XIX fact, to be passed upon by the Commission in the light of all facts duly alleged and supported by competent evidence. . . The mere fact that the disparity between the through and the local rates was considerable did not, of itself, warrant the court in finding that such disparity constituted an undue dis- crimination ; much less did it justify the court in finding that the entire difference between the two rates was undue or un- reasonable, — especially as there was no person, firm, or cor- poration complaining that he or they had been aggrieved by such disparity." § 653. Limitations upon making export and import rates. That foreign businessi must not be unduly favored at the expense of domestic business was expressly pointed out by the Interstate Commerce Commission.® " The decision of the United States Supreme Court in Texas & Pacific Eailway Company v. Interstate Commerce Commission, supra, has been understood in some quarters as virtually removing import and export trafiic from the juris- diction of the Commission. Such is not by any means its scope or effect. That decision simply broadened the power of the Commission in reference to such traffic. If any individual or locality feels itself aggrieved by the rates made upon export or import business as compared with domestic business, the Com- mission has full authority to consider and pass upon that griev- ance. The propriety, as a matter of fact, of the rates main- tained by the Texas & Pacific Eailway Company has never been upheld by the decision of any tribunal. It has never been decided that that company may transport boots and shoes for the English manufacturer from New Orleans' to San Fran- cisco for one-sixth the amount charged the American manu- facturer for the same service, but merely that, in determining whether such rate constitutes an unjust discrimination or an SKemble v. Boston & A. R. R., 8 I. C. C. Rep. 110, 115 (1899). [608] CShap. XIX] Length of TEANSPOETATioif. [§ 653 undue preference, the interest of the carrier and the consumer should be taken into account as well as that of the producer." It was accordingly held by the Commission, in the case of New York Produce Exchange v. 'New York Central & H. R. Railroad,'^ that the inland portion of an export rate through New York must be no less than the inland rate from the orig- inating point to New York. Nothing was shown in the case to justify a difference in rates; and it is no doubt the fact that no differential is needed in order to secure shipments for export through New York.^ 73 I. C. C. Rep. 138, 2 Int. Com. Rep. 553 (1889). 8 Ace. Mansion House Assoc, v. London & S. W. Ry., 9 Ry. & Can. T. Caa. 20 (1895). [609] CHAPTER XX, THE RATE AS AN ENTIRETY. § 661. Nature of a rate. TOPIC A THE UNIT FIXED BY EEGULATION'. § 662. Characteristics of the rate as a regulation. 663. Established classification prima facie reasonable. 664. No presumption from continuance of classification under order of commission. 665. Publication of change of rate requisite. 666. Classification sheet not varied by contract or representation. 667. Methods of charging in rate making. 668. A minimum rate is justifiable. 669. Where minimum is fixed excess may be charged for. 670. Minimum weights with provision for refund of excess. TOPIC B THE JOUENEY THE UNIT IN PASSENGER SERVICE. § 671. The journey is a single entire unit. 672. Fare demanded at any point on the journey. 673. Ticket entitles passenger to carriage for a single journey. 674. Passenger cannot take two journeys for a single fare. 675. Passenger cannot pay two partial fares for a single journey. 676. Part of journey completed before collection of fare. 677. Resumption of journey by rejected passenger. 678. Passenger expelled at a regular station. 679. Change of destination during the journey. 680. Second journey on same train. 681. Non-payment of charges for prior carriages. 682. Effect of repudiation upon the applicants rights. TOPIC C THE SHIPMENT THE UNIT IN THE CAEEIA(JE OF GOODS. § 683. Maritime freight. 684. Right to compensation by agreement in case of carriage by sea. 685. Right to freight on land. [610] Chap. XX] Eate as an Entibety. [§ 661 § 680. Effect of carriage over a portion of the journey. 687. No freight without delivery. 688. Freight indivisible as a rule. 689. Entire freight when goods arrive damaged. 690. Effect of partial delivery. 691. Lien for entire charge on every part. 692. No lien except for specific charge. TOPIC D ADDITIONAL CHAEGES FOE SEPAEATE PAETS OF THE SEEVICE. § 693. General principles as to additional charges. 694. Whether extra charges should be made. 695 Foreign system of itemized charge. 696. Charges for service before carriage is undertaken. 697. Freight should cover the entire carriage. 698. No separate charge for a part of the transit. 699. Charges for services during transportation. 700. Terminal facilities usually included in the rates. 701. Terminals regarded as connections. 702. Services after carriage is ended. 703. Storage charges. 704. Demurrage of cars. § 661. Nature of a rate. In concluding this general discussion of the law governing railroad rates, it is necessary to point out certain characteristics of the rate itself which seem to require consideration. The sep- arate rate is the definite charge fixed by the person conduct- ing a public employment as the price demanded for performing the service asked. The most salient characteristics of a rate, considered abstractly, is that it is an entirety, the single charge for the whole service which is performed. Illustrations of this characteristic of the particular rate are collected in this chapter, as it is a matter of continual importance to those who have dealings with a public service company, such as the railroad corporation is. [611] §§ 662, 663] Kailhoad Eate Eegulation. [Ohap. XX TOPIC A THE UNIT FIXED BY REGULATION. ' § 662. Characteristics of the rate as a regulation. It is natural in public calling in the generality of cases that things are done by rule. The very character of the business usually dictates this policy. Public businesses are commonly carried on upon a large scale; and action according to rules fixed in advance is always found necessary for the proper con- duct of any great business. This applies to charging com- pensation as much as it applies to any other thing done in carry- ing on the business. It is therefore plainly consistent with public duty for those who manage a public service to establish a schedule of rates as the basis of charges. A rate thus fixed is a regulation, and has the legal characteristics pertaining to a regulation made by a public service company to govern the dealings between itself and the public. Thus a schedule of rates once duly established will be presumed to be reasonable unless the contrary is shown. It will be recognized that some minor inequalities are unavoidable in the application of all schedules. It will be considered proper to publisih these rates so that a person dealing with the public company may know with some certainty how much he will be charged. And it will be held bad practice to change established rates without giving notice. All tbese are generally true of other regulations, and it is submitted that they ought to be held as to rates. § 663. Established classiRcation prima facie reasonable. Where the carriers establish a classification and continue it in operation for a considerable time, it may fairly be inferred that the classification is a reasonable one, and it will be so presumed ; and the burden of showing the charge unreasonable is on the party, whether carrier or shipper, who proposes a change.^ " The continuance of a given rate is not conclusive Hn re Charges on Food Products, 3 Int. Com. Rep. 93, 4 I. C. C. 43 (1890). [612] Chap. XX] Eate as an Eosttieett. [§ 664 evidence of the reasonableness of that rate ; But when a railway company advances a rate which has been for some time in force, the fact of its continuance is in the nature of (m< ad- mission against that company which tends to show the unrea- sonableness of the advance." ^ § 664. No presumption from continuance of classification un- der order of commission. Where, however, a classification is adopted and maintained under an order of the Interstate Commerce Commission no such presumption can be made, even though the Commission has no power to enforcfe its order, since the carrier does in fact obey the order, and does not act voluntarily and upon its own judgment. On this point Mr. Chairman Khapp said : " The carriers classified soap in carloads as fifth class freight orig- inally, and only changed it to sixth class in compliance with our order in 1891. However limited the compulsory effect of an order by the Commission may be in the present state of the law, compliance with its requirements cannot be regarded as voluntary action by the carriers. There is nothing to show that the carriers would have changed soap in carloads to sixth class in 1891 or later if no order requiring that to be done had been issued. On the contrary, the carriers' representatives have insisted in this case most strenuous'ly that they have always been dissatisfied with the order of 1890 which was complied with in June of the following year. However that may be, it seems clear that the presumption as to the reasonableness of rates long kept in effect by carriers as a voluntary act on their part does not attach in this case. It may be said, in view of the fact that orders of the Commission can only be enforced by action in the Federal courts, that long compliance with an order of the Commission is in effect voluntary ; but we think, when complaint is made to the Commission, and the case goes 2 Holmes v. Southern Ry., 8 I. C. C. Rep. 561 (1900). [613] ■§665] Eaileoad Rate Regulation. [Chap. XX to hearing and decision, and order against the carriers is is- sued with which they comply, that there is a marked dis- tinction in the respect here referred to between rates thus ■established and like or similar rates applied by the carriers on their volition, and tliat this distinction is sufficient to remove the presumption of the reasonableness of sixth class carload rates for soap which would arise if such rates had been volun- tarily accorded since June, 1891, without the intervention of ,an order by the Commission." *. § 665. Publication of change of rate requisite. It would seem to follow from the assumption that the making Bate Regulation. [Chap. XXI forced by him from others, including the party complaining of it."^ § 734. Whether concessions may be made for special pur- poses. The suggestion is made in several cases that special reductions may be made to further certain policies, provided that there is no discrimination between competitors. It is even urged that such concessions may turn out for the best interests of all con- cerned in the end. The weight of this line of .argument may be judged by the perusal of an extract from the opinion of Judge Baxter in Hays v. Pennsylvania Company,* which is often quoted with approval, although it is dangerous to concede quite so much : " We need not recount all these obligations. It is enough for present purposes to say that the defendant has no right to make unreasonable and unjust discriminations. But what are such discriminations ? l^o rule can be formulated with sufficient flexibility to apply to every case that may arise. It may, however, be said that it is only when the discrimination enures to the undue advantage of one man, in consequence of some injustice inflicted on another, that the law intervenes for the protection of the latter. Harmless discrimination may be indulged in. For instance, the carrying of one person, who is unable to pay fare, free, is no injustice to other passengers who may be required to pay the reasonable and regular rates fixed by the company. ISTor would the carrying of supplies at nominal rates to communities scourged by disease, or rendered destitute by floods or other casualty, entitle other communities to have their supplies carried at the same rate. It is the custom, we be- 7 This same point has been made in various cases, for example in : Hays V. Pennsylvania Co., 12 Fed. 309, B. & W. 368 (1882); Cook v. Chicago, R. I. & P. Ry. Co., 81 Iowa, 551, 46 N. W. 749, 25 Am. St. Rep. 512, 9 L. R. A. 764 (1890) ; Lough v. Outerbridge, 143 N. Y. 271, 38 N. E. 292, 42 Am. St. Rep. 712, 25 L. R. A. 674, B. & W. 380 (1894). 8 12 Fed. 300, B. & W. 368 (1882). . [682] Chap. XXI] Discrimination. [§ 735 lieve, for rs'ilroad companies to carry fertilizers and machinery for mining and manufacturing purposes to be employed along the lines of their respective roads to develop the country and stimulate productions, as a means of insuring a permanent in- crease of their business, at lovs^er rates than are charged on other classes of freight, because such discrimination, while it tends to advance the interest of all, works no injustice to any one." ® § 735. Whether differences in the conditions of service may be recognized. Although there will be found to be some difference of opinion as to the matters discussed in the sections immediately pre- ceding, where the services performed are substantially identical, there is no difference of opinion as to the propriety of differences in rates where the services performed are essentially disssimi- lar.^" " We believe the true rule to be that rates must not only be reasonable in themselves, but must be relatively reasonable; that is, that a person or corporation engaged in public business, and obligated to render its services to all persons having occasion to avail themselves thereof, is bound in fixing its rates to observe two rules: First, its rates must be reasonable; and, second, it must not, without a just and reasonable ground for discrimina- tion, render to one patron services at a less rate than it renders to another, where such discrimination operates to the disadvan- tage of that other." ^' 9 Whether concessions may be made for special purposes is discussed in Chapter XXII, infra. See, permitting such reductions. Hoover v. Pennsylvania R. R., 156 Pa. St. 220, 27 Atl. 282, 36 Am. St. Rep. 43, 22 L. R. A. 263, B. & W. 410 (1893). But see forbidding such reductions Louisville, E. & St. L. Con. R. Co. V. Wilson, 132 Ind. 517, 32 N. E. 311, 18 L. R. A. 105 and note (1892). w The quotation which follows is from Irvine, C, in Western U. T. Co. V. Call Pub. Co., 44 Neb. 326, 62 N. W. 506 (1895). "Citing Hays v. Pennsylvania Co., 12 Fed. 309, B. & W. 368 (1882); Scofield V. Railway Co., 43 Ohio St. 571, 3 N. E. 907, 54 Am. Rep. 846 [683] § 736] Eaileoad Eate Regulation. [Ohiap. XXI " But it is not unjust discrimination — it is not contrary to the common law, and it is not contrary to our statute — ^to make a difference in rates where the expense or difficulty of performing the services renders such discrimination fair and reasonable." '^ § 736. Differences may be made proportionate to the cost of service. It follows from what has been said that differences may be made proportionate to the cost of service without the making of any illegal discrimination ; indeed, in such cases it would be un- reasonable not to make such differences upon that basis. In the leading case upon this point, ^^ the general principle is thus stated : "In determining the duty of a common carrier, we must be reasonable and just. The carrier should be permitted to charge reasonable compensation for the goods transported. He should not, ho vy ever, be permitted to unreasonably or unjustly discriminate against other individuals, to the injury of their business, where the conditions are equal. So far as is reasonable, all should be treated alike ; but we are aware that absolute equal- ity cannot in all cases be required, for circumstances and condi- tions may make it impossible or unjust to the carrier. The car- rier may be able to carry freight over a long distance at a less sum than he could for a short distance. He may be able to carry (1885) ; Chicago & A. R. Co. v. People, 67 111. 11, 16 Am. Rep. 599 (1873) ; Railroad Co. v. Ervin, 118 111. 250, 8 N. E. 862 (1886); Messenger v. Railroad Co., 36 N. J. Law, 407, 13 Am. Rep. 457 (1874); Atwater v. Railroad Co., 48 N. J. Law, 55, 2 Atl. 803 (1886); McDufifee v. Railroad Co., 52 N. H. 430, 13 Am. Rep. 72, B. & W. 149 (1873) ; Railroad Co. v. Rust, 58 Tex. 98; Ragan v. Aiken, 9 Lea (77 Tenn.), 609 (1882). 12 Citing Interstate Commerce Commission v. Baltimore & 0. R. Co., 43 Fed. 37, affirmed s. c. 145 U. S. 263, 36 L. Ed. 699, 12 Sup. Ct. 844 (1892) ; Bayles v. Railway Co., 13 Colo. 181, 22 Pac. 341, 5 L. R. A. 480 (1889) ; Root V. Railroad Co., 114 N. Y. 300, 21 N. E. 403, 4 L. R. A. 33, B. & W. 377 (1889); Savitz v. Railway Co., 49 111. App. 315, affirmed n. c. 150 111. 208, 37 N. E. 235, 27 L. R. A. 626 (1894). "Root V. Long I. R. R., 114 N. Y. 300, 21 N. E. 403, 4 L. R. A. 33, B. & W. 377 (1889). [684] CShap. XXI] DiscEiMiNATioN. [§ 736 a large quantity at a less rate than he could a smaller quantity. The facilities for loading and unloading may be different in dif- ferent places, and the expenses may be greater in some places than in others. Numerous circumstances may intervene which bear upon the cost and expenses of transportation, and it is but just to the carrier that he be permitted to take these circum- stances into consideration in determining the rate or amount of his compensation. His charges must therefore be reasonable, and he must not unjustly discriminate against others, and in de- termining what would amoimt to unjust discrimination all the facts and circumstances must be taken into consideration. This raises a question of fact, which must ordinarily be determined by the trial court." ^* M It is universally admitted that real diflferences in the cost of serving justify differences in rates. This matter is discussed elaborately in Chap- ter XXIII infra. Leading cases to this effect are: United /Stotes— Interstate Com. Com. v. B. & 0. R. R., 145 U. S. 263, 36 L. Ed. 699 (1892) ; Western U. T. Co. v. Call Pub. Co., 181 U. S. 92, 45 L. Ed. 765, 21 Sup. Ct. 561 (1901), overruling s. c. 44 Neb. 326, 62 N. W. 506 (1895) ; 318% Tons of Coal, 14 Blatch. 453, Fed. Cas. 14,010, B. & W. 364 C1878) ; Hays v. Pennsylvania Co., 12 Fed. 309, B. & W. 368 (1882); Burlington, C. R. & N. Ry. v. N. W. Fuel Co., 31 Fed. 652 (1887). Alabama — Lotspeieh v. Central Ry. & B. Co., 73 Ala. 306 (1882). Illinois— Peo-ple v. Chicago & A. R. R., 67 111. 118 (1873). OWo— State v. Cincinnati, N. O. & T. B. Ry., 47 Ohio St. 130, 23 N. E. 928, B. & W. 400 (1890). [68.51 TITLE I. DiSCEIMINATION BeTWEEN PePSONS. CHAPTER XXII. ILLEGAL DISCRIMINATION. 741. The same rate for substantially similar services. TOPIC A CONCESSIONS TO GET COMPETITIVE BUSINESS. 742. Whether concessions may be made in competition. ■ 743. Competitive conditions do not justify making discriminations. 744. Reductions to get competitive business illegal. 745. Concessions allowed by some eases to get shipments from outlying territory. 746. Such concessions forbidden by later cases. 747. Shippers making expensive preparations cannot be favored. 748. Additional services performed for certain shippers. TOPIC B CONCESSIONS TO LAIiGE SHIPPEES. i 749. Whether concessions may be made to large shippers. 750. Unreasonable differences forbidden by all courts. 751. Reasonable diflerences permitted by some courts. 752. Prevalent doctrine that no reduction should be allowed. 753. Reductions to large shippers unjust to small shippers. 754. Services to large shippers and to small shippers practically identical. 755. Reductions to passengers in parties. TOPIC C EEBATES TO EXCLUSIVE SHIPPEES. j 756. vVhether lower rates may be made to exclusive shippers. 757. Shippers who use rival lines must not be charged more than usual rates. 758. Whether lower rates may be given those who ship exclusively. 759. Shippers who agree to give all their business. 760. Shippers who agree to furnish large quantities of freight. 761. Charging other shippers more than contract rates. [CS6] Cbap. XXII] Illegal DiscEmmAxioN. [§§ 741, 742 TOPIC D CONCESSIONS FOE SPECIAL KINDS OF BUSINESS. § 762. Different rates for goods used for different purposes. 763. Such rates allowed by some cases. 764. Such differences held illegal discrimination by other cases. 765. Rates to certain classes of shippers. 766. When commodities are of different character. 767. Special classes of passengers. § 741. The same rate for substantially similar services. In the preceding chapter the general principles as to discrimi- nation were set forth, and the conclusion was reached that if two shippers asked the same service under the same conditions they ought to be given the same rate. In this chapter it is proposed to describe what substantially identical services are, and various cases are discussed where the contention has been made that the conditions were different. In most of the cases in this list it will be seen upon examination that the services are not dissimilar. Whenever a railroad initiates a policy which will get it more bus- iness or enable it to hold the business that it has, it is prone to claim that the differing conditions in the particular case justify making a lower rate to one shipper or class of shippers, while maintaining higher rates for other shippers. But in many such cases it will be found that what the railroad is doing is in the face of the principal rule forbidding personal discrimination. TOPIC A CONCESSIONS TO GET COMPETITIVE BUSINESS. § 742. Whether concessions may be made in competition. The idea runs through certain cases that it is justifiable to. make reductions to certain shippers where business cannot be obtained without it. This principle, as has been seen, has some scope in permitting the rates to stations where there is competi- tion to be made lower relatively than the rates to stations which have no competitive rates. But it may well be doubted whether it has any operation in justifying a difference in rates between two persons shipping from the same station ; for this would seem to [687] § 743] Eailkoab Kate Regulation. [Cihap. XXII be personal discrimination since these two shippers are asking the same service. But to some courts it has seemed otherwise, these courts holding that if concessions are necessary to get more busi- ness by inducing a shipper who is now employing a rival route to give up his present connections, this necessity justifies the re- ductions. This argument apparently disregards the law of public service which, of course, governs this whole question.^ § 743. Competitive conditions do not justify making dis- criminations. It must be insisted upon at the outset that competitive condi- tions in themselves do not justify the making of personal dis- criminations between shippers, giving a lower rate to those to whom it is necessary to make concessions. This is forbidden both by the English courts and by the United States courts under their respective acts forbidding discrimination, but permit- ting reasonable concessions when the conditions are dissimilar. Thus in the leading case of London and ^Northwestern Railroad V. Evershed,* it was said : " We think that a railway company cannot, merely for the sake of increasing their traffic, reduce their rates in favor of individual customers, unless, at all events, I Concessions to get competitive business have been justified in some cases even if they involve discrimination. Johnson v. Pensacola & P. R. R., 16 Fla. 623, 26 Am. Rep. 731 (1878) ; Chicago & A. R. R. v. Coal Co., 79 III. 121 (1875); Lough v. Outerbridge, 143 N. Y. 271, 38 N. E. 292, 42 Am. St. Rep. 712, 25 L. R. A. 674, B. & W. 380 (1894) ; Avinger v. So. Car. R. R., 29 S. C. 265, 7 S. E. 493, 13 Am. St. Rep. 716 (1888) ; Ragan & Buffet V. Aiken, 9 Lea (77 Tenn.), 609 (1882). But by the better view such concessions are held unjustifiable Vf^hen they involve discrimination: Wight v. United States, 167 U. S. 512, 42 L. Ed. 258, 17 Sup. Ct. 822; Menaclio v. Ward, 27 Fed. 529, B. & W. 372 (1886) ; Messenger v. Pennsylvania R. R., 7 Vroom (36 N. J. L.), 407, 13 Am. Rep. 457, 8 Vroom (37 N. J. L.), 531, 18 Am. Rep. 754, B. & W. 357 (1874) ; Brundred v. Rice, 49 Ohio St. 640, 32 N. E. 169, 34 Am. St. Rep. 589 (1892) ; Fitzgerald v. Grand Trunk Ry., 63 Vt. 169, 22 Atl. 76, 13 L. R. A. 70 (1891). ■2L. R. 3 App. Cas. 1029 (1878). [688] Chap. XXII] Illegal Discrimination. [§ 744 there is a sufficient consideration for the reduction which shall lessen the cost to the company of the conveyance of their traffic, or some other or equivalent or other services are rendered to them by such individuals in relation to such traffic." And in the important case of Interstate Commerce Commis- sion V. Texas and Pacific Railroad Company,^ it was said: " The Interstate Commerce Act would be emasculated in its remedial efficacy, if not practically nullified, if a carrier can jus- tify a discrimination in rates merely upon the ground that unless it is given, the traffic obtained by giving it would go to a com- peting carriei'. A shipper having a choice between competing carriers would only have to refuse to send his goods by one of them unless given exceptional rates to justify that one in making a discrimination in his favor on the ground of the necessity of the situation." § 744. Reductions to get competitive business illegal. Such reductions to get business from a rival line are regarded as personal discrimination in most cases, however complicated the facts. This is a matter upon which the English cases have been particularly strong in holding that it is not sufficient that the railway company merely desires to attract the traffic from an- other line to itself, especially where the favor thus shown to a few is prejudicial to many others in the same trade as the fav- ored persons.* Thus the fact that one shipper can go by another route and will probably do so if charged as much as the charge made to the complaining party, is not a circumstance justifying an unequal charge; nor will the fact that those charged a less rate are seeking to develop a new trade." For the lowering of rates for the purpose of developing business is an undue prefer- 3 52 Fed. 187 (1892). 4 Thompson v. London, etc., R. Co., 2 Nev. & Mac. 115. BDenaby Main Colliery Co. v. Manchester, S. & L. R. Co., L. R. 11 App. Cas. 97. [689] § 745] Eaileoad Rate Regulation. [Chap. XXli ence f and so is making a lower rate in consequence of a threat from the owner of a colliery to construct another railway, by which traffic would be diverted.'' § 745. Concessions allowed by some cases to get shipments from outlying territory. It has been seen that some courts permit any difference in the situation to be seized upon as a reason for making a discrimina- tion. Thus in Kagan & Buffet v. Aiken,* where a bill in equity was filed by merchants at a station on the defendant's railway who were charged a twenty-five-eent rate, who alleged that other shippers who brought their goods from an outlying district were charged only a fifteen-cent rate, the court sustained a demurrer to the bill, taking the ground that there was a difference shown in the circumstances. The argument of Mr. Justice Cooper in writing the opinion of the court was : " In determining whether or not a company has given undue preference to a particular person, the court may look to the inter- ests of the company.^ ^ In other words, if the charge on the goods of the party complaining is reasonable, and such as the company would be required to adhere to as to all persons in like condition, it may, nevertheless, lower the charge to another person if it be to the advantage of the company, not inconsistent with the pub- lic interest, and based on a sufficient reason. It is obvious that the intention of the defendant, in this instance, was not to dis- criminate against the complainants in favor of any person of che same place, and in the same condition. His object was to get business for his road from persons at a distance from its ter- minus, which otherwise would reach their destination by a differ- 6 Oxlade v. North Eastern R. Co., 1 C. B. N. S. 454, S. C. 26 L. J. C. P. 129, 1 Nev. & Mac. 72. 7 Harris v. Cockermouth & W. R. Co., 3 C. C. X. S. 693, S. C. 27 L. J. C. P. 162, 1 Nev. & Mac. 97. 8 9 Lea (77 Tenn.), 609 (1882). waiting Ransome v. Eastern Counties Ry., 1 C. B. N. S. 437 (1855), [690] diap. XXII] Illegal Disceimination. [§ 746 €iit route. Under these circiimstances we cannot see that the con- tracts complained of are against public policy, or that the com- plainants have been damaged, if the charges on their goods were reasonable. The bill contains no allegation that the charges made against, and paid by the complainants, were unreasonable. Without such an averment, there has been no damage. The third ground of demurrer was, therefore, well taken." ^* § 746. Such concessions forbidden by later cases. But such concessions are forbidden by the later cases as illegal discrimination. Thus in one proceeding before the Interstate Commerce Commission,^'' the facts shown were that a higher rate was charged to goods brought to one terminus for consump- tion there than for goods which were to be carted beyond to another district. In declaring this illegal. Commissioner Morri- son said : "In collecting more from complainants and others for carrying goods to Eureka Springs, not to be forwarded, than they accept for carrying goods of the same classes from the same placee to Eureka Springs to be forwarded to points in said Harrison transportation district, the defendants receive greater compensation from complainants than from other persons for ' a like and contemporaneous service in the transportation of a like kind of traffic under substantially similar circumstances and conditionsi,' and are guilty of unjust discrimination ; and in thiis. denying to complainants and other shippers of articles to Eureka Springs, for use there or for distribution from that place, the same transportation charges which they accord to shippers and and receivers of like articles there to be forwarded to Harrison and other places for distribution, the defendants subject the complainants, the business in which they are engaged, and the city of Eureka Springs to unreasonable disadvantage and give 14 In the important case of Johnson v. Pensacola & P. R. R., 16 Fla. 623, 26 Am. Rep. 731 (1878), the facts and the decision were the same. 16 Gary v. Eureka Springs Ry., 7 I. C. C. Rep. 286 (1897). [691] § 747] Kaileoad Rate Ebgtjlation. [Chap. XXII to Harrison and such other places, and to shippers and receivers of articles of freight at such other localities, undue preference. The defendant railway companies will be required to discon- tinue the illegal practice of exacting from complainants and other shippers to Eureka Springs proper, any greater charges than are at the same time demanded and received from other persons for the transportation of freights to Eureka Springs to be forwarded to more favored localities." ^* § 747. Shippers; making expensive preparations cannot be favored. In Bundred v. Rice,^^ a shipper of oil set forth in his com- plaint a most extraordinary state of affairs — a contract whereby a railroad com.pany bound itself to carry for one shipper crude petroleum at half the rate it agreed to charge all others, and to pay such favored shipper one half the amount collected from others, in consideration of his agreeing to establish and maintain a system of pipe lines to its road. This was held wholly void and money so paid by a shipper in ignorance of the agreement, and received by the favored shipper was recovered back in an action for money had and received by the former against the latter. An extract from the per czuriam opinion follows: "That the contract between Brundred and his associates was against public policy, and void, will hardly admit of a question. As said by Baxter, J., in Handy v. Railroad Co. :^* ' Railroads are constructed for the common and equal benefit of all persons wishing to avail themselves of the facilities which they afford. While the legal title thereof is in the corporation or individuals 16 Compare Bigbee & W. R. Packet Co. v. Mobile & Ohio R. R., 60 Fed. 545 (1893), where the court laid it down as a fundamental principle that all goods offered for shipment at a certain point must be carried at the established rate for such goods from such point, regardless of the place where they originated. 17 49 Ohio St. 640, 32 N. E. 169, 34 Am. St. Rep. 589 (1892) 18 31 Fed. 689 (1888). [692] Chap. XXII] Illegal Discrimination. [§ 748 owning them, and to that extent private property, they are, by the law and consent of their owners, dedicated to the public use. Except in the mode of using them, every citizen has the same right to demand the services of railroads, on equal terms, that they have to the use of a public highway, or the government mails.' Whatever may have been the financial condition of thei railroad company, it was not warranted in making a contract by which it bound itself to carry for one shipper at half the rate it agreed to charge all others for the same service, in consideration of his agreeing to establish a system of pipe lines to its road; at the same time and for the same consideration binding itself to charge all others double the amount as a fixed, open rate, and to pay to such favored shipper one half of it when collected." § 748. Additional services performed for certain shippers. Upon the general principles now under discussion it will ■constitute discrimination to perform additional services for cer- tain shippers in order to get their business. The issue has sev- eral times been raised whether it would be permissible for a railroad to make allowance for cartage to certain shippers dis- tant from the station, while making no such allowance to other shippers, and the decision has always been that this would be il- legal discrimination.^^ For the feeling has been universal that the varying cost of shippers in delivering to the carrier for ship- ment can have no bearing on the ease. In the most important case of this series,^" Mr. Justice Brewer said : " It is contended by the defendant that it was necessary for the Baltimore & Ohio Company to offer this inducement to Mr. Bruening in order to get his business, and not necessary to make the like offer to Mr. Wolf, because he would have to go to the expense of carting, by w Wight V. United States, 167 U. S. 512, 42 L. Ed. 258, 17 Sup. Ct. 822 (1897) ; Hezel Milling Co. v. St. Louis, A. & T. H. R. R., 5 I. C. C. Rep. 57; Chicago F. P. C. Co. v. Chicago & X. W. Ry., 8 I. C. C. Rep. 316; The Brandt Milling Co.'s Case, 4 Can. Ry. Cas. 259. 20 Wight V. United States, supra. [693] I' 749] Railroad Eate Regulation. [Ohap. XXII whichever road he transported; that therefore the traffic was not ' under substantially similar circumstances and conditions.' within the terms of section 2. We are unable to concur in this view. Whatever the Baltimore & Ohio Company might lawfully do to draw business from a competing line, whatever induce- ments it might offer to the customers of that competing line to in- duce them to change their carrier, is not a question involved in this case. The wrong prohibited by the section is a discrimination between shippers. It was designed to compel every carrier to give equal rights to all shippers over its own road, and to for- bid it by any device to enforce higher charges against one than another. Counsel insist that the purpose of the section was not to prohibit a carrier from rendering more service to one shipper than to another for the same charge, but only that for the same service the charge should be equal, and that the effect of this ar- rangement was simply the rendering to Mr. Bruening of a little greater service for the 15 cents than it did to Mr. Wolf. They say that the section contains no prohibition of extra service or extra privileges to one shipper over that rendered to another. They ask whether, if one shipper has a siding connection with the road of a carier, it cannot run the cars containing such ship- per's freight onto that siding, and thus to his warehouse, at the same rate that it runs cars to its own depot, and there delivers goods to other shippers who are not so fortunate in the matter of sidings. But the service performed in transporting from Cin- cinnati to the depot at Pittsburg was precisely alike for each." Tone B CONCESSIONS TO LARGE SHIPPERS. § 749. Whether concessions may be made to large shippers. Common carriers have often given special discounts to large shippers in order to get their trade or to retain it, and sometimes they have attempted to defend this practice upon general prin- ciples. That this policy may often be advantageous in public business, as it is in private business, may be admitted, [694] Chap. XXII] Illegal Disceimination. [§ 750 but it kas already been seen that public duty may conflict with business policies. If, therefore, these conces- sions to larger shippers are in conflict with the public duty which the common carrier owes to smaller shippers, they must be held illegal as unjust discriminations. And this will be the clearer when it is shown that the favoring of such large shippers will give them such commercial advantages that they may crush out their smaller competitors in the common markets. The rule forbidding the granting of special reductions to larger shippers as such on the ground that they furnish a greater aggregate of business to the common carrier is therefore a necessary part of the law forbidding all personal discrimination.-' " The fact that 01K-! man is a large shipper and another a small shipper does not entitle the carrier to make a difference in the rate, if the property carried in each case is of the same class, and the dis- tance and route is the same." ^ § 750. Unreasonable differences forbidden by all courts. All courts would agree that if there is an unreasonable differ- ence made -between the rates given to the large shipper and the rates charged a small shipper the schedule is illegal in that re- 1 The quotation which follows is from United States v. Tozer, 39 Fed. 369 (1889). 2 By the weight of authority it is illegal to make reductions to large shippers as such. The principal cases are listed below: Western U. T. Co. V. Call Pub. Co., 181 U. S. 92, 45 L. Ed. 765, 21 Sup. Ct. 561 (1901), overruling s. c. 44 Neb. 326, 62 N. W. 506 (1895) ; Hays v. Pennsylvania Co., 12 Fed. 309, B. & W. 368 (1882) ; Burlington, C. R. & N. Ry. v. N. W. Fuel Co., 31 Fed. 652 (1887) ; Kinsley v. Buffalo, N. Y. & P. Ry., 37 Fed. 181 (1888); United States v. Tozer, 39 Fed. 369 (1889); Fitzgerald v. Grand Trunk Ry., 63 Vt. 169, 22 Atl. 76, 13 L. R. A. 70 (1891). But see Savitz v. Ohio & M. Ry., 150 111. 208, 37 N. E. 235, 27 L. R. A. €26 (1894), affirming 49 111. App. 315; Cook v. Chicago, R. I. & Pac. Ry. Co., 81 Iowa, 551, 46 N. W. 749, 25 Am. St. 512, 9 L. R. A. 764 (1890) ; Rothschild V. W.abash, St. L. & P. C. R., 92 Mo. 91, 4 S. W. 418 (1887) ; Concord & P. R. R. v. Forsaith, 59 N. H. 122, 47 Am. Rep. 181 (187f.') ; Silkman v. Yonkers Water Commissioners, 152 N. Y. 327, 46 N. E. 612, 37 L. R. A. 827, B. & W. 363 (18970. [695] § 750] Eaileoab Eate "Regulation. [Ohap. XXII spect. The case of the Burlington, 'Cedar Eapids and Northern Railway Company,^ which is often cited in this connection, goes no further than this, after all. In that case there was an at- tempt by a large shipper to enforce a contract by which a rail- road company agreed to charge a rate of not less than $2.40 per ton to all persons shipping less than 100,000 tons of coal per annum^ over its road, and to make a rate of $1.60 per ton to all shippers shipping 100,000 tons or over. Mr. Justice Brewer, then upon circuit, held the whole contract void as against public policy ; he said in part : " If it be true, as held by Judge Wal- lace, that the rule forbidding an unjust discrimination does not necessarily prevent a railroad company from charging a less rate to one who ships a large quantity than to one who ships a small quantity, (and I am not prepared to deny that under some circumstances, there is force in that proposition, on the same principle that a wholesale dealer sells a large bill of goods at a less rate than a small bill of goods,) yet, even with that limita- tion, a discrimination so vast as this is, and so purely arbitrary, and which is so obviously solely in the interest of capital, and not based upon reasonable distinction in favor of a large as against a small shipper, cannot be sustained. For here the con- tract provides a special rate for shipment of 100,000 tons or over; that is, for one who ships 99,500 tons it makes a rate of $2.40; while to the man who ships 100,000 tons, or 500 tons more than the other, it makes a rate of $1.60, — a difference of 5.0 per cent, in favor of the latter. Such a discrimination, even if any discrimination based upon the amounts of shipments is tolerable, is one so gross that it cannot be sustained. No person can read that contract in the light of the circumstances without perceiving that there was on the part of the fuel company an attempt to monopolize the entire product of this coal-field, as far as respects this market ; and it would be part and parcel of simi- s Burlington, C. R. & N. Ry. v. Northwestern Fuel Co., 31 Fed. 652 (1887). [696] Chap. XXII] Illegal Disckimutatio^t. [§ 751 lar purposes to control in like manner the products of other coal- fields. To sustain the contract even in part would practically validate it for all purposes, and lend the aid of the court to the furtherance of such an objectionable scheme." § 751. Reasonable differences permitted by some courts. In a very few jurisdictions it has been held that there is no legal objection to making a retasonable difference in the rates given to large shippers in comparison with the rates charged small shippers. The argument is that this is a business policy universally practiced ; but the answer seems to be that this may nevertheless be opposed to the peculiar duties which the common carrier owes to the public as a whole. However, an extract is given from the opinion of Mr. Justice Allen in Concord and Portsmouth Kailroad Company v. Forsaithe,* so that the weight of this argument may be felt. In holding that the complainant, a small shipper, had no case, even under a statute which forbade discriminations, he said : " The terms of the statute must re- ceive the interpretation which long-established usage and tlie custom of the commercial world have given them. That custom in all branches of business always has been, and is, to move, care for, and sell a large amount of a given commodity, in one parcel or in a given time, at a less price per pound, yard or ton, than a smaller quantity of the same commodity, distributed in many and smaller parcels at different times. The.expense of handling, carrying, and storing the smaller amount is mTicli greater, pro rata, than that of the same operations upon the larger amount in one body, and a discrimination in favor of the larger dealers is not inequality, but reasonable equality. By any other construc- tion the statute would defeat itself ; for taking into account the lessened expense jyro rata for trans-porting the greater amount of property in a single body or in a given time, the carrier would, by absolute equality of rates for all cases, receive a greater price 4 59 N. H. 122 (1879). [697] § 752] Raileoad Kate Rbgulatiost. [Ohap. XXII rate for carrying the larger quantity than the smaller, and thereby make an unjust discrimination against the person trans- porting the largest quantity of goods. Unreasonable equality is inequality." ° § 752. Prevalent doctrine that no reduction should be al- lowed. It may be asserted with confidence, however, that it is opposed to fimdamental principles to permit the giving of special conces- sions to the large shipper as such. In the leading case of Hays v. Pennsylvania Company,® this doctrine is well worked out. The plaintiffs in that case were, for several years next before the com- mencement of this suit, engaged in mining coal at Salineville and near defendant's road, for sale in the Cleveland market. They were wholly dependent on the defendant for transporta- tion. Their complaint was that the defendant discriminated against them and in favor of their competitors in business, in the rates charged for carrying, coal from Salineville to Cleveland. It appeared in evidence that defendant's regular price for carry- ing coal between the points mentioned, in 1876, was $1.60 per ton, with a rebate of from 30 to 70 cents per ton to all persons 5 To the same effect is Silkman v. Water Commissioners, 152 N. Y. 327, 46 N. E. 612,37 L. E. A. 827, B. & W. 363 (1897), where it was held that lower water rates might be given to large consumers than to small con- sumers, the court saying: "The objection made here is that the persons who consumed the large quantities of water were not charged as much per hundred cubic feet as those who consumed a less amount. Under this statute the question of consumption was one of the elements to be con- sidered in determining the rates. Surely, it cannot be said to be unrea- sonable to provide less rates where d large amount of water is used than ■where a small quantity ia consumed. That principle is usually present in all contracts or established rents of that character. It will be found in contracts and charges relating to electric lights, gas, private water compa- nies, and the like, and is a business principle of general application. We find in the rates as they wore established nothing iinreasonable, or that would in any way justify a court interfering with them." 6 12 Fed. 309, B. & W. 368 (1882). [698] Chap. XXII] Illegal Discrimination. [§ 752 or companies shipping 5,000 tons or more during the year, — the amount of rebate being graduated by the quantity of freight furnished by each shipper. Under this schedule the plaintiffs were required to pay higher rates on the coal shipped by them than was exacted from other and rival parties who shipped larger quantities. But the defendant contended, if the discrimi- nation was made in good faith, and for the purpose of stimu- lating production and increasing its tonnage, it was both rea- sonable and just, and within the discretion confided by law to every common carrier. The court, however, entertained the con- trary opinion. In an excellent opinion by Baxter, the United States Circuit Judge, the various grounds upon which differences in rates have been justified by reason of differences in the cost of service by reason of economies of handling the business were reviewed,^ but he held very properly that none of these applied to the exclusive shipper as such, his conclusion being well worth quoting at length. " In all particulars the plaintiffs occupied common ground with the parties who obtained lower rates. Each ten- dered coal for transportation in the same condition and at such times as suited his or their convenience. The discrimination complained rested exclusively on the amount of freight supplied by the respective shippers during the year. Ought a discrimina- tion resting exclusively on such a basis be sustained ? If so, then the business of the country is, in some degree, subject to the will of railroad officials ; for, if one man engaged in mining coal, and dependent on the same railroad for transportation to the same market, can obtain transportation thereof at from 25 to 50 cents per ton less than another competing with him in business, solely on the ground that he is able to furnish and does furnish the larger quantity for shipment, the small operator will sooner or later be forced to abandon the unequal contest and surrender 7 Discussing particularly Nicholson v. Gt. Western Ry., 5 C. B. N. S. 366 (1858). [699] § 753] Eailkoad Rate Regulation. [Chap. XXII to his more opulent rival. If the principle is sound in its appli- cation to rival parties engaged in mining coal, it is equally appli- cable to merchants, manufacturers, millers, dealers in lumber and grain, and to everybody else interested in any business re- quiring any considerable amount of transportation by rail ; and it follows that the success of all such enterprises would depend as much on the favor of railroad officials as upon the energies and capacities of tlie parties prosecuting the same." § 753. Reductions to large shippers unjust to small shippers. Naturally the practice of some railroads under some circum- stances of making lower rates to large customers was one of the first complaints brought to the Interstate Commerce Commis- sion. One of those cases was Providence Coal Company v. Prov- idence & Worcester Railroad Company,* in which case it ap- peared that the tariff of the railroad on coal contained a provi- sion for a discount of 10 per cent, to any person, firm or com- pany, who shall receive consignments of coal, in any one year, amounting to 30,000 tons or upwards, at any one sitation on the line of this road. In argument for the railroad an effort was made to uphold the discrimination on a consideration of quantity merely ; the consignee who should receive more than 30,000 tons in a year at any one station, being likened to a purchaser of goods at wholesale, and the consignee who received a lesser amount being compared to a purchaser at retail. It was said that a distinction in price is universally made as between these two classes of customers, and that distinction would be as reason- able in the case of purchasers of railroad service as in that of purchasers of cloths or lumber. But the Commission was very plainly of a contrary opinion, Mr. Commissioner Cooley saying: " When a question of rebates or discounts is under consideration, it might be misleading to 8 1 Int. Com. Rep. 363, 1 I. C. C. Rep. 107 (1887). [700] Chap. XXII] Illegal Disceimination. [§ 753 consider them in the light of the principles which merchants act upon in the case of wholesale and retail transactions. There is very manifest difficulty in applying those principles to the con- veniences which common carriers furnish to the public, a diffi- culty which springs from the nature of the duty which such car- riers owe to the public. That duty is one of entire partiality of service. The merchant is under no corresponding duty, and may make his rules to suit his own interest, and discriminate as he pleases. There is no occasion to enlarge upon this now. " A discrimination, such as the offer and its acceptance by one or more dealers would create, must have a necessary tendency to destroy the business of small dealers. Under the evidence in the case it appears almost certain that this destruction must re- sult, the margin for profit on wholesale dealings in coal being very small. The discrimination is therefore necessarily unjust within the meaning of the law. It cannot be supported by the circumstance that the offer is open to all ; for although made to all, it is not possible that all should accept. Moreover, in test- ing fuch a discrimination we must; consider the principle by which it must be supported ; and the principle which would sup- port a 30,000 ton limitation would support one of 50,000 or 100,000 equally well; the quantity named would be arbitrary in any case. It might easily be so high as practicably to be open to the largest dealer only. A railroad company, if allowed to do so, might in this way hand over the whole trade on its road in some necessary article of commerce to a single dealer; for it might at will make the discount equal to or greater than the ordinary profit in the trade; and competition by those who could not get the discount would obviously be then out of the question. So extreme a case would not, however, be needful to show the inadmissibility of such a discount as is here offered; the injustice would be equally manifest if several dealers instead of one were able to accept the offer. A railroad company has no right, by any dis- crimination not grounded in reason, to put any single dealer, [701] § 754] Kaileoad Eate Regulation. [Chap. XXII whether a large dealer or a small dealer, to any such destructive disadvantage." § Y54. Services -to large shippers and to small shippers prac- tically identical. Moreover, the services to large shippers and to small shippers are practically identical. The large shipper sends more car- loads in the aggregate than the small shipper, it is true ; but it makes no real difference whether a railroad takes two cars from A or one car each from A and B. And it is plain that to carry two barrels of sugar for one person on a given date, and to carry one barrel of sugar for another person, between the same points, over the same route, two days later, are contemporaneous, and like services.® The argument may be pressed further: It is not in the least certain that the shipper who furnished the largest aggregate tonnage during the year may not have shipped in the most irregular way in the most inconvenient quantities. There is, therefore, nothing to differentiate the services per- formed for a large shipper in comparison with a small shipper. In Kinsley v. Buffalo, New York & Philadelphia Railroad Company ^° this was well argued in granting a petition of one Couper alleging that there had been illegal discrimination against him by the receiver of a railroad then operated under the control of the court. It was said per curiam : The peti- tioner seeks to obtain reimbursement from the receiver of the sum of $478.44, with interest from April 3, 1887, which he alleges was unlawfully exacted from him as and for freights for the transportation of oil upon the railroad in the custody of the receiver. The exaction of this sum is admitted, as is also the fact that a less rate was charged to another shipper of oil upon the railroad. This charge is justified by the master upon the ground that the quantity of oil shipped by another shipper 9 United States v. Tozer, 39 Fed. 369 (1889). 10 37 Fed. 181 (1888). [702] Chap. XXIIJ Ilj^egal Disceimination. [§ 755 was much larger than that shipped by the petitioner, and hence that the larger proportionate expense attending the handling and transportation of the smaller shipment warranted a higher rate than was charged for the larger shipment. In this conclu- sion we do not agree with the learned master. It does not dif- ferentiate the service performed for the several shippers, nor the conditions or circumstances under which it was performed. iThe only difference is that in one case the quantity shipped was larger, and in the other case it was smaller. I'his has been re^ peatedly held to be an insufficient and unwarrantable reason for discriminating rattes of charge.^ ^ § 755. Reductions to passengers in parties. Reductions to passengers in parties can only be justified if there is a difference in the cost of service. Thus such reductions were held by the Interstate Commerce Commission*^ to forbid granting a special reduced rate to all persons traveling in parties of ten or more. The Commission ruled that the selling of "party rate" tickets was not within any lof the discrimina- tions specifically excepted and allowed by section 22 of the Act, gave no effect to the fact that the discrimination created new business and was not between competitors, held that equality of treatment of every person must be preserved and stated that "It is difficult to see how this individual equality is preserved when in a carload, say of nineteen persons, all starting from the same point and having the same destination, ten of them pay two cents per mile each, and the other nine three cents." The Supreme Court,*^ however, rightly held that conveying one person singly and conveying him as one of a party of tien did not constitute like services, " under substan- 11 Citing Hays v. Pennsylvania Co., 12 Fed. 309 (1882). 12 Pittsburg. C. & St. L. R. Co. v. B. & 0. R. Co., 2 Int. Com. Rep. 729, .•? I. C. C. Rep. 465 (1890). 13 Interstate Com. Com. v. B. & O. R. R., 145 U. S. 263, 12 Sup. Ct. 844 (1895). [V03] § 755] Eaileoad Eate Eegulatioit. [Ohap. XXII tially similar circumstances and conditions," that tlie making of a lower rate per capita for party rate tickets was a due and reasonable preference and not unlawful discrimina- tion. In delivering the opinion of the court in the case last re- ferred to, Mr. Justice Brown said : " Whether these party rate tickets are commutation tickets proper, as known to railway officials, or not, they are obviously within the commuting prin- ciple. As stated in the opinion of Judge Sage in the court be- lows : ' The difference between commutation and party rate tickets is that commutation tickets are issued to induce people to travel more frequently, and party rate tickets are issued to induce more people to travel. There is, however, no difference in principle between them, the object in both cases being to induce travel without unjust discrimination, and to secure patronage that would not otherwise be secured.' . . . " In order to constitute an unjust discrimination under sec- tion 2^ the carrier must charge or receive directly from one per- son a greater or less compensation than from another, or must accomplish the same thing indirectly by means of a special rate, rebate, or other device; but, in either case, it must be for a ' like and contemporaneous service in the transportation of a like kind of traffic, under substantially similar circumstances and conditions.' To bring the present case within the words of this section, we must assume that the transportation of ten per- sons on a single ticket is substantially identical with the trans- portation of one, and, in view of the universally accepted fact that a man may buy, contract, or manufacture on a large scale cheaper proportionately than upon a small scale, this is impos- sible."!* l* Refusing the party ticket rate to the United States Government for the transportation of soldiers in parties numbering ten or over has properly been held, in United States v. Chicago & N. W. Ry. Co., 127 Fed. 785 (1904), not to be unlawful discrimination, as the conditions surrounding such transportation were found to be different from those of ordinary par- ties; the government not paying in advance was one reason. [704] Ciiap. XXII] Illegal DiscEiMiiirATioN. [§ 756 TOPIC C BBBATES TO EXCLUSIVE SHIPPEKS. § 756. Whether lower rates may be made- to exclusive shippers. Tke advantages which may accrue to the railroad company if it may make lower rates to those who will ship by it exclusively are plain and this policy would largely prevail in making rates between competitive points doubtless if it were not for the recognition of its essential illegality. That such a policy may be advantageous to the company which employs it may be granted, but it has already been seen that those who conduct a public employment must forgo many methods of getting business and holding it which are permissible in private affairs.^ The chief argument made in favor of such specially lower rates to those who will ship exclusively is to say that there is in reality no personal discrimination in such an arrangement when it is open to all who choose to conform to the condition. But this is as in- conclusive here as it is when used in support of , other kinds of discrimination between different shippers, for if the condition is one which it is inconsistent with public duty to impose, there is no legal justification for any departure from equality of rates to all who ask the same transportation for like goods. ^ 1 See Chapter X, supra. 'i By the general rule it would seem to constitute illegal discrimination to give rebates to exclusive shippers. United States — Menacho v. Ward, 27 Fed. 529, B. & W. 372 (1886); Bigbee & W. R. P. Co. v. Mobile & 0. Ry. Co., 60 Fed. 545 (1893). Alabama — Mobile v. Bienville Water S. Co., 130 Ala. 379, 30 So. 445, B. & W. 417 (1901). Indiana — Louisville, E. & St. L. Con. R. Co. v. Wilson, 132 Ind. 517, 32 N. E. 311, 18 L. R. A. 105 and note (1892). Missouri — McNeer v. Mo. Pac. Ry., 22 Mo. App. 224 (1886). New Jersey — Messenger v. Pennsylvania R. R., 7 Vroom (36 N. J. L.), 407, 13 Am. Rep. 457, 8 Vroom (37 N. J. L.), 531, 18 Am. Rep. 754, B. & W. 357 (1874). North Carolina — Hilton Lumber Co. v. Atlantic Coast Line, 136 N. C. 479, 48 S. E. 813 (1904). [705] § 757] Eaileoad Eate Ebgttlation. [Chap. XXII § 757. Shippers who use rival lines must not be charged more than usual rates. It would seem to be plainly contrary to public duty for a common carrier to charge shippers who at times employ a rival carrier in their shipments more than the usual rates which other shippers are charged. Yet this sort of discrimination has been defended before the courts more than once even in its most ex- treme forms. The leading case on this point is undoubtedly Menacho v. Ward,^ the facts of which it is necessary to state rather fully. It was alleged by the complainant that the de- fendants had announced generally to jSTew York merchants engaged in Cuban trade that they must not patronize steam- ships which offered for a single voyage, and on various occa- siong when other steamships had attempted to procure cargoes from New York to Havana had notified shippers that those employing such steamships would thereafter be subjected to onerous discriminations by the defendlants. The defendants alleged in their answer to the bill, in effect, that it has been found necessary, for the purpose of securing sufficient patronage, to make differences in rates of freight between ship- pers in favor of those who will agree to patronize the defendants .exclusively. Within a few months before the commencement of this suit two foreign steamers were sent to New York to take cargoes to Havana, and the complainants were requested to act ag agents. Thereupon the complainants were notified by the defendants that they would be " placed upon the black-list " if they shipped goods by these steamers, and that their rates of freight would thereafter be advanced on all goods which they 0;jio— Seofield v. L. S. & M. S. R. R., 43 Ohio St. 571, 3 N. E. 907, -54 Am. Rep. 846 (188.5); Brundred v. Rice, 49 Ohio St. 640, 32 N. E. 169, 34 Am. St. Rep. 589 (1892). But see Lough v. Outerbridge, 143 N. Y. 271, 38 N. E. 292, 42 Am. St. Rep. 712, 25 L. R. A. 674, B. & W. 380 (1894), and Fitchburg R. R. v. Gage. 12 Gray (Mass.), 393, B. & W. 354 i(1859). 3 27 Fed. 529 (1886). [706] Chap. XXII] Illegal Disceimination. [§ 757 might have occasion to send by the defendants. Since that time the defendants have hsfbitually charged the complainants greater rates of freight than those merchants who shipped ex- clusively by the defendants. In disposing of this case Mr. Justice Wallace pointed out that there were vai'ious situations justifying different rates between shippers asking for the same transportation, and in enumerating them he was undoubtedly unduly liberal ; but this particular case before him he rightly decided to go beyond all justification as the conclusion of his opinion which follows will show: " it is upon this foundation, and not alone because the busi- ness of common carriers is so largely controlled by corporations exercising under franchises the privileges which are held in trust for the public benefit, that the courts have so strenuously resisted their attempts', by special contracts or unfair prefer- ences, to discriminate between those whom it is their duty to serve impartially. And the courts are especially solicitous to discountenance all contracts or arrangements by these public servants which savor of a purpose to stifle competition or repress rivalry in the departments of business in which they ply their vocation. '' ' " The vice of the discrimination here is that it is calculated to coerce all those who have occasion to employ common car- riers between New York and Cuba from employing such agencies as may offer. Its tendency is to deprive the public of their legitimate opportunities to obtain carriage on the best terms they can. If it is tolerated it will result practically in giving the defendants a monopoly of the carrying trade between these places. Manifestly it is enforced by the defendants in order to discourage all others from attempting to serve the pub- 7 Citing Coe v. Louisville & N. R. Co., 3 Fed. Rep. 775, B. & W. 251 (.1880). [707] § 758] Eailroad Eate Regulation. [Chap. XXII lie as carriers between these places. Such discrimiiiatioii is net only unreasonable, but is odious." * § 758. Whether lower rates may be given those who ship ex- clusively. On the other hand it is: maintained by some few courts that while higher than usual rates cannot be charged those who will not ship exclusively, yet lower rates may be given to exclusive shippers. That this is the view of the highest court in New York may be seen by an examination of the leading case of Lough v. Outerbridge.® In order to present the question clearly a brief statement of the fapts becomes necessary. The plaintiffs were commission merchants in the city of New York, transacting their business mainly with the Windward and Leeward Islands. The defen- dant, the Quebec Steamship Company, had in its service a fleet of five or six of the highest class iron steamers, sailing at in- tervals of about ten days from New York to the islands,' each steamer requiring about six weeks to make the trip. The steamers were kept constantly engaged in this service and sailed regularly upon schedule days without reference to the amount of cargo then received. Its regular rate in 1892 was 40 cents per dry barrel of five cubic feet, which was taken as the unit of measiurement, and the tariff of charges was adjusted ac- cordingly for goods shipped in other forms and packages. About this time the British steamer El Callao, which had for some years before sailed between New York and Ciudad Bolivar, in South America, transporting passengers and freight between these points, began to take cargo at New York for Bar- s A fortiori it is illegal to refuse altogether to serve an applicant who persists in shipping by a rival line. See § 294, supra. And likewise a passenger who has come a part of the way by a rival line must be accepted. See § 293, supra. 9 143 N. Y. 271, 38 iVT. E. 292, 42 Am. St. Eep. 712, 25 L. R. A. 674 B & W. 380 (1894). [708] Cliap. XXII] Illegal Disceimination. [§ 758 badoes, and sometimes to other points in the Windward Islands which she passed on her regular trips to Ciudad Bolivar, sailing from New York at intervals of five or six weeks. Her trade with South America was the principal feature of her business, but such space as was not required for the cargo des'tined for the end of the route was filled with cargo for the islands which lay in her regular course. The defendants evidently regarded this vessel as a somewhat dangerous competitor for a part of the business, the benefits of which they had up to this time enjoyed ; and, for the purpose of retaining it, they adopted the plan of offering special reduced rates of 25 cents per dry barrel to all merchants and business men in New York who would agree to ship by their line exclusively during the week that the El Callao was engaged in obtaining freight and taking on cargo. This 25 cent rate was refused to the plaintiffs, as they shipped part of their goods by El Callao. The Court of Appeals of New York, one justice dissenting, held for the defendant company. In writing the opinion of the court Mr. Justice O'Brien expressed agreement with those courts which had said that "the principal requirement of the law was that the rates charged different shippers must be reasonable taken separately. Relying upon these cases together with others permitting the granting of reductions of various sorts for various reasons, he came to this conclusion : " The authorities cited seem to me to remove all doubt as to the right of a carrier, by special agreement, to give reduced rates to customers who stipulate to give them all their business, and to refuse these rates to others who are not able or willing to so stipulate, providing, always, that the charge exacted from such parties for the service is not excessive or unreasonable. The principle of equality to all, so earnestly contended for by the learned counsel for the plaintiffs, was not, therefore, vio- lated by the defendants, since they were willing and offered to carry the plaintiffs' goods at the reduced rate, upon the same [709] § 758] Eaileoad Eate Eegulation. [Chap. XXII terms and conditions that these rates were granted to others; and, if the plaintiffs were unable to get the benefit of such rate, it was because, for some reason, they were unable or itnwilling to comply with the conditions upon which it was given to their neighbors, and not because the carrier disregarded his duties or obligations to the public. The case of Menacho v. Ward,^" does not apply, because the facts were radically different. That ac- tion was to restrain the carrier from exacting unreasonable charges habitually for services, the charges having been ad- vanced as to the parties complaining, for the reason that they had at times employed another line. It decides nothing, con- trary to the general views here st^ated." ^^ IsTotwithstanding the weight to be given to this decision it is submitted that it is opposed to what are conceived to be funda- mental principles. As between two shippers who offer the same goods for the same transportation it seems to be personal dis- crimination with all its accompanying evils to make one rate to one and another rate to another by reason- of the fact that one ships exclusively and the other does not. And it ought to be plain that whether this is done as in Menacho v. Ward •'^ by charging the one who does not ship exclusively more than the usual rate or as in this case of Lough v. Outerbridge ^* by giving ■10 27 Fed. 529 (1886). UThe cases principally relied upon by the court in reaching this opin- ion were: Fitchburg Railroad Co. v. Gage, 12 Gray, 393, B. & W. 354 (1859) ; Sargent v. Railroad Co., 115 Mass. 422 (1874) ; Mogul Steamship Co. V. McGregor, 21 Q. B. Div. 544, affirmed 23 Q. B. Div. 598, and by H. L. 17 App. Cas. 25 (1892) ; Evershed v. Railway Co., 3 Q. B. Div. 135. It seems that the important case of Mogul Steamship Company v. Mc- Gregor, supra, cannot be cited, for the proposition that in public business a rebate may be given exclusive shippers. The ship owners in that case may have been private carriers for all that appears ; at all events the point that they were common carriers was not made by the courts or by counsel, so far as can be discovered. 12 27 Fed. 529, B. & W. 372 (1886). 13 143 N. Y. 271, 38 N. E. 292, 42 Am. St. Rep. 712, 25 L. R. A. C74, II. & W. 380 (1894). [no] Chap. XXII] Illegal Discrimination. [§ 759 exclusive shippers concessions from regular rates, the fact re- mains that in either case there is a personal discrimination against the shipper who will not enter into an exclusive arrange- ment. § 759. Shippers who agree to give all their business. The mere fact that a shipper agrees to give all his business to the carrier does not justify a concession from regular rates. Such inducements seem once to have been held out to shippers commonly in England ; but the decisions of the courts have been against them." They have uniformly held it unlawful prefer- ence to give reduced rates in consideration of an agreement to employ other lines of the company for the carriage of other traffic or to employ the company in other distinct business ; which is obviously good law, as the carriage of goods to other points does not affect the cost of carriage betweeai the particular points.'^ Upon the same principles the railways have been forbidden to charge a higher wharfage rate on goods to be conveyed by another railway ^* or to grant a reduced rate in consideration of a contract to carry all of certain goods and to prevent their being carried by water or other meansi.^^ It seems plain that in all of these cases no other decisions would have been justifiable than those which were given, be- cause the policies pursued by the railways in all of these cases seem opposed to the public duty which the common carrier owes the shipping public. i4Baxendale v. Great Western R. Co., 5 C. B. N. S. 309 (1858) ; Diphwy3 Casson Slate Co. v. Festining R. Co., 2 Nev. & Mac. 73 (1860) ; Bellsdyke Coal Co. V. N. B. R. Co., 2 Nev. & Mac. 105 (1860). isBaxendale v. Great Western R. Co., 5 C. B. N. S. 309 (1858) ; Twellis V. Pa. R. R. Co., 3 Am. L. Reg. N. S. 728 (1863) ; Bellsdyke Coal Co. v. North British R. Co., 2 Nev. & Mac. 105 (1860). isToomer v. London R. Co., 3 Nev. & Mac. 79 (1865). "Garton v. Bristol & E. R. R. Co., 1 Nev. & Mao. 218 (1856). [711] §§ 760, 761] Eaileoad Eate Eegulation. [Chap. XXII §' 760. Shippers who agree to furnish large quantities of freight. It would seem to follow, although this has appeared to some courts ^® more doubtful that shippers who agree to furnish large quantities of freight should have no better standing. It is true that the advantage to the railroad company may be proved, but the injustice to the small shipper who can make no such under- taking remains the controlling factor in the situation. This was well shown in an Indiana case ■'^ where the court said : " It is contended by the appellant that, in view of the fact it secured by its contract with Diekason a certain income of $7,000 per month, it could as well afford to carry ties for him at $14 per car as to carry them for the appellees at $24 per car. We find it unnecessary to inquire whether the appellant is cor- rect or otherwise in this contention, for, as we understand the law, a railroad company engaged in the business of a common carrier is not permitted by the law to discriminate in favor of a shipper who is able to furnish a large amount of freight over one engaged in the same business who is unable to furnish the same quantity as that shipped by his more opulent rival. The reasons for prohibiting such discrimination are well stated in the case of Hays v. Pennsylvania 00.^** In our opinion, the fact that Diekason was able to furnish a larger number of car loads of ties for shipment than the apipellees could constituted no suf- ficient reason for a discrimination in his favor over the rates charged to the appellees." § 761. Charging other shippers more than contract rates. In the interesting case of Houston and Texas Central Rail- road Company v. Eust, *^ the railroad and certain shippers 18 Nicholson v. Great Western Ry., 5 C. B. N. S. 366 ( 1858 ) . 19 Louisville, E. & St. L. C. R. R. v. Wilson, 132 Ind. 517, 32 N. E, 311 (1892). ■20 12 Fed. 309, B. & W. 368 (18S2). 2153 Tex. 98 (1882). [712] Cihap. XXII] Illegal Discrimination. [§ 763 entered into an agreement by wliidi the shippers promised to ship all their goods and the railroad undertook to give a certain rate. Later they raised other rates. This the court held not to be discrimination against other shippers. " The test of liability submitted by the charge was confined to the single question of inequality in the rate of freight charged to the plaintiffs as compared to the rate charged to certain other specified persons, irrespective of any or all or all of the other facts of the case. In that the court erred. It ought to have been submitted to the jury to determine whether under all the facts of the case, the defendant charged the plaintiffs a rate beyond what was reasonable, and beyond the price which was exacted of the public generally at the times when the plaintiffs shipped their cotton on the defendant's railroad. And, if, al- though the plaintiffs were not required to pay a higher rate than the public genarally, yet if the defendant had allowed to certain particular persons or merchants in a certain par- ticular locality, more advantageous terms than had been given to the public generally, or to the plaintiffs, it ought to have been submitted as an issue of fact for the jury to deter- mine, whether (under appropriate instructions applicable to the subject), under all the evidence applicable to the question, such preference so given was a fair and legitimate one ; one jus- tified by the common law rule forbidding the carrier to give one special privileges which it denies another, but which at the same time does not exclude as forbidden contracts for transpor- tation at a less rate in special cases, where, under the circum- stances, the discrimination appears reasonable." TOPIC D CONCESSIONS EOE SPECIAL KINDS OF BUSINESS. § 762. Different rates for goods used for different purposes. It is strongly urged by the railroads that they should be al- lowed to make different rates for goods which are going to be used for different purposes. It is pointed out that in order to [713] § 763] Eailboad Rate Regulation. [Cliap. XXII get more traffic, which by reason of the law of increasing re- turns is for the benefit of all concerned, it will often be neces- sary for them to make lower rates for goods which are going to be used for one purpose than for goods which are going to be used for another purpose. Moreover, the railroad managers take a higher plane of argument when they urge that to make different rates for different users they may further the develop- ment of the industries of the communities which they serve. But neither of these arguments can be pushed too far in a legal discussion because in so far as any railroad policy involves dis- criinination it is illegal ; and to charge one of two shippers who wants exactly the same transportation of the same goods one rate while another shipper is charged another rate is personal discrimination prima facie. -^ § 763. Such rates allowed by some cases. The argument for allowing the making of different rates for the same commodities which are destined to be used for dif- ferent purposes is a strong one. How strong it is from an economic point of view may be seen by an examination of the leading case supporting this argument. Hoover v. Pennsylvania Railroad.^ In that case the court held that an agreement to charge a uniform rate on shipment of coal to the Bellefont© !N"ail Works for consumption in operating its machienry could not be complained of as unjust discrimination against a mere 1 Whether concessions may be made for special kinds of business is a de- bated question. In the following case such reductions are allowed: Hoover v. Pennsylvania R. R., 156 Pa. St. 220, 27 Atl. 282, 36 Am. St. Rep. 43, 22 L. R. A. 263, B. & W. 410 (1893). But in the following ease such reductions are forbidden: Fitzgerald v. Grand Trunk Ry., 63 Vt. 169, 22 Atl. 76, 13 L. R. A. 70 (1891). 2 156 Pa. 220, 27 Atl. 282, 22 L. R. A. 263, 36 Am. St. Rep. 43, B. & W. 410 (1893). [714] Chap. XXII] Illegal Disceimination. [§ T63 dealer, who received his coal over the same road and was charged a higher rate. This was held not to be unjust discrim- ination, the court relying upon the broadest grounds of public policy to justify this result, Mr. Justice Green saying : " It is matter of public history that along the valleys of the Lehigh and the Schuylkill there are great numbers of blast fur- naces, rolling mills, rail mills, founderies, machine shops, and numerous other manufacturing establishments, which consiime enormous quantities of the coal output of the state, and, at the same time, in every village, town, and city which abound in these regions, an immensely large industry in the buying and selling of coal for domestic consumption is also prosecuted. And what is true of the eastern end of the state is without doubt equally true throughout the interior and western portions of the commonwealth, where similar conditions prevail. Yet from no part of our great state has ever yet arisen a litigation which called in question the legality or the wisdom or the strict justice of a discrimination favorable to the manufacturing industries as contrasted with the coal-selling industries. This fact can scarcely be accounted for, except upon the theory that such dis- crimination, as has thus far transpired, has not been felt to be undue or unreasonable, or contrary to legal warrant. In point of fact, it is perfectly well knovra. and appreciated that the out- put of freights from the great manufacturing centers upon our lines of transportation constitutes one of the chief sources of the revenues which sustain them financially. Yet no part of this income is derived from those who are mere buyers and sellers of coal. "\Mien the freight is paid upon the coal they buy, the revenue to be derived from that coal is at an end. ISTot so. however, vnth the revenue from the coal that is carried to the manufacturers. That coal is consumed on the premises in the creation of an endless variety of products, which must be put back upon the transporting lines, enhanced in bulk and weight by the other commodities which enter into the manu- [Y15] § 763] Eailroad Eate Regulation. [Chap. XXII factored product, and is then distributed to the variousi''markets -where they are sold. In addition to this, a manufacturing plant requires other commodities besides coal to conduct its operations, whereas a coal dealer takes nothing but his coal, and the freight derived by the carrier from the transportation of these commo- dities fo'rms an important addition to its traffic, and constitutes a condition of the business which has no existence in the business of carrying coal to those who are coal dealers only. Thus a blast furnace requires great quahtities of iron ore, limestone, coke, sand, machinery, lumber, fire bricks, and other materials, for the maintenance of its structures and the conduct of its business, none of which are necessary to a mere coal-selling business. These are some of the leading con- siderations which establish a radical difference in the conditions and the circumstances which are necessarily incident to the two kinds of business we are considering. Another important inci- dent which distinguishes them is that the establishment of man- ufacturing industries and the conducting of their business ne- cessitates the employment of numbers of workmen, and other persons whose services are needed, and these, with their families, create settlements and new centers of population, re- sulting in villages, towns, boroughs, and cities according to the extent and variety of the industries established, and these in turn furnish new and additional traffic to the lines of transpor- tation. But nothing of this kind results from the mere busi- ness of coal-selling. In fact that business is one of the results of the manufacturing business, and is not co-ordinate with it, the business of the coal dealer is promoted by the concentration of population which results from the establishment of manu- facturing industries, and thesie two kinds of business are not competitive in their essential characteristics, but naturally pro- ceed together, side by side, the coal selling increasing as the manufacturing increases in magnitude and extent. These con- siderations are generic, and are suggested for the purpose of [716] Chap. XXII] Illegal Disceimination. [§ 764 illustrating the differences between the fundamental conditions and circumstances of the two industries we are considering." * § T64. Such differences held illegal discrimination by other cases. The arg-ument in the preceding ease was given at length be- cause it was thought that the dangers of leaving such a matter to be decided upon purely economic grounds would be evident from its perusal. AVhen all has been said, the fact of personal discrimination remains ; and it is submitted that the law against personal discrimination has developed so far as to have become a positive rule for the benefit of all shippers. An excellent illustration of this within a few years was the disposition made of this problem by the Canadian Kailway Commission when this problem first came before them in applying the general language against discrimination in their recent statute to this situation. The issue in one proceeding* was whether a lower rate on coal could be given manufacturers than was given dealers and others. The Commission held it could not sanction this, saying: "The law is clear that the allowance of a reduction in the freight rate on any article of merchandise to one class of ship- pers and refusal of the same rate to another is unjust discrim- ination, and unjust discrimination is prohibited by the Rail- way Act. Common carriers are bound by every principle of justice and law to accord equal rights to all shippers who are 3 In Missouri, K. & T. R. R. v. Trinity C. L. Co., 1 Tex. Civ. App. 553, 21 S. W. 290 (1892), the court left the question open, whether it was illegal discrimination for a railroad to fix a lower freight rate for narrow gauge cars for use of railroads engaged in the carrying business than for those intended to be used for logging purposes. 4 Manufacturers' Coal Rates Case, 3 Can. Ry. Cas. 438 (1904). In Man- ufacturers Construction Material Case, 3 Can. Ry. Cas. 427 (1904), the commission foreshadowed this opinion. [^17] § 765] Kaileoad Eate Eegulation. [Chap. XXII entitled to like treatment both in the receiving of supplies and the shipment of their products, and a carrier who, under any pretext whatsoever, grants to one shipper an advantage which he denies to another violates the spirit and thwarts the purpose of the law. This is a statement of a conclusion arrived at by the Interstate Commerce Commission in a question very similar to the present and will be found in a case of Castle v. Baltimore & O. Ky. Co., ^ and to this judgment and opinion this Board subscribes." ® § 7G5. Rates to certain classes of shippers. From what has been said it will be plain that it will usually constitute personal discrimination to give special rates to cer- tain classes of persons upon designated sorts of goods. This complication appeared in one case before the Interstate Com- merce Commission, Duncan v. Atchison, Topeka & Santa Fe Bailroad Company, ' where it was shown tiiat under the West- ern Classification and tariff there were two west bound carload rates from Mississippi river points to Pacific coast terminals on goods termed " Emigrants' Moveables " (including " household goods"), one a general class rate and the other designated a " commodity " rate and less than the general rate ; the latter rate was published as being open to " intending settlers only." In this case the Commission said : " Unless within the au- thorized exceptions to the general rule of the statute, discrim- inations in charges upon like shipments of the same commo- dities based solely upon the purpose or. ' business motive ' of the 5 8 I. C. C. Eep. 333 (1899). 6 In Capital City Gas Co. v. Central Vt. Ry., 11 I. C. C. Rep. 103 (1906), the Interstate Commerce Commission held that it constituted illegal dis- crimination to make a rate of 90 cents per ton for bituminous coal for railroad supply while charging $1.85 per ton to complainant and other consignees. 7G I. C. C. Rep. 85 (1893). [71.5] Chap. XXII] Illegal D-isceimination. [§ 766 shipper, are unlawful whether affected directly or indirectly by methods of classiiieation." ® § 766. When commodities are of different character. Of course different rates may be given when the commodities are not quite of the same character. This is probably the ex- planation of a series of cases in Kentucky justifying a differ- ence in rate between steam coal to manufacturers and domestic coal for dealers. Thus in Commonwealth v. Louisville & Xash- ville Railroad Company * the facts shown at the trial were that the electric light company was engaged in the business of man- ufacturing and selling electricity; that the coal transported to it was a very low grade of coal, commonly known as " slack," and was used by the company for steam purposes; that Wade was a coal dealer in Franklin, and that the particular car load of coal on which this proceeding was based was tlie highest grade of coal, known as " lump " ; that both were hauled in the same sort of cars, and unloaded in the same manner ; that de^ fendant's regular freight tariff on coal from Bevier to Franklin in March, 1899, was $1.50 per ton, except that on coal used for steam purposes by manufacturers, which term included gas, electric light, power, and ice companies, the rate was 30 per cent, less than $1.50 per ton.^* Upon a review of the authorities cited in the note ^^ the court sin Smith v. Findley, 34 Kans. 316 (1885), it appeared that a low rate was given to an immigrant for a car of " household goods," but that he packed a part of the ear with provisions, bacon, flour, and the like for sale. It was held that he could not do this under the circumstances. See, also. Fry v. Louisville & N. R. R., 103 Ind. 265, 2 N. E. 744 (1885), where a lower rate was quoted for commodities for " farm purposes," not- withstanding which the court enforced the bargain of the parties. 9 112 Ky. 78.3, 68 S. W. 1103 (1902). 9a Much the same facts appeared in Louisville, E. & St. L. C. R. R. v. Crown Coal Co., 43 111. App. 228 (1891). 10 Louisville & N. R. R. v. Com., 105 Ky. 179, 48 S. W. 416 (1898); Louisville & N. R. R. v. Com., 108 Ky. 628, 57 S. W. 508 (1900) ; Louis- ville & N. R. R. V. Com., 108 Ky. 628, 57 S. W. 511 (1900). [719] § 767] Eaileoad Kate Regulation. [Chap. XXII held that •'' it was allowable and proper for a railroad company to classify freight according to its quality or character and marketable value; and discrimination in charges for carrying different classes or kinds is not only universally recognized, but plainly authorized by section 215. And that this settled the question since it was admitted in the pleadings and shown by proof that the respective car loads of coal upon which this action was founded were wholly different both as to quality and mar- ketable value." ^^ § 767. Special classes of passengers. Granting lower rates with the customary accommodations to persons representing that they were traveling for the purpose of buying land or settling near the railroad line has been held unlawful discrimination; ^^ but special rates to -emigrants, rid- ing exclusively upon " emigrant trains " with poor accommoda- tions have been permitted. ^^ This distinction is well grounded upon the difference in the cost of service to the two classes. Classifications based upon the form of contract under which passengers are carried have been sustained, as in the case of allowing to a person riding upon a commutation ticket a lower rate than that allowed to one riding upon a mileage ticket; but it is not justifiable to sell such tickets to commercial travellers at a lower rate. -^^ It has also been held that a railroad may give an especially low rate for passenger service to shippers of freight in large nSee Louisville & W. R. R. v. Fulgham, 91 Ala. 555, 8 So. 803 (1890), applying a statutory provision permitting reduction to be made to manu- facturers to build up a community by requiring that any such reductions must be open to all manufacturers. 12 11 Smith V. Northern P. R. R. Co., 1 Int. Com. Rep. 611 (1887). isSavery & Co. v. N. Y. C. & H. R. R. Co., 2 Int. Com. Rep. 210 (1888). M Associated Wholesale Grocers v. Mo. Pac. Ry., 1 I. C. C. Rep. 393. [720] (Jhap. XXII] IliEGAL DiSCEIMINATION. [§ 767 quantities, ^^ but this discrimination seems to be the same in principle as the giving of reduced rates to large shippers, which has been above considered illegal. ^^ "In tbe transportation of passengers carriers are performing a public duty under franchises granted by the State, and are subject to the rules of law which require absolute impartiality to all, when the circumstances and conditions are substantially similar. The fact that their own interests may be promoted to some extent by swerving from this rule cannot be regarded as sufficient to warrant a departure from the obvious language of the Statute." ^^ 16 Inverness Chamber of Commerce v. Highland Ky., 11 E. & T. Cas. 218 (1890). 16 § 749, supra. "Smith V. No. Pacific 'K. K., 1 Int. Com. Rep. 611 (1887). [T21] CHAPTER XXIII. JUSTIFIABLE DIFFERENCES. TOPIC A— — EEASONABLB DIFPEEJENCES IN BATES. 771. Modification of the rule forbidding different rates. 772. Kates should not be disproportionate. 773. Consideration of the cost of serving. 774. Shippers requiring less service. TOPIC B SHIPMENT IN MOBE CONVENIENT UNITS. 775. Differences in the character of the service recognized. 776. Shipment in ear loads. 777. Advantages of ear load traffic. 778. Permission to mix carloads. 779. Lower rates for shipments in bulk. 780. Shipments in train loads problematical. 781. Contracts for regular shipments, TOPIC C FACILITIES PUENISHED BY 9HIPPEE. 782. Terminal facilities furnished by shippers. 783. Transportation e-vpenses paid by shipper. 784. Rental paid on shippers cars. 785. Difference in rates unjustifiable unless both services are offered. 786. Various devices for giving concessions to shippers in bulk con- sidered. 787. Railroads must provide adequate equipment for handling shipments in hulk. TOPIC D OTHER CONSIDERATIONS FOR REDUCTIONS. i 78S. When consideration is given for reduction. 789. Whether indefinite considerations can be a, basis. 790. Concessions to those who deal with the carrier. 791. Rates adopted to foster tlie interests of the carrier. [722] Chap. XXIII] Justifiable Differences. [§§ 771, 772 TOPIC A EEASONABLE DIFFEEENCES IN KATES. § 771. Modification of the rule forbidding different rates. When the services asked of the carrier are esseatially dis- similar the rule against discrimination is apparantly much modified. It is rightly held that different rates may be made when the cost of service is different; for to enforce equal rates under those circumstances, as has been said, would in reality be discriminatory under ordinary conditions. This is admitted even in the most extreme case against personal discrimination. Messenger v. Pennsylvania Railroad Company. ' " It must not be inferred that a common carrier, in adjusting his price, cannot regard the peculiar circumstances of the par- ticular transportation. Many considerations may properly en- ter into the agreement for carriage or the establishment of rates, such as the quantity carried, its nature, risks, the expense of carriage at different periods of time, and the like ; but he has no right to give an exclusive advantage or preference, in that re- spect, to some over others, for carriage, in the course of his busi- ness. For a like service, the public are entitled to a like price. There may be isolated exceptions to this rule, where the in- terest of the immediate parties is alone involved, and not the rest of the public, but the rule must be applied whenever the service of the carrier is sought or agreed for in the range of business or trade." § 772. Rates should not be disproportionate. It has already been explained at much length "^ that the rail- way company may classify freights and passengers and charge different rates for the different classes, if there are reasonable grounds for such discrimination in the difference of the cost of 1 7 Vroom (36 N. J. L.), 407, 13 Am. Eep. 457, 8 Vroom (37 N. J. L.), 531, 18 Am. Rep. 754, B. & W. 357 (1874). 2 See Chapter XVIII passim,. [723] § 773] Eaileoad Eate Regulation. [Chap. XXJII SOTviee, risk of carriage or in the accommodations furnished, or the like; but the rates must be the same for all persons and goods of the same class or else there will be personal discrimina- tion, plainly enough. But it will also constitute personal discrimination if different classification is given to like goods without justification. As a general rule a railway company is justified in carrying goods for one person at a less rate than that at which it carries goods for another, only where there are circunastances which make the cost of carrying the former less than the cost of carrying the latter. And moreover to be exact the difference in the rates between the different classifications of like articles must Be pro- portionate to this difference in cost to the carrier of jierforming the service. § 773. Consideration of the cost of serving. Upon the principles -set forth in the preceding paragj-aph it will be plain why it is permissible to make differences in the rating of the same goods based on the nature and size of the package, large packages being given relatively lower rates than small packages. ^ And likewise if the shipment is in a form more convenient for handling, as in casks rather than in cases, or if the freight is tendered in a form permitting a greater car load, the differ- ence between cotton in bulk and in tightly compressed bales for example, lower rates may be given proportionate to the differ- ence in the cost of service. * "We are not unmindful of the rule which permits a common carrier to discriminate in favor of a shipper who transports large quantities of a given commodity in one parcel at a time, as against a shipper who transports the broken packages. Such discrimination is rendered necessary by the increased expense 3 See Chapter XVIII passim. 4 See §§ 571-572. [724] Chap. XXIII] Justifiable Diffeeences. [§ ''^74 of handling, storing, and caring for the smaller quantities, and is not unreasonable." * § 774- Shippers requiring less service. Upon similar principles it may be shown in any case that the conditions under which particular shipments are made produce such economies in handling the traffic as to justify the reduc- tions made in the rates. An excellent case to illustrate this general doctrine is American Central Insurance Ck>mpany v. Chicago & Alton Railway Company ° where the issue was raised whether a s'tipulation in a contract between a railroad company and its elevator lessee by which the former was to carry the latter's grain from the elevator in car-load lots at less rate than its regular tariff, was justifiable. In holding that this did not constitute illegal discrimination Judge Smith said : " From the face of the leas© it very clearly appears that the service for which the rebate was to be allowed the lessee, and those claiming under it, was not the same nor as great as the ordinary shipper. The transient shipper furnishes no warehouse for the storage nor any supervision of his grain nor the labor necessary to handle the same, but these are sup- plied wholly by the carrier. !N"ot so of tlie lessee of the carrier who constructs his own storehouse and also supplies at his own expense the supervision and labor necessary for the care, storage and loading of his grain, the carrier thereby escaping much expense that it must incur in case of the transient shipper. The exact provisions of the lease complained of is that the de- fendant will carry for the lessee in quantities not less than one full car load at one time, to other stations upon its railroad, at a rate which shall be less by one per cent, per one hundred pounds for grain in bulk, than the regular tariff price of said 4 Louisville, E. & St. L. C. Ry. v. Wilson, 132 Ind. 517, 32 N. E. 211 (1892). 6 74 Mo. App. 89 (1898). [725] ,§ 775] Eailboad Rate EecJulatiow. [Chap. XXIII first party, or tlian the charges made by said first party to tran- sient shippers who deliver grain tosaid first party by wagons or otherwisB. It is manifest from the provisions of the leage, that the lessee was to do a large business and be a regular and constant shipper over the road of the defendant. The rebate to be allowed was not ' one per cent per one hundred pounds ' below what was charged like shippers who provided warehouses and labor at their own expense to care for and handle the ship- ments, but the rebate was one cent one hundred pounds below what the freight cost ' transient shippers./ a totally different kind and class of shippers, who saved the defendant none of the expense of caring for or handling their shipments. We cannot for these reasons think the contract should be held invalid on the grounds of unlawful discrimination." TOPIC B SHIPMBKT IN MGEE CONVEIiriENT UITITS. § 775. Differences in the character of the service recognized. That there are differences in the cost of service by reason of ways in which traffic is handled must be recognized ; and in so far as these economies in conducting the transportation are real a proportionate reduction may be made to the shipper in ques- tion. The various phases of this problem are well set forth in the opinion of Judge Baxter, ekewhere discussed more fully. ^ " For the same reason passengers may be divided into different classes, and the price regulated in accordance with the accom- modations furnished to each, because it costs less to carry an emigrant, with the accommodations furnished to that class, than it does to carry an occupant of a palace car. And for a like reason an inferior class of freight may be carried at a less rate than firs1>class merchandise of greater value and requiring more labor, care, and responsibility in the handling. It has been held that 20 separate parcels done up in one package, and iHaya v. Pennsylvania Co., 12 Fed. 309, B. & W. 368 (1882). [726] Chap. XXIII] Justifiable DiFFEBEOsrcES. [§ 776 coBsigned to the same person may be carried at a less rate per parcel than 20 parcels of the same character consigned to as many different persons at the same destination, be- cause it is supposed that it costs lees to receive and deliver one package containing 20 parcels to one man, than it does to receive and deliver 20 different parcels to as many different consignees. Such are some of the numerous illustrations of the rule that might be given."* § 776. Shipment in car loads. The most obvious application of this rule is the relatively lower rates almost universally quoted for car load lots as com- pared with less than car load.^ " Reasons that are substantial exist for making the rate lower per barrel in car load lota than in less than car load quantities. The cos;t of service is very considerably less in the case of shipments in car load lots than in less than car load quantities. We have had occasion to pass upon this frequently, but the evidence here requires us to do so again. The shipment by the car load goes direct to destina- tion. It is loaded by the shipper and is unloaded by the con- signee. The freight in it does not stop at the way stations to be handled in parcels to different consignees along the line. Only one bill of lading is made. It requires but one entry upon the way bill. The time occupied in transporting it to 2 More convenient unita are recognized reasons for making lower rates. Interstate Com. Com. v. Baltimore Ohio E. R., 145 U. S. 263, 36 L. Ed. 699, 12 Sup. Ct. 844, s. c. 43 Fed. 37. See, also, 2 Int. Com. Rep. 572, 729 (1892); Lotspeich v. Central Ry. & B. Co., 73 Ala. 306 (1882); Savitz V. Ohio & M. Ry., 150 III. 208, 37 N. E. 235, 27 L. R. A. 626 (1894), aflSrming 49 111. App. 315 (1892) ; Cook v. Chicago, R. I. & Pac. Ry. Co., 81 Iowa, 551, 46 N. W. 749, 25 Am. St. Rep. 512, 9 L. R. A. 764 (1890) ; Atwater v. Delaware, L. & W. R. R., 48 N. J. L. 58, 2 Atl. 803 (1886) ; Root V. Long Island R. R., 114 N. Y. 300, 21 N. E. 403, 11 Am. St. Rep, 643, 4 L. R. A. 331, B. & W. 377 (1889) ; Scofleld v. L. S. & M. S. R. R , 43 Ohio St. 571, 3 N. E. 907, 54 Am. Rep. 846 (1885). 3 See §§ 587-590, supra. [727] § 777] Kaileoad Eate Regulation. [Chap. XXIII destination is far less tiban in the case of a shipment in less than car load quantities. There is but one collection of charges for freight. " Where the shipment is made in less than car load quan- tities a separate receipt or bill of lading has to be given to every shipper for his parcel. A separate enjry of every item has to be made on the way bill. The shipment is by a local freight train which stops at every station for which there is a package of freight. The freight has to be taken out in parcels and delivered at each of these stations. The freight is loaded and unloaded by the railroad company. There are as many col- lections of charges for freight as there are different parcels. The time occupied in transporting it is usually from two to three times as long as in the case of a car load shipment — ac- cording to distance. It occupies a whole car, and for the vacant space in that car the company is receiving no compensation." * § 777- Advantages of car load traffic. The economies of handling freight in car load lots can hardly be overestimated. In the opinion quoted in the last section* it was held not unreasonable to make the rate per 100 pounds upon refined oil in less) than car load lots 100 per cent, greater than the rate upon car load lots. This situation was discussed in a broad way by the Interstate Commerce Commission in a later case.® " The greater part of the supplies consumed upon the Pacific Coast originate twenty-five hundred miles from the point of consumption, and these supplies should be transported that twenty-five hundred miles in the cheapest manner. Waste is always expensive; if the railways are required to carry this merchandise in an extravagant manner that extravagance is iScofield V. Lake Shore & M. S. Ry., 2 Int. Com. Rep. 67 (1888). 5 Scofield V. Lake Shore & M. S. Ry., supra. 6 Business Men's L. v. Atchison, T. & S. F. Ry., 9 I. T. C. C. Rep. 318 (1901). [728] chap. XXIII] Justifiable Diffbeencbs. [§ 778 finally borne by tlie public. We have seen that the actual cost of handling this traffic in less than car loads is 50 per cent, greater than the cost of handling car loads. It seems probable, therefore, that the cheapest way in which these supplies can be taken across the continent and distributed to the consumer is by transporting them in solid car loads from the factory to the warehouse upon the Pacific Coast and thence distributing to the retailer in lessi than car loads, although the effect of this may be siomewhat diminished by the back haul from the wholer saler to the interior point which is not performed to the same extent where goods are sent across the continent in less than car load shipments directly to the store of the retailer. It would in our opinion be unfortunate from an economic stand- point to establish a condition which would require distribution entirely or mainly in less than carload lots from the middle west." § 7Y8. Permission to mix car loads. Upon the principles just discussed it would seem to be per- missible for the carrier to allow the shipper to send forward a mixed carload of various products since the cost of handling a mixed carload from one consignor to one consignee is not ma- terially different from the cost of handling a carload of one commodity. But the subject has its difficulties, and the carrier is not obliged to grant this privilege. In pointing this out the Interstate Commerce Commission said:'^ "With regard to the question of allowing the same rate on mixed carloads which is given to carloads of a single product, it may be remarked that it is almost inextricably involved in the question of the rate. A rule which might work well when the load was composed of articles hearing the same rate would be very difficult to formu- late where the different articles took differing rates. The ques- 7 F. Schumacher Milling Co. v. Chicago, E. I. & P. R. R., 6 I. C. C. Rep. 61 (1893). [729] § 779] Eaileoad Kate Regulation. [Chap. XXIII tions, wMch rates should govern ; whether the highest or lowest ; whether the proportion of different articles should influence the carload rate; whether the mixed rate should follow the highest or lowest class rate, — would all be involved, and it would probably be found difficult to formulate an equitable rule which should fix the rate upon such a load." § 779. Lower rates for shipments in bulk. That there are often certain advantages to the carrier in shipments in bulk in car lots over shipments in packages in car lots cannot be denied. It is upon this basis that it is cheaper to handle the traffic that the railroads have felt justified in giving a lower rate per ton mile to those who ship oil in bulk in tank cars in comparison with thoBe who ship oil in barrels in car lots. It is urged in behalf of the right of the railroads to make such differences! in the rates that the different circum- stances and conditions about these two modes of carrying oil fully justify these differences in the rates, viz. : the carrier furnishes the car for transporting the barrel oil, while the shipper usually supplies car and tank for carriage of tank oil, and that at a less charge for mileage than actual cost of main- tenance of the car ; injury to the ears used for barrel oil unfit- ting them for general use; larger return-empty haul on box cars used for barrel oil than on tank cars ; greater risk of such goods in transit and in depot, as well as greater danger to other freights in same train and in same depot in the case of barrel oil over that of tank oil, greater cost of service in loading and unloading barrel oil to and from the cars by the carrier, when tank oil is invariably loaded and unloaded by the shipper; in- ability of carrier to secure insurance on cars used for trans- porting barreled oil, while shipper of tank oil furnishes the car and assumes all risk.^ Such differences in the cost of the ser- 8 See SeofieM v. Lake S. & M. S. Ey., 2 Int. Com. Rep. 67, 2 I. C. C. Rep. 90 (1888). [730] Qiap. XXIII] Justifiable Differences. [§§ 780, 781 vice should, it would seem, justify a carrier in making reason- able differences in its rates. § 780. Shipments in train loads problematical. It is urged with considerable force that a railroad is justified under the rules that are now under discussion in giving a lower rate for a train load consigned from one shipping point to one point of delivery, since it cannot be denied that there is at least a slight difference in the cost of handling the traffic in train loads. But such concessions are dangerous, asi it would tend to concentrate the business of the country into very few hands if a lower rate could be given to the great operator who could ship in train lots. At all events the Interstate Commerce Commission is set against such special rates for train loads in Paine Bros. & Co. v. Lehigh Valley Eailroad.® It expressed itself thus : " We perceive no sufficient reason for different rates on carload than on cargo or train load shipments, whether the grain is carried for export or for domestic use. The prin- ciple involved in such a disitinction violates the rule of equality and tends to defeat its just and wholesome purpose. That pur- pose is not fully accoraplisihed if one scale of charges is applied to cargo shipments and a higher rate is imposed for single carloads, even though all cargo shippersi pay the same and all carload shippers are charged alike." § 781. Contracts for regular shipments. In some English cases concessions are permitted to shippers who agree to make regular shipments. The leading case for this is Nicholson v. Great Western Railway Company.^" This was an application, under the railway and canal traffic act, for an injunctiork to restrain the company from giving lower rates to the Ruabon Coal Company than were given to the complainant 9 7 I. C. C. Rep. 218 (1897). 10 5 C. B. (N. S.) ,S66 (1858). § 781] Eaileoad Kate KEouLATioiir. [Chap. XXIII in that case, in the shipment of coal, in which it appeared that there was a contract between the railroad company and the Rua- bon Coal Company, whereby the coal company undertook to ship, for a period of 10 years, as much coal for a distance of at least 100 miles over defendant's road as would produce an annual gross revenue of £40,000 to the railroad company, in fully load- ed trains, at the rate of seven trains per week. In passing on these facts the court said that in considering the question of un- due preference the fair interest of the railroad company ought to be taken into account ; that the preference or prejudice, referred to by the statute, must be undue or unreasonable to be within the prohibition; and that, although it was manifest that the coal company had many and important advantages in carrying their coal on the railroad as against the complainant and other coal owners, still the question remained, were they undue or unrea- sonable advantages ? And this, the court said, mainly depended on the adequacy of the consideration given by the coal company to the railway company for the advantages offered by the latter to the coal company. And because it appeared that the cost of carrying coal in fully loaded trains, regularly furnished at the rate of seven trains per week, was less per ton to the railway coni- panythancoal delivered in the usual way, and at irregular inter- vals, and in unequal quantities, in connection with the coal com- pany's undertaking to ship annually coal enough over defen- dant's road, for at least a distance of 100 miles, to produce a gross revenue to the railroad of £40,000, the court held that the discrimination complained of in the case was neither undue nor unreasonable, and therefore denied the application. But this case is much limited in later cases. Thus an agree- ment with certain quarry owners to carry slate for a fixed num- ber of years at a less rate than charged for the same service to complainant quarry owners, who refused to bind themselves by such an agreement, held an undue preference.^' And a differ- iiDiphwys Casson Slate Co. v. Festiniog R., 2 Nev. & Mac. 73 (-1874). [732] Chap. XXIII] Justifiable Differences. [§ 782 ence in rates on an agreement for a period of thirty years and another agreement for fourteen years for a similar service is an undue preference. ^^ TOPIC C FACILITIES FUBITISHED BY SHIPPEES. § 782. Terminal facilities furnished by shippers. It is a principal rule in this matter that it is permissible for a railroad to make a lower rate to a shipper who furnishes a part of the facilities which the carrier must otherwise provide in order to serve him. One of the leading cases in establishing this rule is undoubtedly Root v. Long Island Railroad/ the essential facts of which, follow: In June, 1876, the defendant and one Quintard entered into a written contract, which, among other things, provided that Quintard should build at Long Island City upon the lands of the defendant a dock 250 feet long and 40 feet wide, and erect thereon a pocket for holding and storing coal, according to certain plans and specifications annexed. The de- fendant was to have the use of the south side of the dock, and also of 30 feet of the shore end, and the right to use the other portions thereof when not required by Quintard. In consideration therefor, the defendant agreed with Quintard to transport in its cars all the coal in carloads offered for transportation by him at a rebate of 15 cents per ton of 2,240 pounds from the regular tariff rates for coal transported by the defendant from time to time. It was for this rebate that suit was brought, and the court de- cided that there was no public policy opposed to the enforcement of this contract. To quote from the opinion of Mr. Justice Haight: " Is the provision [^itpra] of the contract, therefore, providing for a rebate of 15 cents per ton from the regular tariff K Holland v. Festiniog R. Co., 2 Nev. & Mac. 278 (1876). 1 114 N. Y. 330, 21 N. E: 403, 11 Am. St. Eep. 643, 4 L. R. A. 33, B. & W. 377 (1889). [733] !§ Y82] Eaileoad Eate E>bgulation. [Chap. XXIII rates, an unjust discrimination as a matter of law ? Had this pro- vision stood alone, unqualified by other provisions, without the circumstances! under which it was executed explaining liie neces- sity therefor, we should he inclined to the opinion that it did pro- vide for an unjust discrimination; but, upon referring to the contract, we see that the rebate was agreed to be paid in consid- eration for the dock and coal pocket which was to be constructed upon the defendant's premises at an expense of $17,000, in part for the use and convenience of the defendant. Quintard was to load all the cars with the coal that was to be transported. It was understood that a large quantity of coal was to be shipped over defendant's line, thus increasing the business and income of the company. The facilities which Quintard was to provide for the loading of the coal, his services in loading the cars, the large quantities which he was to ship, in connection with the large sums of money that he had expended in the erection of the dock, in part for the use and accommodation of the defendant, are facts which tend to explain the provisions of the contract com- plained of, and render it a question of fact for the determina- tion of the trial court as to whether or not the rebate, under the circumstances of this case, amounted to an unjust discrimina- tion, to the injury and prejudice of others. Therefore, in this case, the question is one of fact, and not of law ; and, inasmuch as the disorimination has not be^n found to be unjust or unrea- sonable, the judgment cannot be disturbed." ^ 2 It is generally agreed that a reduction may be made to such shippers as furnish a part of the facilities necessary to serve them. See Savitz V. Ohio & M. Ry., 150 111. "208, 27 N. E. 235, 27 L. R. A. 626 (1894), af- firming 49 111. App. 315 (1892) ; Scofield v. Lake Shore & M. S. R. R., 43 Ohio St. 571, 3 N. E. 907, 54 Am. Rep. 846 (1885); State v. Cincinnati, N. 0. & T. P. Ry., 47 Ohio St. 130, 23 N. E. 928, B. & W. 400 (1890) ; Brundred v. Rice, 49 Ohio St. 640, 32 N. E. 169, 34 Am. St. Eep. 589 (1892). [734] Ctap. XXIII] Justifiable Differences. [§§783,784 § 783. Transportation expenses paid by shipper. Whatever is done by the shipper which directly reduces the cost of serving him to the railroad company may be allowed for nn the rate made to him without causing discrimination. One of the plainest cases of this sort is Castle v. Baltimore & Ohio Railroad Company,^ where complainant alleged that defendant had unjustly discriminated in rates and facilities for the trans- portation of sand against him and in favor of his competitors ; but the evidence was said to be not sufficient to show breach of legal duty on the part of the defendant ; and the complaint was dismissed. Discussing the essential facts, the Commission said : " The only remaining point, and by far the most important one raised by this issue, is that involved in the alleged discrimina- tions in favor of Brown, the complainant's competitor at Dock Siding. Brown, it appears, owned and at times leased other cars and equipment, paid the trainmen, conductors, and neces- sary telegraph operators, and relieved the defendant from all liability from either loss or damage to rolling stock or injury to employees ; in consideration of which the defendant charged him for track service only. The complainant owned neither cars nor equipment, and when shipping in the defendant's cars was charged the published rate." § 784. Rental paid on shipper's cars. If the shipper provides his own cars the railroad, it would seem clear, may allow him a reduction in his freight rate, equal to the rental value of his cars at all events. It is properly the business of the railway companies, to be sure, to supply cars for their customers ; but if they stand ready to do this, they may, nevertheless, at their option make an allowance to the shipper who furnishes his own cars, which is not disproportionate to the reduced cost of serving him. Even in the extreme case of State 3 8 I. C. C. Eep. 333 (1899). [735] § 785] Eaileoad Rate Eegulation. [Cliap. XXIII V. Cincinnati, l^ew Orleans & Texas Pacific Railroad Company,* which is most opposed to special arrangements of this sort, this is grudgingly admitted. " ~So doubt, a shipper who owns cars may be paid a reasonable compensation for their use, so that the compensation is not made a cover for discriminating rates, or other advantages to such owner as a shipper. 'Nov is there any valid objection to such owner usiing them exclusively, as long as the carrier provides equal accommodations to its other cus- tomers. It may be claimed that if a railroad company permit all shippers, indifferently and upon equal terms, to provide carti suitable for their business, and to use them exclusively, no dis- crimination is made. This may be theoretically true, but is not so in its application to the actual state of the business of the country ; for a very large proportion of the customers of a rail- road have not a volume of business large enough to warrant equipping themselves with cars, and might be put at a ruinous disadvantage in the attempt to compete with more extensive es- tablishments. Aside from this, however, a shipper is not bound to provide a car." § Y85. Difference in rates unjustifiable unless both services are offered. The difficulty in applying these principles to particular cases is, however, considerable. Unless the railroad offers both services to all shippers alike, so that any shipper is free to choose his method of shipment, discrimination will necessarily result in favor of those who ship at the lower rates in comparison with those who are compelled to pay the higher rates. In the oil business partic- ularly, the complaints against the differences between tank rates and barrel rates have been both loud and long, and the problem has been brought before the Interstate Commerce Commission 447 Ohio St. 130, 23 N. E. 928, B. & W. 400 (1890). [736] CJiap. XXIII] Justifiable Difpekences. [§ 785 several times. In the earliest of these cases,' Commissioner Cooley pointed out that the argument justifying differentials although sound enough doub^ess, abstractly, did not meet the actual conditions. " The most important question that arises upon the assumptions made as the basds for this argument is whether there are in fact two different modes of transportation which are offered, with their cor- responding rates, equally and impartially to all shippers alike, and which it is possible for the class of persons usually engaged in the traffic freely to choose between. If no such offer is in fact made we have no occasion to follow the reasoning of the argument. Unless we wholly misapprehend the real situation, when the rate sheets of these defendants are pre- sented to the class of persons usually engaged in the traffic, the assumption that two different modes of transportation are offered to them equally and impartially is baseless. Xo one of these defendants offer two modes of transportation in the same sease in which it offers its facilities for transportation to shippers of other commodities. Each of them supplies rolling stock for one method only, and that one is shown to be the method on which, by their rate sheets, the heaviest burdens are imposed. . . . It is obvious, wte think, from the facts stated, that instead of the de- fendants offering two modes of transportation which are open to the acceptance of all, they offer only one which is open. Theother is offered on such terms that it can by possibility be accepted only by parties who can control a considerable capital, and who will supply for themselves an important part of the means of transportation, and also supply terminal facilities. The man of small means M'ho adopts the method of transportation in barrels cannot be said to do so of choice when the failure of the carrier to supply for the other the customary means of transportation compels him to do so." B Rice V. Louisville & Nashville Ry., 1 Int. Com. Rep. 722, 1 I. C. C. Rep. 503 (1889). [737] § 786] Railkoad Rate Regulation. [Chap. XXIII § 786. Various devices for giving concessions to shippers in bulk considered. This complaint has been made to the Interstate C'ommeroe Commission many times since this first case and the shippers have in the soiccessive decisions received increasing protection against discrimination of the railroads of the sort here described. The Commission haa insisted upon its policy that unless the rail- roads provide an adequate equipment of tank oars oil must be, takeniin barrels at the same rate as it would be taken in tank cars, roads provide an adequate equipment of tank cars oil must be made for the weight of the barrell since none is made for the weight of the tank. And itis held that in assuming for transpor- tation purposes that a barrel of refined petroleum oil weighs 400 pounds and that a gallon of that commodity weighs 6.3 pounds when shipped in tanks, the railroads were using constructive or hypothetical weights so much out of proportion to actual weights that positive and measurable preference was granted to the ship- per by the tank method ; and so far as that practice enabled the tank shipper to secure the carriage of more pounds of freight for the same money than the shipper in barrels it was an unlawful prejudice. As to another scheme of giving, a reduction it was held that the practice of allowing the tank shipper an arbitrtry deduction of 42 gallons per tank car isi wholly indefensible, as losses from leakage and evaporation were not less proportionally when the shipment is made in barrels, and no circumstance was discovered or reason advanced which justified a concession of that nature to the shipper who furnishes his own conveyance, when no corresponding allowance was made to a rival shipper using the means of transportation provided by the carrier.® 6 Rice V. Louisville & N. R. R., 1 Int. Com. Rep. 722, 1 I. C. C. Rep. 503 (1888); Scofield v. Lake Shore & Michigan Southern R. R., 2 Int. Com. Rep. 67, 2 I. C. C. Rep. 90 (1888) ; Re Rebate Tank & Barrel Rates, 2 Int. Com. Rep. 245, 2 I. G. C. Rep. 365 (1888) ; Rice v. Western N. Y. & Pa. Ry., 3 Int. Com. Rep. 102, 4 I. C. C. Rep. 1-31 (1891); Rice, Robinson & Winthrop v. Western N. Y. & Pa. R. R., 2 I. C. C. Rep. 389 (1888), s. c. [738] Cihap. XXIII] Justifiable Diffeeences. [§ 787 § 787. Railroad must provide adequate equipment for handling shipments in bulk. This abuse came before the judicial courts for decision not long afterward in the case of State v. Cincinnati, New Orleans & Texas Pacific Kailway Company^ The petitions in that case charged, among other things, that the defendants misused their corporate powers and franchises by discriminating in their rates of freight in favor of certain refiners of petroleum oil by charging other shippers of like products unreasonable rates, to the injury of these other refiners and the public ; and, further, that the defendants claimed and exercised, in contravention of law, the right to charge, for shipping oil in tank cars, a lower rate of freight per 100 pounds than they charged for shipping the same in barrels, in carload lots. Mr. Justice Bradbury wrote a strong opinion against such discrimination, concluding with this sweeping language : " The duty of providing suitable facilities for its customers rests upon the railroad company; and if, instead of providing sufficient and suitable cars itself, this is done by certain of its cusitomers, even for their own convenience, yet the cars thus provided are to be regarded as part of the equipment of the road. It being the duty of a railroad company to transport freight for all pe;rsonsi, indifferently, and in the order in which its transportation is ap- plied for, it cannot be permitted to suffer freight cars to be placed upon its track by any customer for his private use, except upon the condition that, if it does not provide other cars suffi- cient to transport the freight of other customers in the order that application is made, they may be used for that purpose. Were this not so, a mode of discrimination fatal to all successful 3 I. C. C. Rep. 87, s. c 4 I. C. C. Rep. 131, s. e. 6 I. C. C. Rep., 455; Rica V. Cincinnati, W. & B. R. R., 3 Int. Com. Rep. 841, 5 I. C. C. Rep. 193 (1892) ; Independent Refiners' Asso. v. Western New York & P. R. R., 4 Int. Com. Rep. 63, 5 I. C. C. Rep. 415 (1892). 7 47 Ohio St. 130, 23 N. E. 928, B. & W. 400 (1890). [739] § 788] Kailkoab Kate Regulation. [Chap. XXIII competition by small establishments and operators with larger and more opulent ones could be successfully adopted and prac- tised at the will of the railroad company, and the favored ship- per. The advantages, if any, to the carrier, presented by the tank- car method of transporting oil over that by barrels, in box-cars, in car-load lots, are not sufficient to justify any substantial dif- ference in the rate of freight for oil transported in that way; but if there were any such advantages, as it is the duty of the carrier to furnish proper vehicles for transporting it, if it failed in this duty, it could not, in justice, avail itself of its own neglect as a ground of discrimination. It must either provide tank-cars for all of its customers alike, or give such rates of freight in barrel packages, by the carload, as will place its cus- tomers using that method on an equal footing with its customers adopting the other method." TOPIC D OTHEE CONSIDERATIONS FOE EEDUCTIONS. § 788. When consideration is given for reduction. Abstractly it is not discrimination if one shipper pays his freight rate in money and another pays the same rate, partly in money and partly in services. This has been permitted in sev- eral eases, for example in Eothschild v. Wabash Railroad^ where a certain reduction was allowed to certain shippers who acted as " eveners " in distributing the traffic to several railways. In permitting these facts to be shown in justification to a suit based upon this alleged discrimination. Judge Lewis said: " Suppose a railway company, instead of paying its conductor a salary, should choose to compensate his services by a percentage of the receipts from passengers traveling on his train. Suppose the conductor to purchase tickets at regular rates, for the use of members of his family, as passengers, on his train. He claims and receives his percentage on such tickets, as upon all others, 1 15 Mo. App. 242, affirmed in 92 Mo. 91, 4 S. W. 418 (1887). [740] Ctap, XXIII] Justifiable Differences. [§ 789 Would i,t not be strangely absurd to allege that, by reason of this percentage, there is an unjust discrimination in the conductor's favor, reducing the cost of transportation to him, below what others are compelled to pay for the same facilities ? The prin- ciple involved would be exactly the same that appears in the present case. Neither reason nor precedent find any injustice or unfairness in either application of it. It is sometimes a mat- ter of judicial inquiry, whether the consideration rendered by the shipper is fairly adequate and not comparatively valueless, except as a mere device to cover up the intended favoritism of the company. But no such question is raised in the present case. For aught that appears, the undertaking and services of the ' eveners ' were a fair equivalent for the percentage paid them." 2 § 789. Whether indefinite considerations can be a basis. It may be conceded that it does not make any difference in what way the freight rate is paid, so that it appears plainly that the full rate is paid; but if some indefinite consideration on which no estimate can accurately be made to ascertain the amount of the charge is alleged, it will bs dangerous to permit that to pass. Thus in the important case of Goodridge v. Union 2 Considerations inuring to the benefit of the carrier are permitted to be shown by most courts. Union Pac. Ry. Co. v. Goodridge, 149 U. S. 680, 37 L. Ed. 986, 13 Sup. Ct. 970 (1893); Louisville & N. K. R. v. Fulgnam, 91 Ala. 555, 8 So. 803 (1890) ; Johnson v. Pensacola & P. R. R., 16 Fla. 623, 26 Am. Rep. 731 (1878) ; Chicago & A. R. R. v. Coal Co., 79 111. 121 (1875); Rothschild v. Wabash, St. L. & P. R. R., 92 Mo. 91, 4 •S. W. 418 (1887) ; Hoover v. Pennsylvania R. R., 156 Pa. St. 220, 27 Atl. '282, 36 Am. St. Rep. 43, 22 L. R. A. 263, B. & W. 410 (1893). But some courts regard it as dangerous to allow this to be done. Louis- ville, E. & St. L. Con. R. Co. v. Wilson, 132 Ind. 517, 32 N. E. 311, 18 L. R. A. 105 and note (1892) ; Griffin v. Goldsboro Water Co., 122 N. C. 206, 30 S. E. 319, 41 L. R. A. 240, B. & W. 403 (1898) ; Brundred v. Rice, 49 Ohio St. 640, 32 N. E. 169, 34 Am. St. Rep. 589; Fitzgerald v. Grand Trunk Ry., 63 Vt. 169, 22 Atl. 76, 13 L. R. A. 70 (1891). [741] § 789] Eaileoad Eate Regulation. [Chap. XXIII Pacific Railway Company,^ the complainant demanded a refund of overcharges by reason of discrimination against him by giving a lower rate to the Marshall Coal Mining Company. The defen- dant railroad as part of its defense brought out that it was for- merly liable to the Marshall Company to a suit for damages for an alleged trespass and to settle this suit it entered into this con- tract for giving this company these lower rates. But Judge Hallet said that to allow this would endanger the law forbidding discrimination. " This law cannot be controlled or defeated by any agreement between the railroad company and the favored shipper. It is true that when the consideration paid for re- duced rates by the favored shipper is obviously equal to the discount allowed him, the law does not apply. Whenever that fact appears, since it matters not in what form the shipper pays the usual rates, the alleged discrimination disappears, and the contract is no longer obnoxious to the law. If, to illustrate, the damages due from the Denver & Western Company had been liquidated, and the agreement was to carry a certain quantity of coal for the amount so fixed, the question would be different. As it stands, the agreement is to give to the Marshall Company a reduced rate for certain considerations which defendant says are sufficient to make up the discount from the schedule rate; and as to that matter, the fact cannot be ascertained- from the contract or otherwise. So understood it is clear that the contract affords no protection to defendant for the discrimination in rates to which plaintiffs and other shippers of coal over defendant's road are subjected. In this case no difficulty arises as to the meaning of the words ' unjust or undue discrimination ' in the law. Plaintiffs and the Marshall Company are dealers in coal in the same market, depending largely on the same rates of trans- portation for the profits of their business. The direct effect of a reduced rate to the Marshall Company is to reduce the profits 337 Fed. 182 (1889), aifirmed in 149 U. S. 680, 37 L. Ed. 986, 13 Sup. Ct. 970 (1893). [742] Cihap. XXIII] Justifiable rtaFFUEEWCES. [§ Y90 on plaintiff's coal to the extent of such redaction. The demur- rer to the second defense will be sustained." * § 790. Concessions to those who deal with the carrier. The dangers inherent in any permission to the common car- rier to make different rates to different classes of customers re- quiring the same service is most apparent in a case like Louis- ville, Evansville & St. Louis Consolidated Railroad Company v. Wilson.^ In that case it appeared that the railroad made high rates on cross-ties to all except one Diekason, with whom it en- tered into a contract giving him low rates in return for his agree- ment to sell it such ties as it should wish at a specified price. When this scheme was brought before the court for examination in a suit by a shipper who had suffered by this discrimination, it appeared that while he was paying $24 per car from one point to another, this Dickason was paying only $14 per car for the same transportation. The highest court sustained the instruc- tions given in behalf of the plaintiff. A part of its opinion follows : "Instruction No. 3, asked by the appellant, and refused by the court, was vicious, in that it was calculated to create the impres- sion upon the minds of the jury that the contract between the appellant and Dickason did not amount to an unjust discrimina- tion, if it was based upon an adequate consideration. If the * Free transportation issued in the form of an annual pass to a person not in the regular and stated service of the carrier nor receiving any wages or salary under a contract of employment, but requested by him as com- pensation for throwing in its way what business he conveniently could, held to be illegal in Slater v. Northern P. R. R., 2 Int. Com. Rep. 243, 2 I. C. C. Rep. .359 (1888). A release of liability by commercial travelers to the railroad company does not constitute a good and suflBcient consideration for discrimination in fare; nor does the fact that they may influence business in favor of the road, etc. Lamson v. Grand Trunk Ry., 1 Int. Com. Rep. 369, 1 I. C. C. Rep. 147 (1887). 6 132 Ind. 517, 32 N. E. 311 (1892). [743] § 791] Eaileoad Kate Regulation. [OLap. XXIII contract was of such a character as to destroy the business of the appellees by reason of the discrimination in favor of Dickason, and thus enable Dickason to acquire a monopoly of the business of purchasing and shipping cross-ties on appellant's road, the discrimination was unjust, without regard to the consideration upon which it was based." ® § 791. Rates adopted to foster the interests of the carrier. Despite any policy which the carrier may ha,ve in mind it must be evident that all patrons of the road have a right to adequate service at fair rates. Every producer has a right to sell his product as he pleases in the best market available, and rates must not be adopted with the idea of compelling the product to be disposed of in a way deserved by the carrier. '^ In one extreme case of this sort the railroad company refused to furnish cars for a coal miner who would not sell his coal to a coal company which was allied with the railroad.^ In granting a mandamus in that case Mr. Justice Dean said : " It is a refusal to carry his coal because he will not sell it at a low price to the president's coal company. As the court below, in substance, says, it was iniquitous. It, in effect, if kept up, would completely destroy his plant, with the consequent loss of his invested capital ; and even if now his wrong is, to some ex- tent, remedied, he has lost months of active business. The pub- lic duty of defendant was to carry freight and passengers. Sup- pose it had refused to sell him a ticket as a passenger, and no- 6 Accord, on similar facts, Reynolds v. Western N. Y. & Pa. R. R., 1 Int. Com. Rep. 685, 1 I. C. C. Rep. 393 (1888). Se^, also, The Cedar Lumber Products Case, 3 Can. Ry. Cas. 412 (1903). A pass issued for valuable consideration is usually held not discrimina- tion. See Curry v. Kansas & C. P. Ry., 58 Kans. 6, 48 Pac. 579 (1897), and cases cited; State v.' Southern Ry., 125 N. C. 666, 34 S. E. 527 (1899), and cases cited. 7Paxton Tie Co. v. Detroit S. R. R., 10 I. C. C. Rep. 422 (1905), accord. 8 Loraine v. Pittsburg, J. E. & E. R. R., 205 Pa. St. 132, 54 Atl. 580, 61 L. R. A. 502 (1903). . ['^44] Chap. XXIII] Justifiable Differences. [§ 791 tified him that such refusal would be kept up unless he sold his coal to the president's coal company ; the wrong would have been a violation of a duty which defendant owed to the general public as a common carrier of passengers, but it would also have been a wrong special to himself, distinct from the public of which he was one, and from which he alone specially suffered. It would have been a demand on him to do something having no connec- tion with defendant's business of transportation, and, if he re- fused, to deprive him of a right which, under the most solemn forms, it had undertaken to accord to him. And it is wholly im- material that the defendant treated some shippers in the same way." ® 9 The free transportation of shippers or dealers between state or inter- state points on account of interstate freight traffic furnished to the car- rier is unlawful. Milk Producers' Asso. v. Delaware, L. & W. E. Co., 7 I. C. C. Rep. 92 (1897). In re Boston & M. E. R., 3 Int. Com. Eep. 717 (1891), the commisaioD left the question open whether free passes could be given proprietors of hotels, agents of ice companies, milk contractors, trustees of railroad mort- gages and newspaper publishers for advertising. [745] TITLE II. Undue Peeference in Service. CHAPTER XXIV. DISCRIMINATION BETWEEN DEPENDENT SERVICES. § 801. Discrimination in regard to dependent services. TOPIC A SUBORDINATE CARRIERS OF GOODS. § 802. Duty toward expressmen considered. 803. Express companies ; conservative view. 804. Express companies; radical view. 805. Discussion of these conflicting views. 806. Exclusive contracts with private car lines. 807. Refrigerator car lines. 808. Live stock transportation companies. TOPIC B DEPENDENT PASSENGER SERVICE. § 809. Duty toward hackmen considered. 810. Cases permitting discrimination between hackmen. 811. Cases forbidding discrimination between hackmen. 812. Discussion of the duty toward hackmen. 813. Hauling sleeping cars. 814. Favoring certain eating houses. 815. Treating baggage transfer men with equality. 816. Granting concessions for private businesses. TOPIC C PRIVILEGES AT FREIGHT TEBMINALS. § 817. Special privileges at freight terminals. 818. Arrangements with stockyards. 819. Contracts with grain elevavtors. 820. Access to connecting steamboats. 821. No access owed except at wharf stations. 822. Rights of compelling draymen. 823. Permitting limitation of telephones. 824. Fostering monopoly in public services. [746] Cliap. XXIV] Dependent Seevice. [§ 801 TOPIC D CONNECTING CAEEIEES. § 825. Discrimination between connecting carriers. 826. Goods requiring further transportation. 827. Transportation in the same cars. 828. Such transportation held obligatory. 829. Through traffic agreements. 830. Through arrangements compelled. § 801. Discrimination in regard to dependent services. The general problem is whether in dealing with dependent services the common carrier is under the usual obligations of the public service law or whether the common carrier is free to deal with them as it sees fit, consulting only its own interests. So close is the argument and so recent is its origin that there has been, and there remains, a square conflict of authority as to whether this law extends so far as to cover this situation. On one side are the jurisdictions conservative in attitude, which hold that there is no public duty involved and that therefore, the carrier may, for example, discriminate among expressmen. On the other hand, are the progressive jurisdictions which hold that there is a public obligation involved and that the carrier may not, therefore, admit certain hackmen to its station while ex- cluding others. And in various other subsidiary businesses of the same sort, where those who offer a service to the public are dependent to a considerable extent for opportunity to conduct their calling upon obtaining privileges from the carrier, there will be found the same issue and the same controversy. Much is said upon both sides ; and in a matter of such commercial conse- quence much of this is worth repeating. The discussion is car- ried on along the whole line; not only is the matter discussed from the point of view of the proper theory to be held, whether the general rules of public service govern or whetheT they are in- applicable; but the matter is also discussed with much heat from the point of view of public policy and business con- venience. [74T] §§ 802, 803] Kaileoad Bate Regulation. [Chap. XXIV TOPIC A SUBOHDINATE CARRIEKS OF GOODS. § 802. Duty toward expressmen considered. At the beginning of the controversy as to the position of subor- dinate carriers of goods both sides admit that to the extent to which a common carrier has made public profession covering a given line of business he is bound to serve all that apply with- out discrimination. Here is the first difiiculty, as the case of expressmen shows: It may be established that tlie usual course of dealing between the railroad companies and the express com- panies has been upon the basis of special contract ; on the other hand, it may be shown that the railways have universally made some provision for handling express matter. This is so clear that it may be asserted that the modern railroad owes some duty in respect to the transportation of small and valuable parcels safely and quickly. But to whom is this duty owed ? It hardly seems to be to the expressman or other subordinate carrier, for the railroad could plainly carry on these branches of the trans- portation business for the general public, and it could then ex- clude all others from the route. Therefore, the duty that it owes seems to be rather to the general public who ship through the ex- pressmen. " An express company engaged in the business of transporting small packages has as good a right to the benefits of the railroad as the owners of the packages possess in person. It is impossible that they can all appear in person to claim their rights, and it is sufficient that they are represented by agents who are intrusted with their goods, and have a special property in' them." ^ § 803- Express companies: conservative view. The leading authority upon the subject is certainly the Ex- press Cases. ^ This is the general heading covering several iPer Lewis, C. J., in Sandford v. Catawissa R. R., 24 Pa. St. 378, 64 Am. Dee. 667 (1855). ■2 117 U. S. 1, 29 L. Ed. 791, 6 Smp. Ct. 542, 628, B. & W. 157 (1886). [748] Chap. XXIV] Dependent Service. [§ 803 suits presenting substantially the same question, as they were all suits begun by expressmen against railways to compel them to give them respectively the express facilities on the sev- eral lines of railway which they had previously enjoyed' by con- tract and of which they had been dispossessed by notice given in accordance with the terms of exclusive contracts made with fav- ored companies. Judgments below had been rendered in favor of the express companies from which the railroad companies ap- pealed. The cases were elaborately argued ; and the whole his- tory of the course of dealings that had gone on between the ex- press companies and the railroad companies was discussed. The decision of the majority of the court went off upon this evidence. Mr. Chief Justice Waite concludes the majority opinion thus: " It is not enough to establish a usage to carry some express com- pany, or to furnish the public in some way with the advantages of an express business over the road. The question is not whether these railroad companies must furnish the general pub- lic with reasonable express facilities, but whether they must carry these particular express carriers for the purpose of en- abling them to do an express business over the lines. In all these voluminous records there is not a syllable of evidence to show a usage for the carriage of express companies on the passenger trains of railroads unless specially contracted for. While it has uniformly been the habit of railroad companies to arrange, at the earliest practical moment, to take one express company on some or all of their passenger trains, or to provide some other way of doing an express business on their lines, it has never been the practice to grant such a privilege to more than one company at the same time, unless a statute or some special circumstances made it necessary or desirable. The express companies that bring these suits are certainly in no situation to claim a usage in their favor on these particular roads, because their entry was originally under special contracts, and no other companies have ever been admitted except by agreement. By the terms of their [V49] § 804] Railroad Eate Regulation. [Chap. XXIV contracts they agreed that all their contract rights on the roads should be terminated at the will of the railroad company. They were willing to begin and to expand their business upon this un- derstanding, and with this uncertainty as to the duration of their privileges. The stoppage of their facilities was one of the risks they assumed when they accepted their contracts, and made their investments under them. If the general public were com- plaining because the railroad companies refused to carry ex- pressi matter themselves on their passenger trains, or to allow it to be carried by others, different questions would be presented. As it is, we have only to decide whether these particular express companies must be carried notwithstanding the termination of their special contract rights." * § 804. Express companies: radical view. It is admitted by both sides to this controversy that the mod- em railroad company owes a duty in respect to express matter to the general shipping public. Thereupon, it will be main- tained by one side that if the railroad makes provision for "the trans.portation of express matter by entering into an arrange- ment with an expressman to carry on the business along its route, it thereby fulfills its dulty; and that it may, therefore, make an exclusive contract if it pleases, although that involves discrimination. But it may be answered from the other side that this argument carried to its logical conclusion leaves the public without protection. 3 Accord: Pfister v. Central R. R., 70 Cal. 169, U Pac. 686, 59 Am. Rep. 404 (1886) ; Louisville v. New Albany & C. R. R., 146 Ind. 21, 44 N. E. 796, 58 Am. St. Rep. 348, 38 L. R. A. 93 (1896) ; Sargent v. Boston & L. R. R., 115 Mass. 416 (1874); Atlantic Express Co. v. Wilmington & W. R. R., Ill N. C. 463, 16 S. E. 393 (1892). This is governed by statute in some jurisdictions; for example, to-day in Massachusetts by statute, such number of local expressmen shall be per- mitted to operate over a given route as the railroad commissioners shall decide. See Rev. Laws chap. Ill, sec. 241. [750] Chap. XXIV] Dependent Seevice. [§ 804 To bring out the difference of opinion upon thia important matter it may be well to give at some length, one of the leading eases upon the other side of this controversy. The most radical decision upon this side is to be found in McDuffee v. Portland and Rochester Kailroad.* This was an action on the case by the plaintiff, an expressman, against the defendant railway for not furnishing the plaintiff terms, facilities, and accommodations for his express business on the defendants' road between Roches- ter, IST. H., and Portland, Me., reasonably equal to those fur- nished by the defendants to the Eastern Express Company. The defendants demurred to the declaration, which demurrer the Supreme Court finally discharged. The gist of Chief Jus- tice Doe's opinion may be seen from the following extract : " A railroad corporation, carrying one expressman, and en- abling him to do all the express business on the line of theia' road, do hold themselves out as common carriers of expresses ; and when they unreasonably refuse, directly, or indirectly, to carry any more public servants of that class, they perform this duty with illegal partiality. The legal principle, which estab- lishes and secures the common right, being the perfection of reason, the right is not a mere nominal one, and is in no danger of being destroyed by a quibble. If there could possibly be a case in which the exclusive arrangement in favor of one express- man would not be an evasion of the common-law right, the ques- tion might arise whether, under our statute law, public railroad corporations are not common carriers (at least to the extent of furnishing reasonable facilities and accommodations of tran- sportation on reasonable terms) of such passengers and such freight as there is no good reason for their refusing to carry.^ 4 52 N. H. 430, 13 Am. Rep. 72, B. & W. 149 (1873). 6 Accord: New Eng. Exp. Co. v. Maine C. R. R., 57 Me. 188, 2 Am. Rep. 31 (1868) ; Sanfoid v. Catawissa R. R., 24 Pa. St. 378, 64 Am. Dec. 667 (1855). " The business of carrying what is called " express matter " has recently grown up, and is productive of great public advantage. The objection to [751] § 805] Railroad Rate Regulation. [Chap. XXIV § 805. Discussion of these conflicting views. The strongest argument for the progressive view may be de- veloped from the principles laid down in the opinion just quoted. If the public duty in this matter does not go to the eixtent of pre- venting discrimination in performing it, none of the law of pub- lic service applies between the railroad company and the ex- press company; and it follows that any express company may be charged extortionate prices. Such unreasonable charges, if not forbidden, will inevitably react upon the general shipping public to whom, by the hypothesis, a public duty is owed to pro- vide adequate service for reasonable rates. It may be urged at this stage that since the express business itself is a public call^ ing, therefore,, the express companies themselves are bound to give satisifactory service at reasonable rates. But their duty is relative; if they cannot get adequate facilities they are not bound to provide them ; and if they must pay extortionate prices they may charge these against the general shipping public as necessary operating expenses. If the Express Cases are law, there is no limit upon the amount which the railroad may charge the express company and no way by which the reaction of that charge upon the shipping public may be avoided. This seem? to reduce the doctrine of the Express Cases® to an absurdity; if, as those cases decide, there is no public duty owed from the rail- ways to the expressmen, then it isi because of that gap impos- carrying such matters, on the ground of the novelty of the business, has nothing in it deserving serious Consideration. If all the improvements of this progressive age are to be excluded from railroad transportation be- cause they were not in existence when the charters were granted fori;he roads, the public would soon be deprived of the chief value of these im- portant works. The law is not so unreasonable in its constructions. The rights of express agents or carriers have been fully recognized in this re- spect in England. They are entitled to equal benefits with others, and no exclusive advantages can be granted to others to their injury. Pickford V. G. J. Ry., 10 M. & W. 397; Parker v. G. W. Ry., 7 M. & G. 253; Parker v. 6. W. Ry., 11 C. B. 545, 583." Lewis, C. J., in Sandford v. R. R., supra. 6 117 U. S. 1, 29 L. Ed. 791, 6 Sup. Ct. 542, 628, B. & W. 157 (1886). [752] Chap. XXIV] Dependent Sekvice. [§ 806 sible in any way entirely satisfactory to protect by the law the shippers of express matter from the machinations of those who are concerned with transporting it. The arguments from policy that' are urged in these conserva- tive cases are not conclusive, although they have a certain force. It is true that it is somewhat more difficult for the railroads to handle three distinct expresses than one, but not more difficult than many problems of railroading that are part of every day traffic handling. Subdivision of express cars upon light runs, and more development of the special train for express matter, would solve the difficulty; and the railroad is protected in any event by the right to charge a fair price for its seirvices based upon the cost of service. Again, it is said that large express companies are better than a greater number of smaller com- panies. It should be pointed out, however, that the doctrine of the Express Cases^ may be used to exclude the national express companies with their full equipment from any raiiroad system, the directors of which favor some local company. § 806. Exclusive contracts with private car lines. The doctrine of the Express Cashes ^ is continually hampering the common law in dealing with interstate transportation. With- in the last few years public opinion has been much aroused against the exclusive arrangements entered into between the railways and the various private car lines. It is pretty gener- ally agreed that what ought to be done in dealing with the pri- vate car lines is to apply to the whole situation the coercive law that regulates public calling. Either the railways ought to be obliged to conduct these special services themselves, furnishing their own cars, or if they decide upon a different policy they should be obliged to haul the cars of as many private car lines as choose to undertake the business. But the conservative doc- 7 Supra. 8 117 U. S. 1, 29 L. Ed. 791, 6 Sup. Ct. 542, 628, B. & W. 157 (1886). [753] § 807] Eaileoad Rate Eegulation. [Chap. XXIV trines held by the Supreme Court of the United States stand in the way of the immediate application to interstate commerce of any such progressive views as these. In the meantime, in the absence of efficient regulation by thorough-going law, those pri- vate car lines that have exclusive agreements with the railways are showing very clearly what may happen, when a common car- rier is permitted to foster a monopoly in a dependent service. § 80'7. Refrigerator car lines. The private refrigerator car lines have been the subject of esipecial complaint. Finally, the Interstate Commerce Com- mission, upon complaints made by various shippers and con- siignees, instituted an investigation into the matter, the results of which are reported under the heading, Be Trans.portation of Fruit.® It was shown that the respondent railroad companies, the Pere Marquette and the Michigan Central, had entered into con- tracts with the other respondent, the Armour Car Lines, to fur- nish the refrigerator car service for the transportation of fruit over their lines, that under these' contracts the use of any other car service was prohibited, and that the icing during transporta- tion wag to be exclusively performed by the car company. Further, it was proved that following after the making of this arrangement the cost of refrigerator car transportation increased from fifty to one hundred and fifty per cent. The commission held that it was the duty of the railroad companies eitlier to provide cars proper for this service or to enter into arrange- ments whereby this service would be provided. Under the doc- trine of the Express Oases" it felt bound to hold that exclusive - contracts of this sort might be entered into. But in its final recommendations the Commission nevertheless suggested that if outrageous extortion resulted from this plan some redress might 9 10 I. C. C. Rep. 360 (1905). 10 117 U. S. 1, 29 L. Ed. 791, 6 Sup. Ct. 542, 628, B. & W. 157 (1886). [754] Chap. XXIV] Dependent Sekvice. [§ 808 be given, saying: "It appears that the Armour Car Lines Com- pany — and that is Armour & Company — already has a practical monopoly of the fruit carrying business under refrigeration from Michigan. We know from former investigations that this is also true in some other sections of the country ; and this mo- nopoly may finally become general. All this is a matter of no concern to the public so long as the service is good and the charge reasonable ; but the establishment of a general monopoly might result in poor service, just as it has in this section already resulted in exorbitant charges. For this reason it ig urged that the Eailway Companies ought not to be permitted to make ex- clusive contracts wiih. private car lines like those under consid- eration, but should be compelled to provide their own equipment. The facts before us call for no expression of opinion on that sub- ject, and none is attempted." ^^ § 808. Live stock transportation companies. Similar issues have been raised as to private car lines for the transportation of live stock ; but the federal courts have applied the doctrine of the express cases to them as in duty bound. The leading case on this point seems to be United States ex rel. Mor- ris V. Delaware, Lackawanna & Western Railroad Company.^^ To an application for a mandamus to compel a carrier to transport relators' stock in the cars of a certain live stock trans- portation company, the respondent set forth in its return that it had entered into a contract with another transportation com- pany, by which that company was to furnish respondent a cer- tain number of cars per year ; that such cars were available, to all shippers of stock ; that they were much more useful to de- "In Rogers L. T. M. Wks. v. Erie Ry., 20 N. J. Eq. 379 (1869), the defendant railroad company entered into an arrangement with a locomotive express concern for the handling of all locomotives offered it for trans- portation. It was held that plaintiff, a shipper of locomotives, could ob- ject to this scheme. 12 40 Fed. 101 (1889). [755] § 808] Eailkoad Eate Reoulatiok. [Chap. XXIV fendant than other live stock cars, in that they could be convert- ed into coal-cars -when not used for live-stock; that defendant paid mileage for the use of cars' ; and that for all of these rea- sons, the respondent railroad vs^as justified dealing exclusively witli the Lackawanna Live Stock Express Company and in re- fusing to enter into relations with the American Live Stock Transportation Company, the co-relator. In holding the de- fense of -the defendant railroad sufficient, Judge Wallace said : " It is no part of the common-law obligation of railway com- panies to furnish the same facilities or instrumentalities of transportation to all alike, and while it is unquestionably their duty to furnish suitable and adequate facilities for all reason- able necessities of the business they engage in, they may never- theless choose their own appropriate means of carriage. This was the doctrine of the Express Cases,^^ in which it was held by the Supreme Court that railroad companies are not required by usage, or by the common law, to transport the traffic of inde- pendent express companies over their lines in the manner in which such traffic is usually carried and handled. But the Inter- state Commerce Act requires them to treat all impartially, and if one shipper is subjected to any undue or unreasonable preju- dice or disadvantage because a railway company permits another shipper to use his own cars for carrying traffic over its road, their right to choose their own appropriate means of carriage is to that extent curtailed."^* , 13 117 U. S. 1, 29 L. Ed. 791, 6 Sup. Ct 542, 628, B. & W. 157 (1886). a Citing Burton Stock Car Co. v. Cliicago, B. & Q. R. Co., 1 Int. Com. Eep. 329, 1 I. C. C. Rep. 132 (1887). See, also, Nicholson v. Great West- ern E. Co., 5 C. B. N. S. 366 (1858) • Cooper v. London & Southewestern, 4 C. B. N. S. 454 (1857). See, however, Shamberg v. Delaware, L. & W. R. R., 3 Int. Com. Rep. 502, 4 I. C. C. Rep. 630 (1891). [Y56] Chap. XXIV] Dependent Service. [§§ 809, 810 TOPIC B DEPENDENT PASSENGER SERVICES. § 809. Duty toward hackmen considered. In the preceding topic the right of those who were conducting a dependent freight service was found to rest in las.t analysis upon the public duty owed by the common carrier to the ship- ping public. In this topic the duty of the common carrier in its dealings with those who are conducting a dependent passen- ger service will be considered, and the hypothesis ia brought for- ward that the duty in such cases is related to the general rights of the traveling public. One of the most bitter controversies within this general dispute is over the right of a railway com- pany to exclude all but certain favored hackmen from its sta- tion grounds. It is admitted by all, that a railroad owes such duties to its incoming and outgoing passengers that it cannot exclude from its station driveways hackmen bringing passen- gers, or hackmen directed by passengers to call for them ; for, of course, no one, upon reflection, would go so far as to deny the duty of the carrier of passengers to permit free access and egress for those whom it is serving.-' § 810. Cases permitting discrimination betwreen hackmen. Notwithsitanding this, it is maintained by many courts that the railroad company is under no public duty to admit hackmen to its station grounds to solicit business. One of the strongest eases for the railway in this matter is the New York, JSTew Haven & Hartford E. R. Co. v. Scoville.^ In that case it ap- appeared from the complaint that the plaintiff by its board of directors adopted a regulation excluding from its station grounds all persons who, without special permission in writing, 1 In the following cases, among others, it was held that at all events hackmen bringing passengers or coming for passengers on special order must be admitted: Griswold v. Webb, 16 R. I. 649, 19 Atl. 143 (1889); Summit v. State, 8 Lea (76 Tenn.) 413, 41 Am. Rep. 637 (1881). 2 71 Conn. 136, 41 Atl. 246, 71 Am. St. Rep. 159, 42 L. R. A. 157 (1898). [757] I 810] Eaileoad Eate KtBGUlation-. [Chap. XXIV should come to solicit the carriage of passengers or their lug- gage. The defendant, knowing the regulation, soon afterwards entered upon its station grounds in Middletown to solicit busi- ness of that description. This was a bill for an ijijunction to stop this practice. The injunction wag granted in. the lower court, but the higher court set this aside. Mr. Justice Baldwin held that the main question to be de- termined was whether the regulation was reasonable; saying that it rested primarily within the discretion of the company: " In regulating matters of this kind, a wide discretion is neces- sarily entrusted to the managers of the railroad. They are in a situation which should make them the best judges of what pro- motes the comfort of those who ride upon their road. Courts will always be slow to pronounce unreasonable any rule pur- porting to be directed toward that end, which they have deliber- ately adopted. It appears from the complaint that the station grounds at Middletown are sufficiently large to allow the estab- lishment there of a public stand at which to ply the carriage and express business, and also that an exclusive privilege for main- taining siuch a stand there has been granted by the plaintiff to a third party. Such a grant was within its lawful powers, pro- vided its terms were not inconsistent with the reasonable accom- modation of the passengers upon its road. Nothing appears on tlie record to indicate any such inconsistency. It may well be more convenient for them to deal with a single local carrier ilian to be met, on alighting from their train, by importunate solici- tations from a number of rival competitors for their custom; and, in the absence of averments to the contrary, it is to be pre- sumed that the prices at this stand are fair, and the service suf- ficient. If any of them prefer that of some other person, they can secure it by an order in advance, which would justify his entrance on the grounds; or by passing by the stand established there, and going into the streets outside, to engage whomsoever they think fit. It follows that the defendant had no right to [758] Ohap. XXIV] Dependent Sebvice. [§ Sll enter the Middletown station grounds for the purpose of solicit- ing business."* §i 811. Cases forbidding discrimination between hackmen. On the other hand, the position that a railroad may not admit favored hackmen to solicit business upon the station grounds and exclude other hackmen from equal privileges is held in many cages. The argument for this view is stated very clearly in State v. Eeed.* From the agreed statement of facta it appeared in that case that there was in connection with the railroad station in the oity of Viciksburg a considerable enclosure; that the railroad company had granted to one Perue exclusive priv- ilege of entering the station grounds in order to solicit passen- gers ; and that hackmen kept thereby outside the enclosure were, '3 United States — Donovan v. Pennsylvania Co., 199 U. S. 272, 50 L. Ed. 000, 26 Sup. Ct. 91 (1905), afiBrming 124 Fed. 1016, 60 C. C. A. 168, 120 Fed. 215, 116 Fed. 907. Connecticut— New York, N. H. & H. R. R. v. Seoville, 71 Conn. 136, 41 Atl. 246, 71 Am. St. Rep. 159, 42 L. R. A. 157 (1898). Gfeorpio— Kates v. Atlanta Bag. & CaJb. Co., 107 Ga. 636, 34 S. E. 372, 46 L. R. A. 431 (1898). Massachusetts— 0\d Colony R. R. v. Tripp, 147 Mass. 35, 17 N. E. 89, 9 Am. St. Rep. 061, B. & W. 166 (1888) ; Boston & A. R. R. v. Brown, 177 Mass. 65, 58 N. E. 189, 52 L. R. A. 418 (1900) ; Boston & M. R. R. v. Sullivan, 177 Mass. 230, 58 N. E. 689, 83 Am. St. Rep. 275 (1900). Minnesota— Godboutv. Union Depot, 79 Minn. 188, 81 N. W. 835 (1900). New Hampshire— Heidmg v. Gallagher, 72 N. H. 377, 57 Atl. 225 (1903), overruling on rehearing 59 N. H. 650. New Yorfc— Brown v. New York C. & H. R. R. R., 151 N. Y. 674, 46 N. E. 1145 (1897) ; New York C. & H. R. R. R. v. Flynn, 74 Hun, 124, 26 N. Y. 859 (1893) ; New York C. & H. R. R. R. v. Sheeley, 27 N. Y. Supp. 185 (1893) ; New York C. & H. R. R. R. v. Warren, 64 N. Y. Supp. 781, 31 Misc. Rep. 571 (1900). Oftio— Snyder v. Depot Co., 19 Ohio Cir. Ct., 368 (1899); State v. Union Depot Co., 71 Ohio St. 379, 73 N. E. 633 (1905). Rhode Island— ^ew York, N. H. & H. R. R. v. Bork, 23 E. I. 218, 49 Atl. 965 (1901). 4 76 Miss. 711, 24 So. 308, 71 Am. St. Rep. 528, 43 L. R. A. 134 (1898). [750] § 812] Kailkoad Eate Regulation. [Chap. XXIV therefore, at great disadvantage. One Reed, a hackman, was arrested for tresipassing within the enclosure contrary to the public prohibition made by the railroad company. Mr. Chief Justice Woods held that the action of the court below in discharging Reed was correct ; he summed the matter up thus: " The quesition is one that affects the interests of the public. The upholding of the grant of thisi exclusive privilege would prevent competition between rival carriers of passengers, create a monopoly in the privileged hackmen, and might pro- duce inconvenience and loss to persons traveling over the rail- road, or those liaving freights transported over it, in cases of exclusion of drays and wagons from its grounds, other than those owned by the person having the exclusive right to enter the railroad's depot grounds. To concede the right claimed by the railroad in the present case would be, in effect, to confer upon the railroad company the control of the transportation of pas^ sengers beyond its own lines, and to create a monopoly of such business, iiot granted by its' charter, and against the interests of lihe public." ^ § 812. Discussion of the duty toward hackmen. There is again plainly no public duty owed by the railways to the hackmen. The hackmen are not asking for transportation 6 Florida — Indian River S. B. Co. v. East Coast Transp. Co., 28 Fla. 387, 10 So. 480, 29 Am. St. Rep. 258 (1891). JlUnois — Pennsylvania Co. v. Chicago, 181 111. 289, 54 N. E. 825, 53 L. R. A. 223 (1899). Indiana — Indianapolis U. Ry. v. Dohn, 153 Ind. 10, 53 N. E. 937, 74 Am. St. Rep. 274, 45 L. R. A. 427 (1899). Kentucky— McOonnell v. Pedigo, 92 Ky. 465, 18 S. W. 15 (1892). Michigan — Kalamazoo Hack & Bus Co. v. Sootsma, 84 Mich. 194, 47 N. W. 667, 22 Am. St. Rep. 693, 10 L. R. A. 819 (1890). Mississippi— State v. Reed, 76 Miss. 211, 24 So. 308, 71 Am. St. Rep. 528, 43 L. R. A. 134 (1898). Missouri — Cravens v. Rodgers, 101 Mo. 247, 14 S. W. 106 (1890). Montana — Montana W. Ry. v. Langlois, 9 Mont. 419, 24 Pae. 209, 18 Am. St. Rep. 745, 8 L. R. A. 753 (1890). [760] Chap. XXIV] Dependent Seevice. [§ 812 nor are they paying rates. And, ultra vires aside, the railways might, if they chose, establish a cab service of their own for the further transportation of their passengers, and in connection therewith they might exclude all rival carriages from soliciting patronage in their stations. Nor could the haclunen complain if they were all confined behind a bar in an appropriate part of the station, for this would be a reasonable regulation for admin- istering the facilities for the general benefit of the pa&sengers. But a regulation which arbitrarily admits one line of hacks to the station and excludes another is a different matter and whether this is valid or not depends upon whether it is consistent with the general duty of the carrier or not.® There seems, however, to be a violation of the duty owed by the carrier to the passenger to permit free egress by these special privileges at the station which prevent the passenger from hav- ing equal access to all who wish to put themselves at his dis- posal. The right of the passenger to have ingress to the station by any carriage that he chooses to employ nobody dares to deny ; it is very hard to see any essential difference from the obliga- tion to give egress without discrimination. Moreover, to allow the grant of exclusive privilege permits the exploitation of the passenger by this monopoly ; for monopoly price is always higher than competitive price ; as may be shown by the fact that the favored lines are always willing to pay roundly for the ex- clusive privilege, even when maximum fares are fixed by local ordinance. 6 In the following eases, among many others, reasonable regulations gov- erning carriage stands at railway stations were held valid upon the ground that no discrimination was involved: Cole v. Rowan, 88 Mich. 219, 50 N. W. 138, 13, L. R. A. 848 (1891) ; Smith v. New York, L. E. & W. R. R., 149 Pa. St.' 249, 24 Atl. 304 (1892). [761] § 813] Eaileoad Eate Ebgulatiow. [Ohap. XXIV § 813. Hauling sleeping cars. A case since the express cases which came up for decision m the Supreme Court of the United States really involves the- same general issue — Chicago v. Pullman Southern Car Co.'' The facts so far as they are material to the present issue are these: An exclusiive contract -^as entered into between a railroad com- pany and a palace-car company whereby the latter company was to have the exclusive right for fifteen years to furnish parlor and sleeping-cars on all passenger trains of the railroad com- pany, the railroad company binding itself not to contract with any other company to run the same class of cars over its lines during that period. ISTow, if this be considered an arrangement within a field not covered by public duty there is really no ob- jection to such a trans-action; for such arrangements for exclu- sive dealings between two private parties are properly not con- sidered objectionable. But if there is a public duty in the premises then such a contract should be held void as against pub- lic policy. The court disposed of the ease by denying that there was any public duty to take on competing lines of palace-cars. An ex- tract from the opinion of Mr. Justice Harlan follows : " The de- fendant was under a duty arising from the public nature of its employment to furnish for the use of passengers upon its lines, such accommodations as were reasonably required by tlie exist- ing conditions of passenger traffic. Its duty, asi a carrier of pas- sengers, was to make suitable provisions for their comfort and safety. Instead of furnishing its own drawing-room and sleep- ing-cars, as it might have done, it employed the plaintiff, whose special business was to provide cars of that character, to supply as many as were necessary to meet the requirements of travel. It thus used the instrumentality of another corporation in order that it might properly discharge its duty to the public. So long as the defendants' lines were supplied with the requisite num- 7 139 U. S. 79, 35 L. Ed. 97, 11 Sup. Ct. 490 (18901. [702] Ciiap. XXIV] UepeiNdent Service. [§ 814 ber of drawing-room and sleeping-cars, it was a matter of indif- ference to the public who owned them."* The argument for the consiervative view is undoubtedly put most attractively when it is phrased in terms of public duty. It is squarely averred in this case, and in others whicb follow its line of thought, that the duty to the public is fully performed when the railroad makes provision for the subordinate service by entering into an arrangement with an independent company to do it, and that the public stand indifferent as to who shall serve them, provided that service is offered. This argument has the force and weakness of half-truth. All this is so ; and yet if public duty plays no part in governing the arrangement between, the railroad company and the palace-car company the public may without illegality be made subject to an exorbitant price by reason, of the exaction of an outrageous fee for the monopoly; while, if public duty governs the railroad in entering into this arrangement, it must accept as many palace-car companies as care to take the risk of entering into this business upon pay- ing a fair charge for haulage. There would never, in fact, be much actual competition under such circumstances ; but there would always be the benefit to the public which results from potential competition. § 814. Favoring certain eating houses. The point has been raised a few times whether there is a duty in respect to the provision of food for passengers. In Kelly v. Chicago, Milwaukee & St. Paul Rairoad® it appeared that the railroad had arranged with the plaintiff to have a dining-room, near the station premises at Sanborn Station where trains were stopped for meals. Later, another arrangement was made with other parties at Spencer Station, twenty-seven miles distant; in 8 Accord, Worcester Excursion Car Co. v. Pennsylvania Ey., 2 Int. Com. Rep. 792, .3 I. C. C. Rep. 577 (1890). 9 93 la. 436. 61 N. W. 957 (1895). [763] § 814] Eailkoad Eate Regulation. [Cihap. XXIV this latter contract the railroad agreed to transport supplies free, and to furnish fuel. Thereafter, the train schedule al- lowed for meals at Spencer instead of Sanborn. Plaintiff in this action alleged these discriminations. The court decided in favor of the railroad. Mr. Justice Deemer said : " We are not inclined to commit ourselves to the doctrine that because a railroad company carries freight free of charge to one of its eating-houses, and furnishes the pro- prietor with fuel, ice, and transportation for his family and his employes, it is bound to do so for all without reference to the contractual relations existing between them." ^^ The public duty here, again, is to the traveling passenger; for it cannot be denied that those, who carry passengers over long distances owe them the duty to make provision for food for them. The rule is thus stated in Peniston v. Chicago, St. Louis Railroad Company,^ * by Mr. Justice Poche : " In conveying passengers through long journeys, such as from Chicago to liew Orleans, at great speed and with rapidity, a common carrier is required by humanity, as well as by law, to provide its passen- gers with easy modes and to allow them reasonable time for the purpose of sustaining life by means of food and necessary re- freshments. Hence it isi that on all such roads arrangements are made to enable passengers to obtain at least two meals a day, and that announcement is made in every passenger train by em- ployes of the road of the approach of a train to a station where, under arrangements with the company, meals are prepared for the convenience of passengers." There may be seen in this instance again, the conflict of opinion between the two schools of thought, the first finding no duty in respect to food supply, the second insisting that there is a duty. If the prices charged for food should b« outrageous 10 It may be claimed with some truth that Perth General Station Com- mittee V. Ross, 1897, A. C. 479, is to the same effect. 1134 La. Ann. 777, 44 Am. Rep. 444 (1882). [764] Chap. XXIV] Dependent Seevice. [§ 815 there ought to be redress ; and it should be pointed out again that any monopolistic arrangement tends toward higher prices. § 815. Treating baggage transfer men with equality. This question, whether access to the station may be granted exclusively to one baggage-transfer line and altogether denied to others, is another case under the general problem. There is upon this issue, therefore, the same bitter controversy; some jurisdictions would permit the exclusion of all but the favored line, while others would allow equal access to all. On one side it may be said, as before, that there is no direct duty owed by the company to the baggagVtrans'fer lines or any of them ; and that, therefore, the railroad may make any dis- criminations that it pleases. For, as is pointed out in the prin- cipal cases cited below if there is no public duty in the matter, a public-service company may bestow its favors as it pleases ; and to many courts it seems that the railways may deal as they please with the baggage-transfer people.^^ On the other hand, in many other jurisdictions it would cer- tainly be held that the general duty owed by the railway com- pany to its passengers to allow them free egress from its sta- tion, involved the duty to allow them free access within the sta- 12 Such is the doctrine of the following cases : Connecticut — New York, N. H. & H. R. R. v. Scoville, 71 Conn. 136, 41 Atl. 246, 71 Am. St. Rep. 159, 42 L. R. A. 157 (1898). Georgia — Kates v. Atlanta Bag. Co., 107 Ga. 636, 34 S. E. 372, 46 L. R. A. 431 (1899). Massachusetts — Old Colony R. R. v. Tripp, 147 Mass. 35, 17 N. E. 89, 9 Am. St. Rep. 661, B. & W. 166 (1888). Minnesota — Godbout v. Union Depot, 79 Minn. 188, 81 N. W. 835 (1900). New Hampshire — Hedding v. Gallagher, 72 N. H. 377, 57 Atl. 225 (1903). New York— Brown v. New York C. & H. R. R. R., 151 N. Y. 674, 46 N. E. 1145 (1897). Rhode Island— New York, N. H. & H. R. R. v. Bork, 23 R. I. 218, 49 Atl. 965 (1901). Virfffnia— Norfolk & W. Ry. v. Old Dominion Bag. Co., 99 Va. Ill, 37 £. E. 784, 50 L. R. A. 722 (1901). [7051 § 815] Raileoajd Eate Eegulation. [Chap. XXIV tion to those who might wish to put themselves at their dis- posal to aid them in getting their belongings away.** The most elaborate case upon this point is Kates v. Atlanta Baggage & Cab Company.^* In that case it appeared, first, that the defendants permitted the cab company to enter the pas- senger trains before reaching the city, for the purpose of solicit- ing baggage, and refused the same privilege to the petitioner; second, that the servants of the cab company were allowed ac- cess to the passenger station for the purpose of soliciting pat- ronage and for more conveniently attending to its business, and this privilege was refused to petitioner ; third, that the privilege of using an office in the baggage room of the defendants for the transaction of its business was granted to the cab company and refused to Kates; fourth, the privilege of checking the baggage of prospective passengers at hotels and residences in advance of delivery of the baggage at the passenger-station was given the cab company — each of which privileges was refused to peti- tioner. The court held all of these justifiable ; but it would seem that some_ distinctions should be taken. The first and fourth priv- ileges it would seem to be permissible for the railroad to grant exclusively, as these are special favors not absolutely necessary for the conduct of the dependent service, the need of the pas- 13 Such is the doctrine of the following cases: Florida — Indian River St. B. Co. v. East Coast Trans. Co., 28 Fla. 387, 10 So. 480, 29 Am. St. Rep. 258 (1891). Indiana — Indianapolis U. Ry. v. Dohn, 153 Ind. 10, 53 N. E. 937, 74 Am. St. Rep. 274, 45 L. R. A. 427 (1899). Kentucky — McConnell v. Pedigo, 92 Ky. 465, 18 S. W. 15 (1892). Michigan — Kalamazoo Hack & Bus Co. v. Sootsuma, 84 Mich. 194, 47 N. W. 667, 22 Am. St. Rep. 693, 10 L. R. A. 819 ( 1890). Missouri — Craven v. Rodgers, 101 Mo. 247, 14 S. W. 106 (189Q). Montana — Montana W. Ry. v. Langlois, 9 Mont. 419, 24 Pac. 209, 13 Am. St. Rep. 745, 8 L. R. A. 753 (1890). Mississippi — State v. Reed, 76 Miss. 211, 24 So. 308, 71 Am. St. Rep. 528, 43 L. R. A. 134 (1898). " 107 Ga. 636, 34 S. E. 372, 46 L. R. A. 431 (1899). [766] Chap. XXIV] DtePENDEisTT Seevice. [§ 816 senger being at the station only.^® It is otherwise as to the sec- ond and probably as to the third, for it is submitted that at the station the passengers should be given equal access to all transfer companies who wish to deal with them. § 816. Granting concessions for private businesses. It is obvious that the outside limits of this public duty which the common carrier owes in respect to dependent services have now been reached. So long as there was a question of the right of shippers in respect to the transportation of their goods, there was a public duty in the premises; and while it could be said that the service was one concerning adequate facilities for pas- sengers, the public duty existed. Within these lines there should be neither exploitation nor discrimination ; but beyond these con- ditions the common carrier should remain free to carry on its own business in its own way. For example, as it owes no duty to passengers to see to the provision of flowers, magazines, cigars and souvenirs, it may grant exclusive privileges for the sale of these articles upon its trains; and so it may grant in a station exclusive rights to barbers and bootblacks. " The busi- ness of selling lunches to passengers, or of soliciting from them orders for the same, isi not one which every citizen has the right to engage in upon the tracks and premises of a railway company, and consequently those who do engage in it and carry it on must depend upon the company for the privilege."^* In street cars, likewise, advertising rights may be given to one and refused to another, and certain newsboys may be allowed to sell papers while othersi are not. All these are more than the adequate fa- cilities that the law requires to be provided by the common car- rier to its patrons. And this may be shown by the fact that none of these trades which bave just been mentioned are so affected 15 Lewis V. W. W. & N. W. R. R., 36 Tex. Civ. App. 48, 81 S. W. Ill (1900). iSFluker v. Georgia R. R., 81 Ga. 461, 2 L. R. A. «43 (1SS9). [767] § 817] Raileoad Eate Eeguiation. [Qhap. XXIV by a publio interest as to be held public employments. In Au- denried v. Philadelphia & Reading Railroad Company," the question was as to the right of the defendant company to so par- cel or divide its wharf among other coal dealers as to exclude the complainant therefrom. After expressing great doubt as to whether the defendant, under its charter, was bound to provide wharf accommodations to any of the coal dealers in question, or was a trustee to any extent for them, the court adds : "Transpor- tation by a common carrier is necessarily open to the public upon equal and reasonable terms. An exclusive right granted to one is inconsistent with the rights of all others. This was not transportation, but wharfage, the nature of which requires ex- clusive possession temporarily." TOPIC C, PEIVILEGES AT FEEIGHT TERMINALS. § 817. Special privileges at freight terminals. The situation at freight terminals is analogous to the situa- tion at passenger terminals ; and as might be expected, there is conflict of authority in relation to the duties of common carrier in dealing with those who wish to serve owners of goods at freight terminals. It would probably be generally agreed that the railroad may undertake these incidental services itself, and if it does so it may exclude all others from conducting the ser- vice. But if the railroad does not care to undertake the service itself then the difEcult question will arise again whether it may enter into an exclusive contract with one concern for the per- formance of these services, or whether such an exclusive contract constitutes an illegal discrimination against other people who would willingly undertake the service in competition. Upon this general problem more evidence is adduced in the sections immediately following. "68 Pa. St. 370, 8 Am. Rep. 195 (1871). [768] Chap. XXIV] Dependent Sekvioe. [§ 818 § 818. Arrangements with stockyards. The relative positions of the railroads and the Sitockyards have been discussed already at some length. Thus it has been seen that although the decision at first was otherwise, it is now held that there is no duty owed to the owner of cattle to make special delivery of them at any place along the line that he wishes. Consequently it is held that the railroad may designate certain points of delivery reasonably convenient as it may of other freight which it has undertaken to carry. Upon this basis the courts have been willing to permit the railroad to designate one of several stockyards as its cattle station in effect, where it will deliver cattle consigned to that point and have accordingly justified it in refusiing to deliver at other stockyards. This was well enough so long, as the court held strictly that no charge could be made under such circumstances against the shipments for yardage if the consignee was ready to take the cattle away. But under the latest decisions the courts have permitted the stockyards company to make an additional charge as a connect- ing carrier might. It would seem, therefore, that there is present danger in the situation that the railroad will not fulfil its duty, which is to deliver everything it carries, as it ought. And should it persist in handing its patrons over to stockyards, with whom it has exclusive arrangements, the danger of exploitation which has been discussed earlier in this chapter will become apparent. Wherever the duty to the ship- ping public is involved the general rule that there must be no discrimination comes into play.^ 1 For the convenience of the reader the principal cages in this sequence that have come before the judicial courts are cited below: Coe v. Louis- ville & N. R. R., 3 Fed. 775, B. & W. 251 (1880) ; Covington S. Y. Co. v. Keith, 139 U. S. 128, 35 L. Ed. 73, 11 Sup. Ct. 461, B. & W. 256 (1891) ; Butchers & D. S. Y. Co. v. Louisville & N. R. R., 67 Fed. 35, 14 C. C. A. 290, B. & W. 262 (1895); Walker v. Keenan, 73 Fed. 758, 19 C. C. A. 668 (1896); Interstate Com. Com. v. Chicago, B. & 0. R. R., 186 U. S. 320, 46 L. Ed. 1182, 22 Sup. Ct. 824 (1904); and Central S. Y. Co. v. Louisville & N. R. R., 192 U. S. 568, 48 L. Ed. 565, 24 Sup. Ct. 339 (1905). [769] ■§ 819] Eailkoad Kate Kegulation. [Chap. XXIV § 819. Contracts with grain elevators. As to grain elevators at terminals, the rule is established, aa has been already pointed out, that the railroad must deliver to all of them that are along its route. Grain in bulk is a peculiar kind of freight, "whicli as a commercial matter requires special delivery. And as this is a duty owed by the railroad to its patrons, it would not be legal for it to make a discrimination in favor of one grain elevator requiring its patrons to receive grain consigned to them through it and pay to its proprietor his fixed charges.^ " May such railroad companies, in like manner, discriminate between grain elevators in the same place, — constitute one ele- vator its depot for the delivery of grain, and force competing interests to receive from and transfer the grain consigned to them through such selected and favored channel? If railroad corporations possess such right, they can destroy a refractory manufacturer, exterminate, or very materially cripple com- petition, and in large measure monopolize and control these several branches of useful commerce, and dictate such terms as avarice may suggest. We think they possess no such power to kill and make alive. Impartiality in serving their patrons is an imperative obligation of all railroad companies ; equality of ac- commodations in the use of railroads is the legal right of every- body. The principle is founded in justice and necessity, and has been uniformly recognized and enforced by the courts. A contrary idea would concede to railroad companies a dangerous discretion, and inevitably lead to intolerable abuses. It would, to a limited extent, make them masters instead of the servants of the public." ^ 2 The quotation which follows is from Baxter, Circuit Judge, in Coe v. Louisville & N. R. R., 3 Fed. 775, B. & W. 251 (1880). 3 But see Richmond v. Dubuque R. R., 26 Iowa, 191 (1886), where it was held that an agreement between a railroad company and an elevator company that the latter should have the handling of all grain passing over their road did not constitute a monopoly. [770] Chap. XXIV] Dependent Sebvice. [§ 820 § 820'. Access to connecting steamboats. An analagous question is raised when a railroad having a terminus upon a wharf in a navigable stream, enters into some arrangement with one steamboat line whereby it may have ex- clusive access to the wharf. In the Indian Eiver Steamboat Co. V. East Coast Transportation Company,* the scheme employed was this : The Indian Eiver Steamboat Company leased from the Jacksonville, Tampa & Key West Railway Company, 390 , feet of the east end of its dock on the Indian Eiver, at Titusville, on which dock was located the railroad track and terminal facil- ity of the railroad company; and the railroad company coven- anted, and agreed in the lease, to maintain the railroad track on said dock and bulkhead and to furnish exclusive facilities for transfer of local freight to and from the bulkhead. The bill asked for an injunction to restrain respondents, a rival steam- ship line, from using this dock at Titusville. Mr. Justice Mabry wrote the opinion of the court. lie said in one place : " The' real question presented here is, can com- plainant corporation, engaged in carrying freight and passengers on the Indian Eiver by means of steamboats, rent from a rail- road common carrier its dock on siaid river, on which its track and terminal facilities are located, and exclude others from landing at said terminal point for the purpose of receiving freight and passengers to and from said common carrier ? This question,, we think, must be answered in the negative. If it be competent to sustain such a contract, the common carrier can select one connecting line of boats, and exclude all others from doing business with it. Such a doctrine would lead to the legal- izing of a monopoly, and the sanction of an unfair and unjust preference between connecting and competing lines of trans- portation. We do not understand that a common carrier ever had such power as this." ° 4 28 Fla. 387, 10 So. 480, 29 Am. St. Rep. 258 (1891). 6 Accord: Mason D. & S. R. R. Co. v. Graham & W., 117 Ga. 555, 43 S, [771] § 821] Kailkoad Eate Regulation. [Chap. XXIV The principal case seems sound in every particular if one accepts the progressive view in dealing with this problem ; but if one adopts the conservative view it is difficult to see why the decision must not be the other way. And it seems that such a result would be unfortunate; since, by force of such an ex- clusive arrangement, the railroad might turn its patrons over to the favored company and demand what price it pleased for fostering this monopoly. And again, if this were legal, there would seem to be no way to prevent the steamboat company from charging this terminal expens'e against the shipping pub- lic. In some instances, perhaps^, this exclusive arrangement might stand, as if it were all one line operated by one system, competing steamboats might be excluded from the intermediate wharf. § 821. No access owed except at wharf stations. It should be said, however, that, as no access or egress is owed, except at established statioas, by a railroad to its patrons, the only legal wrong in such discrimination against connecting siteamboats at terminal wharves will be at such wharves as are regular stations. This was the deciding point in the final de- cision in Ilwaco Railway and Navigation Company v. Oregon Short Line Railway Company,® where the Circuit Court of Appeals held that a transportation company operating a rail- way and a line of steamboats connecting at the company's wharf is not required, by the 3d section of the Interstate Com- merce Act, to permit the boats of a competitor to land at such wharf. For, aa Mr. Justice McKenna pointed out : " The contention of complainant is not that defendant's facilities are inadequate, but that it is excluded from them. The exclusion, E. 1000 (1903) ; Alexandria B. Sb. Co. v. New York C. & H. R. E. R., 45 N. Y. Supp. 1091 (1897). 6 57 Fed. 673, 15 U. S. App. 173, 6 C. C. A. 495, B. & W. 275 (1893), overruling 51 Fed. 611 (1892). [7T2] Chap. XXIV] Dependent Service. [§ 822 however, only consists in the prevention of the landing of its boats at defendant's wharf. We have probably said enough to indicate Qut views of this, but we may add that the wharf does not seem to be a public station. It is a convenience, only, in connecting its railroads and boats; the general station being at Ilwaco, where ample facilities exist." "^ § 822. Rights of competing draymen. On analagous principles to those discussed in regard to bag- gage transfer it would seem that the railroad may not permit certain draymen to have access to its freight houses to cart goods to consignees, and refuse all access to other carters. For example, if a consignee sends to a freight house for his freight by a drayman of his own selection, it should be clear that the railroad would act contrary to its duty if it refused such a drayman access to the goods. On the other hand, it may be granted that if the carrier chooses to extend its route in effect by undertaking personal delivery of freight to the consignee at his address, it might do this by its own carts and men and need not employ in that service all who wish to engage in it. But whether, if it offers delivery beyond its own route to its patrons, and to that end enters into an exclusive contract with one line of drays to perform this service, the owners of other drays may complain if they are excluded from offering their services to shippers in this behalf, is the question of the duties of a com- mon carrier in dealing with a dependent service presented in still another form. The Federal courts, as might be expected, see nothing wrong in such an arrangement. The point is thus made in St. Louis Drayage Company v. Louisville and Nash- 7 See Louisville & N. Ry. Co. v. West Coast N. S. Co., 198 IJ. S. 483, 49 L. Ed. 1135, 25 Sup. Ct. 745 (1905), overruling 121 Fed. 645 (1903), where it was held that if a railroad provided adequate wharfage facili- ties, it might at a particular wharf exclude all but one' line. See, also, Gulf C. & S. F. Co. V. Miami S. S. Co., 86 Fed. 407 (1900). 1:773] § 822] Kailboad Kate Kegui^A-Tion. [Okap. XXIV ville Railroad Campany,® where the facts involved the issue which has juat been raised. In that case Mr. Justice Phillips said : " It was essential that, in selecting a company for the transfer of its freights between St. Louis and East St. Loiiis, it should secure one fully equipped for doing the business, — solvent and reliable. It could not afford to take chances in so grave a matter. It might be unsafe to trust to the caprice of competing transfer companies, or to sporadic rivalries. It could not foresee how long, it would be before the railroad company, in such dependence, might find itself a prey to a ' combine ' among the transfer companies, or become exposed to the not improbable contingency of a rivalry between competing com- panies, which would break both down, leaving, the railroad company without a certain, reliable connection with the city. It would be harsh, unreasonable, and questionable legislation that would deny to the common carrier the protection of a provident, reliable contract, like the one in question. It was essential to a reliable and permanent arrangement that the transfer company should establish and maintain sufficient ware- house buildings for the reception and storage of freights col- lected from the city of St. Louis, and that the company with which it contracted should have ample facilities and equip- ments to successfully carry out such connecting arrangement. All this, the evidence shows, was represented in the business character, standing, and capital of the transfer company, which, without disparaging the business character of the younger com- pany, it is not too much to say, the defendant would not find in the plaintiff company to the extent presented in the transfer company. So long as the public enjoys the advantages of the competition between the defendant company and other railroad companies, in securing through rates for freights to competitive points, it is of no concern to the public that the plaintiff dray- age company cannot share equally in the business of the de- 8 65 Fed. 39 (1894). [774] Chap. XXIV] Dependent Service. [§ 823 fendant company. Especially so when the plaintiff makes no showing of any benefit to the shipper by admitting it to equal facilities with the transfer company." § 823. Permitting installation of telephones. A most' interesting modern instance of the problem arose be- fore the Canadian Board of Railway Commissioners, reported as the Telephone Case.® It appeared in that case that an arrange- ment had been entered into between the Canadian Pacific Rail- way and the Bell Telephone Company by which the telephone com- pany was to have the exclusive right to place instruments in the railway stations. A rival telephone system was therefore ex- cluded from installing an instrument in a railway station. The majority of the tribunal held that there was nothing ille- gal in giving such an exclusive right; but a minority held for the applicants. An extract from each view is given herewith as the case is of first impression. Bailey, J., for the majority, said : " If it be said that the Bell Company has a monopoly, the question may fairly be asked, ' What does their monopoly consist of ? ' Certainly not of the telephone business. There is nothing to prevent telephone companies from being established in any locality where a company with means sufficient for the purpose may choose to locate. The extent of their monopoly so far as affects the present application is the right to have their phones in the railway station on railway premises. The only difference between the Bell Company and any other company is that the railway company's agent may be reached directly by subscribers by phone, other companies not having a phone in the station may reach him indirectly by their agent most conve- niently located. There is, therefore, no monopoly of the busi- ness of telephony ; there is no monopoly of the information which the railway officials have to furnish for the general public ; there will be no material difference in the expense of maintaining 93 Can. Ry. Cas. 203 (1904). [775] § 824] Eailkoad Eate Kegulation. [Chap. XXIV him ; so that, so far as I can discover, the general interests of the public are not prejudicially affected." Commissioner Mills, dissenting, said in part : " In all these cases, however, one thing is clear, viz. : that the fundamental and guiding principle is the public interest, and that no restraint upon trade or restriction upon legitimate business in any part of the country, should be regarded as reasonable and in harmony with public policy, unless it can be clearly shown that it does not interfere or tend to interfere with the rights and interests of the public in that locality. It may be said that an exclusive privilege, such as that in the telephone agreement, does not inter- fere with the public interest, because the public will be better served by a strong, well-equipped organization, such as the Bell Telephone Company, than it would be served if free competition were allowed. That may or may not be so. One thing we know, viz. : that this is the argument of all monopolists. We know, also, that, generally speaking, the people are the best judges of their own interests; and, on a well-established prin- ciple of government in free countries, they should be allowed to decide such questions for themselves — whether to depend wholly on an organization such as the Bell Telephone Company, or to establish a municipal system of telephones for their own use."^** § 824. Fostering monopoly in public services. There have been brought forward now the principal argu- ments for the conservative view and the chief reasons for tne progressive view upon each distinct instance that has arisen under the general problem of the public duty of the common carrier in dealing with the dependent services. Those v>ho argue for the conservative position are prone to rest their case upon practical convenience, assuring us that only if the com- mon carrier be left to deal with these dependent services, as^ the 10 Compare Cumberland Telephone & Telegraph Co. v. Morgan's Louisi- ana R. R., 51 La. Ann. 180, 24 So. 803 (1899). [776] Chap. XXIV] Dependent Seevice. [§ 825 situation may demand, can these diverse problems be success- fully solved in particular cases. But that the monopoly system may be found to work well in particular instances, does not alter the fact that there is real danger in leaving the carrier wholly without the restraint of law, and able, therefore, to exploit those whom it is his duty to serve. The time has long since passed when lazzez faire may be put forward as the better method of dealing with the public services ; and any concession, such as so many courts are willing to make in these instances, that there is no law to be found to restrain the common carriers in dealing with the dependent services, is a survival from that older policy now outgrown in respect to virtual monopolies. But even if the common carrier at times exercises his discre- tion by seeing to it that the dependent service is provided under fair conditions, the danger remains in leaving this important situation without law; for if there is abuse of discretion and those who need the dependent service are systematically ex- ploited, then there will be no law in reserve by which redress is possible. And if experience in dealing with the public service companies is teaching anything, it is showing that only the most comprehensive law will prove effectual; for if a way of escape is left, it will be found. Therefore, it is to be hoped that the progressive program in dealing with this special prob- lem of the relation between the principal sierviee and the de- pendent service will be the one that will prevail. TOPIC D — connecting caeriees. § 825. Discrimination between connecting carriers. One other form of discrimination ought to be discussed in this chapter, and that is differences made by one carrier between rival carriers which connect with it. With some one of these the carrier enters into a contract of one sort or another for through routing to some degree, but it refuses to give some of these privileges, or all of them, to the other. This is, of course, [777] § 826] Eailboad Rate Eegulation. [Chap. XXIV illegal discrimination only to the extent that public duty is involved so that the preliminary question is as to the extent of the duty of -a railroad in dealing v^ith connecting railroads. May it refuse altogether to have dealings with them, to accept goods from them or to deliver goods to them ? Obviously, this will not do ; it is the duty of the railroad as a common carrier to accept of any consignor or deliver to any consignee, whether it be a railroad or a person. On the other hand it can hardly be said that the railroad must accord to all railroads every special privilege that it gives one railroad in a joint traffic agreement; for what it does for one as a favor, another cannot demand as a right. The truth of this matter must therefore lie between these two extremes. § 826. Goods requiring further transportation. A common carrier must accept all goods properly tendered to it ; however strained the relations between two carriers may be, the first carrier may tender goods received from a shipper to the second carrier; and the second carrier must accept these goods and forward them to their destination; for the first carrier in reality is offering the goods to the second carrier as agent of the shipper, to whom it is plain the public duty in the matter is owed.-^ Although one line tendering goods as agent for the shipper may demand whatever the shipper might demand, if acting through any other agent, it cannot demand more. In Southern Indiana Express Company v. United States Express Com- pany^ the plaintiff company complained that the defendant com- pany refused to take parcels from it for further transportation without prepayment of charges, while for allied lines it not only did not require prepayment but even advanced back charges. The plaintiff claimed that this discrimination was a denial of its 1 Beers v. Wabash R. R., 34 Fed. 244 (1888). 2 88 Fed. 659 (1898). [YY8] Chap. XXIV] Depestdsitt Service. [§ 826 public duty. But Mr. Justice Baker held : " There is no prin- ciple of the common law requiring a common carrier receiving articles of trade and commerce from a connecting line to ad- vance or assume the payment of the charges accrued thereon fo'? the transportation of such articles from the point of origin to the connecting line. If it does thus pay or assume such accrued charges, it can retain a lien upon the property transported for their payment as well as for the payment of the charges due to itself for such transportation. An express company, like any . other common carrier, has a right to demand that its charges for transportation shall be paid in advance, and is under no obliga- tion to receive goods for transportation unless such charges are paid if demanded. JTor is such express company under any obligation to pay to the tendering company the charges due to it for its services in transporting such articles of trade and com- cerce from the point of origin to the point of tender. It is true that the general practice is to collect the charges upon delivery of the goods to the consignee, and, when goods are received with- out payment in advance being demanded, it becomes the duty of the carrier to transport them to their destination, or to deliver them to the next receiving carrier. Receiving the goods lor transportation without any demand for prepayment of charges constitutes a waiver of such right. The carrier holds a lien upon the goods for payment of charges, and, in case of a delivery of them to the consignee before payment, it can hold him re- sponsible therefor. The same rule applies whether the articles of trade and commerce are received from the original consignor or from a connecting carrier. An express company, in the absence of contract, is under no obligation to receive and trans- port for the original consignor, or to continue the transportation for a connecting carrier, without the prepayment of its charges if demanded. The furnishing of equal facilities, without dis- crimination, does not require a common carrier to advance money to all other carriers on the same terms, nor to give credit for the [7Y9] § 827] Eaileoad Kate Kegui^tion. [Chap. XXIV carriage of articles of trade and commerce to all carriers because it extends credit for such services to others."* § 827. Transportation in the same cars. As to whether transportation must be given to the goods offered by a first carrier to a second carrier in the cars in which they are tendered by the first carrier, regardless of the desires of the second carrier, there is some conflict of authority. In Oregon Short Line and Utah JSTorthern Railroad Company v. Northern Pacific Railroad Company* the law and fact of this matter were by Mr. Justice Field summarized thus : "As the receiving company is under no obligation to take the freight in the cars in which it is tendered, and transport it in such cars, when it has cars of its own, not in use, to transport it, there can be no custom that it shall pay the owner of such cars, should it receive them in such case, car mileage for their use. The car mileage in that case must be upon an arrangement be- tween the parties. But when the receiving company takes the freight in the foreign cars because it has none of its own out of use to transport it, or because it would injure the freight to transfer it to its own cars, it is the general practice for the receiv- ing company to pay the usual mileage on the cars taken and used, and such practice is a reasonable one, and should be enforced."® 3 Citing Oregon Short Line & U. N. Ry. Co. v. Northern Pac. R. Co., 9 C. C. A. 409, 61 Fed. 158 (1894); Id., 51 Fed. 465 (1892); Little Rock & M. R. Co V. St. Louis S. W. Ry. Co.. 11 C. C. A. 417, 63 Fed. 775 (1894) ; Little Rock & M. R. Co. v. St. Louis, I. M. & S. Ry. Co., 41 Fed. 559 (1890). 4 51 Fed. 465 (1892). 5 The use of cars upon other lines is a service incidental to the receiv- ing, forwarding and delivering of traflfic, and is within the provision of the English Act. Niphwys Casson Slate Co. v. Festiniog R. Co., 2 Nev. & Mac. 73 (1858). Where cars are dissimilar in character a. railway company may refuse to forward, upon reasonable requirements. Caledonian R. Co. v. North British R. Co., 3 Nev. & Mac. 56 (1862). [780] Chap. XXIV] Dependent Seevice. [§§ 828, 829 § 828. Such transportation held obligatory. On the other hand there are several cases, most of them based upon statute, which hold that the railroad is obliged to accept the cars of another road filled with goods and carry them through to their destination. Thus, in an opinion written by Mr. Justice Cooley, in the case of Michigan Central Eailroad Company v. Smithson," is the following statement : " The pri- mary fact that must rule this controversy is that the Michigan Central Railroad Company is compelled to receive and transport over its road all the varieties of freight cars which are offered to it for the purpose, and which are upon wheels adapted to its gauge. It is compelled to do so, first, because the necessities of commerce demand it. It cannot and would not be tolerated that cars loaded at New York for San Francisco, or at Boston for Chicago, should have their freight transferred from one car to another whenever they passed upon another road. Time would be lost, expense increased, injuries to freight made more numer- ous, and no corresponding advantage accrue to any one. It is compelled to do so, second, by its own interest. To attempt to atop every car offered to it at its termini, that the freight might be transferred to its own vehicles, would be to drive away from its line a large portion of its trafiic, and compel it to rely upon a local business."^ § 829. Through traffic agreements. The principal question in this topic is whether, if a railroad enters into through trafiic arrangements with one railroad, it is 6 45 Mich. 212, 7 N. W. 791 (1881). 7 See, to the same effect : Louisville & N. R. R. Co. v. Boland, 96 Ala. 626, 11 So. 667 (1892); Baldwin v. Railroad, 50 Iowa, 680 (1878); C, B. & Q. R. Co. y. Curtis, 51 Neb. 442, 71 N. W. 42 (1897) ; Vermont & M. R. R. v. Fitchburg R. R., 14 Allen (Mass.), 462 (1867); Macklen v. Boston & A. R. R., 1.35 Mass. 201 (1887); Thomas v. Mo. Pac. Ry. Co., 109 Mo. 187, 18 S. W. 980 (1892). [781] § 830] Eailroad Rate Eegulation. [Cliap. XXIV bound to do so with others in the same situation. In the leading case in the United States Supreme Court, Atchison, Topeka and Santa Fe Eailroad v. Denver and New Orleans Railroad,^ it was squarely held that a railroad might enter into through traffic agreements with one railroad, pro rating its through rate, and at the same time refuse to enter into a similar agreement with another railroad traversing the same territory as the iirst and having the same terminus. To quote but one paragraph from the elaborate opinion of Chief Justice Waite: "At common law, a carrier is not bound to carry except on his own line, and we think it quite clear that if he contracts to go beyond he may, in the absence of statutory regulations to the contrary, deter- mine for himself what agencies he will employ. His contract is equivalent to an extension of his line for the purposes of the contract, and if he holds himself out as a carrier beyond the line, so that he may be required to carry in that way for all alike, he may nevertheless confine himself in carrying to the particular route he chooses to use. He puts himself in no worse position, by extending his route with the help of others, than he would occupy if the means of transportation employed were all his own. He certainly may select his own agencies and his own associates for doing his own work." § 830. Through arrangements compelled. In some states, however, under authority of statute, through arrangements may be compelled by the body which has general power of the services and rates of the companies. The ques- tion has been raised whether such statutes are constitutional, but there seems to be little doubt." In holding such a Minne- sota statute valid Mr. Justice Collins said : " We see no reason why, under the amendatory act (Gen. Laws 1895, chap. 91), the commission cannot lawfully compel a joint arrangement in 8 110 U. S. 667, 28 L. Ed. 281, 4 Sup. Ct. 185, B. & W. 265 (1884). 10 State V. Minneapolis & St. L. R. R., 80 Jlinn. 191, 83 N. W. 60 (1900). [782] Cliap. XXIVJ Dependent Seevice, L§ 830 a case like this. The evidence shows that the location of the Dulnth road and the Minneapolis and St. Lonis road, their track facilities, equipment, etc., are such that, by operating together under joint traffic agreements, the cost of the service can be greatly lessened. The public has, at least, a right to share in the benefits of this condition. If it is judicious so to do and of public benefit to have joint traf&c arrangements in any given case, why should not the public be permitted to compel that such arrangements be made 'i " " If the state is to have any voice, therefore, in the establishment of reasonable rates, it must have a voice in some degree and some manner in the business of the carrier. Where a single carrier is being dealt with, this can be accomplished by determining what the operating expenses ought reasonably to be; the reasonable value of the capital invested; what return, under all the circumstances of the case, would be fair ; and then, by adjusting the rate, an economical management is secured. But in a case like the one at bar, where each may plead its inability to make the necessary agreement with the other, the state must have the power to arbitrate between them, and, within proper limitations, compel the acceptance of its award." '•' If the state is powerless to decide as between carriers, we have, as said by counsel for the commission, the following absurdity, namely: '(a) The state may regulate rates ; (b) the rate must be reasonable ; (c) it must afford the carrier compen- sation over and above operating expenses; (d) the method of operating and consequent expenses is beyond the state control.' But this question has heretofore been considered and disposed of in this state adversely to defendant's contention in Jacobson v. Tlailroad Company.^^ It was there held that the act of 1895 did not, under the facts of that case, contravene the federal or the state constitution when conferring upon the commission the power to compel the transfer and interchange of loaded cars, and 1171 Minn. 519, 74 N. W. 893, 40 L. R. A. 389 (1898), affirmed 179 U. S. 287, 4.3 L. Ed. 194, 21 Sup. Ct. 115 (1900). [VS3] § 830] Railboad Eatb Regulation. [Chap. XXIV the making of joint rates for through shipments, where the haul was in part on one, and in part on the other, of two connecting roads. There are no facts here which ta,ke this case out of the operation of the rule thus established, and we must abide by it as perfectly legitimate, until the federal court declares that an error has been committed. We hold, therefore, Laws 1895, chap. 91, is constitutional." [784]' CHAPTER XXV. DISCRIMINATION BETWEEN LOCALITIES. TOPIC A DISOEIMINATION BETWEEN LOCALITIES AT COMMOIT LAW. § 831. Locality has no right to complain of rates at, common law. 832. Discrimination as evidence that the higher charge is unreasonable. 833. Weight to be given to such evidence. 834. Lower rate as evidence of unreasonableness of higher. 835. Higher rate not necessarily unreasonable. 836. What circumstances may be considered. 837. Elements affecting cost of service at one point. TOPIC B UNDUE PKEFBEENCE OF LOCALITIES UNDEE STATUTE. § 838. General principles of statutory regulation. 839. Reasonableness of rate per se immaterial under statute. 840. Interdependence of rates to various localities. 841. What preferential rates are obnoxious. 842. Discrimination explained by circumstances. TOPIC C WHAT CIECUMSTANCES JUSTIFY PEEFEEENTIAL BATES. § 843. Equalization of commercial advantages. 844. Equalizing rates sometimes may be established. 845. Public policy for equalization. 846. Grouping by reason of competition in the articles transported. 847. Burden upon the railroad to defend discriminatory rates. 848. Question of dissimilarity of condition one of fact. TOPIC D LONG AND SHOET HAUL. § 849. Statutes regulating rates for long and short haul. 850. Various systems of making distance rates. 851. Long and short haul at common law. 852. Limitations upon charging less for longer haul. 853. Competition justifies reduction. [V85] .§§ 831, 832] Eaileoad Rate Regulation. [Chap. XXV TOPIC E COMPETITION AS A EACTOE. § 854. Competitive rate must be reasonable. 855. Non-competitive rate must not be extortionate. 856. Competition may affect all parts of a joint rate. 857. Potential competition. 858. Competition artificially removed at the nearer point. 859. Nominal competition as justifying lower rate for longer haul. 860. Stifling of competition by consideration. 861. Carrier need not consider competition. TOPIC A DISCKIMINATION BETWEEN LOCALITIES AT COMMON LAW. § 831. Locality has no right to complain of rates at common law. At common law the carrier deals with individuals, not with cities or towns, and no one but a person has a right to complain that rates are too high. Except under a statute, a city or locality or the citizens in general cannot complain of the rates charged by a carrier. At common law the wrong, if any, is against the individual shippers at the various stations. They may complain if the rates charged them are unreasonable. While discrimination in rates between individuals is illegal, even if the higher rate is reasonable in itself, this is not true as to discrimination between localities. If a general rate charged to all shippers in a certain place is reasonable in itself it is not rendered illegal merely because shippers in another place are charged a lower rate. § 832. Discrimination as evidence that the higher charge is unreasonable. When, however, a rate between two points is attacked by an individual shipper as unreasonable in itself, as evidence in sup- port of the complaint he may show that rates are lower for a similar haul between other points.^ J State V. Minneapolis & S. L. Ry., 80 Minn. 191, 83 N. W. 60 (1900) ; Cordele Machine Shop v. Louisville & N. R. R., 6 I. C. C. Rep. 361 (1895). [786] Chicago to Norfolk, 586 m. Chicago Omaha 119 " Omaha Lincoln " " 134 " Lincoln Sioux Cy. " 74 " Sioux Cy, Chap. XXV] Between Localities. [§ 83S " In determining what would be fair and equitable rates to Norfolk a comparison of population and of rates and distances be- tween eastern points and JSTorfolk and Columbus may be of some advantage. The two cities are located about 50 miles apart, Columbus being a little east of a north and south line through, Norfolk. By the census of 1900 the population of Platte County, in which Columbus is located, was 10,542, while the population of Madison County, in which jSTorfolk is located, was 9,255. The population of Columbus was 8,522, and that of Norfolk was 3,883. The former is the junction point of the Union Pacific and Burlington roads, and the latter the junction of the a, St. P., M. & O. and the F., E. & M. V. roads. The railway distances from eastern points are as follows : to Columbus, 550 m. 91 " 75 " 126 " The rates between Chicago and Norfolk, however, are con- siderably higher than between Chicago and Columbus, and the difference furnishes an indication of the extent to which we re- gard the Norfolk rates as excessive. In other words, taking all the facts and circumstances into account, the reduction which we think should be made would give Norfolk the same Chicago rates as Columbus now enjoys."^ Except so far as it has an evidentiary bearing on the reason- ableness of the rate in question, rates to other places or from other points of shipment are not material at common law.^ § 833. Weight to be given to such evidence. How much weight shall be given to such evidence must, of course, depend on the facts of each case. When rates to Dan- 2Yeomans, Com. in Johnson v. Chicago, S. P., M. & 0. Ry., 9 L C. C. Rep. 221, 244 (1902). '■' Interstate Commerce Commission v. Louisville & N. R. R., 73 Fed. 409 (1896). [787] § 833] Eaileoad Eate Regtjlatioi?^. [Chap. XXV ville were in question the Court gave considerable weight to rates charged for similar hauls. " Whether or not the Daiiville rates are reasonable per se is a question that has given me no small amount of trouble. That the cost of transporting freight by wagons is not a proper test is very clear. The rates at Lynch- burg cannot be alone used as a basis of comparison. The cri- teria to which I think the greatest weight should be given are as follows : The opinions of expert witnesses ; the effect of the present rates on the growth and prosperity of Danville ; the cost of transportation as compared with the rates charged; and the rates in force at numerous other cities, where the circumstances are as nearly similar as may be to those prevailing at Danville. . . . The inconclusive and unsatisfactory results, and the inher- entdifEcultiesin applying the above-mentioned tests., have led me to the conclusion that the most satisfactory test to be applied in this case is to compare the Danville rates with those in force at numerous other cities and towns in the South, where the circum- stances are as nearly as may be similar to those at Danville. This has been done by numerous witnesses for the defense. The rates to and from a great number of towns and cities in the South — some larger and some smaller, some of more and some of less commercial importance, than Danville; some inland and some having water as well as rail transportation; some being on only one railroad and some having more than one road — ^have been shown. The result of comparisons between these rates and the Danville rates is the conclusion that the latter compare favorably with the former. It may be said that the rates used for comparison are themselves unreasonably high. But the expert witnesses for the defense — who alone testify on the point — are of opinion that they are" not ; and, if it be true that they are imreasonably high, evidence to this effect should have been introduced by the complainant. Again, it may be true that there are many cities in the South that are fairly to be compared with Danville, the rates at which are much lower than the Dan- [788] Chap. XXV] Between Localities. [§834 ville rates. But, if so, no evidence to this effect has been introduced." * § 834. Lower rate as evidence of unreasonableness of higher. In the case of Interstate Commerce Commission v. East Ten- nessee, Virginia and Georgia Railway,^ in the Circuit C^urt, Judge Severans expressed the strong opinion that a less rate for a longer haul tended to prove the higher rate unreasonable. "It is assumed in argument by counsel in making defense that the rates to Chattanooga are just and reasonable in themselves. This, it is said, is conceded, and upon the premises it is urged, in substance, that the public at Chattanooga has no right to com- plain if the respondents lower their rates to Nashville. In one sense, this is true. But the suggestion is fruitful of other con- siderations. The question whether the rates are just and rea- sonable in themselves is in some measure a relative one ; that is to say, it may be tested by a comparison of the particular rates with those accepted elsewhere for a similar service, and whether the instances thus employed are or are not such as by their relation to the case in hand are subject to the operation of some other provision of the commerce act, is immaterial. Besides, I think the question of the justness and reasonableness of rates under the first section is colored by the other provisions of the law, and by the general policy of the whole enactment, which is to effect the equality of charges. And, at all events, it seems to me clear that the charges accepted for a longer haul may be referred to for the purpose of considering the reasonableness of the charges made for the shorter haul. Such comparisons are applied to every other kind of business, and the fact that there may be competition in such business would not be a controlling consideration, for the presumption would always be that the com- 4 Quoted from McDowell, Dist. J., in Int. Com. Commission v. Southern Ey., 117 Fed. 741 (1902). 5 85 Fed. 107 (1898). [789] § 835] Eaileoad Eate Eegulatioit. [Cbap. XXV pensation charged for the service or thing is sufficient to be rea- sonable. The presumption is not, of course, a conclusive one, but would seem a fair one, in the absence of special circum- stances. It is not according to my understanding that it is conceded that the rates to Chattanooga are just and reasonable in themselves." In that case the Supreme Court'* did not pass upon the reasou- ableness of the lower rate in itself on the ground that the Com- mission had not done so. But in that and other cases the Supreme Court has carefully refrained from expressing an opinion as to the extent to which the Commission might use the lower rate as evidence of the unreasonableness of the higher rate. § 835. Higher rate not necessarily unreasonable. On the other hand, it has been held that a comparison of rates between two places is not of itself enough to justify the conclusion that the higher rate is unreasonable, even if the dif- ference is not explained by the carrier. " The bill in this ease charges that the rates charged by the appellees on goods shipped from St. Louis and Tennessee points to Hampton, Fla., are unreasonably high in themselves, in vio- lation of section 1 of the act to regulate commerce. As we read the opinion of the Commission, filed as an exhibit to the bill, the Commission did not find that the Hampton rates were in and of themselves unreasonable, but found argumentatively that they were too high, not as based upon the matters to be considered in determining such questions, as pointed out in United States v. Freight Association,'^ and Smyth v. Ames,* but largely upon a consideration of rates and charges between St. Louis, Nashville and Chattanooga, and Jacksonville and Palatka, Fla. The evi- dence submitted to the Commission, supplemented by evidence GEast Tennessee V. & G. Ry. v. Interstate Commerce Com., 181 U. S. 1, 45 L. Ed. 719, 21 Sup. Ct. 516 (1901). 7 ICfl U. S. 331, 17 Sup. Ct. 540, 41 L. Ed. 1007. 8 169 U. S. 546, 547, 18 Sup. Ct. 418, 42 L. Ed. 819. [790] ' Chap. XXV] Between Localities. [§§ 836, 837 taken in the Circuit Court, is not sufficient for us to iind affirm- atively that the Hampton rates were in and of themselves unrea- sonable. The Commission furnishes the authority for the prop- osition that with regard to the exaction of unreasonable rates the burden of proof is on the complainant.® Certainly, the com- plainant has failed in this instance to prove that the Hampton rates were in violation of the first section of the Interstate Com- merce Act." " § 836. What circumstances may be considered. ITnlike circumstances which will justify discrimination are circumstances connected with the traffic over the line on which the discrimination is made. " If the respondent is acting, or claims to act, under the compulsion of circumstances and con- ditions of its own creation or connivance in the making of an exceptional rate, then these will not avail it."^^ Therefore where goods were offered to a carrier at Mobile it could not charge more than the Mobile rate, on the ground that the car- riage of the goods really originated at another place and had been brought from there by a cheap conveyance instead of by a carrier with whom the present carrier had a traffic arrange- ment;*^ and the same thing is true in the case of carriage of passengers. -"^ § 837. Elements affecting cost of service at one point. The comparison between two points may be affected by other circumstances besides competition, so as to prove a discrimina- 9 See Harding v. C, St. P., M. & 0. R. Co., 1 I. C. C. Rep. 104 (1887) j- Brewer v. L. & N. R. R. Co., 71 I. C. C. Rep. 234 (1897). 10 The quotation is from Pardee, J., in Interstate Com. Com. v. Nash- ville, C. & St. L. Ry., 120 Fed. 934 (1903). 11 Business Men's Assoc, v. Chicago, S. P., M. & 0. R. R., 2 Int. Com. Rep. 41, 2 I. C. C. Rep. 52 (1888). i-'Bigbee & W. R. Packet Co. v. Mobile & 0. R. R., 60 Fed. 545 (1893). 13 Bennett v. Button, 10 N. H. 481, B. & W. 105 (1839). [791] § 838] Eailboad Eate Kegulatiow. [Chap. XXV tion between them reasonable. Thus where on one of the hauls there are heavier grades than on the other comparison fails. ^* So where expensive terminal facilities must be provided at one of the points. ^^ And the volume of traffic and the possibility of back freights will also affect the problem.^® TOPIC B^UNDDB PKEFEEEIVCE OF LOCALITIES UNDER STATUTE. § 838. General principles of statutory regulation. But though discrimination between localities is not illegal at common law, it is not infrequently made so by statute; and it is well to examine the question in some detail in order to reach a proper understanding of the statutory provisions. The rule does not forbid all differences between localities, but such only as are undue or unreasonable ; for the statutes general have a saving clause respecting dissimilar conditions and cir- cumstances. The general principle may be thus expressed in one brief paragraph. " It is insisted that these differentials give an undue preference for the reason that they are without excuse or justi- fication. If the assumption of fact embraced in this state- ment is true, the conclusion probably follows. A preference without legitimate excuse would be in and of itself an undue and unreasonable one." ^ It follows from what has just been said ^ that : " A disturb- MBellsdyke Coal Co. v. North British Ry., 2 Ry. & Can. Tr. Gas. 105 (1858); Nitshill Coal Co. v. Caledonian Ry., 2 Ry. & Can. Tr. Cas. 39 (1858). 15 Rice V. Western N. Y. & P. R. R., 2 I. C. C. Rep. 389 (1888).. 16 New Orleans Cotton Exch. v. Illinois Central R. R., 2 Int. Com. Rep. 777, 3 I. C. C. Rep. 534 (1890). 1 Prouty, Com. in New York Produce Exchange v. Baltimore & O. R. R., 7 I. C. C. Rep. 613, 659 (1898). 2Knapp, Com. in Board of Trade of Lynchburg v. Old Dominion S. S. Co., 6 I. C. C. Rep. 632. 646 (1896). [792] . Qhap. XXV] Betweeut Localities. [§ 839 ance of a settled equality between localities by making for the first time a difference between them is prima facie unreason- able, and siiould be looked upon with suspicion." * § 839. Reasonableness of rate per se immaterial under stat- ute. Under the provisions of such a statute, the Interstate Com- merce Act, for instance, the fact that a rate is per se reason- able does not disprove the charge that it is unlawful. If rates are relatively unjust, so that undue preference is afforded to one locality or undue prejudice results to another, the law is 3 The general principles of statutory regulation of local discrimifiation may be seen in: United States Supreme Court: Cincinnati, N. 0. & T. P. Ry. v. Interstate Com. Com., 162 U. S. 184, 40 L. Ed. 935, 16 Sup. Ct. 700, B. & W. 424 (1896) ; Texas & P. R. E. v. Interstate Cora. Com.,'l62 U. S. 197, 40 L. Ed. 940, 16 Sup. Ct. 666 (1896) ; Interstate Com. Com. v. Alabama M. R. R., 168 U. S. 144, 42 L. Ed. 414, 18 Sup. Ct. 45, B. & W. 433 (1897) ; Louisville & N. R. R. v. Behlmer, 175 U. S. 648, 44 L. Ed. 309, 20 Sup. Ct. 209 (1898); East Tenn. V. & G. Ry. V. Interstate Com. Com., 181 U. S. 1, 45 L. Ed. 719, 21 Sup. Ct. 516 (1901); Interstate Com. Com. v. Clyde S. S. Co., 181 U. S. 29, 15 L. Ed. 725, 21 Sup. Ct. 512 (1901) ; Louisville & N. Ry. v. Kentucky, 183 U. S. 511, 46 L. Ed. 403, 22 Sup. Ct. 99 (1902) ; Interstate Com. Com. v. Louisville & N. Ry., 190 U. S. 273, 47 L. Ed. 1047, 23 Sup. Ct. 687 (1904). Federal Courts: In addition to the above cases when before the lower federal courts see Missouri Pac. Ry. v. Texas & Pac. Ry., 31 Fed. 862 (1888); Ea; parte Koehler, 31 Fed. 315 (1888); Interstate Com. Com. v. Atchison, T. & S. F. R. R., 50 Fed. 295 (1892) ; Interstate Com. Com. v. Southern Ry., 117 Fed. 741 (1902), 122 Fed. 800, 60 C. C. A. 540 (1903). State Courts:. Alabama — Lotsperch & P. v. Central Ry. & B. Co., 73 Ala. 306 (1882). Georgia— Logan v. Central Ry. & B. Co., 74 Ga. 684 (1885). Kentucky— Hntcherson v. Louisville & N. Ry., 22 Ky. L. Rep. 361, 57 S. W. 251 (1895). Iowa — Blair v. Sioux City & P. R. R., 109 Iowa, 369, 80 N. W. 673 (1899). [793] § 8 40 J Kaileoad Kate Regulatiok. [Ctap. XXV violated and its penalties incurred, although the higher rate is not in itself excess-ive.* The right of one locality in that re- gard is not increased, nor is the equal right of a competing locality diminished, by municipal subscriptions which were advanced for the building of the road.^ § 840. Interdependence of rates to various localities. The theory upon which these statute's are administered is that there is a certain interdependence in a schedule of rates; and that rates to various related localities should not be out- rageously disproportionate. By this test it is not enough that the rate charged a particular locality is not unreasonable in itself; the requirement of the statute generally is that there shall not be undue preference and priority between localities unless the circumstances and conditions are dissimilar. These elementary principles were well set forth by the Interstate Com- merce Commission in applying the Federal Act in one case.® " It is said that the rate from St. Cloud is reasonable in and of itself. A rate can seldom be considered ' in and of itself.' It must be taken almost invariably in relation to and in con- nection with other rates. The freight rates of this country, both upon different commodities and between different local- ities, are largely interdependent, and it is the fact that they do not bear a proper relation to one another, rather than the fact that they are absolutely either too low or too high, which most often gives occasion for complaint, and which is the ground of complaint here. A rate of 12 cents per hundred pounds on flour from St. Cloud to Duluth may be reasonable when com- pared with a similar rate from Minneapolis. When compared with a rate of 5-| cents from the latter place, it is certainly *Knapp, Com. in Board of Trade of Lynchburg v. Old Dominion S. S. Co., 6 I. C. C. Rep. 632, 646 (1896). 5 Lincoln Board of Trade v. Burlington & M. E. R. R., 2 Int. Com. Rep. 95, 2 I. C. C. Rep. 147 (1888). 6 Geo. Tileston Mill Co. v. Northern P. R. Co., 8 I. C. C. Rep. 354 (1898). r704] Ohap. XXV] Between Localities. [§§ 841, 84S prima facie grossly unreasonable. Minneapolis and St. Cloud are competitors in the milling business, and when this de- fendant charges the St. Cloud miller 12 cents per hundred pounds for transporting his flour from St. Cloud to Duluth, while it ehargesi the Minneapolis miller but 5^ cents for iden- tically the same service plug an additional haul of 60 miles, it is guilty of a discrimination against the St. Cloud shipper, which is not justified by the circumstances of this casie." ^ § 841. What preferential rates are obnoxious. The discrimination in order to be considered must have some appreciable effect. There may be some disproportion in rates for which the carrier is responsible, and which possibly results in some benefits to a given community as against its commercial rival; but to be obnoxious to the law it must appear that the preference and advantage in the one case, and the corresponding prejudice and disadvantage in the other, are so appreciable and established with such a degree of certainty as to be justly de- clared unreasonable.* § 842. Discrimination explained by circumstances. Circumstances m'ay, however, so explain the difference be- tween the rates compared as to deprive the lower of any bearing on the higher. " It is earnestly contended by counsel for the appellant that the rates at the longer-distance points being shown to be reasonably remunerative, and the rates at the shorter-dis- tance points being admitted to be higher, the latter must, of logical necessity, be found to be imreasonably high, and there- fore unreasonable and unjust, and such as give an undue prefer- 7 Because of this interdependence of rates in a schedule, there should be hesitation in setting aside an established rate. Winsor Coal Co. v. Chi- cago & A., 52 Fed. 716 (1891). See, however, Matthews v. Board of Corp. Coramrs., 106 Fed. 7 (1901). sKnapp, Com, in Commercial Club of Omaha v. Chicago & N. R. R., 7 I C. C. Rep. 386, 404 (1897). § 843] Eaileoad Bate Regulation. [Ohap. XXV ence to the longer-distance points, and subject the shorter distance points to an undue and unreasonable prejudice and disadvantage. It will be perceived that this argument excludes all considera- tion of the force of competition, and ignores its presence at the longer-distance points and its comparative absence from the shorter-distance points. What is a reasonable action, or a rea- sonably remunerative rate for carriage, at a given time and place, necessarily has relation to the circumstances and condi- tions bearing upon the actor or upon the carrier at the time and place."* As will be seen in the subsequent discussion, competition is the circumstance which is most commonly relied on to justify discrimination; but any of the circumstances which were dis- cussed in former chapters as affecting the distance-charge would be of equal pertinence. TOPIC C WHAT CIECUMSTANCES JUSTIFY PEEPEBEITTIAIi BATES. § 843. Equalization of commercial advantages. It has sometimes been urged that a carrier should so arrange its rates as to bring about some desirable commercial result, either by equalizing commercial advantages between two locali- ties or by otherwise affecting natural conditions. But this theory is dangerous. The carriers' rates may seldom be regu- lated with such an object in view. As was said in Brewer v. Central of Georgia Railway :" " Shall government undertake the impossible, but injurious, task of making the commercial advantages of one place equal to those of another ? It might as well attempt to equalize the intellectual powers of its people. There should be no attempt to deprive a community of its 9 McCormick, J., in Interstate Com. Com. v. Western & A. E. B ., 93 Fed. 83, 90 (1899). 10 84 Fed. 268 (1897). [796] CKap. XXV] Between Localities. [§ 844 natural advantages, or those legitimate rewards which flow from large investments, business industries, and competing systems of transportation to facilitate and increase commerce." This view has constantly been held and enforced by the Inter- state Commerce Commission, as well as by the courts. " It is not the duty of carriers, nor is it proper, that they undertake by adjustment of rates or otherwise to impair or neutralize the nat- ural commercial advantages resulting from location or other favorable condition of one territory in order to put another terri- tory on an equal footing with it in a common market. Each locality competing with others in a common market is entitled to reasonable and just rates at the hands of the carriers serving it and to the benefit of all its natural advantages. If this result in prejudice to one and advantage to another, it is not the undue prejudice or advantage forbidden by the statute, but flows natur- ally from conditions beyond the legitimate sphere of legal or other regulation." ' ^ § 844. Equalizing r.ates sometimes may be established. The comparison of the rate alleged to be illegal must be made with the rates from neighboring towns, similar in size, situation and volume of competing JrafSc, and at approximately the same distance from common markets.-'^ It is entirely legitimate for a carrier to make a difference 11 Quoted from Freight Bureau of the Cincinnati Chamber of Commerce V. Cincinnati, N. O. & T. P. R. Co., 6 I. C. C. Rep. 195, 4 Int. Com. Rep. 592 (1893). See to the same effect, James & M. Buggy Co. v. Cin- cinnati, N. O. & T. P. R. Co., 3 Int. Com. Rep. 682, 4 I. C. C. Rep. 744 (1893) ; Raworth v. Northern Pac. R. Co., 3 Int. Com. Rep. 857, 5 I. C. C. Rep. 234 (1893); Eau Claire Board of Trade v. Chicago, M. & St. P. K. Co., 4 Int. Com. Rep. 65, 5 I. C. C. Rep. 264 (1892) ; Chamber of Com- merce of Minneapolis v. Great Northern R. Co., 4 Int. Com. Rep. 230, 5 I. C. C. Rep. 571 (1894) ; Commercial Club of Omaha %-. Chicago, R. I. Si P. Ry., 6 I. C. C. Rep. 675 (1896). i'SKnapp, Com. in Eau Claire Board of Trade v. Chicago, M. & S. L. Ry., 4 Int. Com. Rep. 65, 5 I. C. C. Rep. 264 (1892). [707] § 845] Eailboad Rate Regulation. [Chap. XXV ill rates based on a difference in natural advantages/^ but even the most enthusiastic economists would hardly go so far as to argue that the railroads must mate it their policy to equalize natural advantages, to the end that all regions of production shall have equal access to central «iarkets. And surely no rate- making body would compel the establishing of preferential rates. § 845. Public policy for equalization. That there is a certain public policy in permitting, equaliza- tion, subject to strict limitations, may be admitted: " It is not the duty of carriers to disregard distance or natural disadvant- ages of location, and equalize access to markets for all engaged in a coin m on business though differently situated. It may, however, be lawful and be supported by just public considera- tions, for carriers to give equal access to markets to localities of dissimilar distances ; and it may involve no material difference in expense to the carrier. ITo producer or shipper has an exclu- sive right to supply a market, and the interests of consumers and of the general public may justify carriers in enlarging the field from which the demand for a commodity may be supplied on terms of equality for transportation. That is only a recog- nition of the principle that the general interests are paramount to individual or local interests. In other cases it may be unrea- sonable, and therefore unlawful, to give equal rates to diversely situated localities where a demand does not exist for a larger supply, and where conditions intervene that give an undue preference or advantage to the less favorably situated locali- ties." " 13 Commercial Club of Omaha v. Chicago & N. R. R., 7 I. C. C. Rep. 386 (1897). 14 Quoted from Schoonmaker, Com. in Imperial Coal Co. v. Pittsburgh & L. B. R. R., 2 Int. Com. Rep. 436, 2 I. C. C. Rep. 618 (1889). [T98] Ctap. XXV] Betweest Localities. [§§ 846, 847 § 846. Grouping by reason of competition in the articles transported. Grouping is often resorted to in order to preserve competition in commodities carried, where a strict mileage rate would give too great an advantage to the commodities produced at the near- est point to the market. On this ground the railroads entering jSTew York were allowed to group stations which supplied the city with milk, and to charge a uniform rate for milk carried from all stations in the group. ^® But the limitations upon this sort of thing were set forth in a later opinion ^^ by the C'ommisi- sion, in which the prohlem was elaborately discussed and it was held that to be just in such cases reasonable zones ought to be established with a uniform rate within each zone. § 847. Burden upon the railroad to defend discriminatory rates. The question was considered by the Interstate Commerce Commission in connection with rates for the carriage of shingles from Fredericton and Fort Fairiield, respectively, to Boston. The two places in question were situated on different branches of the same railroad. Mr. Commissioner Veazey^'^ said : " A departure from equal mileage rates on different branches or divisions of a road is not conclusive that such rates are unlawful, but the burden is on the company making such departure to show its rates to be reasonable when disputed. " The essential question here is one of relatively reasonable rates ; not whether either rate is reasonable in itself. It is the effect of the carriers' action at one point upon the legitimate business prosperity of another point, which is the vital point in 15 Howell V. New York, L. E. & W. E. R., 2 Int. Com. Rep. 162, 2 I. C. C. Rep. 272 (1888).- 16 Milk Dealers' Assn. v. Delaware, L. & W. Ry., 7 I. C. C. Rep. 92 (1897). "Logan V. Chicago & N. W. R. Co., 2 Int. Com. Rep. 431, 2 I. C. C. Rep. 604 (1889). [700] § 848] Eaileoad Eate Regtjlatioit. [Cbap. XXV this controversy. If the present Fredericton rate does not actually result in profit, the carriers should not seek to coiitrol or stimulate traffic from that point by making the rate so low; and if they carry for unusually small compensation from that place they do so under the plain injunction of the law that their action must not inflict undue prejudice or disadvantage upon other communities or persons. When a carrier engages in trans- portation for which, by reason of competitive conditions or for purposes of its own, it receives lees rates from some patrons and at some localities, it accepts the legal obligation to give impar- tial service to other patrons and at other localities that sustain similar relations to the traffic." ^® § 848. Question of dissimilarity of condition one of fact. The question as to what in any particular case justifies a dif- ference of rate isi one of fact.-'* "As the third section of the act, which forbids the making or giving any undue or unreasonable preference or advantage to any particular person or locality, does not define what, under that section, shall constitute a prefereace or advantage to be undue or unreasonable, and as the fourth section, which forbids the charging or receiving greater compen- sation in the aggregate for the transportation of like kinds of property for a shorter than for a longer haul over the game line, under substantially similar circumlstances and conditions, does not define or describe in what the similarity or dissimilarity of circumstances and conditions shall consist, it cannot be doubted that whether, in particular instances, there has been an undue or unreasonable prejudice or preference, or whether the circumstances and conditions of the carriage have been substan- 18 Manufacturers & Jobbers Union v. Minneapolis &.St. L. E. Co., 3 Int. Com. Rep. 115, 4 I. C. C. Rep. 79 (1891). w Shiras, J., in Interstate Commerce Com. v. Alabama Midland Ey., 168 U. S. 144, 42 L. Ed. 414, 18 Sup. Ct. 45, B. & W. 433 (1897). [800] Chap. XXV] Between Localities. [§§ 849, 850 tially similar or otherwise, are questions of fact, depending on the matters proved in each case." *** TOPIC D LONG AND SHOET HAUL. § 849. Statutes regulating rates for long and short haul. The seeming unfairness of a higher rate for the intermediate short than for the longer haul has led to the passing of statutes in many jurisdictions', forbidding charging less for a long haul than for a short haul embraced in it; the chief of which is the Interstate Commerce Act. In that act the provision ia subject to the condition that the hauls should be under substan- tially similar conditions. There is already a considerable body of judicial interpretation of this prohibition of charging more for short than for long haul, and more especially of the extent to which the modifying clauses affect this prohibition. These cases are considered with some detail in this chapter. § 850. Various systems of making distance rates. These statutory provisions affect rate-making only to a certain extent. " There are four principal methods of mating rates to localities: that prevailing in the Tnmk Line Territory, in prac- tical compliance with the fourth section ; that in the Southeast- em Territory, where basing points or trade centers are recog- nized to which through rates are made and the local rates are added for rates to tributary territory. To the Pacific coast, water competition has brought about low rates, and a combina- tion of these with the local rate back fixes the rates for the interior mountain territory points. In the ease under considera- ■20 Citing Denaby Main Colliery Co. v. Manchester, &c., Ry. Co., 3 Ry. & Can. Cas. 426 (1876) ; Phipps v. London & Northwestern Railway [1892], 2 Q. B. 229; Cincinnati, N. 0. & Tex. Pac. Ry. v. Interstate Commerce Commission, 162 U. S. 184, 40 L. Ed. 935, 16 Sup. Ct. 700 (1896) ; Texas & Pacific Railway v. Interstate Commerce Commission, 162 U. S. 197, 40 L. Ed. 940, 16 Sup. Ct. 666 (1896). [801] § 851] Eaileoad Eate Regulation. [Chap. XXV tion rates are made to Colorado coimnon points with. Denver, Colorado Springs, Pueblo and Trinidad named as such points in the schedules, but there are several hundred smaller interme- diate points to which the rates apply, so that the system is nearly the equivalent of a blanket rate, or a like rate for a large territory. The coast system of rate-making by adding the local back to the low through rate arouses complaints, for the reason that the shortest haul where the system prevails has the highest rate; that is, rates .are lower the nearer to the coast terminal — an apparent violation of the fourth section. The basing point system arouses friction, in that rival centers and shorter-distance points demand like privi- leges, and the blanket rate finds objectors where an im- portant point is ambitious to supply the surrounding territory. Each has its advantages and each is open to some objections." ^ § 851. Long and short haul at common law. The charge by a carrier of a less rate between two points than it charges for carriage from the same initial point to an intermediate point seems at first sight indefensible. In the case of carriage of passengers it would be difficult to enforce the higher charge upon a conveyance which stopped at the inter- mediate point ; for the passenger who had bought a ticket to the point of destination could not be restrained fromi leaving the train at an intermediate station. It would seem to be actionable false imprisonment to keep him on the train against his will. A train might, to be sure, run from one end to the other of the long haul without stopping at the intermediate station; and a reason- able schedule might be so arranged as to run no accommodation train through from one end of the long haul to the other. Only in that way could a lower rate for the long haul be effectually enforced. In the case of carriage of goods, also, it appears to be dear 3 Quoted from Kindel v. Boston & A. R. R., 11 I. C. C. Rep. 495 (1905). [802] Ciiap. XXV] Between Localities. [§ 852 abstractly that the owner may demand that his goods shall be delivered up to him at any point on the journey, provided it is reasonably easy for the carrier to comply with the demand. It is of course possible for a railroad to run freight trains through without stopping from one end to the other of the long haul, and thus defeat the demand of the owner to have his goods at the intermediate point; and it is also in its power so to make up the train that it will be difficult to drop goods directed to the end of the route at a way station. This being the case, it is not a diffi- cult matter in the case of goods to defeat the demand of an owner for the delivery of his goods short of their destination ; and as a practical matter, therefore, a lower charge for a longer haul may be enforced. § 852. Limitations upon charging less for longer haul. As a matter of reasonableness the charge has still to be justi- fied at common law ; but this may be done in some cases. If competition is met at one point and not at another, a competitive rate is established at the former point. A railroad whose line runs through the non-competitive to the competitive point must at the latter point either meet the competitive rate or lose all business. It must of course give up the business rather than carry at a loss, and throw upon the remaining traffic the burden of supporting the road and also of making up the loss. But the competitive rate is ordinarily slightly remunerative ; it yields a net income, though less than is necessary to pay its proportion of the fixed charges. If the business is given up, all the fixed charges must be paid by the traffic at the non-competitive points ; if the competitive rate is met and business obtained, the profit from the business will go to reduce the amount of fixed charges to be paid by the non-competitive traffic. As the competitive traffic will not pay its share of the fixed charges, the non-com- petitive traffic, having more than its share of the fixed charges to bear, will necessarily pay a rate higher than the competitive rate in proportion to the distance; and it may well be obliged § 853] Eaileoad Rate Regulation. [Chap. XXV to pay absolutely a higher rate than the competitive rate for a longer haul. Nevertheless, the rate will be lower than it would be if the railroad did not meet the competitive rate and obtain its share of the business; and therefore, being the lowest rate which the carrier can charge and obtain fair compensation, it is reasonable at common law. § 853. Competition justifies reduction. Led by these considerations, the courts have held that competi- tion at the more distant point will constitute such dissimilarity of conditions as to justify a lower rate for the longer haul.^ The most elaborate argument in favor of that view has been made by Mr. Justice White in East Tennessee, Virginia & Georgia Railway v. Interstate Commerce Commission.^ " The only principle by which it is possible to enforce the whole statute is the construction adopted by the previous opinions of this court; that is, that competition which is real and substantial, and exercises a potential influence on rates to a particular point, brings into play the dissimilarity of circumstance and condition 2 An important series of recent cases in the United States Courts es- tablished this doctrine: United States Supbeme Cocbt: Cincinnati, N. O. & T. P. Ry. v. Interstate Com. Com., 162 U. S. 184, 40 L. Ed. 935, 16 Sup. Ct. 700 (1896); Texas & P. Ry. v. Interstate Com. Com., 162 U. S. 197, 40 L. Ed. 940, 16 Sup. Ct. 666 (1896); Interstate Com. Com. v. Alabama Mid. Ry., 168 U. S. 144, 42 L. Ed. 414, 18 Sup. Ct. 45, B. & W. 433 (1897); Louisville & N. Ry. v. Behlmer, 175 U. S. 648, 44 L. Ed. 309, 20 Sup. Ct. 209 (1898) ; East Tenn. V. & G. Ry. v. Interstate Com. Com., 181 U. S. 1, 45 L. Ed. 719, 21 Sup. Ct. 516 (1901); Interstate Com. Com. v. Clyde S. S. Co., 181 U. S. 291, 45 L. Ed. 866, 21 Sup. Ct. 512 (1901). Federal Coubts: , In addition to the above cases, vi^hile in various stages below, see: Missouri Pac. Ry. v. Texas & P. Ry., 31 Fed. 862 (1886) ; Ex. p. Koehler, 31 Fed. 315 (1886); Interstate Com. Com. v. Atchison, T. & S. F. Ry., 50 Fed. 295 (1892); Interstate Com. Com. v. Southern Ry., 105 Fed. 703 (1900). 3 Supra. [804] Olxap. XXV] Between Localities. [§ 854 provided by the statute, and justifies the lesser charge to the more distant and competitive point than to the nearer and non- competitive place, and that this right is not destroyed by the mere fact that incidentally the lesser charge to the competitive point may seemingly give a preference to that point, and the greater rate to the non-competitive point may apparently engen- der a discrimination against it. . . . If the carrier was pre- vented under the circumstances from meeting the competitive rate at ISTashville, when it could be done at a margin of profit over the cost of transportation, it would produce the very dis- crimination which would spring from allowing the carrier to meet a competitive rate where the traffic must be carried at an actual loss. To compel the carriers to desist from all iN'ashville traffic under the circumsitanees stated would simply result in de- flecting the traffic to Nashville to other routes, and thus entail upon the carriers who were inhibited from meeting the competi- tion, although they could do so at a margin of profit, the loss which would arise from the disappearance of such business, without anywise benefiting the public." TOPIC E COMPETITION AS A FACTOE. § 854. Competitive rate must be reasonable. On the other hand, considerations which must lead the courts to some limitation of this doctrine were thus expressed by Judge Severens in the court below :^ " If railway carriers engage in a competitive struggle for business at a place where they meet, and underbid each other or other carriers to a point which is not in itself remunerative, can they turn back on the line, and takin?^ advantage of the conditions existing at other localities, arising either from the fact that there is no opportunity for competition, or from the fact that by concert of the carriers there is none, 1 Interstate Commerce Com. v. East Tennessee V. & G. Ry., 85 Fed. 107, 115 (1898). [S05] § 855] Kaileoad Eate Regulation. [Cbap. XXV charge such rates for the shorter haul as shall make good their lack of profits in competitive business, and even up the profits on their whole business to the point they set before themselves as reasonable? To the proposition thus roundly stated, no doubt counsel for the carriers would say that they could not contend for it. And yet this is the result reached by the not very indirect steps of the argument. And the proposition itself cannot be admitted without ' tearing up by the roots ' the whole scheme of the commerce act. This is one of the considerations tending to minimize somewhat the privilege arising from competition." And this Mr. Justice White reiterated, clearly expressing the nature of the limitation. " That, as indicated in the previous opinions of this court, there may be oases where the carrier cannot be allowed to avail of the competitive condition be- cause of the public interests and the other provisions of the statute, is of course clear. What particular environment may in every case produce this result cannot be in advance indicated. But the suggestion of an obvious case is not inappropriate. Take a case where the carrier cannot meet the competitive rate to a given point without transporting the merchandise at less than the cost of transportation, and therefore without bringing about a deficiency, which would have to be met by increased charges upon other business. Clearly, in such a case, the engag- ing in such competitive traffic would both bring about an unjust discrimination and a disregard of the public interest, since a tendency towards unreasonable rates on other business would arise from the carriage of traffic at less than the cost of trans- portation to particular places.^ § 855. Non-competitive rate must not be extortionate. On the other hand the rate to the intermediate point where there is no competition must not be unreasonable in itself. 2 White, J., in East Tennesaee V. & G. R. R. v. Interstate Commerce Com., 181 U. S. 1, 19, 45 L. Ed. 719, 21 Sup. Ct. 516 (1901). [806] Cliap. XXV] Between Localities. [§§ 856, 857 Tihe Supreme Court has guarded its opinions to this extent: " In order further to guard against any misapprehension of the scope of our decision, it may be well to observe that we do not hold that the mere fact of competition, no matter what its character or extent, necessarily relieves the carrier from the restraints of the third and fourth sections, but only that these sections are not so stringent and imperative as to exclude in all cases the matter of competition from consiideration, in determining the questions of ' undue or unreasonable prefer- ence or advantage,' or what are ' substantially similar circum- stances and conditions.' The competition may in some cases be such as, having due regard to the interests of the publia and of the carrier, ought justly to have effect upon the rates, and in such cases there is no absolute rule which prevents the commission or the courts from taking that matter into consider- ation." * § 856. Competition may affect all parts of a joint rate. In Interstate Commerce Commission v. Cincinnati, Ports- mouth & Virginia Railroad,* the rates between the west and Wilmington, North Carolina were attacked as unreasonably high compared with the rates from the same points to ISTorfolk and Richmond. The greater part of the carriage in all cases was a common haul over trunk lines ; and those lines exacted as their part of the through rate for the same haul on their roads, a much greater amount for goods destined to Wilmington than for goods destined to Richmond or Norfolk. This difference was held justified by the active competition at the latter points. § 857. Potential competition. Whether potential river competition which is not actual can be considered was discussed by the Circuit Court of Appeals 3Mr. Justice Shiras, in Interstate Commerce Com. v. Alabama Midland Ry., 168 y. S. 144, 167, 42 L. Ed. 414, 18 Sup. Ct. 45 (1897). 4 124 Fed. 624 (1903). [807] § 857] Eailroad Eate Regulation. [Ckap. XXV' in East Tennessee, Virginia & Georgia Railway v. Interstate Commerce Commission.® The facts were not shown to present a case of even potential competition; bnt Judge Taft seemed on the whole to agree that mere potential competition might properly affect the rate. The effect of the Erie Canal upon grain freight rates was cited as a significant example of merely potential competition affecting the rates. If, however, a potential competition has not in fact affected rates, it clearly need not be considered. This was clearly held by the Supreme Court.® Mr. Justice White said : " In the report of the Commission a suggestion is found that LaGrange should be entitled to the same r^te as Atlanta, because, if the carriers concerned in this ease in connection with other carriers reaching LaGrange chose to do so, they might bring about com- petition by the way of a line between Macon and LaGrange which would be equivalent to the competitive conditionsi exist- ing at Atlanta. We are unable, however, to follow the sug- gestion. To adopt it would amount to this: That the sub- stantial dissimilarity of circumstances and conditions provided by the Act to Regulate Commerce would depend, not as has been repeatedly held, upon a real and substantial competition at a particular point affecting rates, but upon the mere possi- bility of the arising of such competition. This would desitroy the whole effect of the Act, and cause every case where com- petition was involved to depend, not upon the fact of its exist- ence as affecting rates, but upon the possibility of its arising. What the 4th section of the Act to Regulate Cbmmerce has reference to is an actual dissimilarity of circumstancesi and conditions, not a conjectural one." 599 Fed. 52, 39 C. C. A. 413 (1899). 6 Interstate Commerce Com. v. Louisville & N. K. R., 190 U. S. 273, 47 L. Ed. 1047, 23 Sup. Ct. 687 (1903). [808] § 859] Eaileoad Eate Kegulation. [Chap. XXV § 858. Competition artificially removed at the nearer point. The question whether a higher rate can be justified for the shorter haul when the natural competition at that point has been removed artificially by an agreement of all the carriers there was considered by Judge Taft in East Tennessee, Virginia & Georgia Railway v. Interstate Commerce Commis'sion.^ The rates from jSTashville through Chattanooga to the southern sea- board were lower than those from Chattanooga. The dis- crimination was justified on the ground that there was com- petition in JSTashville, but not in Chattanooga. In the physical conditions of the cities there was no reason for the distinction ; each was situated on a navigable river, and each was a rail- road center. More roads entered Chattanooga than Nashville. But the Chattanooga rates were fixed and agreed upon by an association of the Southern railways and steamship com- panies. Judge Taft regarded such a stifling of competition as no excuse for the higher rate. The Supreme Court* reversed the judgment of the Circuit Court of Appeals, not because the latter erred in its law, but because the finding of facts was not justified by the record. § 859. Nominal competition as justifying lower rate for longer haul. In East Tennes'see, Virginia and Georgia Railway v. Inter- state Commerce Commission,® Judge Taft in the Circuit Court of Appeals dealt with an apparent competition which was not real because of a secret arrangement between the carriers. The lower rates for the longer haul from JSTashville to the sea- board were justified by the competition at JSTashville between two railroads, the Louisville & I^ashville and the Nashville, Chatta- nooga and St. Louis. There was an apparent competition be- 7 99 Fed. 52, 39 C. C. A. 413 (1899). 8 East Tennessee V. & G. Ry. v. Int. Com. Com., 181 U. S. 1, 45 L. Ed. 719, 21 Sup. Ct. 512 (1901). 99 Fed. 52, 39 C. C. A. 413 (1899). [809] Chap. XXV] Between Localities. [§§ 858, 859 tween these -roads, and they named independent rates; but the latter road was controlled by the former through ownership of a majority of the stock. The Circuit Court of Appeals held that this was not a real competition, and could not be considered as a dissimilar circumstance which would justify a difference in rates. Judge Taft said : " We know that it is stipulated in the record that the officers of the Nashville, Chattanooga & St. Louis Kailway Company would testify that it competes with the Louisville & ISTashville Railroad Company, and that they are under different managements; but such evidence must be weighed in the light of the history of railroads in this country, and the motives that ordinarily govern in railroad manage- ment. One railroad company acquires the controlling interest in another company to control its general policy ; and, while it may permit independence in the personnel and the details of management, it needs more than a stipulated statement of this general nature to induce a belief that the company which elects the directors of the other will permit that other to take a course materially detrimental to the interests of the owning com- pany," The Supreme Court ^" reversed the decision on the ground that the facts on which it was based were at variance with those found by the Commission ; and the court refrained from expressing its opinion upon the proposition of law. It is difficult to see how any doubt can exist on the point. If the Circuit Court of Appeals was right in finding that the com- petition which appeared to exist at ISTashville was in reality stifled by a control of all carriers by one of them, there was surely no such competition as would create a dissimilar con- dition by forcing upon one road a low competitive rate. In a later case in the Supreme Court,^^ Mr. Justice White said: 10 East Tennessee V. & G. Ey. v. Int. Com. Com., 181 U. S. 1, 45 L. Ed. 719, 21 Sup. Ct. 512 (1901). 11 Interstate Commerce Com. v. Louisville & N. R. R., 190 U. S. 273, 47 L. Ed. 1047, 23 Sup. Ct. 687 (1903). [810] ahap. XXV] Between Locauties. [§§ 860, 861 " Of course, if, by agreements or combinations among carriers, it were found that at a particular point rates were unduly in- fluenced by a suppression of competition, that fact would be proper to consider in determining the question of undue dist- crimination and the reasonableness per se of the rates at such possiible competitive points." § 860. Stifling of competition by consolidation. Where competition at the intermediate point is stifled, not by an agreement among the competing roads, but by a con- solidation of all the roads into one, it has been urged that for the purpose of determining the reasonableness of discrimination the point should continue to be regarded as a competitive point. This was urged in the Danville case.^^ The rates between Southern and Western points and Danville were very much higher than those between the same points and Lynchburg, the business rival of Danville. There was an active competition between railroads at Lynchburg. Such competition had existed at Danville, but all the other roads were absorbed by the South- em Railway. The courts held the discrimination justified. The case went off on the ground that before the consolidation of the last competing road with the Southern the rates were as high as at the time proceedings were begun. § 861. Carrier need not consider competition. The carrier is not bound to consider competition in fixing its rates, and to give a lower rate to a competitive point. " ISTow, to anyone who has given the Act to Regulate Commerce much at- tention it must be obvious that a eomplainst against a carrier that it gives to non-competitive points the same rates which it gives to competitive is not a complaint that the Act is violated. On the contrary, the spirit and purpose of the Act require that 12 Interstate Commercfe Commission v. Southern Ry., 117 Fed. 741 (1902), 122 Fed. 800, 60 C. C. A. 540 (1903). [811] § 861] Eaileoad Eate Regulation. [Clttap. XXV when tlie circumstances and conditions will fairly admit of it the charges to all points for a like service should be made rela- tively equal. If, therefore, this defendant were to so arrange its tariffs as to give the least important station on its line rates as favorable as it allowed to the most important, there would in its doing so be nothing out of harmony with the Law. The result might for a time be prejudicial to competitive points, but the carrier cannot be blamed for a consequence which the Law favors ; and there can be no doubt that the Law favors Keidsville and Goldsboro' having rates as low as are given to Danville or to Richmond when the circumstances and conditions are such as to render it practicable. There is nothing, therefore, in the giving of such rates which the law will discountenance, much less punish." ■'^ isCooley, ConSmissioner, in Crews v. Kichmond & D. R. R., 2 Int. Com. Rep. 703, 1 I. C. C. Rep. 401 (1888). [812] BOOK III. STATUTOKY REGULATIOI^ OF KAILROAD RATES PART I. Examination of Ameeican Legislation. CHAPTER XXVI. HISTORY OF STATUTORY REGULATION. TOPIC A LEGISLATION IN ENGLAND SINCE 1830. § 871. Carriers' limitation of liability before 1830. 872. The Carriers' Act of 1830. 873. The Railway and Canal Traffic Act of 1854. 874. The Railway and Canal Commission. TOPIC B LEGISLATION IN AMERICAN STATES. § 875. Early railway charters in the United States. 876. Granger legislation. 877. Railroad Commissions. 878. Regulations .i,gainst discrimination. TOPIC C FEDER.U, LEGISLATION SINCE 1887. § 879. The Interstate Commerce Act. 880. The Elkins Act of 1903. TOPIC D INTEEPEETATION OF THE INTERSTATE COMMERCE ACT. § 881. The long and short haul clause. 882. The fixing of rates. 883. Through routes. TOPIC E THE BATE REGULATION ACT OF 1906. § 884. Occasion for the act. 885. Extension of scope of the Interstate Commerce Act. 886. Private switches. 887. Private car lines. 888. Dealing by railroads In commodities. 889. Rate fixing and court review. 890. Through routes and rates. [813] §§ 871, 872] Eaileoad Kate Eegulation. [Chap. XXVI TOPIC A LEGISLATION IN ENGLAND SINCE 1830. § 871. Carriers' limitation, of liability before 1830. The practice of the carriers of escaping full liability for goods carried became established at a very early date. The hint for this was given by Lord Coke in his report of Southcote's case.-* In a note to that case he pointed out the desirability of bailees' making a special acceptance of goods to hold as their own in order to escape the absolute liability which, as he believed, all bailees underwent. His view as to the absolute liability of all bailees was soon modified by the courts, but carriers continued under this liability, and indeed the stringent nature of their ob- ligation was increased by the decision of the Court of the King's Bench in the case of Forward v. Pittard.^ In order to escape this excessive obligation, carriers came more and more to limit their liability by special acceptance. This was usually effected by the giving of notice to ship'pers that the carrier would not be responsible under certain circum- stances, or to the full extent of the value of the goods carried. These notices were usually posted in the shipping office, and were often contained in advertisements in newspapers. The courts allowed the practice and permitted the carriers thus to limit their liability. Eventually the carriers attempted so great a limitation of their liability that shippers were really left without protection, and it became necessary to correct the evil by legislation. This was the occasion of the first English statute. § 872. The Carriers' Act of 1830. The Carriers' Act of 1830 applied to all carriers by land. Its most important provision forbade the limitation of liability by. public notice, permitting, however, the carrier to make special 14 Coke, 83b (1601). 2 1 T. R. 27 (1785). [814] Ciiap. XXVI] Statutoey Kegulation. [§ 8Y3 contracts for the conveyance of goods.* The statute further exempted the carrier fromi liability beyond the value of £10 unless special notice of value was given.* Under this Act the giving of special notices ceased for several years, but finally the carriers again attempted to limit their liability by the giving of special notice, and the courts finally found a way of permitting the limitation of liability in this way notwithstanding the provisions of the statute. In the case of Walker v. York and No. Midland Railway,^ the plaintiff sued the carrier for the loss of fish he had shipped, which had been injured by the negligent delay of the carrier. The defendant had distributed to the plaintiff and others printed notices saying it would not be liable for any damage caused by delay and that no servant had any authority to alter this condition. The plaintiff claimed that he was not bound by such a notice, and that it would not protect tlie carrier, and, so claiming, he shipped the fish. The court advised the jury if they found that the plaintiff had received the no- tice to find for the defendant, unless the plaintiff had unam- biguously refused to deliver the goods on the terms of the notice and the defendant had acquiesced in the refusal. Under this instruction the jury found for the defendant, and the Court of the Queen's Bench held the verdict correct. § 873. The Railway and Canal Traffic Act of 1854. Partly as a result of this practice of the carriers thus legalized by the courts, Parliament passed the Railway and Canal Traffic Act of 1854.'' This Act applied only to carriers by railway and canal. It forbade the limitation of liability by notice and pro- vided that no contract limiting liability should be valid unless it 3 11 Geo. 4 & 1 Wm. 4, e. 68, §§ 4, 6. ilbid, § 1. 5 2 E. & B. 750 (1853). 6 17 & 18 Viot. e. 31. [815] § 874] Eaileoad Rate Eegulation. [Chap. XXVI was in writing and signed by the shipper. In addition to this provision it contained several other important regulations of carriage by railway. In the second section it provided that every railway and canal company should afford all reasonable facilities for the receiving and forwarding and delivering of traffic upon and from the sev- eral railways and canals and for the return of carriages, trucks, boats, and other vehicles ; that no such company should give any undue or unreasonable preference or advantage to or in favor of any particular person or company, or any particular description of traffic, or subject any person, company, or description of traffic to any undue or unreasonable prejudice or disadvantage in any respect whatsoever; and that every such carrier having a railway or canal which formed a part of a continuous line of communication or which had a station near the station of another carrier should afford all due and reasonable facilities for receiv- ing and forwarding all the traffic arriving by one or the other such railway without any unreasonable delay or preference or advantage, so that no obstruction might be offered to the public desirous of using such railways -or canals as a continuous line of communication, and so that all reasonable accommodation might at all times be afforded to the public. In the third section it was provided that any company or per- son might complain of a violation of the act in any of the courts, and that the attorney-general might complain on behalf of the public; that injunctions might be issued and a penalty exacted for disobedience of such injunction. § 874. The Railway and Canal Commission. In 1888 ^ a commission was established in Great Britain, called the Railway and Canal Commission, with both adminis- trative and judicial duties. The Commission is composed of two appointed members (one of them experienced in railroad 7 51 & 52 Vict. c. 25. [816] Chap. XXVI] Statutory Regulation. [§ 874 business) and a judge of the Superior Court, appointed in each country of the United Kingdom for the business of that country. All three commissioners sit in each case brought before the Commission ; but the two appointed members may do ad- ministrative business. To this Commission the returns are to be made; and they are to hear complaints for violation of the provisions of the Railway and Canal Traffic Act or other regu- lative acts, and any dispute with regard to tolls, rates and charges. They may order such reasonable facilities for traffic as the interests of the public may require. They may award damages for violations of law or for overcharge; but no dam- ages can be awarded for overcharge where the rate charged had been properly published. The Commission may order two or more companies to make joint arrangements for traffic, and apportion the expense. Complaint may be made by munic- ipal bodies or by trade associations. On questions of fact no appeal is allowed from an order or decision of the Commission. On any question of law the judi- cial member of the Commission shall decide, in case of differ- ence of opinion; and from the decision of the Commission an appeal lies regularly to the Court of Appeal and thence to the House of Lords. On appeal the court may draw such inferences as are not inconsistent with the facts expressly found, when it is necessary to determine the question of law. A classification and rate sheet must be siubmitted by every railway to the Board of Trade, which after hearing passes upon it; the schedule after approval is then introduced into Parliament and passed as a statute, fixing thereby the max- imum rates of the railway. If the schedule of the railway is not approved, the Board of Trade may make and in- troduce into Parliament its own schedule. The Railway and Canal Traffic Act is amended by providing that if a joint rate is necessary as a reasonable facility for traffic, the railways may be required to make a joint rate. Differences [81Y] § 874] Kaileoad Kate Eegulation. [Chap. XXVI in charges for similar services to traders of different districts presumably constitute an undue preference, and the burden of proving them reasonable is on the railway. The Commission may so far as it thinks reasonable consider whether such differ- ence is necessary " for the purpose of securing in the interests of the public the traffic in respect of which it is made;" provided no difference shall be made in the treatment of home and foreign merchandise. The (IJommissi oners have power to direct that no higher charge shall be made to any person for services in respect of merchan- dise carried over a less distance than is made to any other,persoit for similar services in respect of the like description and quan- tity of merchandise carried over a greater distance on the same line of railway. Group rates are permitted. Provisions are made for posting the tariff sheet at stations; for complaints to the Board of Trade ; for filing returns ; and for the Board of Trade making rules and regulations. Six years later, by an amendment," it was provided that if a railway increased its rates, and a shipper filed a complaint with the Commission, the complainant (unless otherwise ordered by the Commission) need pay at the outset no more than the old rate; and the burden is on the railway to justify the increase. In 1904 it was provided further ' that the reasonable facilities required by the Railway and Canal Traffic Act shall include reasonable facilities for the junction of private sidings or private branch railways with the main line, and reasonable facilities for receiving, forwarding and delivering traffic upon and from those sidings or private branch railways. 8 57 & 58 Vict. c. 54. 9 4 Edw. 7 c. ]9. [818] Cbap. XXVI] Statutory Eegulation. [§§ 875, 876 TOPIC B LEGISLATION IN AMERICAN STATES. § 875. Early railw.ay charters in the United States. The beginning of statutory regulation of the American rail- ways is coeval with the railways themselves. The first railway charters contained regulations as to the doing of the business, which have been of considerable importance in the history of statutory regulation. One of the earliest such charters was that of the Baltimore & Ohio Railway in 1827.^ This charter, among other provisions, limited the amount of tolls to be charged for freight and also expressly reserved to any future company the right to connect with the road. The charter of the Worces- ter Railroad in 182^ limited the toll to six cents a ton per mile.^ Other charters limited the earnings of the railroad to a certain percentage each year to amounts varying from ten to twenty- five per cent per annum. § 876. Granger legislation. Between 1870 and 1880 the western states began to pass strin- gent statutes for the regulation of railway charges. The rail- ways running through this section were principally organizea and owned in the eastern states, and the farmers of the west had become dissatisfied with the treatment they received, believing that the roads were managed exclusively in the interest of their eastern owners. The cruder legislation at the beginning of this period provided in the statute itself maximum rates for the car- riage of freight. For instance, in the constitution of 1870 * the Illinois legislature was given express power to establish rea- sonable maximum rates by railroads for the transportation of passengers and freight on the different railroads of the State. 1 Laws of Maryland, 1826, o. 123. 2 Massachusetts Acts of 1829, c. 26. 3 Art. XI, sect. 12. [819] §§ 878, 877] Eaileoad Eate Eegulation. [Chap. XXVI Extracts from some State statutes belanging to this period are in chapter xxxvi. § 877. Railroad commissions. The regulation of charges by direct legislation was found not to be a convenient or effective method, and the States soon agreed in establishing State commissions, which were given in several States the power to fix maximum rates. The move- ment for the establishment of railroad commissions has covered the entire country. Almost every State has such a commission, although the powers entrusted to it differ widely in the different States. Some commissions have been granted full power to fix rates ; others have power to revise rates, while many are simply established to investigate railroad conditions and report to the legislature. In chapter xl extracts from these State statutes are given. The effectiveness of these commissions has depended to a great extent upon the skill and ability with which they are ad- ministered, and the confidence felt in their decisions. Thus one of the most efficient is the Massachusetts Eailroad Commis- sion ; yet its power over the railroads is merely advisory. With- out any power whatever to fijt rates, it nevertheless indicates to the railroads what rate in ita opinion is reasonable, and in no instance has its recommendation been neglected; because if such a recommendation were reported to the legislature as disregarded by the railroad, a statute would undoubtedly be passed to enforce it. The similarity of this practice with the English law will be noted. § 878. Regulations against discrimination. Meanwhile -Qther difficulties were felt by the people beside that of excessive charges. The discrimination of railroads in favor of certain shippers came to be an industrial evil, and pro- visions were adopted in State after State forbidding such dis- [820] Chap. XXVI] Statutory Regulation. [§ 879 crimination. Among the earliest was that contained in the constitution of Pennsylvania of 1873, in which it was provided that persons and property should be transported without undue or unreasonable discrimination in charges or in facilities. In chapter xxxvii extracts from these various State statutes are given. TOPIC C FEDEEAL LEGISLATION SINCE 1887. § 879. The Interstate Commerce Act. The power given to Congress by the constitution over com- merce between the States was not taken advantage of until the year 1887, when the Interstate Commerce Act^ was passed. This act was founded to a considerable ex- tent on the English Railway and Canal Traffic Act, al- though many of its provisions were influenced by prior State legislation. In that Act the Interstate Commerce Commission was created; railroads were forbidden to discrimi- nate between persons, places or varieties of traffic. The Com- mission was given the power to investigate alleged violations of the Act and to make orders thereon and power was given to the courts to act in support of such orders. One or two particular abuses were directly forbidden. Thus it was forbidden to charge more for a shorter than for a longer haul in the same direction and over the same route under substantially similar conditions, and the practice of giving rebates or free carriage was forbidden. Amendments to the Act were made in 1889 ^ and 1891 ^ per- fecting the Act, extending the power of the federal courts, and supporting the Commission in its investigations by giving it greater power to summon witnesses and elicit testimony. lAct of Feb. i, 1887; 24 Stat. 379, 3 Comp. Stat. p. 809. 2 Act of March 2, 1889; 25 Stat. 855. 3 Act of February 10, 1891; 26 Stat. 643. [821] §§ 880, 881] Kaileoad Eate Regulation. [Chap. XXVI § 880. The Elkins Act of 1903. In 1903 the so-called Elkins Act was passed to perfect the Act.* In the first section corporation commerce carriers are made criminally responsible for violations of the Act. In the second section provision is made for bringing into any proceed- ing before the Commissiion all carriers or other persons inter- ested in the inquiry. In the third section jurisdiction is given to the courts sitting in equity, at the request of the Commission, to inquire into and enjoin any infraction of the provisions of the Act These suits shall be prosecuted by the District Attor- neys under order of the Attorney-General, and shall not pre- clude suit by private persons. Provision is made for speedy trial. TOPIC D INTEEPEETATION OF THE INTEESTATE COMMEECE ACT. § 881. The long and short haul clause. It V7as undoubtedly the intention of the framers of section 4, the long and short haul clause, to forbid absolutely the practice of charging more for a shorter haul unless upon application to the Commission express permission so to charge was given. The section, however, was a matter of contention between the two houses of Congress, and as it was finally passed the qualifying phrase " under substantially similar circumstances and condi- tions " was inserted without probably any very clear belief that the meaning of the section was thereby fundamentally altered. At first the railroads acted upon the supposition that express permission of the Commission must be obtained according to the proviso in the section, if a greater charge was to be made for the shorter haul, and this seemed to be the view at first taken by the courts. The philosophy of the Act as expressed by Judge Shiras 4 Act of Feb. 19, 1903; 32 Stat. 847, U. S. Comp. Stat. Supp. of 1903, p. 363. [822] Chap. XXVI] Statutory Regulation. [§ 882 in Van Patten v. Chicago, M. & St. P. Ey.,^ was that competi- tion would reduce the rates to a fair amount at all competitive points, and that,the 4th section would then keep the rates at non- competitive points do\^'n to the level of the competitive rates. The courts, however, finally decided in view of the limitation of the section to eases where the conditions were substantially simi- lar that competition with other railroads would justify a lower rate for the longer haul, and as practically all cases of the sort before the passage of the Act had been due to the competition of other railways, this decision in effect qualified the whole section. Since that time few applications have been made to the Com- mission for express permission to charge the higher rate, since under the decision of the courts any reason which would justify siuch permission by the Commission would justify the charge at the lower rate by the railroads without obtaining permission. These matters have been discussed in chapter xxv and will be treated in detail in chapter xxx. § 882. The fixing of rates. From the outset of its history the Commission claimed that under the Act it had the power not merely to forbid an unrea- sonable rate, but also to indicate to any railroad what it would regard as a reasonable rate for any particular service, and that then the railroad disregarding such recommendation would be subject to the action of the courts. The lower federal courts, however, from the beginning denied this power to the Commis- sion. The question did not reach the Supreme Court of the United States for ten years, but finally in the case of Cincinnati, New Orleans and Texas Pacific Railway v. Interstate Commerce Commission,^ the issue was fairly presented, and the Supreme Court of the United States decided that the Commission had no 181 Fed. 545 (1897). 2 162 U. S. 184, 40 L. Ed. 935, 16 Sup. Ct. 700, 5 Int. Com. Rep. 391 (1896). [823] |§ 883, 884] Raileoad Eate Regulation. [Chap. XXVI power to fix rates. Since that time the Commissioii has under certain circumstances advised a railroad that in its opinion a reasonable rate would be no greater than a sum named, but no attempt has been made to go further than this in fixing rates. It will have been noticed that the English practice is to fix rates by Act of Parliament upon recommendation of an adminis- trative body. § 883. Th'rough routes. The practice of carriers to make through traffic arrangements with some one connecting line, and to throw all business into the hands of that line, notwithstanding the wishes of the shipper and without regard to his interests, caused dissatisfaction. It is true that in case such an arrangement was made the through rate would be posted ; but if the tariff sheet did not state the route the shipper was deprived of a chance to discover and ship by a cheaper route, or one more agreeable to him for any reason. Purthermore, the connecting carriers sometimes refused to recognize the joint rates and collected their entire local charges. The Commission in 1894 ordered that published joint tariffs should indicate the route, and that the connecting carriers should file a consent to the rate.* But the carriers refused to abide by this order ; and upon a suit for enforcing it the Supreme Court finally held that the carrier might publish a through tariff of rates, reserving the right to route as it pleased.* TOPIC E THE BATE EEGULATIOlir ACT OF 1906. § 884. Occasion for the Act. The attitude of the courts toward the Intej-state Commerce Act caused considerable dissatisfaction, especially in those parts of the country where the great bulk of freight originates, 3 In re Form and Contents of Eate Schedules, 6 I. C. C. Rep. 267 (1894). 4 Southern Pacific Co. v. Interstate Commerce Commission, 200 U. S. .536, 26 Sup. Ct. 330 (1906). [824] Chap. XXVI] Statutory Regulation. [§ 884 and the desire for further regulation culminated in the passage of the Rate Regulation Act of 1906. This action of Congress had been foreshadowed by a very considerable body of similar legislation in the States between 1903 and 1905. It is charac- teristic of this legislation that it confers on the railway com- missions the power 'of fixing a maximum rate and the giving of such power to the Interstate Commerce Commission was in fact the chief object of those who secured the passage of the Railroad Rate Act. The decisions of the Supreme Court, which have given most dissatisfaction are the decision denying the Commission the power to fix rates and that permitting the carrier to charge a less sum for a longer haul. In addition to this, certain omissions in the original act were found to work badly, in view of the railroad practices. Most of these defects had been remedied by legislation in England. The occasion for the new Act was thus stated by the Con- gressional Committee that reported the bill : " It has been believed by a large portion of the shippers that railway rates were in many instances too high, and that favor- itism through rebates and other forms of discrimination were indulged in by various methods by the carriers. The ingenuity of some of the carriers and shippers has resulted in avoiding the provisions of that Act through the use of joint tariffs, in- volving, in some instances, a railroad and a mere switch owned by a shipper; through arrangements whereby excessive mileage was given to the shipper of products who owned his own cars ; through the use of refrigerator ears; through the permission given to independent corporations to render some service inci- dent to the shipment, as the furnishing of ice in the bunkers of the car; by what is known as the " midnight tariff," a method involving an arrangement with a shipper to assemble his freights, have them ready for shipment at a particular date, whereupon the carrier would give the necessary three days' notice of a reduction in the rate. Competing carriers and ship- [825] §§ 885, 886] Kaileoad Eate Regulation. [Chap. XXYI pers would know nothing about this arrangement. The freight would be shipped at the new lower rate, and then there would be a restoration of the old rate. The law of to-day would be fairly satisfactory to all shippers if the spirit of fairness re- quired by it had controlled the conduct of the carriers, and the necessity for the proposed legislation is the result of and is made necessary by the misconduct of parties who are now most clamorous against additional restraint. If the carriers had in good faith accepted existing statutes and obeyed them there would have been no necessity for increasing the powers of the Commission or the enactment of new coercive measures." § 885. Extension of scope of the Interstate Commerce Act. The Act of 1906,^ like the Elkins Act, is in the form of an amendment to the original Interstate Commerce Act; and it perfects that Act by an extension of its scope. It includes in the provisions of the Act express and sleeping-car companies and pipe lines for the transportation of oil or any other com- modity except water and natural or artificial gas. It enumer- ates at great length the persons to whom free passes may be issued (the original act having named typical classes only), and makes it a crime to issue or to use a pass contrary to the pro- visions of the Act. It makes the penalties for a violation of the Act more severe, and provides more carefully for the institution of prosecutions for violation of the Act. § 886. Private Switches. Several new provisions are directed against certain abuses which had fostered monopolies. Among the chief of these abuses was that of the private switch. The original Act had left it possible for a railroad to serve a favored shipper by mak- ing connection with his private switch and refusing a similar connection to another shipper. This is forbidden in the Act of lAet of June 29, 1906; Pub. Acts, No. 337. [826] C'hap. XXVI] Statutoey IJegui-ation. [§ 887 1906. By a proyision in section 1 of the Act, it is provided that any common carrier subject to the provisions of this Act upon application of any lateral, branch line of railroad, or of any shipper tendering interstate traffic for transportation, shall construct, maintain, and operate upon reasonable terms a switch connection with any such lateral, branch line of railroad, or private side track which may be constructed to connect with its railroad, where such connection is reasonably practicable and can be put in with safety and will furnish sufficient business to justify the construction and maintenance of the same; and shall furnish cars for the movement of such traffic to the best of its ability without discrimination in favor of or against any such shipper. In case the carrier refuses, upon application, to make or operate such connection, an appeal is given to the Commission, which may make an order for the allowance of reasonable facilities. This provision is very like the provision of the English Act of 1904.^ § 887. Private car lines. One of the most galling monopolies established by action of the railroads and permissible under the original act, was that of the private car. One or two great corporations, by contract with the railroads, established a monopoly of the supply of re- frigerator cars for the carriage of i:>erishable fruit; and a similar, though perhaps less far-reaching monopoly, was created in tank cars.* The evil of the private car line was felt in two directions : first, the charge to ordinary shippers using the cars was increased by monopolistic rates; second, the charge to the owners of the cars was greatly lessened by rebates for the use of the cars. In the first section of the new Act it is provided that the term " transportation " shall include cars and other vehicles and all instrumentalities and facilities of shipment or ^Ante, § 874. 3 Ante, §§ 95, 806-808. [8271 § 888] Eaileoad Eate Regulation. [Chap. XXVI carriage, irrespective of ownership or of contract, express or implied, for the use thereof and all services in connection with the receipt, delivery, elevation, and transfer in transit, ventila- tion, refrigeration or icing, storage, and handling of property transported; and it shall, be the duty of every carrier subject to the provisions of this Act to provide and furnish such trans- portation upon reasonable request therefor, and to establish through routes and just and reasonable rates applicable thereto. In Section 4 of the new Act, it is further provided that if the owner of property transported, directly or indirectly, renders any service connected with such transportation, or furnishes any instrumentality used therein, the charge and allowance therefor shall be no more than is just and reasonable, and the Commission may, after hearing on a complaint, determine what is a reasonable charge as the maximum to be paid by the carrier or carriers for the service so rendered or for the use of the in- strumentality so furnished, and fix the same by appropriate order. Dealing by railroads in commodities. Another abuse tending to monopolistic conditions has been the acquiring by railroad companies of various industrial prop- erties, especially mines. The result of this "has been that the railroad, through its control over transportation, has been able to undersell its competitors and at the same time enrich itself. Its power has, to be sure, been limited by a recent decision of the Supreme Court ;* but the new Act has dealt with the subject in a thoroughgoing way. In section 1 the Act provides that from and after May first, nineteen hundred and eight, it shall be unlawful for any railroad company to transport from any State, Territory, or the District of Columbia to any other State, Territory, or the District of Columbia, or to any foreign country, any article or commodity, other than timber and the ^Ante, §§ 301, et seq. [828] Chap. XXVI] Statutory Regulation. [§ 889 manufactured products thereof, manufactured, mined, or pro- duced by it or under its authority or which it may own in whole or in part, or in which it may have any interest, direct or in- direct, except such articles or commodities as may be necessary and intended for its own use in the conduct of its business as a common carrier. § 889. Rate fixing and court review. Theonost important feature of the new Act is that giving the Commission the power to fix maximum rates. The fixing of maximum rates has not been uncommon in the States; and in other countries it has been usual if not universal. In England, maximum rates are fixed, not by the Hallway and Canal Com- mission, but by the Board of Trade, one of the executive depart- ments of the government, after due hearing ; and the rates thus fiied are enacted in the form of statute by Parliament, after an opportunity for hearing before a committee. The provisions of the new Act are, that upon complaint the Commission, after hearing, shall determine a reasonable maximum rate, which shall take effect at such time after thirty days as may be fixed by the Commission, and shall continue in force not more than two years, unless suspended or set aside by the Commission or the courts. The carrier aggrieved may appeal to the courts for an injunction against the rate so fixed. No injunction or in- terlocutory order shall be issued without a hearing after five days' notice to the Commission. An appeal from the Circuit Court lies directly to the Supreme Court, and preference is given to such eases. No change in rates, even within this maxi- mum, can be made by the carriers until after thirty days' notice, unless this period is shortened by the Commission. A special provision for a rehearing by the Commission, upon request, is made in section 6 of the new Act. [829] § 890] Eaileoad Eate Regulation. [Chap. XXVI § 890. Through routes and rates. The English acts gave to the Railway and Canal Commission power to establish through routes and to Parliament, on recom- mendation of the Board of Trade, power to establish through rates whenever this course was required, in order to create reasonable facilities; but this power was not included in the original Interstate Commerce Act. The Commission has often recommended that the power be granted, and this has now been done. In section 1 of the new Act, it is made the duty of every carrier subject to the provisions of the Act to establish through routes and just and reasonable rates applicable thereto. In section 4 of the Act it is provided that the Commission may, after hearing on a complaint, establish through routes and joint rates as the maximum to be charged and prescribe the division of such rates, and the terms and conditions under which such through routes shall be operated, when that may be necessary to give effect to any provision of the Act, and the carriers com- plained of have refused or neglected to voluntarily establish such through routes and joint rates, provided no reasonable or satisfactory through route exists ; and this provision shall apply when one of the connecting carriers is a water line. The secret routing evil is met by section 2, in which it is provided that the names of the several carriers which are parties to any joint tariff shall be specified therein, and each of the parties thereto, other than the one filing the same, shall file with the Commis- sion such evidence of conciirrence therein or acceptance thereof as may be required or approved by the Commission, and where such evidence of conourrence or acceptance is filed it shall not be necessary for the carriers filing the same to also file copies of the tariffs in which they are named as parties. [830] Ohap. XXVII] Carriage Subject to Act. [§ 891 TITLE I. The Interstate Commerce Acts. CHAPTER XXVII. CARRIAGE SUBJECT TO THE ACT. i 891. Provisions of the statute. 892. Amendments of 1906. TOPIC A EXTENT OF APPLICATION OF THE ACT. § 893. Effect of the act. 894. Foreign carriers and discriminations. TOPIC B WHAT IS INTERSTATE COMMERCE. § 895. What are States. 896. Nature of interstate traffic. 897. Termini within a single State, route passes through a second State. 898. Breaking continuity of interstate shipment. 899. End of the interstate transit. TOPIC C CONTINUOUS CARRIAGE UNDER COMMON CONTROL. § 900. Common arrangement. TOPIC D CARRIERS SUBJECT TO THE ACT. § 901. Kind of carrier subject to the act. 902. Carriage wholly within the State. 903. Local carrier taking part in through carriage. § 891. Provisions of the statute. To what carriers applicable. — The provisions of this Act shall apply to any corporation or any person or persons engaged in the transportation of oil or other commodity, [831] § 891] Railroad Eate Regitlation. [Chap. XXVII except water and except natural or artificial gas by means of pipe lines, or partly by pipe lines and partly by rail- road or partly by pipe lines and partly by water, who shall be considered and held to be common carriers within the mean- ing and purpose of this Act, and to any common carrier or car- riers engaged in the transportation of passengers or property wholly by railroad (or partly by railroad and partly by water when both are used under a common control, management, or arrangement for a continuous carriage or shipment), from one State or Territory of the United States, or the District of Columbia, to any other State or Territory of the United States, or the District of Columbia, or from one place in a Territory to another place in the same territory, or from any place in the United States to an adjacent foreign country, or from any place in the United States through a foreign country to any other place in the United States, and also to the transportation in like manner of property shipped from any place in the United States to a foreign country and carried from suchplace to a- port of transshipment, or shipped from a foreign country to any place in the United States and carried to such place from a port of entry either in the United States or an adjacent foreign country: Provided, however, that the provisions of this Act shall not apply to the transportation of passengers or property, or the receiving, delivering, storage, or handling of property wholly within one State and not shipped to or from a foreign country from or to any State or Territory as afore- said. The term " common carrier," as used in this Act, shall include express companies and sleeping-car companies. Railroad: msaning. — The term " railroad," as used in this Act, shall include all bridges and ferries used or operated in connection with any railroad, and also all the road in use by any corporation operating a railroad, whether owned or oper- ated under a contract, agreement, or lease, and shall also include all switches, spurs, tracks, and terminal facilities of every kind [832] Chap. XXVIl] Caeeiage Subject to Act. [§ 892 used or necessary in the transportation of the persons or prop- erty designated herein, and also all freight depots, yards, and grounds used or necessa,ry in the transportation or delivery of any of said property. Transportation: meaning. — The term " transportation " shall include cars and other vehicles and all instrumentalities and facilities of shipment or carriage, irrespective of ownership or of any contract, express or implied, for the use thereof and all services in connection with the receipt, delivery, elevation, and transfer in transit, ventilation, refrigeration or icing, storage, and handling of property transported ; and it shall be the duty of every carrier subject to the provisions of this Act to provide and furnish such transportation upon reasonable request there- for, and to establish through routes and just and reasonable rates applicable thereto. [Interstate Commerce Act, section 1, as amended by Act of June 29, 1906, section 1.] Railroad forbidden to deal in commodities. — From and after May first, nineteen hundred and eight, it shall be unlawful for any railroad company to transport from any State, Territory, or the District of Columbia, to any other State, Territory, or the District of Columbia, or to any foreign country, any article or commodity, other than timber and the manufactured pro- ducts thereof, manufactured, mined, or produced by it, or under its authority, or which it may own in whole, or in part, or in which it may have any interest, direct or indirect, except such articles or commodities as may be necessary and intended for its use in the conduct of its business as a common carrier. [Interstate Commerce Act as amended by Act of June 29, 1906, section l.J § 892. Amendments of 1906. The new provisions of the Act of June 29, 1906, are as follows: 1. At the beginning of the section, the clause making pipe lines subject to the provisions of the Act is new. See ante, § 43. 2. At the beginning of the second paragraph, express companies and sleeping-ear companies are^ included in the term " common carriers." [833] §§ 893, 894] Eaileoad Eate Regulation. [Cliap. XXVII Express companies are common carriers at common law (ante, § 181), but were not included in the original act; only when the express business was conducted by a railroad was it subject to the Act (post, § 901). Sleeping-car companies are not carriers at (jommon law, but are public- service companies ( ante, § 96 ) . 3. Within the term " railroad " are included switches, tracks, and ter- minal facilities, and freight depots and yards. Within the term " trans- portation " are specifically included cars and oth,er vehicles, irrespective of ownership or contract for their use (the former provision being merely that the term should include all instrumentalities of shipment and car- riage) ; aild it is made the duty of carriers to furnish such transporta- tion. 4. The entire provision with regard to the carriage of commodities owned or produced by the railroads is new. See ante. Chapter X, Topic D. TOPIC A EXTENT OF APPLICATION OF THE ACT. [See chapter XV as to the division between interstate and intrastate business.] § 893. Effect of the Act. The entire commerce joi the United States, foreign and interstate, is sub- ject to the provisions of the act of Congress to regulate commerce. Texas & P. R. Co. V. Interstate Commerce Commission, 162 U. S. 197, 40 L. Ed. 940, 16 S;ip. Ct. 666, 5 Int. Com. Rep. 405 (1896). It is intended to and does apply, not only in cases of direct injury to particular individuals or industries, but also in cases involving indirect injury to the community as a whole. Re Export and Domestic Rates on Grain, 8 I. C. C. Rep. 214 (1899). It applies to all carriers and to all eases subject to its control. It abrogates all executory contracts between carriers and shippers incon- sistent with its provisions, and is not contrary to the Constitution in doing so. Kentucky & I. Bridge Co. v. Louisville & N. R. R., 1 Int. Com. Rep. 704, 715, 2 I. C. C. 162 (1888); Fitzgerald v. Fitzgerald & M. C. Co., 41 Neb. 374, 59 N. W. 838 (1894). See Haddock v. Delaware, L. & W. R. R., 3 Int. Com. Rep. 302, 4 I. C. C. 296 (1890). Similarly a provision in a charter gj-anted by the State is controlled by the Act; and therefore the Northern Pacific Railroad Company is not exempt under its charter from the authority to regulate rates conferred on the Commission by tha Act to ilegulate Commerce. Raworth v. Northern P. R. R., 3 Int. Com. Rep. 857, 5 I. C. C. 234 (1891); Merchants' Union v. Northern Pacific R. R., 4 Int. Com. Rep. 183, 5 I. C. C. 478 (1892). • § 894. Foreign carriers and discriminations. The provisions of the act apply to foreign as well as domestic common carriers engaged in the transportation of passengers or property, for a [834] Chap. XXVII] Caebiage Subject to Act. [§§ 895, 896 continuous carriage or shipment, from a place in the United States to a place in an adjacent foreign country. The common carriers engaged in such transportation are subject to the provisions of the act in respect to the printing of schedules of rates, fares, and charges for the traffic they carry, the posting and filing with the Interstate Commerce Commission of copies of such schedules, the notice of advances or reductions, and the maintenance of the rates, fares, and charges established and published and in force at the time; and to the provisions of the act in respect to joint tariffs of rates, fares, and charges for continuous lines or routes. It was therefore held by the Commission that the Grand Trunk Railway of Canada violated the act by allowing a rebate on goods shipped from Buffalo to Canadian points. Re Grand Trunk Ry., 2 Int. Com. Rep. 496, 3 I. C. C. 89 (1889). But in order to violate the act the giving of the rebate or other violation must take place within the United States, since an act of Congress cannot affect the legality of anything done outside its jurisdiction. Therefore the giving by an international carrier of special rates outside the United States cannot be punished under the act. United States V. Knight, 3 Int. Com. Rep. 801 (1891). Nor can discrimination between places in Canada. Cist v. Michigan Central R. R., 10 Int. Com. Rep. 217 (1904). And the regulation of the transportation of foreign merchandise from a port of entry to a place within the United States upon a through bill of lading does not extend to the control of rates made in the foreign port for its carriage to the port of entry of the United States or to a foreign country adjacent. New York Bd. of Trade & Transp. Co. v. Pennsylvania R. R., 3 Int. Com. Rep. 417, 4 I. C. C. 447 (1890). TOPIC B "WHAT IS INTERSTATE COMMEECE. [See chapter XHI as to the constitutional questions involved.] § 895. What are States? Commerce between an Indian reservation and other parts of the State in which it is situated is not interstate commerce. Selkirk v. Stevens, 72 Minn. 335, 75 N. W. 386, 40 L. R. A. 759 (1898). But commerce be- tween the District of Columbia and the State of Maryland is interstate, and may constitutionally be regulated by the act. Willson v. Rock Creek R. R., 7 I. C. C. Rep. 83 (1897). § 896. Nature of interstate traffic. The purelv internal commerce of a. State is that which is confined within its limits, which originates and ends within the State. The question, what is the entire transit upon which goods or passengers are being car- [835] §.§ 897, 8'9'8] Eailhoad Rate Regulation. [Chap. XXVII ried, has already been discussed (ante. Chap. XX) ; and the question whether a certain transaction constitutes interstate commerce must be determined by ascertaining, on the principles heretofore discussed, what the real transit is, and whether that traffic is or is not between separate States. Whenever' a commodity has begun to move as an article of trade from one State to another, commerce in that commodity between the States has commenced. The fact that several different and independent agencies are employed in transporting the commodity," some acting en- tirely in one State and some acting through two or more States, in no respect affects the character of the transaction. The Daniel Ball, 10 Wall. 557, 19 L. Ed. 999 (1871). A train composed of empty coal cars, although destined for a point in another State to procure a load, is not engaged in transporting articles of interstate commerce so as to be be- yond the control of State laws. Norfolk & W. R. R. v. Cora., 93 Va. 749, 24 S. E. 837, 34 L. R. A. 105 (1896). § 897. Termini within a single State, route passes through a second State.. The Interstate Commerce Commission has always held that commerce between paints in the same State, but which in being carried from one place to the other passes through another State, is interstate commerce, and subject to regulation by the provisions of the act to regulate com- merce. New Orleans Cotton Exch. v. Cincinnati, N. 0. & T. P. Ry., 2 Int. Com. Rep. 519, 2 I. C. C. 375 (1889); Milk l>roducers' Protective Assoc. V, Delaware, L. & W. R. R., 7 I. C. C. Rep. 92 (1897). The same doctrine was held in several of the State courts. State v. Chicago, S. P., M. & 0. R. R., 40 Minn. 267, 2 Int. Com. Rep. 519, 3 L. R. A. 238 (1889) ; Delaware & H. C. Co. v. Com. (Pa.), 2 Int. Com. Rep. 222 (1888) ; Stern- berger v. Cape Fear & Y. V. R. R., 29 S. C. 510, 2 Int. Com. Rep. 426 (1888). At one time it seemed that such commerce would not be held interstate commerce. Lehigh Valley R. R. v. Pennsylvania, 145 U. S. 192, 36 L. Ed. 672, 12 Sup. Ct. 806, 4 Int. Com. Rep. 87 (1892) ; United States V. Lehigh Valley R. R., 115 Fed. 373 (1902); Seawell v. Kansas City, F. S. & M. R. R., 119 Mo. 222, 24 S. W. 1002, 5 Int. Com. Rep. 262 (18'93) ; Dillon V. Erie R. R., 19 N. Y. Misc. 116, 43 N. Y. Supp. 320 (1897). But it is now finally decided that this commerce falls within the federal juris- diction. Hanley v. Kansas City So. Ry., 187 U. S. 617, 47 L. Ed. 333, 23 Sup. Ct. 214, affirming 106 Fed. 353. §• 898. Breaking continuity of interstate shipment. If the transporting of goods or passengers to an ultimate destination in another State has begun, interstate commerce has begun, and no device to break up the transit into intrastate portions will affect its real nature. So where transportation of goods destined for a, point without the State has been actually begun, temporary stoppage within the State, without the [836] Ohap. XXVII] Caeeiage Subject to Act. [§§ 899, 900 intention of abandoning the original movement (which movement is ulti- mately completed), will not deprive the transportation of the character of interstate commerce. Delaware & H. 0. Co. v. Com. (Pa.), 2 Int. Com. Rep. 222 (1888). And so if the goods are first billed to a point in the State of shipment, and at that point are rebilled to their ultimate des- tination in another State, without breaking of bulk, the whole constitutes a single carriage. Cutting v. Florida Ey. & Nav. Co., 46 Fed. 641, 4 Int. Com. Rep. 424 (1891); Texas & P. Ry. v. Avery (Tex. Civ. App.), 33 S. W. 704 (1895) ; Houston D. & N. Co. v. Insurance Co., 89 Tex. 1, 32 S. W. 889, 30 L. R. A. 713, 59 Am. St. Rep. 17 (1895) ; Mexican Nat. R. R. V. Savage (Tex. Civ. App.), 41 S. W. 663 (1897); State v. Gulf, C. & S. F. Ry. (Tex. Civ. App.), 44 S. W. 542 (1898). The continuity of the carriage of freight over a line formed by two or more roads is not broken in fact and cannot be broken in law by the charge of a local rate by one or more of such roads as its proportion of the through rate; nor can the obligations imposed by the statute be evaded by the demand of the local charge for the haul over its own road by one or more of such carriers or by the declaration on the part of one or more of said carriers that as to the transportation over its road it is a local and not a through carrier. Troy Board of Trade v. Alabama Mid- land Ry., 4 Int. Com. Rep. 306, 6 I. C. C. Rep. 1 (1894). Neither is the continuity of the shipment broken by a sale of the goods in transitu. Gulf, C. & S. P. Ry. V. Fort Grain Co. (Tex. Civ. App.), 72 S. W. 419 (1903). If, however, the goods are consigned to a dealer and he, selling them before arrival, rebills to the purchaser without breaking bulk, the two carriages are distinct. Gulf, C. & S. F. Ry. v. State, 97 Tex. 274, 78 S. W. 495 (1904). § 899. End of the interstate transit. On the principle already examined, the transit is a single unit, continu- ing from the time of the original shipment to the ultimate end of the carriage; and where the beginning and end are in different States, the en- tire transit from beginning to end is interstate. It does not cease to be interstate when the goods finally enter the State of destination; it con- tinues an interstate transit even within that State, until delivery. Cattle Raisers' Assoc, v. Fort Worth & D. C. Ry., 7 I. C. C. Rep. 513 (1898) ; State V. Southern K. Ry. (Tex. Civ. App.), 49 S. W. 252 (1899). TOPIC C CONTINUOUS CAEEIAGE UNDEE COMMON CONTEOL. [See generally as to through transportation, chapter XIX.] § 900. Common arrangement. When goods are shipped under a through bill of lading from a point in one State to a point in another, are received in transit by a State common. [837] § 901] Eaileoad Rate Regulation. [Chap. XXVII carrier, under a conventional division of the charges, such carrier must he deemed to have subjected its road to an arrangement for a continuous carriage or shipment, within the meaning of the act. Cincinnati, N. O. & T. P. Ry. V. Interstate Commerce Commission, 162 U. S. 184, 40 L. Ed. 935, 16 Sup. Ct. 700, 5 Int. Com. Rep. 391 (1896) ; Louisville & N. R. R. V. Behlmer, 175 U. S. 648, 44 L. Ed. 309, 20 Sup. Ct. 209 (1899) ; United States V. Seaboard Ry., 82 Fed. 563 (1897) ; Interstate S. Y. Co. v. Indian- apolis U. Ry., 99 Fed. 472 ( 1900 ) ; Troy Board of Trade v. Alabama Mid- land Ry., 4 Int. Com. Rep. 348, 6 I. C. C. 1 (1894); Daniels v. Chicago, R. I. & P. Ry., 6 I. C. C. Rep. 458 ( 1895 ) ; Pennsylvania Millers' State Assoc, v. Philadelphia & R. R. R., 8 I. C. C. Rep. 531 (1900). The re- ceipt successively by two or more carriers for transportation, of traffic shipped under through bills for continuous carriage over their lines, is assent to such a, " common arrangement;" and previous formal arrangement between them is not necessary to bring such transportation under the terms of the Interstate Commerce Law. Trammell v. Clyde Steamship Co., 4 Int. Com. Rep. 120, 5 I. C. C. 324 ( 1892 ) . In the case of carriage of passengers a similar interpretation will be made; assent by a carrier to the issue of a thrtfugh ticket over several railroads constitutes an arrangement for continuous carriage. Carrey v. Spencer, 72 N. Y. State Rep. 108, 36 N. Y. Supp. 886, 5 Int Com. Rep. 636 (1896) ; Missouri, K. & T. R. R. v. Fookes (Tex. Civ. App.J, 40 S. W. 853 (1897). The through billing and rating is the usual but by no means the only method of manifesting a common arrangement. Thus such common ar- rangement exists in a case where the initial carrier furnishes the shipper with a car specially fitted up for his business, which is taken over connect- ing roads on special through time tables. Boston Fruit & P. Exch. v. New York & N. E. R. R., 3 Int. Com. Rep. 493, 4 L C. C. 664 (1890). So where a short line of railroad, entirely within a State, was operated entirely by an interstate railroad as a link in interstate carriage, there was common control. Heck v. East Tennessee, V. & G. Ry., 1 Int. Com. Rep. 775, 1 L C. C; 495 (1887). TOPIC D CAEEIEES SUBJECT TO THE ACT. [See generally as to common carriage, chapter III- VI.] § 901. Kind of carrier subject to the Act. A carrier of passengers is as much subject to the Act as a carrier of goods. Louisville, N. O. & T. T. R. R., v. State, 66 Miss. 662, 6 So. 203, 2 Int. Com. Rep. (1888). A street railway is subject to the act. Willson v. Rock Creek R. R., 7 I. C. C. Rep. 83 (1897). An express business conducted by a railroad company is subject to the act, but not an independent express company. Re Express Companies, 1 [838] Ohap. XXVII] Caeriage Subject to Act. [§ 902 Int. Com. Rep. 22, 1 I. C. C. 349 ( 1887 ) ; United States v. Morsman, 42 Fed. 448, 3 Int. Com. Rep. 112 (1890) ; Southern Ind. Exp. Co. v. United States Exp. Co., 88 Fed. 659, affirmed 92 Fed. 1022, 35 C. C. A. 172 (1898, 1899). Independent express companies are made subject to the Act by the Act of 1906. A company which supplies a roadbed only, over which other companies carry, and not being itself a carrier, is. not subject to the act. So of a bridge company. Kentucky & I. Bridge Co. v. Louisville & N. R. R., 37 Fed. 567, 2 L. R. A. 289, 2 Int. Com. Rep. 351 (1889), appeal dismissed 149 U. S. 777, 37 L. Ed. 964, 13 Sup. Ct. 1048 (1892). So of a stock-yards company. Cattle Raisers' Assoc, v. Fort Worth & D. C. Ry., 7 I. C. C. Rep. 513 (1898). If, however, such a company is chartered as a carrier, it appears to be subject to the Act, though the transportation is actually furnished by another. Heck v. East Tennessee, V. & G. Ry., 1 Int. Com. Rep. 775, 1 I. C. C. 495 (1887). Similarly a company which simply furnishes cars for another company to haul, not being a carrier, is not subject to the act. Burton Stock Car Co. v. Chicago, B. & Q. R. R., 1 Int. Com. Rep. 329, 1 I. C. C. 132 (1887). § 902. Carriage wholly within the State. Even though passengers or goods are being carried betweeil two States, a carrier transporting them may nevertheless not be engaged in interstate commerce. Though a carrier receives goods directed to a point outside the State, he is not an interstate carrier if he is only to carry within the State and there deliver to an entirely independent succeeding carrier, with whom he has no common arrangement. Missouri & I. R. R. T. & L. Co. v. Cape Girardeau S. W. Ry., 1 Int. Com. Rep. 607, 1 I. C. C. 30 (1887); Ex parte Koehler, 30 Fed. 867, 1 Int. Com. Rep. 28 (1887). So if the carrier receives within the State of destination goods brought from with- out the State by an entirely independent carrier, the receiving carrier is not engaged in interstate commerce. Fort Worth & D. C. Ry. v. White- head, 6 Tex. Civ. App. 595, 26 S. W. 172 (1894). This is commonly the case where the intrastate carrier does not issue a through bill of lading, or receive freight upon through bills issued by an interstate carrier. Interstate Commerce Commission v. Bellaire, Z. & C. Ry., 77 Fed. 942 (1897) ; United States v. Chicago, K. & S. R. R., 81 Fed. 783 (1897). So where goods were shipped in New Jersey, directed to a consignee in New York, but carried only to Jersey City and there received by the con- signees, the shipment is not interstate. New Jersey Fruit Exchange v. Central R. R., 2 Int. Com. Rep. 84, 2 I. C. C. 142 (1888). A mere switching company which transfers goods from one carrier to another within the State, entirely without reference to their final desti- nation, is not engaged in interstate commerce, whatever the destination of [839] § 903] Eaileoad Eatb Regulation. [Cliap. XXVII the goods. Kentucky & I. Bridge Co. v. Louisville & N. R. R., 37 Fed. 567, 2 L. R. A. 289, 2 Int. Com. Rep. 102 (1889), appeal dismissed 149 U. S. 777, 37 L. Ed. 964, 13 Sup. Ct. 1048 (1892). See, however, Interstate S. Y. Co. V. Indianapolis U. Ry., 99 Fed. 472 (1900). § 903. Local carrier taking part in through carriage. Where, however, a local carrier takes part in the carriage of goods through to destination in another State, though his share of the carriage is entirely within the State, he is engaged in interstate commerce. Nor- folk & W. R. R. V. Pennsylvania, 136 U. S. 114, 34 L. Ed. 394, 10 Sup. Ct. 958, 3 Int. Com. Rep: 178 (1890); Eao parte Koehler, 30 Fed. 867, 1 Int. Com. Rep. 28 (1887); Augusta So. R. R. v. Wrightsville & T. R. R., 74 Fed. 522 "(1896) ; In re Annapolis, W. & B. R. R., 1 Int. Com. Rep. 315, 1 I. C. C. 315 (1887); Mattingly v. Pennsylvania Co., 2 Int. Com. Rep. 806, 3 I. C C. 598 (1890) ; James v. Cincinnati, N. O. & T. P. Ry., 3 Int. Com. Rep. 682, 4 I. C. C. 744 (1891) ; State v. Gulf, C. & S. F. Ry. (Tex. Civ. App.), 44 S. W. 542 (1898). This is often shown to be the case by a through billing and rating of the goods, assented to by the carrier in question. Cincinnati, N. O. & T. P. Ry. v. Interstate Commerce Commis- sion, 162 U. S. 184, 40 L. Ed. 935, 16 Sup. Ct. 700, 5 Int. Com. Rep. 391 (1896). In Texas it has been held that through billing is not enough, and a State carrier is not engaged in interstate commerce unless it takes part in a through rating. Gulf, C. & S. F. Ry. v. Nelson, 4 Tex. Civ. App. 345, 23 S. W. 732 (1893); Houston & T. C. Ry. v. Williams (Tex. Civ. App.), 31 S. W. 556 (1895); Houston & T. C. Ry. v. Davis, 11 Tex. Civ. App. 24, 31 S. W. 308 (1895). But it is certain that the rating need not be a joint one; the^State carrier is none the less an interstate carrier be- cause his share of the total rate is equal to his entire local rate, if he takes part in or permits through billing. United States v. Seaboard Ry., 82 Fed. 563 ( 1897 ) ; Independent Refiners' Assoc, v. Western N. Y. & P. R. R., 6 I. C. C. Rep. 378 ( 1895 ) . And it would seem to be unnecessary for the establishment of a through carriage, to prove that a technical through rate has been named. [840] CHAPTER XXVIII. REASONABLE CHARGES AND FACILITIES. S 911. Provisions of the statute. 912. Amendments of 1906. TOPIC A THE SCHEDULE AS A WHOLE. § 913. Elements considered in establishing a general tariff of rates. 914. Bearing of tariff as a whole on reasonable rates. 915. Schedule as a whole may throw light on reasonableness of par- ticular rate. 916. Schedule aa a whole important where rate is fixed by public authority. TOPIC B THE PAETICULAB KATE, § 917. Customary rate presumably reasonable. 918. General principles. 919. Comparison with other rates. 920. Special service. 921. Incidental charges. 922. Conditions. 923. Route. 924. Cost of service. - 925. Value of service to shipper. 926. Value of goods. 927. Amount. 928. Distance. 929. Through rates. TOPIC C CLASSIFICATION. § 930. General principles of classification. 931. Instances. TOPIC D UNEEASONABLE EATING. § 932. General principles. 933. Passenger rates. 934. Freight rates; instances. TOPIC E EEASONABLE FACILITIES. § 935. Not required by original act. 936. Switching privileges. [841] §§ 911, 913] Kailjroad Rate Regulation. [Chap. XXVIII § 911. Provisions of the statute. Reasonable charges. — All charges made for any service ren- dered or to be rendered in the transportation of passengers or property as aforesaid, or in connection therewith, shall be just and reasonable; and every unjust and unreasonable charge for such service or any part thereof is prohibited and declared to be unlavsrful. [Interstate Commerce Act, section 1, as amended by Act of June 29, 1906, section l.J Switch connections. — Any common carrier subject to the pro- visions of this Act, upon application of any lateral, branch line of railroad, or of any shipper tendering interstate traffic for transportation, shall construct, maintain, and operate upon reasonable terms a switch connection with any such lateral, branch line of railroad, or private sidetrack which may be con- structed to connect with its railroad, vjheve such connection is reasonably practicable and can be put in with safety, and will furnish sufficient business to justify the construction and main- tenance of the same; and shall furnish cars for the movement of such traffic to the best of its ability without discrimination in favor of or against any such shipper. [Act of June 29, 1906, section l.J § 912. Amendments of 1906. The changes made by the act of 1906 are aa follows: 1. From the original section are omitted, as unnecessary and covered by other parts of the act, the words "or for the receiving, delivering, storage, or handling of such property." 2. The entire provision as to connection with lateral branches and switches is new. TOPIC A THE SCHEDULE AS A WHOLE. [See generally on this topic Chapters XI-XV.] § 913. Elements considered in establishing a general tariff of rates. The elements to be considered in determining the reasonableness of an entire system of rates are widely different from those involved in the [842] Oliap. XXVIII] Eeasonable Charges. [§§ 914, 915 question of the reasonableness of the rate upon a single commodity. Central Yellow Pine Asso. v. Illinois C. R. R., 10 I. C. C. Rep. 505 (1905). What those elements are has been fully examined in the earlier portion of this treatise (ante, Chapters XI-XV). That railroad investments may be as secure as other property, the rea- sonable rates should be liberal until earnings are sufficiently large for a fair return on actual expenditure. Newland v. Northern P. R. R., 4 Int. Com. Rep. 474, 6 I. C. C. Rep. 131 (1894). § 914. Bearing of tariff as a whole on reasonable rates. Under the power given in the Interstate Commerce Act to pass on the question of reasonable rates, the Commission seldom had to consider the schedule as a whole, since each case presented to the Commission is that of a particular rate, and the considerations which determine the reason- ableness of a particular rate are seldom those which determine the rea- sonableness of the entire schedule of rates. The capital account of a rail- road does not necessarily furnish a criterion by which the reasonableness of its freight rates is to be determined; and in order that the capitaliza- tion should be considered in cases involving the readjustment of rates, it must be accompanied by a history of the capital account. Grain Shippers' Asao. v. Illinois C. R. R., 8 I. C. C. Rep. 158 (1899). The mere fact of the need of additional revenue to meet additional expenses without di- minishing net income does not justify an advance in a particular rate. Tift V. Southern Ry., 10 I. C. C. Rep. 548 ( 1905 ) ; Central Yellow Pine Assoc. V. Illinois Central R. R., 10 I. C. C. Rep. 505 (1905). The finan- cial necessities and conditions of a carrier d,re not controlling to the ex- tent that, independent of other circumstances, any rates are reasonable until the earnings are sufficient to operate the road and meet all the ob- ligations of the carrier. Jerome Hill Cotton Co. v. Missouri, K. & T. Ry., 6 I. C. C. Rep. 601 (1896). § 915. Schedule as a whole may throw light on reasonable- ness of particular rate. The gross income from the schedule as a whole may, however, be con- sidered under some circumstances in determining the reasonableness of the particular rate. Jerome Hill Cotton Co. v. Missouri, K. & T. Ry., 6 I. C. C. Rep. 601 (1896). That railroad investments may be as secure as other property, the reasonable rates should be liberal until earnings are sufficiently large for a fair return on actual expenditure. Newland v. Northern P. R. R., 4 Int. Com. Rep. 474, 6 I. C. C. Rep. 131 (1894). In fixing reasonable rates the requirements of operating expenses, bonded debt, fixed charges, and dividend on capital stock from the total traffic, are all to be considered; but the claim that any particular rate is to be [843] §,§ 916, 917] Eailkoad Eate Regulation. [Chap. XXVIII measured by these as a fixed standard, below which the rate may not lawfully be reduced, is one rightly subject to some qualifications, one ol which is- that the obligations must be actual and in good faith. Ee Rates and Charges on Food Products, 3 Int. Com. Rep. 93, 4 I. C. C. 116 (1890). See, also, Board of Railroad & Warehouse Comrs. v. Eureka Springs Ry., 7 I. 0. C. Rep. 69 ( 1897 ) ; Brewer & Hanleiter v. Louisville & N. R. R., 7 I. C. C. Rep. 224 (1897) ; Cary v. Eureka Springs Ry., 7 I. C. C. Rep. 286 (1897) ; Brockway v. Ulster & D. Ry., 8 I. C. C. Rep. 21 (1898). § 916. Schedule as a whole important where rate is fixed by public authority. Where the rate is fixed by the legislature or by a commission the most common inquiry is whether the schedule as a whole will bring in a fair income, and it is in such cases that this inquiry is mose frequently made. Ante, § 351 fiF.; Smyth v. Ames, 169 U. S. 466, 42 L. Ed. 819, 18 Sup. Ct. 418 (1898) ; Chicago & N. W. Ry. v. Dey, 35 Fed. 866, 2 Int. Com. Rep. 325 (1888) ; Pensacola & A. R. R. v. State, 27 Fla. 403, 9 So. 89, 2 Int. Com. Rep. 522 (1889). Under the power to regulate rates the Interstate Commerce Commission will probably have more frequent occasion to pass upon the reasonableness of the schedule as a whole. TOPIC B THE PAETICULAB BATES. [See, on this tfapic generally. Chapters XVI-XX.J § 917. Customary rate presumably reasonable. A railroad company by putting in force and continuing in force a rate of charges, furnishes evidence that the rate "is profitable, and if it in- creases a long-established rate, the new rate will be presumed to be un- reasonably high. Re Rates and Charges on Food Products, 3 Int. Com. Rep. 93, 4 I. C. C. 48 (1890) ; Coxe v. Lehigh Valley R. R., 3 Int. Com. Rep. 460, 4 I. C. C. 535 ( 1891 ) ; Railroad Commission v. Savannah, F. & W. Ry., 3 Int. Com. Rep. 688, 5 L C. C. 13 (1891) ; National Hay Assoc. V. Lake Shore & M. S. R. R., 9 I. C. C. Rep. 264 (1902) ; Central Yellow Pine Assoc, v. Illinois Central R. R., 10 I. C. C. Rep. 505 (1905) ; Tift v. Southern Ry., 10 I. C. C. Rep. 548 (1905). So where a certain rate had been long established for delivery in New York, and the railroad company changed its practice and made delivery in Jersey City, but charged the same rate, this rate, being for less service, was held prima facie unrea- sonable. Truck Farmers' Assoc, v. Northeastern R. R., 6 I. C. C. Rep. 295 (1895). But a former special rate is not a fair test of the reasonable- ness of present rates, the act having abolished special and preferred rates. Myers v. Pennsylvania Co., 2 Int. Com. Rep. 403, 2 I. C. C. 573 (1889). Similarly, there is a presumption that rates fixed by a State commission [844] Chap. XXVIII] Reasonable Chaeses. [§ 918 are reasonable, and the burden of proof is upon the railroad companies to show the contrary, but the presumption is not conclusive. Brabham v. Atlantic C. L. K. R., 11 I. C. C. Rep. 464 (1905) § 918. General principles. Reasonable compensation for the service actually rendered is all that a common carrier is permitted to exact. Smyth v. Ames, 169 U. S. 466, 42 L. Ed. 819, 18 Sup. 418 (1898); Chicago & N. W. Ry. v. Osborne, 52 Fed. 914, 3 C. C. A. 347 (1892); Tift v. Southern Ry., 138 Fed. 754 (1905) ; Coxe V. Lehigh Valley R. R., 3 Int. Com. Rep. 460, 4 I. C. C. 535 (1891). This is the upper limit of his charge. On the other hand he is entitled to no more than a reasonable and fair return for his labor and his capital invested. Brabham v. Atlantic C. L. Ry., 11 I. C. C. Rep. 464 (1905). A variety of practical considerations must enter into making of freight rates and determine to a great extent whether rates are reasonable; the earnings and expenses of operating, rates charged upon the same commod- ity upon other roads as nearly similarly situated as may be, the diversities between the railroad in question and such other roads, the relative amount of through and local business, the proportion borne by the commodity in question to the remainder of the local traific, the market value of the com- modity and its gradual reduction, the reductions made by the carrier upon other articles which are consumed and necessarily required by the pro- ducers of the article in question, and all other circumstances affecting the traffic of itself and as related to other considerations entering into tlie charges of the carrier. Evans v. Oregon Ry. & Nav. Co., 1 Int. Com. Rep. 641, 1 I. C. C. 325 (1897). All the surrounding circumstances must be considered as well as the rights of the shipper; and if these circumstances and conditions are so compulsory or imperious that they fairly and justly exercise any controlling influence in the making of the rate, they cannot be disregarded in a proceeding in which the reasonableness and justness oi the rate is presented for determination. Business Men's Assoc, v. Chi- cago, S. P., M. (fe 0. Ry., 2 Int. Com. Rep. 41, 2 I. C. C. 52 (1888). In passing upon the reasonableness of rates, the question whether they afford the carrier a proper return for the service rendered is to be con- sidered, as well as the result of the business to the shipper or producer of the traffic. Loud v. South Carolina Ry., 4 Int. Com. Rep. 205, 5 I. C. C. 529 (1892). Under no circumstances should they be so low as to impose a burden on other traffic. Re Rates and Charges on Food Products, 3 Int. Com. Rep. 93, 4 I. C. C. 48 (1890). But a railroad under the act cannot be compelled to increase its rates, though they are so low as to be ruinous to itself or its rivals. The provision that all rates shall be just and rea- sonable, was intended for the protection of the general public, and not for that of the carrier against the action of its own officers or the action of [8451 § 919] Eailkoad Eatb Regulation. [Chap. XXVIII rivals. Re Chicago, S. P. & K. C. Ry., 2 Int. Com. Rep. 137, 2 I. C. 0. 2:11 (1888). Willie on general principles a railroad is entitled to a fair return on the value of its investment, yet in the case of any particular rate which is al- leged to be too high the value of its entire property can shed but little, il any, light upon the question vphether the rate on one among thousands of articles of trafiSe yields its proper proportion of a fair return upon that value. Central Yellow Pine Assoc, v. Illinois Central R. R., 10 I. C. C. Rep. 505 { 1905 ) . Nor as has been said could the rate be determined by the amount of gross earnings and net income, even if they could be determined with reference to a single rate. If a rate is in itself excessive, as an un- reasonable compensation for the service rendered, it cannot be justified as necessary to yield the railroad a reasonable income. If there are more roads than the business at fair rates will remunerate, they must rely upon future earnings for the return of investments and profits. New Orleans Cotton Exchange v. Cincinnati, N, O. & T. R. Ry., 2 Int. Com. Rep. 289, 2 I. C. C. 385 (1888). § 919. Comparison with other rates. Where the reasonableness of rates is in question, comparison thereof may be made, not only with rates on another line of "the same carrier, but also with those on the lines of other and distinct carriers. Cincinnati Freight Bureau v. Cincinnati, N. O. & T. P. Ry., 4 Int. Com. Rep. 592, 6 I. C. C. Rep. 195 (1894) ; Morrell v. Union Pae. Ry., 4 Int. Com. Rep. 469, 6 I. C. C. Rep. 121 (1894). But in determining the reasonableness of rates a comparison of one isolated rate with another is not sufficient; the whole field must be considered in order to approximate justice, and at best the result cannot be regarded as other than an approximation. Howell v. New York, L. B. & W. R. R., 2 Int. Com. Rep. 162, 2 I. C. C. 272 (1888). Thus the unreasonableness of a rate for mileage tickets cannot be proved by showing that it is higher than the rate for commutation tickets. Assoc, of Wholesale Grocers v. Missouri Pac. Ry., 1 Int. Com. Rep. 321, 1 I. C. C. 156 (1897). And a finding that the rates charged by railroads for ship- ments to a particular point are unreasonable in themselves cannot prop- erly be based on evidence which only tends to show that they are too high as compared with the rates charged between the initial points and one or two other points. Interstate Commerce Commission v. Nashville, C. & S. L. Ry., 120 Fed. 934, 57 C. C. A. 224 (1903). Any comparison of rates must first be shown to be proper by establish- ing a similarity in the rates compared. Evans v. Union Pacific Ry., 1. C. C. Rep. 520 (1896). Thus rates on branch lines and main lines can- noi be compared. Northwestern la. G. & S. S. Assoc, v. Chicago & N. W. Ey., 2 Int. Com. Rep. 431, 2 I. C. C. 604 (1888). Nor rates in different sections of the country. Morrell v. Union Pacific Ry., 4 Int. Com. Rep. [846] OKap. XXVIII] Reasokable Charges. [§§ 920, 921 469, 6 I. C. C. Rep. 121 (1894). Nor can the rates in diflferent directions be compared. Duncan v. Atchison, T. & S. F. R. R., 4 Int. Com. Rep. 385, 6 1. C. C. Rep. 85 (1894). Of course, even in a case of admitted similarity, the difference in rates may be explained; as where the lower rate is a violation of the act. Squire v. Michigan Central R. R., 3 Int. Com. Rep. 515, 4 I. C. C. 611 (1890). Or where the lower rate was given by mistake. Rea v. Mobile & 0. Ry., 7 I. C. C. Rep. 43 (1897). § 920. Special service. A higher rate will be justified where special service is required, such as rapid transit, special cars, and speedy delivery for perishable freight. Delaware State Grange v. New York, P. & N. R. R., 3 Int. Com. Rep. 554, 4 I. C. C. 588 (1891) ; Loud v. South Carolina Ry., 4 Int. Com. Rep. 205, 5 I. C. C. 529 (1892); Newland v. Northern Pacific R. R., 4 Int. Com. Rep. 474, 6 I. C. C. Rep. 131 (1893). This increased rate must, neverthe- less, remain reasonable. Board of Railroad Comrs. v. Florence Ry., 8 I. C. C. Rep. 1 (1898). The amount of the reasonable rate must also be affected by other special circumstances. Thus in arriving at what is a just and reasonable rate on freight transported by a carrier on a short local line having but a small volume of business, where the cost of transportation is exceptionally great, arising from steep grades, sparse population, and light traffic, these are circumstances and conditions of controlling weight in the making of the rates, and cannot be overlooked when a question of their reasonableness is involved. Rice v. Western N. Y. & P. R. R., 2 Int. Com. Rep. 298, 2 I. C. C. 389 (1888) ; Savannah Bureau of Freight & Transp. v. Charleston & S. Ry., 7 I. C. C. Rep. 601 (1898) ; Georgia Peach Growers' Assoc, v. At- lantic C. L. Ry., 10 I. C. C. Rep. 255 (1904). In the same way a, higher rate is justified where the carrier goes to expense in collecting his freight. Howell V. New York, L. E. & W. R. R., 2 Int. Com. Rep. 162, 2 I. C. C. 272 (1888). § 921. Incidental charges. Where a carrier has a right to include in the rate items for special charges, whether for services furnished by the carrier himself or by an- other under an arrangement with the carrier, the compensation for such incidental services must be reasonable. Such incidental services are: Trrminal charges. — Truck Farmers' Assoc, f. Northeastern Ry., 6 I. C. C. Rep. 295 (1895) ; Cattle Raisers' Assoc, v. Fort Worth & D. C. Ry., 7 I. C. C. Rep. 295 (1895) ; Re Transportation of Fruit, 10 I. C. C. Rep. 360 10 I. C. C. Rep. 83 (1904). Elevator charges. — In re Allowances to Ele- vators, 10 I. C. C. Rep. 309 (1904). Demurrage charges. — Pennsylvania [847] § 922] E iiLROAD Kate Kegulation. [Chap. XXVIII Millers' State Assoc, v. Philadelphia & E. R. R., 8 I. C. C. Rep. 531 (1900), Storage charges. — Blackman v. Southern Ry., 10 I. C. C. Rep. 352 (1904). Refrigerating charges. — Truck Farmers' Assoc, v. Northeastern Ry., 6 I. C. C. Rep. 295 (1895) ; Re Transportation of Fruit, 10 I. C. C. Rep. 360 (1904); Consolidated Forwarding Co. v. Southern Pacific Co., 10 I. C. C. Rep. 590 ( 1905 ) . Such changes may properly be separately made. Inter- state Commerce Commission v. Chicago, B. & Q. R. R., 186 U. S. 320, 46 L. Ed. 1182, 22 Sup. Ct. 824 (1902), affirming 103 Fed. 249, 43 C. C. A. 209 (1900). § 922. Conditions. Lower rate is good for released liability. Duncan v. Atchison, T. & S. F. Ry., 4 Int. Com. Rep. 385, 6 I. C. C. Rep. 85 (1894). And when ticket is bought before taking the train. Cist v. Michigan Central R. R., 10 I. C. C. Rep. 217 (1904). So a different rate may be made for summer and win- ter. Interstate Commerce Commission v. Louisville & N. R. R., 5 I. C. C. Rep. 656 (1896). When a practice had existed on the part of certain carriers of live cattle to make a carload rate irrespective of weight, leaving the shipper to load into the car as many cattle as he pleased and was able to put into it, and the carriers substituted for this practice the rule that while naming a car-lot rate they prescribed a minimum weight for a carload, and theu charged by the hundred pounds in proportion to the ear-lot rate for any excess over the minimum, it was held that this rule was not unlawful. Prima faoie the new rule is more just and reasonable than the practice it supplanted, since the charge is more in proportion to the service rendered. Leonard v. Chicago & A. R. R., 2 Int. Com. Rep. 599, 3 I. C. C. 241 (1889). A carrier which had not provided track scales at stations prescribed a rule or regulation forbidding shippers to load grain in ears beyond a specified weight above the market capacity under a so-called " penalty " of increased rates on the excess weight. Held,' that such rule or regula- tion, if properly established, is' not unlawful, provided the increase in charges for excessive weight is not unreasonable, and the margin between such maximum and the carrier's minimum carload weight for grain is so wide that shippers may, without scales, readily comply with both rules. Suffern v. Indiana, D. & W. Ry., 7 I. C. C. 255 (1897), and see Phelps v. Texas & P. Ry., 4 Int. Com. Rep. 363, 6 I. C. C. Rep. 36 (1894) ; Rice v. Cincinnati, W. & B. R. R., 3 Int. Com. Rep. 841, 5 L C. C. 193 (1891). But unreasonable conditions should not be imposed. Thus, a shipper should not be subjected to unnecessary restrictions as to the kind of case or package he should use. Rhode Island Egg & B. Co. v. Lake Shore & M. S. R. R., 4 Int. Com. Rep. 512, 6 I. C. 'C. Rep. 17G (1894). A different rate on coal loaded by tipple is not reasonable. Glade Coal Co. v. Balti- more & O. R. R., 10 I. C. C. 226 (1904). And a difference based on the [848] Chap. XXVIII] Reasonable Chaeges. [§§ 923, 925 ultimate destination of the goods is not justified. Hope Cotton Oil Co. v. Texas & P. Ry., 10 I. C. C. Rep. 696 (1905). When a conditional rate is justified, the difference must be no more than is reasonable under the circumstances. New Orleans Cotton Exoh. v. Illi- nois Central R. R., 2 Int. Com. Com. Rep. 777, 3 I. C. C. 534 (1891). And if a difference in rate is authorized, it is only while the circumstances jus- tifying it exist. Re Relative Tank & Barrel Rates, 2 Int. Com. Rep. 245, 2 I. C. C. 365 (1888). § 923. Route. If a shipper gives no directions as to the particular route by which the freight is to be sent forward, it is the duty of the freight agent to forward it by the best and cheapest route for the shipper. Pankey v. Richmond & D. R. R., 3 Int. Com. Rep. 33, 3 I. C. C. 173 (1890) ; Newland v. Northern P. Ry., 6 I. C. C. Rep. 131 (1894). Therefore a carrier which sends freight over its own line, which is much longer and more expensive to operate than another route over continuous lines operated in part by other common carriers with which it exchanges traffic, can charge only a rate which is reasonable for transportation by the shorter and less expensive route. Minneapolis Chamber of Commerce v. Great Northern R. R., 4 Int. Com. Rep. 230, 5 I. C. C. 571 (1892) ; Newland v. Northern Pac. Ry., 6 I. C. C. Rep. 131 (1894). And if a higher rate is charged, the carrier must refund the excess. Pankey v. Richmond & D. R. R., 3 Int. Com. Rep. 33, 3 I. C. C. 173 (1890); Dewey v. Baltimore & 0. R. R., 11 I. C. C. Rep. 481 ( 1905 ) . If, however, the shipper gives instructions as to the route, the carrier is entitled to a rate that is reasonable over the route chosen. Pankey v. Richmond & D. R. R., 3 Int. Com. Rep. 33, 3 I. C. C. 173 (1890) ; Dewey v. Baltimore & 0. R. R., 11 I. C. C. Rep. 481 (1905). § 924. Cost of service. The cost of the service to the carrier is to be considered. Interstate Commerce Commission v. Chicago G. W. Ry., 141 Fed. 1003 (1905). It is indeed the minimum rate; since a carrier cannot be required to carry at a loss {ante, § 501 ff). But a rate higher than the cost of carriage is of course justifiable. Interstate Commerce Commission v. Western & Atlantic R. R., 88 Fed. 180 (1898). § 925. Value of service to shipper. The value of the service to the shipper should be considered; which includes a consideration of the profit which the shipper can make by having his goods transported to their destination. Re Rates and Charges on Food Products, 3 Int. Com. Rep. 93, 4 I. C. C. 48 (1890). This is con- sidered by District Judge Bethea and the railroad attorneys " an ideal [849] §§ 926, 927] Eaileoad Eate Kegulation. [Chap. XXVIII method;" "practical, and is based on an idea similar to taxation." In- terstate Commerce Commission v. Chicago G. W. Ky., 141 Fed. 1003 (1905). Nevertheless, the correctness of this view may be doubted (ante, § 524), and it is tolerably well settled by authority that it is no more than a fact to be considered, and by no means a controlling factor in the de- termination of the reasonableness of a, rate. Florida Fruit Exchange v. Savannah, F. & W. Ey., 4 Int. Com. Rep. 400 (1892), affirmed 9 C. C. A. 691, 4 Int. Com. Rep. 589 (1894); reversed on another point, 167 U. S. 512, 42 L. Ed. 257, 17 Sup. Ct. 998 (1898) ; Tift v. Southern Ry., 138 Fed. 753 (1905) ; Cincinnati Freight Bureau v. Cincinnati, N. 0. & T. P. Ry., 4 Int. Com. Rep. 592, 6 I. C. C. Rep. 195 (1894) ; F. Schumacher Milling Co. V. Chicago, R. I. & P. Ry., 6 I. C. C. Rep. 61 (1894) ; In re Proposed Advances in Freight Rates, 9 I. C. C. Rep. 382 (1903); Central Yellow Pine Assoc, v. Illinois Central R. R., 10 I. C. C. Rep. 505 (1905) ; Tift v. v. Southern Ry., 10 I. C. C. Rep. 548 (1905). § 926. y,alue of goods. The value of the goods carried is to be considered in determining the reasonableness of the rate, since the greater the value the greater the risk. Interstate Commerce Commission v. Delaware, L. & W. R. R., 64 Fed. 723, 5 I. C. C. Rep. 144 (1894) ; Interstate Commerce Commission v. Chicago G. W. Ry., 141 Fed. 1003 (1905) ; Howell v. New York, L. E. & W. Ry., 2 Int. Com. Rep. 162, 2 I. C. C. 272 (1888) ; Colorado F. & I. Co. v. Southern Pacific Co., 6 I. C. C. Rep. 488 ( 1895 ) . But the value of the goods cannot be made an arbitrary standard for fixing the compensation. Grain Shippers' Assoc, v. Illinois Central R. R., 8 I. C. C. Rep. 158 (1899) ; Georgia Peach Growers' Assoc, v. Atlantic C. L. Ry., 10 I. C. C. Rep. 255 (1904). § 927. Amount. As it is cheaper to move goods in bulk rather than in small lots, a smaller relative rate is permissible upon carload lots than on less than carload lots; but this difference must be no more than is reasonable. Duncan v. Atchison, T. & S. F. R. R., 4 Int. Com. Rep. 385, 6 I. C. C. 85 (1894); Business Men's League v. Atchison, T. & S. F. R. R., 9 I. C. C. Rep. 318 (1903). Before allowing a carload rating for a carload shipment, a carrier is allowed to require that goods shall be loaded at onij time and place, that but a single bill of lading shall be allowed, and that the shipment shall be by one consignor to one consignee. Buckeye Buggy Co. V. Cleveland, C, C. & St. L. Ry., 9 I. C. C. Rep. 620 (1903) ; C. S. Bell Co. V. Baltimore & 0. S. Ry., 9 I. C. C. Rep. 632 (1903). So while a carrier should receive a greater compensation in the aggregate for hauling things being equal, as a general rule, the rate per hundred weight should [850] Ckap. XXVIII] Reasonable Chakges. [§§ 92S, 929 a carload of large tonnage than one of less tonnage, nevertheless, other be less in the former than in the hitter case. Murphy v. Wabash R. R., 3 Int. Com. Rep. 725, 5 I. C. C. 122 (1891). The large bulk in which a commodity moves by railroad will for the same reason justify a lower rate. Re Rates and Charges on Food Products, 3 Int. Com. Rep. 93, 4 I. C. C. 48 (1890). Nevertheless though carload rates will be justified, it is usually held that a carrier cannot be forced to grant lower rates for a carload. Railroad Commrs. v. Weld, 96 Tex. 394, 73 S. W. 529 (1902); or for a larger carload than the -ordinary load. Planter's Compress Co. v. Cleveland, C, C. & St. L. Ry., 11 I. C. C. Rep. 382 (1905). But see Bar- row v. Yazoo & M. V. R. R., 10 I. C. C. Rep. 333 (1904). § 928. Distance. As a rule, in the transportation of freight by railroads, while the aggre- gate charge is continually increasing the farther the freight is carried, the rate per ton per mile is constantly growing less all the time, making the aggregate charge less in proportion every hundred miles after tdu first, arising out of the character and nature of the service performed, and the cost of the service; and thus staple commodities and merchandise are enabled to bear the charges of this mode of transportation from and to the most distant portions of the country. The act to regulate com- merce, so far from throwing hampering restrictions or obstacles in the way of the operation of this salutary rule, gives it all the benefit and aid of its sanction and safeguards by providing that the carrier shall be entitled to receive a reasonable compensation for the service performed upon open published rates, against which no competitor can take advantage by allow- ing shippers secret rebates and drawbacks in order to get the business. In the nature of things rates on long hauls usually are, and as a rule should be, lower in proportion to distance than local rates on short hauls of the same commodity. Farrar v. East Tenn. V. & G. Ry., 1 Int. Com. Rep. 764, 1 T. C. C. 480 (1888); Crews v. Richmond & D. R. R., 1 Int. Com. Rep. 703, 1 I. C. C. 401 (1888). For this reason the rate per ton mile is not controlling, and cannot be enforced upon carriers by the Com- mission. La Crosse, M. & J. Union v. Chicago, JM. & S. P. Ry., 2 Int. Com. Rep. 9, 1 I. C. C. 629 (1888) : Gustin v. Atchison, T. & S. F. R. R., 8 I. C. C. Rep. 277 (1899). But distance is of great importance in fixing rates and must be considered. Freight Bureau v. Cincinnati, N. 0. & T. P. Ry., 7 I. C. C. Rep. 180 (1897) ; and see Milwaukee Chamber of Com- merce V. Chicago, M. & St. P. Ry., 7 I. C. C. 481 (1898) ; New York Pro- duce Exchange v. Baltimore & O. R. R., 7 I. C. C. Rep. 612 (1898). § 929. Through rates. When several carriers agree upon a through rate, tlio reasonableness of the rate must be determined in the first instanog as if the rate stood by [851] § 930] Eaileoad Rate Regulation. [Chap. XXVIII itself, and were the rate of a single carrier. It must be reasonable as a whole in order to satisfy the requirements of the act. Lippman v. Illi- nois Central R. R., 2 Int. Com. Kep. 414, 2 I. C. C. 584 (1889). The division among themselves which a number of connecting carriers make of a through rate should not affect the question of the reasonableness or unres^sonableness of the rate as an entirety. Florida Fruit Exch. v. Savan- nah, F. & W. Ry., 4 Int. Com. Rep. 400 (1893). Re Transportation of Salt, 10 I. C. C. Rep. 148 (1904). The division may, to be sure, throw some light on the reasonableness of the whole rate. And if part of the through line is owned by the shipper, as an industrial railroad {ante, 5 112), the division of the rate may be scrutinized to be sure that under the form of division there is not in fact a rebate allowed. Re Transpor- tation of Salt, 10 I. C. C. Rep. 148 (1904). A joint through rate is not necessarily or usually the sum of the local rates; indeed, as a longer haul is ordinarily carried on relatively more cheaply than a shorter one the sum of the local rates should ordinarily e.^ceed the through rate. Lippman v. Illinois Central R. R., 2 Int. Com. Rep. 414, 2 I. C. C. 584 (1889) ; Troy Board of Trade v. Alabama Mid- land Ry., 4 Int. Com. Rep. 348, 6 I. C. C. 1 (1894) ; Hilton Lumber Co. v. Wilmington & W. R. R., 9 I. C. C. Rep. 17 (1901). And a through rats which is greater than the sum of the local rates is ordinarily for that reason unjust and unreasonable. Savannah Bureau of Freight & Transp. V. Louisville & N. R. R., S I. C. C. Rep. 377 (1899). But where the local rates are fixed not by the railroads themselves but by railroad commis- sioners of the States, a through rate greater than the sum of the local rates may in an exceptional case be reasonable. Savannah Bureau of Freight & Transp. v. Charleston & S. Ry., 7 I. C. C. Rep. 601 (1898). TOPIC C CLASSIFICATION. [See Chapter XVIII, where classification is discussed at length.] § 930. General principles of classification. The general principles of classification have already been fully stated in a former chapter. It has been seen that a classification of com- modities is necessary in order to fix particular rates. This division must not be unduly minute, as that would greatly complicate the work, and go far to defeat the very purpose of classification, and even then it would be impracticable to apportion with mathematical exactness the burdens of transportation; the best result obtainable in this direction is reasonable and substantial approximation. Derr Mfg. Co. v. Pennsylvania R. R., 9 I. C. C. 646 (1903); see also § 557. The classification being made, a rate must be fixed for each class; and the difference in rates between the different classes must be reasonable, in addition to the requirement that [852] Okap. XXVIII] Keasonable Charges. [§ 931 the rates In themselves should be reasonable. Business Men's League v, Atchison, T. & S. F. R. R., 9 I. C. C. 318 (1903). § 931. Instances. The Interstate Commerce Commission has examined and passed upon the classification of the following articles: Barrel Stock, Base Boards, Bed Slats and Butternut Lumber — Duluth Shingle Co. v. Duluth, S. S. & A. Ry., 10 I. C. C. 489 (1905). Beans— Rea, v. Mobile & O. Ry., 7 I. C. C. Rep. 43 (1897). Bitters — Myers v. Pennsylvania Co., 2 Int. Com. Rep. 403, 2 I. C. C. 573 (1889). Carpenters' Mouldings, Casings, Cherry Lumber — Duluth Shingle Co. \: Duluth, S. S. & A. Ry., 10 I. C. C. Rep. 489 (1905). Celery — Teoumseh Celery Co. v. Cincinnati, J. & M. Ry., 4 Int. Com. Eep. 318, 5 I. C. C. 663 (1893). Cowpeas — Swaffield v. Atlantic Coast Line Ry., 10 I. C. C. Rep. 281 (1904). Eggs—Brovrnell v. Columbus & C. M. R. R., 4 Int. Com. Rep. 285, 5 I. C. C. 638 (1893). Fence Posts— Duluth Shingle Co. v. Duluth, S. S. & A. Ry., 10 I. C. C. Rep. 489 (1905). Fertilizer— Swa.meld v. Atlantic C. L. Ry., 10 I. C. C. Rep. 281 (1904). Fruits, Dried — Martin v. Southern Pac. Co., 1 Int. Com. Rep. 596, 2 I. C. C. 1 (1887). Fruit and Vegetable Packages — Duluth Shingle Co. v. Duluth S. S. & A. Ry., 10 L C. 0. Rep. 489 (1905). Grain and Grain Products — McMorran v. Grand T. Ry., 2 Int. Com. Rep. 604, 3 I. C. C. 252 (1889). Groceries— Tlmrber v. JMew York C. & H. R. R. R., 2 Int. Com. Rep. 742, 3 I. C. C. 473 (1890). Bides — McMillan v. Western Classif. Committee, 3 Int. Com. Rep. 282, 4 I. C. C. 276 (1890). Bogs — Chicago Board of Trade v. Chicago & A. R. R., 3 Int. Com. Rep. 233, 4 L C. C. 158 (1890). Boops, ff«6s— Duluth Shingle Co. v. Duluth, S. S. & A. Ry., 10 I. C. C. Rep. 489 (1905). Bub Blocks — Bates v. Pennsylvania R. R., 2 Int. Com. Rep. 715, 4 I. C. C. 281 (1889). 7^,oiAs— Duluth Shingle Co. v. Duluth S. S. & A. Ry., 10 I. C. C. Rep. 489 (1905). Leather Scrap— Newman v. New York C. & H. R. R. R., 11 I. C. C. Rep. 517 (1906). Lemons — Consolidated Forwarding Co. v. Southern Pac. Co., 10 I. C. C. Rep. 590 (1905). [853] (§ 931] Eaileoad Ea-te Regulation. [Chap. XXVIII Xo^rs— Duluth Shingle Co. v. Duluth S. S. & A. Ry., 10 I. C. C. Rep. 489 (1905). Lumber— B.m-\hvLt v. Lake Shore & M. S. Ry., 2 Int. Com. Rep. 81, 2 I. C. C. 122 (1888). Mahogany Lumber — Dnluth Shingle Co. v. Duluth S. S. & A. Ry., 10 I. C. C. Rep. 489 (1905). Packinghouse Products — Chicago Board of Trade v. Chicago & A. R. R., 3 Int. Com. Rep. 233, 4 I. C. C. 158 (1890). Paper Bags— Wolf Bros. v. Allegheny Valley Ry., 7 I. C. C. Rep. 40 (1897). Patent Medicine — ^Warner v. New York C. & H. R. R. R., 3 Int. Com. Rep. 74, 3 I. C. C. 32 (1890). Paving Blocks— Vnluth Shingle Co. v. Duluth, S. S. & A. Ry., 10 I. C. C. Rsp. 489 (1905). Pearline—P\-\e v. East Tenn., V. & G. Ry., 1 Int. Com. Rep. 767, 1 I. 0. C. 465 (1888). Petroleum and Petroleum Products — ^Rice v. Western N. Y. & Pa. R. E., 3 Int. Com. Rep. 162, 4 I. C. C. 131 (1890). Pickets, Piles, Plow Beams and Handles — Duluth Shingle Co. v. Duluth S. S. & A. Ry., 10 I. C. C. Rep. 489 (1905). Railroad Ties — Reynolds v. Western N. Y. & P. Ry., 1 Int. Com. Rep. 685, 1 I. C. C. 393 (1887). Raisins — Martin v. Southern Pac. Co., 1 Int. Com. Rep. 596, 2 I. C. C. 1 (1887). Salt — ^Anthony Salt Co. v. Missouri Pac. Ry., 4 Int. Com. Rep. 33, 5 I. C. C. 299 (1892). Sawdust, Sleigh Wood, Spokes, Spools for Barb Wire, Staves — Duluth Shingle Co. v. Duluth, S. S. & A. Ry., 10 I. C. C. Rep. 489 (1905). Soap— 'PjIb v. East Tenn., V. & G. Ry., 1 Int. Com. Rep. 767, 1 I. C. C. 465 (1888); Andrews Soap Co. v. Pittsburg, C. & S. L. Ry., 3 Int. Com. Rep. 77, 4 I. C. C. 41 (1890) ; Proctor v. Cincinnati, H. & D. R. R., 3 Int. Com. Rep. 131, 4 I. C. C. 87 (1890) ; Beaver v. Pittsburg, C. & S. L. Ry., 3 Int. Com. Rep. 546, 4 I. C. C. 733 (1891). Surgical Chairs — Harvard Co. v. Pennsylvania Co., 3 Int. Com. Rep. 257, 4 I. C. C. 212 (1890). Telegraph and Telephone Poles, Wagon Wood, Walnut Lumber, Windoiv Stoe/c— Duluth Shingle Co. v. Duluth, S. S. & A. Ry., 10 I. C. C. Rep. 489 (1905). Wagon Materials — Hurlburt v. Lake Shore & M. S. Ry., 2 Int. Com. Rep. 81, 2 L C. C. 122 (1888). [854] Ohap. XXVIII] Reasoitable Charges. [§§ 932, 933 TOPIC D UNEEASONABLE BATES. [Particular rates are discussed in Chapters XI, XVI, XVII, XVIII, XIX.] § 932. General principles. No one can refuse to pay the published tariff rates, on the ground that they are unreasonable; since it would be a crime to accept from him les.s than the tariff rates. Van Patten v. Chicago, M. & S. P. Ry., 81 Fed. 545 (1897). It is necessary, therefore, in order to obtain redress where rates are unreasonably high to apply to the Interstate Commerce Commission for redress. Upon a complaint to the Commission for reduction of rates the burden is on the complainant to establish his case; it must aiRrma- tively appear that charges assailed as unreasonable are so and ought to be reduced. Lincoln Creamery v. Union P. Ey., 3 Int. Com. Rep. 794, 5 T. C. C. 156 (1891) ; Duncan v. Atchison, T. & S. F. R. R., 6 I. C. C. Rep. 85 (1894). Where a change of rates would involve a reduction of rates on other competing lines not parties to the proceeding, and unsettle relative rates in a large extent of territory, such a change ought not to be made unless based upon clear grounds. Rice v. Western N. Y. & P. Ry., 2 Int. Com. Rep. 298, 2 I. C. C. 389 (1888) ; and see Dallas Freight Bureau v. Texas & P. Ry., 8 I. C. C. Rep. 33 (1898). In a proper case, however, the Commission will declare a, rate unreasonable. Jerome Hill Cotton Co. v. Missouri, K. & T. Ry., 6 I. C. C. Rep. 601 (1896); New Orleans L. S. Exch. v. Texas & P. Ry., 10 I. C. C. Rep. 327 (1904) ; H. B. Pitts & Son V. Atchison, T. & S. F. R. R., 10 I. C. C. Rep. 691 (1905). While, as has been seen, the reasonableness of a rate may be tested by comparison with similar rates, such comparison alone, without other evidence, will not justify the conclusion that a rate is unreasonable. Allen V. Oregon Ry. & Nav. Co., 100 Fed. 265 (1901) ; Interstate Commerce Com- mission v. Nashville, C. & S. L. Ry., 120 Fed. 934, 57 I. C. C. A. 224 (1903) ; Kentucky R. R. Comrs. v. Cincinnati, N. 0. & T. P. Ry., 7 I. C. C. Rep. 380 (1897); Chattanooga Chamber of Commerce v. Southern Ry., 10 I. C. C. Rep. Ill (1904). § 933. Passenger rates. Several decisions on the reasonableness of passenger rates are interest- ing. Thus twenty-five dollars is not unreasonable for a mileage ticket. Associated Wholesale Grocers v. Missouri Pac. Ry., 1 Int. Com. Rep. 321, 393, 1 I. C. C. 156 (1887). A passenger fare from A to B is not necessarily unreasonable because jt is higher than that from B to A. Mac- Loon V. Boston & M. R. R., 9 I. C. C. Rep. 642 (1903); Hewins v. New York, N. H. & H. R. R., 10 I. C. C. Rep. 221 (1904). A through rate is not necessarily unreasonable because it is higher than the sum of local rates feed by State laws. Savannah Bureau of Freight & Transp. v. [855] § 934] Kaileoad Rate Regulation. [Cliap. XXVIII Charleston & S. R. R., 7 I. C. C. Rep. 601 (1898) ; see, however, Board of Railroad Commissioners v. Eureka Springs Ry.^ 7 I. C. C. Rep. 69 (1897). See for other discussions of the reasonableness of passenger rates, Willson V. Roek Creek Ry., 7 I. C. C. Rep. 83 (1897); Cist v. Michigan Cent. E. R., 10 I. C. C. Rep. 217 (904). § 934. Freight rates; instances. In the following cases the reasonableness of rates on particular articles was considered by the Interstate Commerce Commission: Agate Ware — Chamber of Commerce of Chattanooga v. Southern Ry., 10 I. C. C. Rep. 117 (1904). Agricultural Implements — Shippers' Union of Phoenix v. Atchison, T. 4. S. F. R. R., 9 I. C. C. Rep. 250 (1902). Angle Beads— Duluth Shingle Co. v. Duluth, S. S. & A. Ry., 10 I. C. C. Rep. 489 (1905). Apples — Truck Farmers' Asso. v. Northwestern Ry., 6 I. C. C. Rep. 295 (1895) ; National Hay Asso. v. Lake Shore & Michigan S. R. R., 9 I. C. C. Rep. 264 (1902). Asbestos — Chicago Fire Proof Covering Co. v. Chicago & N. W. Ry., S I. C. C. Rep. 316 (1899). Astragals— Duluth Shingle Co. v. Duluth, S. S. & A. Ry., 10 I. C. 0. Rep. 489 (1905). Bacon — ^Rates on. Savannah Bureau of Freight & Transp. v. Louisville & N. R. R., 8 I. C. C. Rep. 377 (1899). Baking Powder — Kindel v. Atchison, T. & S. F. R. R., 9 I. C. C. Rep. 606 (1903) ; Re Transportation of Salt from Hutchinson, 10 I. C. C. Rep. 1 (1904); Chamber of Commerce of Chattanooga v. Southern Ry., 10 I. C. C. Rep. 117 (1904). Balusters— Dalnth. Shingle Co. v. Duluth, S. S. & A. Ry., 10 I. C. C. Rep. 489 (1905). iJanauHs— Gardner & Clark v. Southern Ry., 10 I. C. C. Rep. 342 (1904). Barley — F. Schumacher Milling Co. v. Chicago, R. I. & P. Ry., 6 I. C. 0. Rep. 61 (1894) ; Cannon Falls Farmers' Elevator Co. v. Chicago G. W. Ry., 10 I. C. C. Rep. 650 (1905). Barrel Material — Holmes & Co. v. Southern Ry., 8 I. C. C. Rep. 5G1 (1900). Beans — Truck Farmers' Assoc, v. Northeastern Ry., 6 I. C. C. Rep. 295 (1895); Rea v. Mobile & 0. Ry., 7 1. C. C. Rep. 43 (1896); Shippers' Union of Phoenix v. Atchison, T. & S. F. R. R., 9 I. C. C. Rep. 250 (1902) ; Chattanooga Chamber of Commerce v. Southern Ry., 10 I. C. C. Rep. 117 (1904). Beef Cattle — New Orleans Live Stock Exeh. v. Texas & Pac. Ry., 10 I. C. C. Rep. 327 (1904). [856] Okap. XXVIII] Keasonable Chakges. [§ 934 BlacUing Brushes — Derr Mfg. Co. v. Pennsylvania R. E., 9 I. C. C. Rep. 646 (1903). Blankets— KAn&el v. Atchison, T. & S. F. R. R., 9 I. C. C. Rep. 606 (1903). B«in. Atchison, T. & S. F. R. R., 9 I. 0. C. Rep. 323 (1902). [867] §'§ 935, 936] Eailroad Eate Eegtjlation. [Chap. XXVIII TOPIC E EEASOIS^ABLE FACILITIES. [The common law situation is discussed in Ciiapters VII, IX, XX, XXIII.] § 935. Not required by original act. The original interstate commerce act did not require or give the Com- mission power to require that carriers should furnish reasonable facilities; though it did forbid any discrimination in furnishing facilities. The common law required the furnishing of such facilities; but since the act was silent, the Commission could not require a carrier to furnish cars. Scofield V. Lake Shore & M. S. Ry., 2 Int. Com. Rep. 67, 2 I. C. C. 90 (1888) ; Rice v. Cincinnati, W. & B. R. R., 3 Int. Com. Rep. 841, 5 I. C. C. 193 (1891). Nor can it require a railroad to furnish refrigerator cars for the carriage of fruit. Re Transportation & Refrigeration of Fruit, 10 I. C. C. Rep. 360 (1904). So it cannot order a railroad to deliver carload freight in bulk to a cjjnnecting road. Railroad Comrs. v. Louisville & N. R. R., 10 I. C. C. Rep. 173 (1904). Nor is a railroad under the act obliged to allow a steamboat access to its wharf. Ilwaco Ry. & Nav. Co. V. Oregon S. L. & U. N. Ry., 57 Fed. 673, 6 C. C. A. 495, 5 Int. Com. Rep. 627 (1895). § 936. Switching privileges. In the same way under the original act a railroad was not bound to pro- vide and maintain a spur track to the premises of a shipper. Mt. Vernon Milling Co. v. Chicago, M. & S. P. Ry., 7 I. C. C. Rep. 194 (1897) ; Red Rock Fuel Co. v. Baltimore & O. R. R., 11 I. C. C. Rep. 438 (1905). The duty of providing switching privileges was placed upon railroads in Eng- land in 1904 {ante, § 874), and now is imposed in the United States by the provision of the act of 1906 given above. [868] CHAPTER XXIX. DISCRIMINATIONS BETWEEN PEBSONS. § 941. Provisions of the statute. 942. Amendments of 1906. TOPIC A UNDUE OR UNEEASONABI>E PEEFERENCE OE ADVANTAGE. § 943. What discrimination is forbidden. 944. What preference is undue and unreasonable. 945. Device for concealing preference unavailing. 946. Preference in certain services permissible. 947. Effect of illegality on contract of carriage. TOPIC B LIKE AND CONTEMPORANEOUS SERVICE. § 948. Difference in time or place. 949. Difference in nature of service. TOPIC C SUBSTANTIALLY SIMILAR CIRCUMSTANCES AND CONDITIONS. § 950. What circumstances can be considered. 951. Occupation of passenger or shipper. 952. Difference in amount of shipment. 953. Discrimination in use of cars. 954. Discrimination between commodities. TOPIC D SPECIAL RATE OR REBATE. § 955. What amounts to a rebate. 956. Allowance for cars or facilities furnished by the shipper. 957. Division of rate with industrial railway. 958. Sale and delivery of commodities by a railroad. TOPIC E EXCEPTIONS. § 959. Statutory exceptions not exclusive. 960. Carriage for the government. 961. Ministers of religion. 962. Officers and employees. 963 Mileage, excursion and commutation tickets. [869] § 941] Raileoad Rate Rugulation. [Chap. XXIX § 941. Provisions of the statute. Equal charges for like and contemporaneous service. — Sqc. 2. That if any common carrier subject to the provisions of this act shall, directly or indirectly, by any special rate, rebate, draw- back, or other device, charge, demand, collect, or receive from any person or pea-sons a greater or less compensation for any service rendered, or to be rendered, in the transportation of passengers or property, subject to the provisions of this Act, than it charges, demands, collects, or receives from any other person or persons for doing for him or them a like and con- temporaneous service in the transportation of a like kind of traffic under substantially similar circumstances and conditions, such common carrier shall be deemed guilty of unjust discrimi- nation, which is hereby prohibited and declared to be unlawful. [Interstate Commerce Act, section 2.] Discrimination. — Sec. 3. That it shall be unlawful for any common carrier, subject to the provisions of this act, to make or give any undue or unreasonable preference or advantage to any particular person, company, firm, corporation, or locality, or any particular description of traffic, in any respect whatso- ever, or to subject any particular person, company, firm, corpo- ration or locality, or any particular description of traffic, to any undue or unreasonable prejudice or disadvantage in any respect whatsoever. Interchange of traffic. — Every common carrier subject to the provisions of this act shall, according to their respective powers, afford all reasonable, proper, and equal facilities for the inter- change of traffic between their respective lines, and for the receiving, forwarding, and delivering of passengers and prop- erty to and from their several lines and those connecting there- with, and shall not discriminate in their rates and charges be- tween such connecting lines ; 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. [Interstate Commerce Act, section 3.] [870] Ckap. XXIX] DiscEiMiNATioNS. [§ 941 Preference to United States in war time. — That in time of war or threatened war, preference and precedence shall, upon the demand of the President of the United States, be given, over all other traffic, to the transportation of troops and material of war, and carriers shall adopt every means within their con- trol to facilitate and expedite the military traffic. [Act of June 29, 1906, section 2.] Exceptions. — That nothing in this Act shall prevent the car- riage, storage, or handling of property, free or at reduced rates For the United States, State, or municipal governments. Or for charitable purposes. Or to or from fairs or expositions for exhibition thereat. Or the free carriage of destitute and homeless persons trans- ported by charitable societies. And the necessary agents employed in such transportation. Or the issuance of mileage, excursion, or commutation pass- enger tickets ; Nothing in this Act shall be construed to prohibit any com- mon carrier from giving reduced rates to ministers of religion. Or to municipal governments for the transportation of in- digent persons. Or to iimiates of the National Homes or State Homes for Disabled Volunteer Soldiers and of Soldiers' and Sailors' Orphan Homes, including those about to enter and those return- ing home after discharge, under arrangements with the boards of managers of said homes. Nothing in this act shall be construed to prevent railroads from giving free carriage to their own officers and employees, Or to prevent the principal officers of any railroad company er companies from exchanging passes or tickets with other rail- road companies for their officers and employees; And nothing in this Act contained shall in any way abridge or alter the remedies now existing at common law or by statute, but the provisions of this act are in addition to such remedies : [■[871] § 941] Eaileoad Eate Kegulation. [Chap. XXIX Provided, tkat no pending litigation shall in any way be affected by this act. [Interstate Commerce Act, section 22, as amended by section 9, Act of March 2, 1889.] Free passes: exceptions. — ITo carriers subject to the provis- ions of this Act shall after Jan. 1, 1907, directly or indirectly, issue or give any interstate free ticket, free pass or free trans- portation for passengers, except to its employees and their families, its officers, agents, surgeons, physicians, and attorneys at law; to ministers of religion, traveling secretaries of railroad Young Men's Christian Associations, inmates of hospitals and charitable and eleemosynary institutions, and persons exclusively engaged in charitable and elee- mosynary work; to indigent, destitute, and homeless persons, and to s:uch persons when transported by charitable societies or hospitals, and the necessary agents employed in such trans- portation ; to inmates of the ISTational Homes or State Homes for Disabled Volunteer Soldiers, and of Soldiers' and Sailors^ Homes, including those about to enter and those returning home after discharge, and boards of managers of such Homes; to necessary caretakers of live stock, poultry and fruit; to em- ployees on sleeping cars, express-cars, and to linemen of tele- graph and telephone companies; to railway mail service em- ployees, post-office inspectors, customs inspectors, and immigra- tion inspectors, to newsboys on trains, baggage agents, witnesses attending any legal investigation in which the common carrier is interested, persons injured in wrecks and physicians and nurses attending such persons. Provided, that this provision shall not be construed to prohibit the interchange of passes for the officers, agents, and employees of common carriers, and their families, nor to prohibit any common carrier from carry- ing passengers free with the object of providing relief in cases of general epidemic, pestilence, or other calamitous visitations. Penalty. — Any common carrier violating this provision shall be deemed guilty of a misdemeanor and shall for each offense, on; conviction, pay to the United States a penalty of not less [872] Chap. XXIX] DiscBiMiifATioNS. [§§ 942, 943 than one hundred dollars nor more than two thousand dollars, and any person, other than the persons excepted in this pro- vision, who uses any such interstate free ticket, free pass, or free transportation shall be subject to a like penalty. Juris- diction of offenses under this provision shall be the same as that provided for offenses in an Act entitled " An Act to further regulate commerce with foreign nations and among the States," approved February nineteenth, nineteen hundred and threei, and any amendment thereof. [Interstate Commerce Act, as amended by Act of June 29, 1906, section 1.] § 942. Amendments of 1906. The language of sections 2 and 3 of the original act was unchanged by the Act of 1906. The eflfect of the latter act on section 22 of the original act, as amended in 1889, is more doubtful. The Act of 1906 does not purport to amend section 22; the free-pass provision is in form an amend- ment to section 1. It can affect section 22, therefore, only as a result of the repealing clause (section 10 of the Act of 1906), which repeals all laws or parts of laws " in conflict with the provisions of this act." The first part of section 22, which refers to transportation of property is certainly not affected by the new provisions. The clause permitting the issuance of mileage, excursion, or commutation tickets is almost as clearly unre- pealed, since the new provision applies only to free carriage. The provi- sions of section 22 as to the free carriage of persons appear all to have been included in the new act. On the whole, therefore, none of the pro- visions of the new act appear to be in necessary conflict with any part of section 22, and we may therefore conclude that no part of that section has been repealed. All three of these sections of the old act are therefore printed as in force. The new provisions are two: 1. The preference to the United States in time of war. 2. The new anti-free-pass provision, with its penalties. TOPIC A UNDUE OK UNEEASOISTABLE PEEFEEENCE OE ADVANTAGE. [This topic is fully discussed, ante. Chapters XXI-XXIII.] § 943. What discrimination is forbidden. The discrimination forbidden by the act is not confined to any one form of "unfair dealing. It need not be accomplished by any particular device; [8Y3] § 944] Eailkoad Rate REGULATioiir. [Chap. XXIX and on the other hand no device will prevent an unreasonable preference from being unlawful under the act. Scofield v. Lake Shore & M. S. R. R., 2 Int. Com. Rep. 67, 2 I. C. C. 90 (1888). It includes preference in rates: United States v. Tozer, 37 Fed. 635, 2 Int. Com. Rep. 597, on appeal 39 Fed. 904 (1889); in classification: Bates v. Pennsylvania R. R., 2 Int. Com. Rep. 715, 3 I. C. C. 435 (1889) ; National Hay Assoc, v. Lake Shore & M. S. R. R., 9 I. C. C. Rep. 264 ( 1902 ) ; and in the furnishing of facili- ties: Re Morris, 2 Int. Com. Rep. 617 (1889). The discrimination must be actual, not merely contemplated, as by offering a discriminative rate which is not accepted: Griffee v. Burlington & M. R. Ry., 2 Int. Com. Rep. 194 (1889); Richmond Elevator Co. v. Pere Marquette R. R., 10 I. C. C. Rep. 629 (1905) ; Lehigh Valley R. R. v. Ramey, 112 Fed. 487 (1902) ; or by giving a concession to a shipper which is not shown to have been refused to any other shipper. United States v. Hanley, 71 Fed. 672 (1896). The act applies only to the future; it does not embrace cases which oc- curred before the act was passed. Ottinger v. Southern Pac. R. R., 1 Int. Com. Rep. 607, 1 I. C. C. 144 (1887). § 944. What preference is undue and unreasonable. In a passage often quoted Judge Jackson in Interstate Commerce Com- mission v. Baltimore & 0. R. R., 43 Fed. 37 (1890), said: "These words necessarily involve the idea or element of comparison of one service or traffic with another similarly situated and circumstanced, and require that, to be undue and unreasonable, the preference or prejudice must relate and have reference to competing parties, producing between them unfair- ness and an unjust inequality in the rates charged them, respectively, for contemporaneous service under substantially the same circumstances and conditions. In determining the question whether rates give an undue preference or impose an undue prejudice or disadvantage, consideration must be had to the relation which the persons or traffic affected bear to each other and to the carrier. When and so long as their relations are similar or ' substantially ' so, the carrier is prohibited from dealing dif- ferently with them in the matter of charges for a like and contemporane- ous service. . . The English cases referred to above, and others that might be cited, establish the rule that, in passing upon the question of undue or unreasonable preference or advantage, it is not only legitimate, but proper, to take into consideration besides the mere difference in charges, various elements, such as the convenience of the public, the fair interest of the carrier, the relative quantities or volume of the traffic in- volved, the relative cost of the services and profit to the company, and the situation and circumstances of the respective customers with reference to each other, as competitive or otherwise." This language was approved by the Supreme Court on appeal : Interstate Commerce Commission v. Balti- more & 0. R. R., 145 U. S. 263, 36 L. Ed. 699, 12 Sup. Ct. 844, 4 Int. Com. [874] Ohap. XXIX] Discriminations. [§ 945 Rep. 92 (1892), and has since been universally followed. See Interstate Commerce Commission v. Chicago G. W. Ry., 141 Fed. 1003 (1905). Undue preference involves comparison between the treatment given to shippers, and upon comparison a finding that one is unfairly treated. In short, any unreasonable inequality of treatment of passengers or shippers is a violation of the law. Daniels v. Chicago, R. I. & P. Ry., 6 I. C. C. Rep. 458 (1895) ; Page v. Delaware, L. & W. R. R., 6 I. C. C. Rep. 548 (1896); Castle v. Baltimore & 0. R. R., 8 I. C. C. Rep. 333 (1899). So it is an unjust discrimination to remove a colored passenger holding i first class ticket from a first class car, to a second class car, less clean and comfortable. Passengers paying the same fare upon the same railroad train, whether white or colored, are entitled to equality of transportation in respect to the character of the cars in which they travel and the com- forts and conveniences supplied. The separation of white and colored passengers paying the same fare is not unlawful, if cars and accommoda- tions equal in all respects are furnished to both and the same care and protection of passengers observed; but by requiring one who had paid a first class fare, to ride in a half car set apart for colored passengers, with accommodations and comforts inferior to the car for white passengers in the same train who paid the same fare, and without the protection against annoyances furnished to white passengers, a railroad subjected him to un- due and unreasonable prejudice and disadvantage, in violation of the act. Heard v. Georgia R. R., 1 Int. Com. Rep. 719, 1 I. C. C. 428 (1888); Oouneill v. Western & A. R. R., 1 Int. Com. Rep. 638, 1 I. C. C. 339 (1887); Heard v. Georgia R. R., 2 Int. Com. Rep. 508, 3 I. C. C. Ill' (1889). So where a carrier refused to permit a sidetrack connection with its road to one coal mine, while permitting it to another uridei^ similar cir- cumstances, it was held to be a violation of the act. Not every person or company desiring to develop a coal mine along or near defendant's road is entitled to demand a sidetrack connection merely because connections have previously been made with other mines. There must be such simi- larity of situation and feasibility of connection as will permit practical adherence to reasonable operating conditions by the carrier. But where physical conditions pertaining to the proposed connection are at least as favorable to the carrier as those pertaining to the other connections the applicant is entitled to his connection. Red Rock Fuel Co. v. Baltimore & O. R. R., 11 I. C. C. Rep. 438 (1905). § 945. Device for concealing preference unavailing. As has been seen, no device to conceal the preference can operate to evade the statute. Thus underbilling a device by which a shipper pays for the transportation of a less quantity of freight than is actually carried, and thereby obtains a reduced rate upon the gross shipment, is forbidden [875] § 946] Eaileoad Rate Eegdlation. [Cliap. XXIX by the act. In re Underbilling, 1 Int. Com. Rep. 813, 1 I. C. C. 633 (1888>. So the failure to furnish cars rateably in time of shortage is an unreasonable preference under the act. Richmond Elevator Co. v. Pere Marquette R. R., 10 I. C. C. Rep. 629 (1905). So complainant was un- justly discriminated against by defendant's refusal to provide cars for the shipment of cross ties, while it did furnish cars to other persons for the interstate shipment of lumber, stone, and many other freight articles, and also supplied cars for the shipment of cross ties destined almost en- tirely for its own use. Paxton Tie Co. v. Detroit S. Ry.,' 10 I. C. C. Rep. 422 (1905). So the payment of an unreasonable rent for the use of cars furnished by shippers creates an unreasonable preference. Rice v. Cincin- nati, W. & B. R. R., 3 Int. Com. Rep. 841, 5 I. C. C. 193 (1891). When actual weights cannot be ascertained without needless inconvenience there is no serious objection to the use of estimated or constructive weights, provided the method of estimation works no inequality in its practical ap- plication to competing modes of conveyance; but this rule, too, in cir- cumstances where it works injustice would be iJlegal. Ibid. § 946. Preference in certain services permissible. In matters outside the scope of its public business the carrier is at liberty to discriminate at pleasure; such cases are not covered by the act. So in providing ears for its traffic it may lease as well as buy them, and if it leases them, it may deal exclusively with one car company and refuse to deal with other companies. Re Transportation of Fruit, 10 I. 0. C. Rep. 360 (1905)'; Consolidated Forwarding Co. v. Southern P. Co., 9 I. C. C. Rep. 182 (1902) ; Burton Stock-Car Co. v. Chicago, B. & Q. R. R., 1 Int. Com. Rep. 329, 1 I. C. C. 132 (1887). So a railway company practices no discrimination within the Interstate Commerce Act by sell- ing passenger tickets at full fare to a land company which sells them at half rates to guests of its hotel, persons residing upon land sold or trans- ferred by it, and others, but refusing to sell them at half rates to a per- son living in the same locality upon ground not acquired from it, although the two corporations are under substantially the same ownership and con- trol, where their community of interests is not made a device for enabling the railway company to evade its legal obligations. Willson v. Rock Creek R. R., 7 I. C. C. Rep. 83 (1897). So a railroad may make and carry out an exclusive contract with a stock-yards company for the exclusive delivery to that company of live stock in a city, and no other stock-yards company or carrier can complain so long as all shippers and consignees have equal facilities there. Central Stock-Yards Co. v. Louisville & N. R. R., 118 Fed. 113, 55 C. C. A. 63 (1902). And this is true although in carrying out such contract it refuses to deliver to another railroad company, for delivery to a competing stock yards, live stock consigned to such competing stock yards. Railroad Com- [876] Chap. XXIX] DiscEiMiXATioNS. [§§ 947, 948 mission of Kentucky v. Louisville & X. R. R., 10 I. C. C. Rep. 173 (1904). So the exercise by a railway company of the right to prepayment, or to retain a lien upon the goods until payment is made, or to hold the con- signee responsible in case of delivery before payment, or the waiver of some of such rights at different times, cannot be construed to be a dis- crimination. Little Rock & M. R. Co. v. St. Louis & S. W. Ry., 63 Fed. 775, 11 C. C. A. 417, B. & W. 277 (1894). § 947- Effect of illegality on contract of carriage. The effect of a violation of the act is to make the contract of carriage, including the rate named therein, invalid. The carrier therefore cannot be sued for breach of an executory term of the contract. Interstate Com- merce Commission v. Chesapeake & O. Ry., 128 Fed. 59 (1904); Red Cloud Mining Co. v. Southern Pac. Co., 9 I. C. C. Rep. 216 (1902). And the contract rate being invalid the carrier may collect the schedule rate. Texas & P. Ry. v. Mudd, 26 Sup. Ct. 628 (1906), reversing 98 Tex. 352, 83 S. W. 800; Duncan v. Atchison, T. & S. F. R. R., 4 Int. Com. Rep. 385 (1893) ; St. Louis & S. F. R. R. v. Ostrander (Ark.), 52 S. W. 435 (1899) ; Kizer v. Texarkana & F. S. Ry. (Ark.), 50 S. W. 871 (1899) ; Raleigh & G. R. R. V. Swanson (Ga.), 28 S. E. 601 (1897) ; Bullard v. Northern Pac. R. R. (Mont.), 25 Pac. 120, 3 Int. Com. Rep. 536 (1890). The burden is on the party desiring to avoid the contract to show that it violates the act. Southern Pac. Co. v. Redding (Tex. Civ. App.), 43 S. W. 1061 (1897). This principle however applies only to a, claim which must be based on the illegal contract. The granting of a rebate contrary to the provision of the interstate commerce law does not render the bill of lading void, so that no action can be maintained against the carrier for loss of the goods by negligence. Merchants' C. P. & S. Co. v. Insurance Co. of North America, 151 U. S. 368, 38 L. Ed. 195, 14 Sup. Ct. 367 (1894). TOPIC B LIKE AND CONTEMPOEANEOUS SEKVICE. [See Chapters XXI and XXII for discussion of principles.] § 948. Difference in time or place. In order to be obnoxious to the act on the ground of discrimination, the services of the carrier with respect to which discrimination is alleged must be performed at practically the same time and place. If the two services are performed at subst. Indiana, D. & W. %., 7 I. C. C. Rep. 255 (1897). In Spillers v. Louisville & N. R. R., 8 Int. Com. Rep. 364 (1899), it appeared that defendant instructed its agents to disregard the regular pub- lished tariff rates and to charge a lower combination rate. It also had this rule of applying combination rates when less than tariff rates were in [915] §§ 1016, 1017] Eaileoad Kate Regulation. [Chap. XXXII force at other stations on its line. Instructions to that effect were issued in a separate printed circular, and did not appear, nor were they referred to in any way, upon its regular published tariffs. It was held that this practice is unlawful, and that, to be in compliance with the act, any rule which operates to alter, modify, or change established rates must be fully and clearly set forth upon the published tariffs of rates and charges to be affected thereby. It would seem, however, that the carrier need not post feuch regulations as are usual and notorious. It was for instance held by the Supreme Court that the privilege of free cartage at a certain station, which had been openly and notoriously granted for many years and was well known to all who would have occasion to rely on it, need not be posted; though it might be within the power of the Commission to order such posting. Interstate Commerce Commission v. Detroit, G. H. & M. Ry., 167 U. S. 633, 17 Sup. Ct. 986 (1897). § 1016. Printing and keeping open to public inspection. These provisions are not complied with by posting a notice stating that tariffs may be inspected upon application to the carrier's agent; Paxton Tie Co. V. Detroit S. R. R., 10 Int. Com. Rep. 422 ( 1905 ) ; even though the expedient is adopted because the schedules have been repeatedly torn down. Rea v. Mobile & O. Ry., 7 Int. Com. Rep. 43 (1897). § 1017. Posting in station. Posting u, notice in a station or depot that the tariff sheets of the rail- road company may be found in some other place is not a compliance with this provision. Johnson v. Chicago, S. P., M. & 0. Ry., 9 Int. Com. Rep. 221 (1902). A rate may be an established one, so that an offence could be committed by charging less than the rate, even though the rate has not been posted as required by this section. United States v. Howell, 56 Fed. 21 (1892). Nor is the rate, when posted, such a matter of public knowledge that ordi- nary shippers can be charged with knowledge of it. Mobile & 0. Ry. v. Dismukes (Ala.), 10 So. 289 (1891). But on the other hand, if the rate is duly published and called to the attention of shippers or consignees, they cannot depend for the lawful rate or charge upon what may be quoted by the carrier's agent, but must be guided by the published rate sheets them- selves. Suffern v. Indiana, D. & W. Ry., 7 Int. Com. Rep. 255 (1897). Local rates when applied to interstate business must be published. Re Export Rates from Points East and West of Miss. River, 8 Int. Com. Rep. 185 (1899). See, also, as to posting the notices, Rea v. Mobile & 0. Ry., 7 Int. Com. Rep. 43 (1897). The publication of inland joint tariffs for the transportation of foreign [916] Chap. XXXII] Schedules of Kates. [§§ 1018, 1019 merchandise, and of advances and reductions, should be made by posting in a public place ai the depot of the carrier where the freight is received in the port of entry, and also where it is delivered at the place of destination in the United States. New York Board of Trade & Transp. v. Pennsylva- nia R. R., 3 Int. Com. Rep. 417 (1890). TOPIC B VAEIATION FEOM SCHEDULE. [See Chapter XXVIII.] §' 1018. Any variation forbidden. It is an unlawful practice for a carrier to disregard the regular published tariff rates, and charge a lower rate made up of a combination of the rate from the point of shipment to a competitive point, and from such com- petitive point to the station of destination, where the rule is not set forth in its published tariff. Spillers & Co. v. Louisville & N. R. R., 8 I. C. C. Rep. 364 ( 1899 ) . In short, all rules or regulations which, if enforced, would result in changing or affecting rates or charges shown on the pub- lished schedules must be notified to the public for the time required by law for other rate changes. The notice should set forth the changes pro- posed to be made in the existing schedule, and such changes must be shown by printing new schedules, or plainly indicating it on the schedules in force. Suffern v. Indiana, D. & W. Ry., 7 I. C. C. Rep. 255 (1897). So a practice that grain may be shipped to an intermediate station and there forwarded as a new shipment at a proportional rate lower than the local rate from that point is a variation from the local published rate and therefore illegal. Re Rates and Practices of Mobile & 0. Ry., 9 I. C. C. Rep. 373 (1903). § 1019. Devices to avoid the section. A device to avoid the operation of this section will be futile. Thus, any device by which a published rate for carriage of coal from the mines of thii carrier, which in the ease of a favored consignee was made to include tlie price of the coal thus sold to the consignee by the carrier and delivered to him, is of course a violation of the Act. Re Transportation of Coal and Mine Supplies, 10 I. C. C. Rep. 473 ( 1904 ) . And deliveries of coal by an interstate carrier not empowered to mine and market coal by its charter or by any legislation existing at the time of the adoption of the act to regu- late commerce, under a contract to sell and transport such coal at a stipu- lated price, come within the requirement of that act respecting the mainte- nance of published rates, and its prohibitions against undue preferences and discrimination whenever, from any cause, the gross sum realized is insufficient to yield the carrier its published freight rates after deducting the purchase price of the coal and the cost of delivery, although the con- [917] §§ 1020-1022] Eailboad Eate Regulation. [Chap. XXXII tract may not have been open to that objection when made. New York, N. H. & H. E. R. V. Interstate Commerce Commission, 200 U. S. 361, 26 Sup. Ct. 272 (1906). So where a railroad company ( through a development ' company which it owned) bought grain in Kansas City, transported it to Chicago, and there sold it, the purpose being merely to transport it, and the varying profit on the transactions being the only real compensation for the car- riage, this was held to be a departure from the published schedule and therefore illegal. In re Rates and Practices in the Transportation of Grain,, 7 I. C. C. Rep. 33 (1897). § 1020. Rate wars. Reduction of passenger rates without consent of connecting lines over which tickets are sold, and without filing schedules thereof with the Com- mission is violation of this section, and no necessity or compulsion is cre- ated by a war of rates which justifies disobedience of the statute. In re Passenger Tariffs and Rate Wars, 2 Int. Com. Rep. 340, 2 I. C. C. 513 (1889). TOPIC C FILING OF SCHEDULES AND AGREEMENTS. [See Chapter XX.] § 1021. Purpose of the filing. The purpose of the filing is to call the attention of the Commission to a proposed change in rates; and when a schedule is filed announcing an advance of general application, for which no apparent reason exists, such action is a proper subject of investigation, and if it thereupon appears that the advance is unwarranted, the Commission should use whatever power it has to correct the injustice. In the Matter of Proposed Advances in Freight Rates, 9 Int. Com. Rep. 382 ( 1903 ) . The public purpose of the posting and filing of the schedules is insisted upon by the Commission. " It is proper to add, however, that the requirement of publication found in the law is based upon many other considerations besides that of affording Information to local shippers. The necessity of establishing and maintain- ing a steady, uniform, open tariff rate is of paramount importance, in view of the evils which the Act to regulate commerce attempts to correct, and obviously the first and most efiieient method of regulation is the require- ment of constant publicity." Re Atlanta & W. P. R. Co., 2 Int. Com. Rep. 480, 3 I. C. C. Rep. 75 (1889). § 1022. Presumption of legality. The filing of schedules of rates with the Commission, as required by statute, raises no presumption as to the legality of such rates in any pro- [918] Chap. XXXII] Schedules of Eates. [§ 1023 ceedings before the Commission. San Bernardino Bd. of Trade v. Atchison, T. & S. F. R. R., 3 Int. Com. Rep. 138 (1890). But, as has been seen, the result of the provisions of this section is that in all dealings between t-hipper and carrier, whether out of court or in court, except in a pro- ceeding before the Commission to have the rates altered, the rate so filed with the Commission must be taken as the reasonable rate. Kinnavey v. Terminal R. R. Assoc, 81 Fed. 802 (1897) ; Van Patten v. Chicago, M. & S. P. Ry., 81 Fed. 545. TOPIC D JOINT TAJEIFFS AND SCHEDULES. [See Chapter XIX.] § 1023. Meaning of joint tariff. Two kinds or classes of routes are recognized and provided for, namely, the line of a single carrier, and a continuous line or route operated by more than one carrier, where the participating carriers establish joint rates or charges for such continuous line or route; and in respect of both classes of lines, the provision is uniform that established rates shall not be increased except after ten days' notice, nor reduced except after three days' notice. Joint through routes and rates are ordinarily the subject of agreement between the participating carriers; but when this is established, and until finally abrogated or changed, they are required by the statute to be kept open to public use. Consolidated Forwarding Co. v. Southern Pa- cific Co., 9 Int. Com. Rep. 182 (1902). Joint tariffs, in the meaning of this section, are those established by agreement and mutual consent of the several carriers, as distinguished from the mere aggregate of the separate rates of the several carriers for transportation over their respective routes. The publication by a carrier subject to the Act to Regulate Commerce, of the aggregate local rates be- tween points on its own line and those on the line of a connecting carrier with which it has no joint tariff, is not illegal; but it cannot lawfully add to the duly established rates of another carrier any amount it pleases less than its own rate, and publish and use that sum as a through rate, with- out the consent of the other company, as such a through rate is not a "joint rate," for joint rates can be made only by concurrence or assent; nor is it a combination rate, for one of its component parts has no legal existence or sanction as a, separate or local charge; there must be lawful rates upon each of the roads before there can be a lawful combination of rates. New York, N. H. & H. R. R. v. Piatt, 7 Int. Com. Rep. 323 (1897). A combination rate, not being a joint rate, need not be posted, and is not subject to the act. Gulf, C. & S. F. Ry. v. Nelson (Tex. Civ. App.), 23 S. W. 732 (1893). When rates established to apply between points within a single bcate are applied as part of combination rates on transportation between dif- [919] §§ 1024-1026] Eaileoad Eate Kegulation. [Okap. XXXII I ferent States, such State rates, as well as the interstate rates with which they are combined, must be published at stations and filed with the Com- mission. Ee Export Kates from Points East and West of Miss. River, 8 I. C. C. Rep. 185 (1899). § 1024. Making and filing. Any 'one member of a joint combination may file copies of joint tariff for all the members. Re Filing Copies of Joint Tariff, 1 Int. Com. Rep. 76, 1 I. C. C. 225 (1887). And where one carrier files and properly publishes a joint tariff, he is not affected by the failure of other carriers properly to publish it. Virginia C. & I. Co. v. Louisville & N. R. R. (Va.), 37 S. E. 310 (1900). The tariffs need not be filed at a non-competing point. Chicago & N. W. Ry. v. Osborne, 52 Fed. 912 (1892). i A railway, stage route, and hotel association are not connecting carriers who can make and file a joint tariff. Wylie v. Northern Pac. R. E., 11 I. C. C. Rep. 145 (1905). § 1025. Whether routes must be published. The Commission held that the published tariff should definitely name all tne participating roads and indicate the various routes by which they un- dertake to afford transportation at designated rates. Theoretically, at least, it said, such a disclosure is necessary to a complete statutory joint tariff. And it was ordered, that all carriers concerned should file an ac- ceptance of the tariff. In re Form and Contents of Rate Schedules, 6 I. C. C. Rep. 267 (1894). But the Supreme Court of the United States finally held that the carrier publishing a through tariff might reserve the right to route the goods as it pleased beyond its own terminal. Southern Pacific Co. V. Interstate Commerce Commission, 200 U. S. 536, 26 Sup. Ct. 330 (1906). § 1026. Export rates. . Rates on export traffic must be published and filed in accordance with the provisions of this section. So-called through export rates, made by adding the ocean rate to the inland rail rates, are not analogous to railroad rates made by joint arrangement by railway carriers subject to the statute, in the sense that the total rate must be published and filed, and it is enough if the railroad carrier publishes and maintains its own rate to the sea- board; but if there is in fact such a joint arrangement that the rate is 'a joint rate under this section, then the entire through rate should be pub- lished, and not the inland division, which in that case might vary while the entire rate remained the same. Re Export & Domestic Rates on Grain, 8 Int. Com. Rep. 214 (1899) ; Kemble v. Boston & A. R. R., 8 Int. Com. Rep. 110 (1899) ; Re Publication & Filing of Tariffs, 10 Int. Com. Rep. 55 (1904). [920]i Ckap. XXXII] Schedules of Kates. [§§ 1027, 1028 TOPIC E FOKM OE SCHEDULES. [See Chapter XVIII.] § 1027. Clearness of statement. The publication of tariffs in convenient form, adequate in statement and properly authenticated, is essential to the enforcement of reasonable rates and impartial tseatment. So far as possible the schedules should be simple in arrangement, ample in their disclosures, and free from ambiguity. Oth- erwise the opportunity is afforded for evading the law by discriminating practices and unjust exactions. Re Kate Schedules, 6 Int. Com. Rep. 267 (1894). The rate sheets must be readily intelligible to shippers and con- signees. Johnston-Larimer D. G. Co. v. Atchison, T. & S. F. R. R., 6 Int. Com. Rep. 568 (1896). They must be so simplified that persons of ordi- nary comprehension can understand them; and a notation in the tariff of one carrier, making reference to the tariff of some competing carrier, does not meet the requirement of the \a,w that the rate charged shall be pub- lished and filed. H. B. Pitts & Son v. St. Louis & S. F. Ry., 10 Int. Com. Rep. 684 ( 1905 ) . The mere designation, in a paper or circular, of the means of arriving at rates by calculation or reference to other papers, does not constitute the rate sheet required; and the reissuing by a carrier of a tariff of another line, and, by a supplement concurrently issued, lim- iting its use of the rates therein prescribed to such as are over a specified minimum, is reprehensible. Colorado Fuel & I. Co. v. Southern P. Co., 6 Int. Com. Rep. 488 (1895). § i028. Necessary fullness of statement. The schedules should be sufficiently full to show all that a shipper needs to know. Thus published tariffs specifying rates per standard crate ou vegetables shipped from Florida to northern or northeastern points should state plainly the dimensions of the crate to which the rates apply. Re Alleged Unlawful Charges for Transportation of Vegetables, 8 Int. Com. Rep. 585 (1900). On the other hand, where the rate sheet states that the rates are subject to an official classification filed with the Commission which specifically states in detail the rates under a form of bill of lading called uniform bill of lading, limiting the common-law liability and statinc that rates on property not shipped subject to the conditions of the uniform bill are a specified percentage higher than the reduced rates under the uni- form bill, the schedule was held sufficiently to inform shippers that the rates given were for carriage with limited liability. Mannheim Ins. Co. V. Erie & W. T. Co. (Minn.), 75 N. W. 602 (1898). [921] § 1029] Kaileoai> Rate Regulation. [Ckap. XXXII TOPIC F ENFOECEMENT OF THE SECTION. [See Chapter XX.] § 1029. Invalidity of the varied rate. Under this section a contract for the transportation of an interstate shipment at less than the published rate approved by the interstate com- meree commission is invalid; and the carrier may collect the rate as pub- lished, regardless of that fixed by the bill of lading. Southern Ry. Co. V. Harrison (Ala.), 24 So. 552 (1898). For the same reason the viola- tion of such a contract furnishes no grounds for redress under the Act. Red Cloud Mining Co. v. Southern P. Co., 9 I. C. C. Rep. 216 (1902). And a, shipper who ia compelled to pay charges in excess of those set forth on the published rate schedules, because of rules prescribed by the railroad company in circulars as to maximum and minimum carload weights, is entitled to recover the same back from the company. SuflFern v. Indiana, D. & W. Ry., 7 Int. Com. Rep. 255 (1897). See the similar decisions as to invalidity of rates under other sections of the act, ante, § 947. [922J CHAPTER XXXIII. ORaANIZATION AND FUNCTIONS OF THE COMMISSION. § 1031. Provisions of the Statute. 1032. Amendments of 1906. TOPIC A ADMINISTRATIVE NATUEE OF THE COMMISSION. S 1033. Nature of the commission. 1034. Powers of commission. TOPIC B POWER TO INVESTIGATE AND MAKE OBDEE. \ § 1035. Investigation by commission. 1036. Report of commission. 1037. Opinion of commission. TOPIC C POWEE OVEE BATES. § 1038. Early difference of opinion. 1039. Decision of the Supreme Court. 1040. Indication of basis for proper rate. § 1031. Provisions of the statute. Creation of Interstate Com,merce Commission. — That a Com- mission is hereby created and established to be known as the Interstate Commerce Commission, which shall be composed of five commissioners, who shall be appointed by the President, by and with the advice and consent of the Senate. The com- missioners first appointed imder this Act shall continue in office for the term of two, three, four, five, and six years, respectively, from the first day of January, anno Domini eighteen hundred and eighty-seven, the term of each to be designated by the Pres- ident; but their successors shall be appointed for terms of six years, except that any person chosen to fill a vacancy shall be appointed only for the unexpired time of the commissioner [923] § 1031] Eaileoad Kate Regulation. [Ohap. XXXIII whom lie shall succeed. Any commissioner may be removed by the President for ineiSciency, neglect of duty, or malfeasance in office. Not more than three of the commissioners shall be appointed from the same political party. 'No person in the em- ploy of or holdiiig any official relation to any common carrier subject tto the provisions of this Act, or owning stock or bonds thereof, or who is in any manner pecuniarily interested therein, shall enter upon the duties of or hold such office. Said commis- sioners shall not engage in any other business, vocation, or em- ployment. No vacancy in the Commission shall impair the right of the remaining commissioners to exercise all the powers of the Commission. [Interstate Commerce Act, section 11. J Authority of the Commission. — That the Commission hereby created shall have authority to inquire into the management of the business of all common carriers subject to the provisions of this Act, and shall keep itself informed as to the manner and method in which the same is conducted, and shall have the right to obtain from such common carriers full and complete infor- mation necessary to enable the Commission to perform the duties and carry out the objects for which it Avas created; and the Commission is hereby authorized and required to execute and enforce the provisions of this Act. [Interstate Commerce Act, section 12. J Salaries and expenses. — That each commissioner shall re- ceive an annual salary of seven thousand five hundred dollars, payable in the same manner as the judges of the courts of the United States. The Commission shall appoint a secretary, who shall receive an annual salary of three thousand five hundred dollars, pay- able in like manner. The Commission shall have authority to employ and fix the compensation of such other employees as it may find necessary to the proper performance of its duties. Until otherwise provided by law, the Commission may hire suitable offices for its use, and shall have ' authority to procure all necessary office supplies. [924] Ohap. XXXIII] Organization and Functions. [§ 1031' Witnesses summoned before the. Commission shall be paid the same fees and mileage that are paid witnesses in the courts of the United States. All of the expenses of the Commission, including all neces- sary expenses for transportation incurred by the commissioners, or by their employees under their orders, in making any inves- tigation, or upon official business in any other places than in the city of Washington, shall be allowed and paid on the presen- tation of itemized vouchers therefor approved by the chairman of the Commission. [Interstate Commerce Act, section 18. J Office. — That the principal office of the Commission shall be in the city of Washington, where its general sessions shall be held ; but whenever the. convenience of the public or the parties may be promoted or delay or expense prevented thereby, the Commission may hold special sessions in any part of the United States. It may, by one or more of the commissioners, prosecute any inquiry necessary to its duties, in any part of the United States, into any matter or question of fact pertaining to the busi- ness of any common carrier subject to the provisions of Ibis Act. [Interstate Commerce Act, section 19.] Reports of carriers to the C ommission. — That the Commis- sion is hereby authorized to require annual reports from_all common carriers subject to the provisions of 'this Act, and from the owners of all railroads engaged in interstate commerce as defined in this Act, to prescribe the manner in- which such re- ports shall be made, and to require from such carriers specific answers to all questions upon which the Commission may need information. Such annual reports shall show in detail the amount of capital stock issued, the amounts paid therefor, and the manner of payment for the same; the dividends paid, the surplus fund, if any,_ and the number of stockholders; the funded and floating debts and the interest paid thereon; the cost and value of the carrier's property, franchises and equip- ments; the number of employees and the salaries paid each class ; the accidents to passengers, employees, and other persons, [925] § 1031] Eaileoad Rate Regulation. [Chap. XXXIII and tlie causes thereof ; the amounts expended for improvements each year, how expended, and the character of such improve- ments; the earnings and receipts from each branch of business and from all sources; the operating and other expenses; the balances of profit and loss ; and a complete exhibit of the finan- cial operations of the carrier each year, including an annual balance sheet. Such reports shall also contain such informa- tion in relation to rates or regulations concerning fares or freights, or agreements, arrangements, or contracts affecting the same as the Commission may require; and the Commission may, in its discretion, for the purpose of enabling it the better to carry out the purposes of this Act, prescribe a period of time within which all common carriers subject to the provisions of this Act shall have, as near as may be, a uniform system of accounts, and the manner in which such accounts shall be kept. Said detailed reports shall contain all the required statistics for the period of twelve months ending on the thirtieth day of June in each year, and shall be made out under oath and filed with the Commission, at its office in Washington, on or before the thirtieth day of September then next following unless addi- tional time be granted in any case by the Commission; and if any carrier, person, or corporation subject to the provisions of this Act shall fail to make and file said annual reports within the time above specified, or within the time extended by the Commission for making and filing the same, or shall fail to make specific answer to any question authorized by the provi- sions of this section within thirty days from the time it is law- fully required so to do, such parties ^shall forfeit to the United States the sum of one hundred dollars for each and every day it shall continue to be in default with respect thereto. The Commission shall also have authority to require said carriers to file monthly reports of earnings and expenses or special reports within a specified period, and if any such carrier shall fail to file such reports within the time fixed by the Commission it shall be subject to the forfeitures last above provided. [926] Cliap. XXXIII] Orgaktization and FtrNCTiosrs. [§ 1031 Said forfeitures shall be recovered in the manner provided for the recovery of forfeitures under the provisions of this Act. The oath required by this section may be taken before any person authorized to administer an oath by the laws of the State in which the same is taken. The Commission may, in its discretion, prescribe the forms of any and all accounts, records, and memoranda to be kept by carriers subject to the provisions of this Act, including the accounts, records, and memoranda of the movement of traffic as well as the receipts and expenditures of moneys. The Com- mission shall at all times have access to all accounts, records, and memoranda kept by carriers subject to this Act, and it shall be unlawful for such carriers to keep any other accounts, rec- ords, or memoranda than those prescribed or approved by the Commission, and it may employ special agents or examiners, who shall have authority under the order of the Commission to inspect and examine any and all accounts, records, and mem- oranda kept by such carriers. This provision shall apply to receivers of carriers and operating trustees. In case of failure or refusal on the part of any such carrier, receiver, or trustee to keep such accounts, records, and mem- oranda on the books and in the manner prescribed by the Com- mission, or to submit such accounts, records, and memoranda as are kept to the inspection of the Commission or any of its authorized agents or examiners, such carrier, receiver, or trus- tee shall forfeit to the United States the sum of five himdred dollars for each such offense and for each and every day of the continuance of such offense, such forfeitures to be recoverable in the same manner as other forfeitures provided for in this Act. Any person who shall wilfully make any false entry in the accounts of any book of accounts or in any record or memo- randa kept by a carrier, or who shall willfully destroy, muti- late, alter, or by any other means or device falsify the record of any such account, record, or memoranda, or who shall will- [927] § 1031] _ Eailkoad Rate Regulation. [Qhap. XXXIII fully neglect or fail to make full, true, and correct entries in such accounts, records, or memoranda of all facts and trans- actions appertaining to the carrier's business, or shall keep any other accounts, records, or memoranda than those pre- scribed or approved by the Commission, shall be deemed guilty of a misdemeanor and shall be subject, upon conviction in any court of the United States of competent jurisdiction, to a fine of not less than one thousand dollars nor more than five thou- sand dollars, or imprisonment for a term not less than one year nor more than three years, or both such fine and imprisonment. Any examiner v?ho divulges any fact or information v^hich may come to his knovs^ledge during the course of such examina- tion, except in so far as he may be directed by the Commission or by a court or judge thereof, shall be subject, upon convic- tion in any court of the United States of competent jurisdic- tion, to a fine of not more than five thousand dollars or impris- onment for a term not exceeding two years, or both. That the circuit and district courts of the United States shall have jurisdiction, upon the application of the Attorney-General of the United States at the request of the Commission, alleging a failure to comply with or a violation of any of the provisions of said Act to regulate commerce or of any Act supplementary thereto or amendatory thereof by any common carrier, to issue a writ or writs of mandamus commanding such common carrier to comply with the provisions of said Acts, or any of them. And to carry ovit and give effect to the provisions of said Acts, or any of them, the Commission is hereby authorized to employ special agents or examiners who shall have power to administer oaths, examine witnesses, and receive evidence. [Interstate Commerce Act, section 20, as amended by Act of June 29, 1906, section 7.] Enlargement of the Commission. — That a new section be added to said Act at the end thereof, to be numbered as section twenty-fo\ir, as follows : [928] Cfhap. XXXill] OuGANizATioisr and Ftj:ntctions. [§ 1032 " Sec. 24. That the Interstate Commerce Commission is hereby enlarged so as to consist of seven members with terms of seven years, and each shall receive ten thousand dollars^ compensation annually. The qualifications of the com- misisioners and the manner of the payment of their sal- aries shall be as already provided by law. Such enlarg&- ment of the Commission shall be accomplished through ap- pointment by the President, by and with the advice and consent of the Senate, of two additional Interstate Com- merce Commissioners ; one for a term expiring December thirty- first, nineteen hundred and eleven, one for a term expiring December thirty-first, nineteen hundred and twelve. The terms of the present commissioners, or of any successor appointed to fill a vacancy caused by the death or resignation of any of the pres- ent commissioners, shall expire as heretofore provided by law. Their successors and the successors of the additional commis- sioners herein provided for shall be appointed for the full term of seven years, except that any person appointed to fill a va- cancy shall be appointed only for the unexpired term of the commissioner whom he shall succeed. Not more than four commissioners shall be appointed from the same political party." [Act of June 29, 1906, section 8.J § 1032. Amendments of 1906. Sections 12 and 19 of the original act are unchanged by the new legis- lation. Sections 11 and 18 are amended by an increase of the Commission from five to seven, and an increase of salary from seven thousand five hundred dollars to ten thousand dollars a year. This change is effected by new section 24. The new form of section 20 gives the Commission additional power with regard to reports from all common carriers, subject to the law, and to prescribe the manner in which such reports shall be made and the subject- matter of the report, and provides a penalty for failure to obey such re- quirements. It also gives the Commission power, in its discretion, to pre- scribe the form of accounts, records, and memoranda to be kept by carriers, and that the Commission shall at all times have access to such records and books and other accounts to be kept. It provides penalties for the wrongful making of accounts or records or for destroying records or books [929] §§ 1033, 1034] Eaileoad Kate Regulation. [Cliap. XXXIII of accounts. It authorizes examinations to be made by experts appointed by the Commission, and imposes a penalty of fine of not more than $5,000 or imprisonment of not more than two years upon any examiner who di- vulges any knowledge that may come to him in the performance of his duties. TOPIC A ^ADMINISTEATIVE NATUEE OF THE COMMISSIOIT. [See Chapter XLII.] § 1033. Nature of the Commission. Under the Interstate Commerce clause of the Constitution Congress has the power to create a commission for the purpose of supewising, investi- gating, and reporting upon matters or complaints connected with or grow- ing out of interstate commerce. Kentucky & I. Bridge Co. v. Louisville &. N. R. R., 37 Fed. 567, 2 L. R. A. 289, 2 Int. Com. Rep. 351 (1889). By the acts of Congress creating the Commission, providing that it shall have an official seal and making it lawful for it to apply by petition for the en- forcement of its orders, the Interstate Commerce Commission is made a body corporate with legal capacity to be a party plaintiff or defendant in the Federal courts. Texas & P. Ry. v. Interstate Commerce Commission, 162 U. S. 197, 40 L. Ed. 940, 16 Sup. Ct. 666, 5 Int. Com. Rep. 405 (1896). The Interstate Commerce Commission is a special tribunal whose duties, though largely administrative, are sometimes semi-judicial; but it is not a court empowered to render judgments and enter decrees. Ken- tucky & I. Bridge Co. v. Louisville & N. R. R., supra; Toledo Produce Exchange v. Lake Shore & M. S. R. R., 3 Int. Com. Rep. 830 ( 1891 ) . § 1034. Powers of Commission. ■ The Commission derives all its powers from the act, and it can exercise no powers not granted by the act. Thus it has no authority to administer the anti-trust law, or even to determine whether it has been violated. Sprigg V. Baltimore & 0. R. R., 8 Int. Com. Rep. 443" (1900). Nor to enforce the provisions of a State Constitution. Railroad Commission of Kentucky v. Louisville & N. R. R., 10 Int. Com. Rep. 173 (1904). Or to investigate any action of a carrier committed prior to the time when the act went into effect. Holbrook v. St. Paul, M. & M. Ry., 1 Int. Com. Rep. 323 (1887) ; White V. Michigan Cent. R. R., 2 Int. Com. Rep. 641 (1889). Thus the Commission has no power to enforce contracts, nor has it any general power to manage business of carriers. Traders & Travelers Union V. Phila. & R. R. R., 1 Int. Com. Rep. 371 (1887). So it has no authority to control commissioners of immigration, and cannot do so indirectly by inhibiting railroad companies from carrying out arrangements made by them with the commissioners. Savery v. New York C. & H. R. R., 2 [930] Oihap. XXXIII] Oegajstization and Ftinctions. [§ 1035 Int. Com. Rep. 210 (1888). It has no power to grant redress for the fail- ure of a carrier to comply with its common-law duty to furnish refrigerator cars. Re Transportation of Fruit, 10 Int. Com. Rep. 360 (1904). Or any particular equipment of cars, or in fact any cars at all. Scofleld v. Lake Shore & M. S. R. R., 2 Int. Com. Rep. 67 (1888) ; Rice v. Cincinnati, W. & B. R. R., 3 Int. Com. Rep. 841 (1891). So the act noes not confer upon the Commission authority to make an order affirmatively requiring a rail- way carrier to deliver carloads of interstate freight to a, connecting car- rier. Railroad Commission of Kentucky v. Louisville & N. R. R., 10 Int. Com. Rep. 173 (1904). Or to determine the right of milling in transit. Diamond Mills v. Boston & M. R. R., 9 Int. Com. Rep. 311 (1902). The Interstate Commerce Commission cannot inquire whether railroad compa- nies act wisely or unwisely, fairly or unfairly, between themselves in mak- ing rates, forming lines, and establishing diflferentials ; but its inquiry is limited to the question whether the situation created by the companies violates the Act to Regulate Commerce. New York Produce Exch. v. Baltimore & O. R. R., 7 Int. Com. Rep. 612 (1898^. TOPIC B POWER TO INVESTIGATE AND MAKE OEDEE. [See Chapter XLI.] § 1035. Investigation by Commission. On the other hand, the Commission may investigate any supposed viola- tion of the act, even on its own motion. Re Atlanta & W. P. R. R.. 2 Int. Com. Rep. 461 (1889) ; Re Grand Trunk Ry., 2 Int. Com. Rep. 496 (1889). It has authority to inquire into the management of the business of common carriers, and to require the attendance and testimony of witnesses, the production of books and papers, tariflfs and contracts, relating to any mat- ter under investigation; and to enforce its authority in this respect the Commission may invoke the aid of a court of the United States. Re Rates & Charges on Food Products, 3 Int. Com. Rep. 151 (1890). It may in- quire as to division of alleged unlawful joint rate. Warren-Ehret Co. v. Central Ry. of New Jersey, 8 Int. Com. Rep. 598 (1900). Its jurisdiction extends to a case of alleged unlawful prejudice and disadvantage to ship- pers of outbound package freight through enforcement by carriers of a reg- ulation providing for the earlier closing of depots used for the reception of such freight. Cincinnati Chamber of Commerce and Merchants' Exchange v. Baltimore & O. S. W. Ry., 10 Int. Com. Rep. 378 (1904). The Act to Regulate Commerce applies to the transportation of export and import traffic, and the jurisdiction of the Commission over such traffic is not denied, but is distinctly affirmed and rather enlarged by the decision of the United States Supreme Court in Texas & P. R. Co. v. Interstate [931] § 10'3&] Eaileoad Eate Kegulation. [Cihap. XXXIII Commerce Commission, 162 U. S. 197, 40 L. Ed. 940, 16 Sup. Ct. 666, 5 Int. Com. Rep. 405. Ke Export and Domestic Rates on Grain, 8 Int. Com. Rep. 214 (1899). § 1036. Report of Commission. The report of the Commission should be framed after the manner of a Master's report to a Court of Chancery. It is not suificient for the Com- mission in a report of its findings of fact and conclusions, to make state- ments in such a general way as not to disclose its view upon particular phases of the evidence, or its conclusions of law upon facts found with reference to the particular issues in the case, and make up the report of mere conclusions. In the ease of Interstate Commerce Commission v. Louisville & N. R. R., 73 Fed. 410, 5 Int. Com. Rep. 656 (1896), Judge Clark said : " The procedure in a complaint before the Commission is pre- scribed in section 13 of the act, and by section 14 the Commission is re- quired to make a report in writing in respect thereto, which shall include the findings of fact upon which the conclusions of the Commission are based, and such findings so made are to be deemed prima facie evidence as to each and every fact found in any judicial proceeding thereafter had. The Commission is authorized to provide for the publication of its reports and decisions, and for the distribution thereof. Other sections of the act, not necessary to be set out herein, make it evident, in my opinion, that while the investigation and report of the Commission and its order thereon, as stated, do not constitute a judicial proceeding, still it was the intention of Congress that the procedure should substantially conform to that be- fore a court charged with the duty of finding the facts, and giving judg- ment thereon, or to the Investigation and report of a referee or special master in chancery, passing on both facts and law. Congress having pro- vided for such investigation and report in general terms only, it is not to be doubted that substantial conformity to a judicial proceeding was con- templated. And the Importance of the Commission's action, taking sub- stantially the form of a judicial proceeding, is apparent when it is recog- nized that the Commission is composed of men of ability and experience, selected for this position with reference to their particular qualifications therefor, and whose entire time is devoted to questions arising under this act. This gives to the Commission's finding and opinion great weight, and entitles it to great consideration, both by the parties affected and by the courts, when called upon to enforce obedience to its mandates. For the Commission's investigation and opinion to have this intended value, how- ever, it should, in fact, conform to the purpose of Congress in requiring such proceedings. It is not sufficient, therefore. In a report of its findings of fact and conclusions, to do so In such general way as not to disclose its views upon particular phases of the evidence, or its conclusions of law upjn facts found with reference to the particular issues in the case. Stated in [932] Chap. XXXIII] Oeganization and Functions. [§ 1037 another form, it is not sufficient for the report to be mads up of mere con- clusions. Its opinion or report should show what the issues in the case are, and what facts it finds in regard to such issues. The report should make suitable reference to the evidence adduced in regard to any pa.rticular question, where there is a conflict in the proof, showing how the Commis- sion settles the disputed fact; or, if the evidence in regard to any issue is undisputed, state that fact. In other words, the report should give the parties to be aflleeted, as well as the court, in any judicial proceeding afterwards instituted, definite and distinct information as to what was found as facts, and the Commission's opinion thereon, such as would be necessary to make a judicial opinion sufficient and satisfactory for the purpose of ordinary litigation. Now, the report of the Commission in this case does nothing of this kind. It was not intended to cast upon the courts the labor of an original and independent examination, as in a case instituted here in the first instance. If so, action by the Commission would be idle. The report should on all issues make a distinct showing, sp that on its face it would be prima faoie good as required under the act." See, also. Western N. Y. & P. R. R. v. Penn. Refining Co., 137 Fed. 343 (1905). This is the principle on which the Commission proceeds; and it is its present practice to report its findings of fact separately from its conclu- sions. But neither before the above decision nor since does the Commis- sion report cumulative evidence or mere details of evidence already em- braced in substantial facts stated, upon which its findings are made. Riddle v. Pittsburg & L. E. R., 1 Int. Com. Rep. 773 (1888). § 1037. Opinion of Commission. The Commission does not give opinions on abstract questions. Penn- sylvania Co. V. Louisville, N. A. & C. R. R., 2 Int. Com. Rep. 603 (1889). So it will not construe the act before violation thereof is charged. Re Order of Railway Conductors, 1 Int. Com. Rep. 18 I, C. C. 8 (1887); 'Re Theatrical Rates, I Int. Com. Rep. 18 (1887); Re Inmates of Nat. Homes, I Int. Com. Rep. 73, 75 (1887) ; Boston & A. R. R. v. Boston & L. R. R., I Int. Com. Rep. 571 (1887). Nor will it express an opinion upon facts not brought before it by a petition within its jurisdiction. Re Iowa Barb Steel Wire Co., 1 Int. Com. Rep. 605 (1887) ; Re United States Commission of Fish and Fisheries, 1 Int. Com. Rep. 606 (1887). And it will not make rules as to free baggage until violation of act is charged. Re Order of Railway Conductors, Traders & Travelers Union v. Phila. & Reading R. R., 1 Int. Com. Rep. 18, 62, 315, 371 (1887). [933] ,§§ 1038, 1039] Kaileoad Kate Regulation. [Chap. XXXIII TOPIC C POWEE OVEE EATES. [See Chapter XL.] § loss. Early difference of opinion. The Interstate Commerce Commission has no power under the Inter- state Commerce Act to fix absolute or maximum rates. Cincinnati, N. 0. & T. P. Ry. V. Interstate Commerce Commission, 162 U. S. 184, 40 L. Ed. 935, 16 Sup. Ct. 700, 5 Int. Com. Rep. 391, B. & W. 424 (1896) ; Interstate Commerce Commission v. Cincinnati, N. O. & T. P. Ry., 167 U. S. 479, 42 L. Ed. 243, 17 Sup. Ct. 896 (1897); Interstate Commerce Commis- sion V. Alabama Midland Ry., 168 U. S. 144, 42 L. E. 414, 18 Sup. Ct. 145, B. & W. 433 (1897). This question was vigorously discussed before its final settlement by the Supreme Court. The opinion of the federal courts was practically unani- mous against the existence of the power. Interstate Commerce Commis- sion V. Baltimore & O. R. E., 43 Fed. 37 (1888); Interstate Commerce Commission v. Lehigh Valley R. R., 5 Int. Com. Rep. 643 (1896) ; Inter- state Commerce Commission v. Northwestern Ry., 5 Int. Com. Rep. 650 (1896) ; Interstate Commerce Commission v. Louisville & N. R. R., 5 Int. Com. Rep. 656 (1896) ; Interstate Commerce Commission v. Alabama Mid- land Ry., 5 Int. Com. Rep, 685 (1896). § 1039. Decision of the Supreme Court. It was finally decided by the Supreme Court of the United States in Interstate Commerce Commission v. Cincinnati, N. 0. & T. P. Ry., 167 U. S. 479, 42 L. Ed. 243 17 Sup. Ct. 896 (1897). Mr. Justice Brewer thus discussed the question: " Before the passage of the act it was generally believed that there were great abuses in railroad management and railroad transportation, and the grave question which Congress had to consider was how those abuses should be corrected and what control should be taken of the business of such corporations. The present inquiry is limited to the question as to what it determined should be done with reference to the matter of rates. There were three obvious and dissimilar courses open for consideration. Con- gress might itself prescribe the rates, or it might commit to some sub- ordinate tribunal this duty, or it might leave with the companies the right to fix rates, subject to regulations and restrictions, as well as to that rule which is as old as the existence of common carriers, to wit, that rates must be reasonable. There is nothing in the act fixing rates. Con- gress did not attempt to exercise that power, and, if we examine the legis- lative and public history of the day, it is apparent that there was no serious thought of doing so. [934] Chap. XXXIII] Organization and Functions. [§ 1039 " The question debated is whether it vested in the Commission the power and the duty to fix rates, and the fact that this is a debatable question, and has been most strenuously and earnestly debated, is very persuasive that it did not. The grant of such a power is never to be implied. The power itself is so vast and comprehensive, so largely affecting the rights of carrier and shipper, as well as indirectly all commercial transactions, the language by which the power is given had been so often used, and was so familiar to the legislative mind, and is capable of such definite and exact statement, that no just rule of construction would tolerate a grant of such power by mere implication. Administrative control over railroads through boards or commissions was no new thing. It had been resorted to in England and in many of the States of this Union. In England, while control had been given in respect to discrimination and undue pref- erences, no power had been given to prescribe a tariff of rates. In this country the practice has been varying." The learned judge then discussed the State acts, examined the terms of the Interstate Commerce Act, and reached these conclusions: " We have therefore these considerations presented : First. The power to prescribe u, tariff of rates for carriage by a common carrier is a legis- lative, and not an administrative or judicial, function, and, having re- spect to the large amount of property invested in railroads, the various companies engaged therein, the thousands of miles of road, and the mil- lions of tons of freight carried, the varying and diverse conditions attach- ing to such carriage, is a power of supreme delicacy and importance. Sec- ond. That Congress has transferred such a power to any administrative body is not to be presumed or implied from any doubtful and uncertain language. The words and phrases efficacious to make such a delegation of power are well understood, and have been frequently used, and, if Con- gress had intended to grant such a power to the Interstate Commerce Commission, it cannot be doubted that it would have used language open to no misconstruction, but clear and direct. Third. Incorporating into a, statute the common-law obligation resting upon the carrier to make all its charges reasonable and just, and directing the Commission to execute and enforce the provisions of the act, does not by implication carry to the Commission, or invest it with the power to exercise, the legislative function of prescribing rates which shall control in the future. Fourth. Beyond the inference which irresistibly follows from the omission to grant in express terms to the Commission this power of fixing rates is the clear language of section 6, recognizing the right of the carrier to establish rates, to increase or reduce them, and prescribing the conditions upon which such increase or reduction may be made, and requiring, as the only conditions of its action — First, publica- tion; and, second, the filing of the tariff with the Commission. The grant to the Commission of the power to prescribe the form of the schedules, and [935] Clhap. XXXIII] Organization and Functions. [§ 1040 to direct the place and manner of publication of joint rates, thus specify- ing the scope and limit of its functions in this respect, strengthens the conclusion that the power to prescribe rates or fix any tariff for the future is not among the powers .granted to the Commission. " These considerations convince us that under the Interstate Commerce Act the Commission has no power to prescribe the tariff of rates which shall control in the future, and therefore cannot invoke a judgment in mandamus from the courts to enforce any such tariff by it prescribed. " But has the Commission no functions to perform in respect to the mat- ter of rates, no power to make any inquiry in respect thereto? Unques- tionably it has, and most important duties in respect to this matter. It is charged with the general duty of inquiring as to the management of the business of railroad companies, and to keep itself informed as to the man- ner in which the same is conducted, and has the right to compel complete and full information as to the manner in which such carriers are trans- acting their business. And, with this knowledge, it is charged with the duty of seeing that there is no violation of the long Jind short haul clause; that there is no discrimination between individual shippers, and that noth- ing is done, by rebate or any other device, to give preference to. one as against another; that no undue preferences are given to one place or places or individual or class of individuals, but that in all things that equality of right, which is the great purpose of the Interstate Commerce Act, shall be secured to all shippers. It must also see that that publicity which is required by section 6 is observed by the railroad companieSi Holding the railroad companies to strict compliance with all these statu- tory provisions, and enforcing obedience to all these provisions, tends, as observed by Commissioner Cooley in Re Chicago, St. P. & K. C. Ry. Co., 2 Int. Com. Rep. 137, 2 I. C. C. 231, 261 (1888), to both reasonableness and equality of rate, as contemplated by the Interstate Commerce Act." Under the amendments of 1906, the Commission is given the power to make rates. See Chapter xxxiv. § 1040. Indication of basis for proper rate. But though it cannot prescribe rates, the Commission may after in- vestigation find a particular rate to be unlawful, and prohibit the exaction of that rate, or find the time allowed for loading or unloading unlawful or, in other words, unreasonably small, and forbid the charging of de- murrage at the expiration of that time and before the expiration of a reasonable time. Pennsylvania Millers' State Asso. v. Philadelphia & R. R., 8 Int. Com. Rep. 531 (1900). So it may require a carrier to desist from enforcing a classification of specified articles higher than the classi- fication, which upon the facts is found to be lawful. This is not pre- scribing a rate for the future. Classification determines the relation of rates as between commodities, not the rate itself, and when a commodity [936] § 1040] Eaileoad Eate RmuLATioiir. [Chap. XXXIII is transferred from a higher to a lower class, the revenues of the carrier are not necessarily diminished, since it may advance the rates applicable to those classes. Myer v. Cleveland, Cincinnati & St. L. Ry., 9 Int. Com. Rep. 78 (1901). As a result of its inability to prescribe rates, the Interstate Commerce Commission may determine in respect to the past what was reasonable and just, but as to rates found to be unreasonable, unjust, and unlawful can make no provision or order for their reduction which the courts are re- quired to enforce or the carrier obliged to obey, except to notify the carrier to cease and desist from violation of the statute. Gary v. Eureka Springs Ey., 7 Int. Com. Rep. 286 (1897). It cannot correct wrongs caused by improperly adjusted rates over independent lines from connecting cities to a. common destination, as it is without authority to prescribe a maxi- mum and minimum rate. Savannah Bureau of F. & T. v. Charleston & S. Ry., 7 Int. Com. Rep. 458 (1897). But where the Commission finds the existing rate to be unjust, it will indicate the basis on which the rate should be. Milwaukee Chamber of Commerce v. Chicago, M. & St. P. Ry., 7 Int. Com. Rep. 481 (1898); Daniels v. Chicago, R. I. & P. Ry., 6 Int. Com. Rep. 458 (1895). rosTi CHAPTER XXXIV. PEOCEDURE BEFORE THE COMMISSION. I 1041. Provisions of the Statute. 1042. Amendments of 1906. TOPIC A PEOCEEDINGS ON ITS OWN MOTIOW. § 1043. Investigation by the Commission on its own motion. 1044. Investigation by order of Congress. 1045. Investigation as result of filing new tariff. 1046. Procedure on such investigation. TOPIC B PEOCEEDINGS ON COMPLAINT. I 1047. Procedure. 1048. Parties given opportunity to be heard. 1049. Place of hearing. 1050. Pleadings. TOPIC C PEOPEE PAETIES. § 1051. Person interested as complainant. 1052. Complaint by association. 1053. Board of Trade. 1054. State Railroad Commission. 1055. Complainant not coming with clean hands. 1056. Proper parties defendant. 1057. Necessary parties defendant. 1058. Supervening receivership. 1059. One of several joint parties. 1060. Parties must have an interest. 1061. Intervening parties. TOPIC D OEDEE OF PEOCEDTJEB. § 1062. Default. 1063. Stay of proceedings. 1064. Continuance for settlement. [938] Ohap. XXXIV] Peoceduee. [§ 1041 TOPIC E EVIDENCE AND BUEDEN OF PEOOF. § 1065. Testimony on both sides should be introduced. 1066. Acts of Commission need not be proved. 1067. Rules of evidence. 1068. Privilege against self-crimination. 1069. Production of books and papers. 1070. Order to carrier to produce books. 1071. Methods of avoiding inconvenience of producing all books. 1072. Petitioner thus gets all material and proper evidence. 1073. Examination of witnesses upon prepared statements. 1074. Hearing held where books are kept. 1075. Adverse interest of witnesses not to be considered. 1076. Rights of parties must be preserved. 1077. Presumptions. 1078. Burden of proof. TOPIC F FINDING OF THE COMMISSION. S 1079. Dismissal when order unnecessary. 1080. Reparation. 1081. Proof of damage required. 1082. Conditions of granting reparation. 1083. Finding of Commission does not work an estoppel. 1084. Difference of parties. 1085. How far party may reopen case. 1086. New petition may be filed. 1087. Reopening a case for rehearing. 1088. Form and requisites of petition for rehearing. § 1041. Provisions of the statute. Attendance of wistn)esses. — For the purposes of this Act the Commission shall have power to require, by supboena, the at- temdauce and testimony of witnesses and the produetion of all books, papers, tariffs, contracts, agreements, and documentsi relating to any matter under investigation. Such attendance of witnesses, and the production of such documentary evidence, may be required from any place in the United States, at any designated place of hearing. And in case of disobedience to a subpoena the Commission, or any party to a proceeding before the Commission, may in- [930] § 1041] E.AILROAD Rate Regulatiost. [Okap. XXXIV voke the aid of any court of the United States in requiring the attendance and testimony of witnesses and the production of books, papers, and documents under the provisions of this sec- tion. And any of the circuit courts of the United States within tlie jurisdiction of wliich such inquiry is carried on may, in case of contumacy or refusal to obey a subpoena issiued to any common carrier subject to the provisions of this act, or other person], issue an order requiring such common carrier or other person to appear before said Commission (and produce books and papers if so ordered) and give evidence touching tbe matter in question: And any failure to obey such order of the court may be pun- ished by such court as a contempt thereof. Tbe claim that any such testimony or evidence may tend to criminate the person giving such evidence sball not excuse such witness from testifying; but such evidence or testimony sball not be used against such person on tbe trial of any criminal proceeding. Tbe testimony of any witiiese may be taken, at the instance of a party, in any proceeding or investigation pending before the Commission, by deposition, at any time after a cause or pro- ceeding is at issue on petition and answer. Tbe Commission may also order testimony to be taken by deposition in any proceeding or investigation pending before it, at any stage of such proceeding or investigation. Such deposition may be taken before any judge of any court of tbe United States, or any commissioner of a circuit or any clerk of a district or circuit court, or any chancellor, justice or judge of a supreme or superior court, mayor or chief magistrate of a city, judge of a county court, or court of common pleas of any of the United States, or any notary public, not being of counsel or attorney to either parties, nor interested in the event of the proceeding or investigation. Reasonable notice must first be given in writing by the [940] Chap. XXXIV] Peoceduee. [§ 1041 party or his attorney proposing to take such deposition to the opposite party or his attorney of record, as either may be near- est, which notice shall state the name of the witness and the time and place of the taking of his deposition. Any person may be compelled to appear and depose, and to produce documentary evidence, in the same manner a3 wit- nesses may be compelled to appear and testify and produce documentary evidence before the Commission as hereinbefore provided. Every person deposing as herein provided shall be cautioned and sworn (or affirm, if he so request) to tesitify to the whole truth, and shall be carefully examined. His testimony shall be reduced to writing by the magistrate taking the deposition, or under his direction, and shall, after it has been reduced to writing, be subscribed by the deponent. If a witness whose testimony may be desired to be taken by deposition be in a foreign country, the deposition may be taken before an officer or person designated by the Commission, or agreed upon by the parties by stipulation in writing to be filed with the Commission. All depositions must be promptly filed with the Commission. Witnesses whose depositions are taken pursuant to this act, and the magistrate or other officer taking the same, shall sever- ally be entitled to the same fees as are paid for like services in the courts of the United States. (Interstate Commerce Act, section 12, as amended by Act of Feb. 10, 1891.) No person shall be excused from attending and testifying or from producing books, papers, tariffs, contracts, agreements, and documents before the Interstate Commerce Commission, or in obedience to the subpoena of the Commission, whether such subpoena be signed or issued by one or more Commission- ers, or In any cause or proceeding, criminal or otherwise, based upon or growing out of any alleged violation of the Act of Congress, entitled "An Act to regulate commerce," approved February fourth, eighteen hundred and eighty-seven, or of any [941] § 1041] Railroad Rate Regulation. [CKap. XXXIV amendmeait tlieTeof on the ground or for tlie reason that the testimony or evidence, documentary or otherwise, required of him, may tend to criminate Kim or subject him to a penalty or forfeiture. But no person shall be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter or thing, concerning which he may testify, or produce evidence, documentary or otherwise, before said Commission, or in obedience to its subpoena, or the subpoena of either of them, or in any such case or proceeding: Provided, That no person so testfying shall be exempt from prosecution and punishment for perjury committed in so testifying. Any person who shall neglect or refuse to attend and testify, or to answer any lavsrful inquiry, or to produce books, papers, tariffs, contracts, agreements, and documents, if in his power to do sio, in obedience to the subpoena or latvfnl requirement of the Commission shall be guilty of an offense and upon convic- tion thereof by a court of compenttent jurisdiction shall be punished by fine not less than one hundred dollars nor more than five thousand dollars, or by imprisonment for not more than one year or by both such fine and imprisonment. (Act of February 11, 1903.) Complaint to the Commission^ — Sec. 13. That any person, firm, corporation, or association, or any mercantile, agricul- tural, or manufacturing society, or any body politic or munici- pal organization complaining of anything done or omitted to be done by any common carrier subject to the provisions of this Act in contravention of the provisions thereof, may apply to said Commission by petition which shall briefly state the facts ; Whereupon a statement of the charges thus made shall be forwarded by the Commission to such common carrier, who shall be called upon to satisfy the complaint or to answer the same in writing within a reasonable time, to be specified by the Commisision. If such common carrier, within the time specified, shall make reparation for the injury alleged to have been done, said carrier shall be relieved of liabiliy to the oom- [942] Chap. XXXIV] Peocbduke. [§ 1041 plainant only for the particular violation of law tlius com- plained of. If sueli carrier shall not satisfy the complaint within the time specified, or there shall appear to be any reasonable ground for investigating said complaint, it shall be the duty of the Com- mission to investigate the matters complained of in such manner and by such means as it shall deem proper. Said Commission shall in like manner investigate any com- plaint forwarded by the railroad commissioner or railroad com- mission of any State or Territory, at the request of such commissioner or commission, and may institute any inquiry on its own motion in the same manner and to the same effect aa though complaint had been made. 'No complaint shall at any time be dismissed because of the absence of direct dam,age to the complainant. Complaint to secure switch conwction. — Any common car- rier subject to the provisions of this Act, upon application of any lateral branch line of railroad, or of any shipper tendering interstate traffic for transportation, shall construct, maintain, and operate upon reasonable terms a switch, connection with any such lateral, branch line of railroad, or private side track which may be constructed to connect with its railroad, where such connection is reasonably practicable and can be put in with safety and will furnish sufficient business to justify the construction and maintenance of the same; and shall furnish cars for the movement of such traffic to the best of its ability without discrimination in favor of or against any such shipper. If any common carrier shall fail to install and operate any such switch or connection as aforesaid, on application therefor in writing by kny shipper, such shipper may make complaint to the Commission, as provided in section thirteen of this Act, and the Commission shall hear and investigate the same and shall determine as to the safety and practicability thereof and justi- fication and reasonable compensation therefor, and the Com- mission may make an order, as provided in section fifteen of [9431 § 1041] Eaileoad Rate Eegttiatioit. [CKap. XXXIV tills Act, directing the common carrier to comply with, the pro- visions of this section in accordance with such order, and such order shall be enforced as hereinafter provided for the enforce- ment of all other orders by the Commission, other than orders for the payment of money. [Interstate Commerce Act, as amended by Act of June 29, 1,906, -section 1.] Report of Commission. — That whenever an investigation sthall be made by said Commission, it shall be its duty to make a report in writing in respect thereto, which shall state the conclusions of the Commission, together witih its decision, order, or requirement in the premises ; and in case damages are awarded such report shall include the findings of fact on which the award is made. All reports of investigations made by the Commission shall be entered of record, and a copy thereof shall be furnisheid to the party who may have complained, and to any common car- rier that may have been complained of. The Commission may provide for the publication of its re- ports and decisions in such form and manner as may be besit adapted for public information and use, and such authorized publications shall be competent evidence of the reports and decisions of the Commission therein contained in all courts of the United States and of the several States without any further proof or authentication thereof. The Commission may also cause to be printed for early distribution its annual reports. [Interstate Commerce Act, section 14, as amended by Act of June 29, 1906, section 3.] Fixing of maxirmim rate; order of Commission. — That the Commission is authorized and empowcTed, and it shall be its duty, whenever, after full hearing upon a complaint made as provided in section thirteen of this Act, or upon complaint of any common carrier, it sihall be of the opinion that any of the rates, or charges whatsoever, demanded, charged, or collected by a;iy common carrier or carriers, subject to the provisions of this Act, for the transportation of persons or property as defined [944] Chap. XXXIV] Proceduee. [§ 1041 in the first section of this Act, or that any regulations or jirac- tices whatsoever of such carrier or carriers affecting such rates, are unjust or unreasonable, or unjustly discriminatory or un- duly preferential or prejudical, or otherwise in violation of any of the provisions of this Act, to determine and prescribe what will be the just and reasonable rate or rates, charge or charges, to be thereafter observed in such case as the maximum to be charged; and what regulation or practice in respect to such transportation is just, fair, and reasonable to be thereafter followed; and to make an order that the carrier shall cease and desist from such violation, to the extent to which the Com- mission find the same to exist, and shall not thereafter publish, demand, or collect any rate or charge for such transportation in excess of the maximum rate or charge so prescribed, and shall conform to the regulation or practice so prescribed. All orders of the Commission, except orders for the payment of money, shall take effect within such reasonable time, not less than thirty days, and shall continue in force for such period of time, not exceeding two years, as shall be prescribed in the order of the Cbmmission, unless the same shall be suspended or modified or set aside by the Commission or be suspended or set aside by a court of competent jurisdiction. Whenever the carrier or carriers, in obedience to such order of the Commission or other- -wise, in respect to joint rates^, fares, or charges, shall fail to agree among themselves upon the apportionment or division thereof, the Commission may after hearing make a supple- mental order prescribing the just and reasonable proportion of sueh joint rate to be received by each carrier party thereto, which order shall take effect as a part of the original order. EstdbUshmeni of through routes and joint rates. — ^The Commission may also, after hearing on a complaint, establish through routes and joint rates as the maximum to be charged and prescribe the division of such rates as hereinbefore pro- vided, and the terms and conditions under which sueh through routes shall be operated, when that may be necessary to give [945] § 1041] Kaileoad Rate Regulatiobt. [Chap. XXXIV effect to any provision of tliis Act, and the carriers complained of have refused or neglected to voluntarily esftablisii such through routes and joint rates, provided no reasonable or satisfactory through route exists, and this provision shall apply when one of the connecting carriers is a water line. Allowance for services or insfrumentalities of shipper.— ^li the owner of property transported under this Act directly or indirectly renders any service connected with such transporta- tion, or furnishes any instrumentality used therein, the charge and allowance therefor sihall be no more than ia just and rea- sonable, and the Conunission may, after hearing on a complaint, determine what is a reasonable charge as the maximum to be paid by the carrier or carriers for the service so rendered or for the use of the insitrumentality so furnished, an.d fix thie same by appropriate order, which order shall have the same force and effect and be enforced in like manner as the orders above provided for in this section. The foregoing enumeration of powers sh,all not exclude any power which the Commission would otherwise have in the mak- ing of an order under the provisions of this Act [Interstate Commerce Act, section 15, as amended by Act of June 29, 1906, section 4.J Reparatimi, — That if, after hearing on a complaint made aa provided in section thirteen of this Act, the Commission shall determine that any party complainant is entitled to an award of damages under the provisions of this Act for a viola- tion thereof, the Commission shall make an order directing the carrier to pay to the complainant the sum to which he is en- titled on or before a day named . . . All complaints for the recovery of damages shall be filed with the Commission within two years from the time the cause of action accrues, and not after. Service of ordef. — Every order of the Commission shall be forthwith served by mailing to any one of the principal officers or agents of the carrier at his usual place of business a copy [946] Chap. XXXIV] Peoceduee. [§ 1041 thereof; and the registry mail receipt shall be prima facie evi- dence of the receipt of such order by the carrier in due course of mail. Suspension m- modification of order. — The Commission shall be authorized to suspend or modify its orders upon such notice and in such manner as it shall deem proper. Obedience of carrier to order. — It shall be the duty of every common carrier, its agents and employees, to obsei-ve and com- ply with such orders so long as the same shall remain in effect Schedules and reports to be public records. — The copies of schedules and tariffs of rates, fares, and charges, and of all con- tracts, agreements, or arrangements between common carriers filed with the Commission as herein provided, and the statistics, tables, and figures contained in the annual reports of carriers made to the Commission, as required by the provisions of tliis Act, shall be preserved as public records in the custody of the secretary of the Commission, and shall be received as prima facie evidence of what they purport to be for the purpose of investigations by the Conxmission and in all judicial proceed- ings; and copies of or extracts from any of said schedules, tar- iffs, contracts, agreements, arrangements, or reports made pub- lic records as aforesaid, certified by the secretary under ifa seal, shall be received in evidence with like effect as the origi- nals. [Interstate Commerce Act, section 16, as amended by Act of June 29, 1906, section 5.J Reheanng. — That a new section be added to said Act immediately aftei- section sixteen, to be numbered as section sixteen a, as follows: Sec. 16a. That after a decision, order, or requirement has been made by the Commission in any proceeding any party thereto may at any time make application for rehearing of the same, or any matter determined therein, and it shall be lawful for the Commission in its discretion to grant such a rehearing if sufficient reason therfor be made to appear. Applications for rehearing shall be governed by such general rules as the COm- [947] :§ 1041] Raileoad Rate Regulation. [Chap. XXXIV mission may establish. No suck application shall excuse any carrier from complying with or obeying any decision, order, or requirement of the Commission, or operate in any manner to stay or postpone the enforcement thereof, without the special order of the Commission. In case a rehearing is granted the proceedings thereupon shall conform as nearly as may be to the proceedings in an original hearing, except as tlie Commission may otherwise direct ; and if, in its judgment, after such re- hearing and the consideration of all facts, including those aris- ing since the former hearing, it sihall appear that the original decision, order, or requireanent is in any respect unjust or un- warranted, the Commission may reverse, change, or modify the same accordingly. Any decision, order, or requirement made after such rehearing, reversing, changing, or modifying the original determination shall be subject to the same provisions as an original order. [Act of June 29, 1906, section 6. J Procedure of Commission. — That the Commission may con- duct its proceedings in such manner as will best conduce to the proper dispatch of business and to the ends of justica A ma- jority of the Commission shall constitute a quorum for the transaction of business, but no Commission shall participate in any hearing or proceeding in which he has any pecuniary in- terest. Said Commission may, from time to time, make or amend such general rules -or orders as may be requisite for the order and reg-ulation of proceedings before it, including forms of notices and the service thereof, which shall conform, as nearly as may be, to those in use in the courts of the United States. Any party may appear before said Commission and be heard, in person or by attorney. Every vote and official act of the Commission shall be en- tered of record, and its proceedings shall be public upon the request of either party interested. Said Commission shall have an official seal, which shall be judicially noticed. Either of the members of the Commission may administer oaths and affirmations and sign subpoenas. [Interstate Com- [948] Ohap. XXXIV] Pkocedure. [§ 1042 merce Act, section lY, as amended by Act of IMarcli 2, 1889, section 6.J § 1042. Amendments of 1906. By the act of 1906 the action of the Commission has been fundamentally modified. Section 12, as to the attendance and examination of witnesses, as perfected by the act of February 11, 1893, is unchanged, as are sections 13 and 17. The important changes and new provisions are as follows: 1. By a new provision of the act any shipper who is aggrieved by the failure of a carrier to install and operate a, switch connection with a lateral branch or private side track may complain to the Commission, which may investigate and make an order. 2. Section 14 of the act is amended by omitting the requirement that the Commission shall include in its reports its findings of fact, except such findings on which damages are awarded. The avowed object of this change was to save the Commission unnecessary labor. It tends to make the decisions of the Commission more like those of a court in form; and it may have an important effect on the action of the courts when applied to for an injunction against an order of the Commission. If the find- ings of fact are not stated, the facts will all go before the court, whicli may refuse an injunction upon its own view of the facts, without regard to the findings of the Commission. In fact, the position of the Commission, which has been similar to that of a Master in Chancery, will now be that of an independent quasi-judicial body. 3. By the amendment of section 15 the power of fixing a maximum rate is conferred on the Commission. This is not a power to initiate rates, but only to make an order after complaint and investgiation ; nor is the rate named one which the carrier must adopt, but only a maximum above which it cannot go. The power is much less extensive than that con- ferred by the English act on the Board of Trade and Parliament. 4. By the same section the power is given to the Commission to estab- lish through routes and joint rates, and to apportion the division of joint rates. This power is entirely new, though it has been given to the Eng- lish Commission from the beginning ( ante, §' 890 ) . 5. The Commission is to settle the allowance to be made by a, carrier to a shipper for his services or for the use of his cars and other instru- mentalities furnished to the carrier. Extravagant allowances of this sort have in the past given rise to much dissatisfaction (ante, § 884). The power is entirely new. 6. By amendments to section 16, several new provisions are introduced in relation to the procedure of the Commission; the section in its original form having covered only proceedings in the courts. A statute of limita- tions is provided for complaints to the Commission for the recovery of [949] §§ 1043, 1044] Raileoad Rate REGiri.ATioN. [Ckap. XXXIV damages; and provision is made for service of its orders, and for sus- pension and modification of them. 7. By a new provision, it is made the duty of a carrier to comply with the orders of the Commission so long as they are in effect. Under the original act the carrier could legally refuse to obey an order of the (Com- mission taking the risk of a decision of the courts supporting the (com- mission. 8. The schedules and reports of carriers are made public records, prima facie evidence in judicial proceedings. 9. A new section is added, giving power to grant rehearings. The Com- mission has in fact from the first granted rehearings and this amendment codifies the practice. TOPIC A PEOCEEDINGS OS ITS OWN MOTION. § 1043. Investigation by the Commission on its own motion. The Commission, without complaint or petition of an individual may investigate on its own motion the charges or other practices of any car- rier subject to its jurisdiction. In such a case, before entering upon the investigation, it will give notice of the time and place of taking testimony, - and afford opportunity for calling and cross-examination of witnesses. Such proceeding is a substantial compliance with the statute. Re Rates and Charges on Food Products, 3 Int. Com. Rep. 151, 4 I. C.-C. 116 (1890). Upon investigation if it thereupon appears that the conduct of the carrier is illegal, the Commission should use whatever power it has to correct the injustice. In the Matter of Proposed Advances in Freight Rates, 9 I. C. C. Rep. 382 (1903). § 1044. Investigation by order of Congress. Such an investigation was instituted in 1890 as a result of a resolution of the Senate and a complaint of the Department of Agriculture. The Commission held that its authority in this case was derived from the permission given in the statute to proceed on its own motion. " Neither the Senate nor the Department of Agriculture is authorized to make any complaint, which under the statute the Commission is required to investi- gate. The complaint so made and repeated through the Senate and Agri- cultural Department was not a form of legal process, but an expression of discontent and dissatisfaction with existing rates. It imposed no duty, conferred no power. It was an admonition suggesting too much forbear- ance if not an omission of duty in respect to rates. As such it showed that the Commission did not of its own motion without probable good cause institute this inquiry and begin the investigation under the statute." Re Rates and Charges on Food Products, 3 Int. Com. Rep. 151, 4 I. C. C. 116 (1890). [950] Chap. XXXIV] Peoceduee. [§§ 1045, 1046 § 1045. Investigation as result of filing new tariff. A similar investigation was ordered by the Commission upon the filing of tariffs by the trunk lines showing a general increase of freight rates. The circumstances are thus stated by Mr. Commissioner Prouty : " Dur- ing the last of November, 1902, tariifs were filed with the Commission giving notice of advances in rates of general application. About the same time, owing largely to published interviews of railway traffic officials, the impression grew up that other general advances were to be made. This was widely commented upon by the press, and was the subject of consider- able informal complaint to us. Any general advance in transportation charges is a matter of great public concern, and it seemed especially appro- priate that the Commission, in the discharge of its duty to keep informed touching the methods and practices of railway carriers subject to the act to regulate commerce should ascertain the reason for these advances. An order was accordingly entered on December 1st respecting rates upon grain and grain products, dressed meats and provisions from the Mississippi river to the Atlantic seaboard, by which the leading lines of railway engaging in this traffic were required to appear at Washington on Decem- ber 16th for the purpose of giving information touching the advances which had been made or were contemplated in these rates." After a full inves- tigation the Commission stated its conclusion; but since such general investigation of proposed advances in freight charges was in a manner ex par*e, , although the respondent carriers were fully heard through their traffic representatives, and in some instances through their attorneys, and since facts not brought out in the inquiry, with further discussion of the subject, might lead to a different conclusion, no order was made. It was, however, determined that, unless the rates be readjusted in accordance with the views expressed by the Commission, proceedings would be begun against the several lines, which would put directly in issue the rates involved. In the Matter of Proposed Advances in Freight Rates, 9 Int. Com. Rep. 382 (1903). § 1046. Procedure upon such investigation. Such investigation cannot be instituted by petition, since there is no petitioner; but it must be begun by some notice to the carrier investigated of the subject of inquiry. An investigation of this sort having been under- taken, counsel for the carriers attacked the jurisdiction of the Commis- sion on the ground that " the proceeding was not commenced and con- ducted in accordance with the Rules of Practice established by the Com- mission, and was therefore \\'ithout authority of law." The Commission, however, held the procedure regular, saying: "The act provides 'that the Commission may conduct its proceedings in such manner as will best conduce to the proper dispatch of business and to the ends of justice,' and [951] § 104T] Eaileoad Rate Regulation. [Chap. XXXIV ' may from time to time make or amend such general rules or orders as may be requisite for the order and regulation of business before it.' The Rules of Practice or orders which have been made in accordance with these provisions of the act refer to proceedings commenced by parties author- ized to complain and apply to the Commission by petition. Such rules or orders have no application to proceedings instituted by the Commission on its own motion. These are commenced and conducted under the statute. The law requires the party complaining of anything done or omitted to be done by any common carrier to apply to the Commission by petition which shall briefly state the facts, and the rules made Jby the Commission for the regulation of its proceedings require the petition to be verified. If the statute requires the two proceedings, or the method of commencing the two proceedings provided for in section 13 of the act, to be commenced in the same way, then the Commission to institute inijuiry on its own motion must present a petition to itself; and, if the course ot procedure or Rules of Practice prescribed by the Commission apply to the investigations and proceedings commenced by the Commission on its own motion as well as to those not so commenced, then the Conunission mu^st not only petition to itself, but must itself verify such petition. In the matter under consideration the Commission or some member of it would first make oath to the facts showing the rates to be unreasonable, then proceed with the investigation to ascertain if the verification was true and whether the rates were or were not unreasonable. Such is not believed to be the method provided by the act or the rules of the Commission for attaining the ' ends of justice.' " The Commission is authorized to institute inquiry on Its own motion and in such inquiry ' to investigate the matter in question.' It has ko determined when it has entered upon the investigation of such matters; and it may prosecute any inquiry necessary to such investigation by one or more of the Commissioners in any part of the United States. In any investigation the party to be affected must have notice. In any such mat- ter as that we are now considering the party to be affected must have notice of what such party has done or omitted to do and which is challenged and which it is proposed to investigate. The notice given to the several com- panies named elsewhere in this proceeding was sufficient for this purpose and sufficient in law." Re Rates and Charges on Food Products, 3 Int. Com. Rep. 151, 4 I. C. C. 116 (1890^. TOPIC B PBOCEEDINGS ON COMPLAINT. [See Appendix of Forms.] • § 1047. Procedure. The practice and procedure of the Commission is as simple as possible, consistent with justice; and it desires that without dilatory motions, [952] Oliap. XXXIV] Pboceduke. [§ 1048 pleas in abatement or other interlocutory proceedings, the matter in ques- tion may be brought to an issue at the earliest practicable day when o. final hearing may be had forthwith, and all proper questions will then be entertained, whether jurisdictional or going to the merits of the contro- versy. So in a case where the defendant moved to dismiss the petition for lack of jurisdiction, the Commission declined to take_up the motion, be- cause the object of the motion was to reach the merits of the case and have them discussed and passed upon summarily, instead of at the customary final hearing. A practice thus to anticipate by motion the final hearing the Commission did not think advisable and would not therefore favor. Associated Wholesale Grocers v. Missouri Pac. R. R., 1 Int. Com. Rep. 321, 1 I. C. C. 156 (1887). In accordance with this view, the Commission desires counsel to simplify the issues so far as possible by agreeing upon the facts. This was ex- pressed by the first chairman. Judge Cooley, in a letter in connection with a, petition of the Boards of Trade Union of Minnesota. 1 Int. Com. Rep. 446 (1887). He wrote that in nearly every case " the major portion of the facts are not in dispute at all, and as to all such facts we are compelled to insist that counsel shall stipulate them in advance. We have more difficulty with this matter than with any other, counsel holding themselves aloof from each other, not trying to agree or not half trying, and then coming forward expecting to take time indefinitely in making proof of facts which are really not contested. If we had an indefinite amount of time at our disposal, they might be indulged; but as the case actually is, unnecessary indulgence to some is equivalent to denial of rights to others awaiting a hearing. " In the Boards of Trade Union case, the facts must be largely matters of public notoriety, and it would be altogether wrong to calculate upon taking up time to prove them by oral evidence. An agreement upon thein should be all ready before we take up the case. Of couse it would not Ije expected parties should agree upon the consequences flowing from the facts, but even as to these it is not generally necessary to go into proof as in a suit at law, for the Commission will apply its own judgment where all that is requisite in an application of ordinary common sense, and will not require or expect that evidence be adduced to show that usual results have followed." § 1048. Parties given opportunity to be heard. Proceedings on complaint of a party take the form of judicial proceed- ings. Thus a reasonable opportunity will be given for the parties to be heard. Business Men's Assoc, v. Chicago & N. W. Ry., 2 Int. Com. Rep. 48, 2 I. C. C. 52 (1888). So where a railroad submits a shipper's claim for carload rating on a mixed carload to the Commission, it will be treated [953] §§ 1049, 1050] Eaileoad Eate Regulation. [Chap. XXXIV as a complaint and answer, and the cause will proceed judicially. Roth v. Texas & P. Rj., 9 I. C. C. Rep. 602 (1902). § 1049. Place of hearing. The Commission may hear cases either in Washington or in some other convenient place. A case involving local rates was ordered to be heard before the Interstate Commerce Commission at a central point in the ter- ritory immediately affected by the rates. Delaware State Grange v. New York, P. & N. R. R., 2 Int. Com. Rep. 187, 2 I. C. C. 309 (1888). Jf the petition is not specific, though plainly sufficient to constitute the basis for an award of damages, the defendants are entitled, before the hearing, to a specification showing in detail the amounts for which recovery is sought. Cattle Raisers' Assoc, v. Chicago, B. & Q. R. R., 10 I. C. C. Rep. 83 (1904). § 1050. Pleadings. The complaint must be presented in u, verified petition. Re Southern Pac. R. R., I Int. Com. Rep. 16, 1 I. C. 0. 6 (1887). The complainant will be bound by the form of his complaint. So when a carrier on complaint under the Act to Regulate Commerce, § 4, avers substantial dissimilarity in circumstances and conditions ^is justifying its greater charge for shorter hauls, it is concluded by its pleading, and must afiirmatively show that tha circumstances and conditions, of which it is entitled to judge in the first instance, are in fact substantially dissimilar; but upon an application for relief under the § 4 proviso the carrier is not limited by such a, rule of evi- dence, and may present to the Commission every material reason for an order in its favor. Trammell v. Clyde Steamship Co., 4 Int. Com. Rep. 120, 5 1. C. C. 324 (1892). An answer which sets up a justification must clearly advise complain- ants of the facts and circumstances relied on as constituting such justifica- tion. Raworth v. Northern P. R. R., 3 Int. Com. Rep. 857, 5 I. C. C. 234 (1892). Under the rules of practice issued by the Commission, a replication to an answer is not required or allowed. Oregon S. L. Ry. v. Northern P. R. R., 2 Int. Com. Rep. 639, 3 I. C. C. 264 (1889). Matter which is not expressly in issue by the pleadings or necessarily involved in issues pre- sented in a strictly inter partes case instituted by complaint before the Interstate Commerce Commission cannot be authoritatively determined by it.r Commercial Club v. Chicago, R. I. & P. R. R., 6 Int. Com. Rep. 647 (1896). The Interstate Commerce Commission is liberal in allowing amendments to complaints, but will not allow one that would be in effect making a new case. Delaware State Grange v. New York, P. & N. R. R., 2 Int. Coui. [954] Cliap. XXXIV] Procedure. [§§ 1051, 1052 Rep. 187, 2 I. C. C. 309 (1888); Riddle v. Baltimore & O. R. R., l,Int. Com. Rep. 701, I. C. C. 372 (1888). A complaint against a railroad com- pany stating that it had been previously in the hands of a receiver who was now president, was allowed to be amended so as to show existence of receivership which it appeared on hearing was still in existence. Reynolds V. Western New York & P. Ry., 1 Int. ,Com. Rep. 685, 1 I. C. C. 347 (1887). TOPIC C PROPER PARTIES. § 1051. Person interested as complainant. Only a person interested in his own right can file a complaint. Thus a. coal operator not being damaged by the failure of a. railroad company to establish a rate upon a class of coal not produced at his mine, cannot complain of such a rate. McGrew v. Missouri Pac. R. R., 8 I. C. C. Rep. 630 (1901). The person aggrieved should complain in his own name; a complaint by a ticket broker having no interest in the transaction will not be entertained. Ottinger v. Southern Pac. R. R., 1 I. C. C. Rep. 607 (1887). But the interest of the petitioner, by the provision of the act, need not be direct; therefore the defendants are not entitled to a dismissal of a complaint of unlawful rates, on the ground that the petitioners, being merely commission merchants, can sustain no direct or material damage under the rates in question. James v. Canadian P. R. R., 4 Int. Com. Rep. 274, 5 I. C. C. 612 (1893) ; Milk Producers' Protective Assoc, v. Dela- ware, L. & W. Ry., 7 I. C. C. Rep. 92 (1897); Central Y. P. Assoc, v. Vicksburg, S. & P. R. R., 10 I. C. C. Rep. 193 (1904). § 1052. Complaint by association. A corporation whose object is to promote the marketing of live stock at Chicago in the interest of its members may, under the Act to Regulate Commerce, § 13, maintain a proceeding to correct an unreasonable freight rate on live stock shipped to Chicago, as its members, for whose general benefit and protection it was formed, have a vital interest in such a proceeding. Cattle Raisers' Assoc, v. Fort Worth & D. C. R. R., 7 I. C. C. Rep. 513 (1897); Chicago Live Stock Exchange v. Chicago G. W. R. R., 10 I. C. C. Rep. 428 (1905). So a, Milk Producers' Association, whether representing its own members, or specially authorized to represent other shippers, or assuming in addition to represent shippers engaged in the same industry on some of the defendant lines, was entitled to bring and maintain this proceeding, afl'ecting rates on milk supplied for a common market, against all the defendants engaged in carrying for that market. A defendant carrier is not entitled to have a complaint dismissed as to it " because of the absence of direct damage to the complainant," and it is the duty of the Commission, under express direction in the act, to " exe- [955] § 1053] Raileoad Rate Regulation. [Cbap. XXXIV cute and enforce " the pro^dsions of the statute. Milk Producers' Protec- tive Assoc. V. Delaware, L. & W. R. R., 7 I. C. C. Rep. 92 (1897). And while an association of shippers has no direct interest in the determination of the question as to whether divisions or allowances from published tariff rates, made by defendants to tap lines owned or controlled by other shippers, constitute departures from the published rates, it has such an indirect interest as entitles it, under the statute, to maintain a proceeding to have such division declared unlawful. Central Yellow Pine Assoc, v. Vicksburg, S. & P. R. R.,' 10 I. C. C. Rep. 193 (1904). If the complaint is brought in the name of the association, it seems that in a proper case reparation may be ordered to individual members; but the better practice, in view of the unsettled state of the law in this respect, and in order that all phases of the question may be presented to the court, is for the members of the association seeking damages to file claims in the nature of inter- vening petitions. When such a petition is filed, it is considered the beginning of the action in all its subsequent stages; consequently the suit of the members of a cattle raisers' association for the recovery of damages should be treated as having been begun by the filing on their behalf of the original petition by the association itself, although they subsequently in- tervened. Cattle Raisers' Assoc, v. Chicago, B. & Q. R. R., 10 I. C. C. Rep. 83 (1904). § 1053. Board of trade. In the ease of Texas & Pacific Ry. v. Interstate Commerce Commission, 162 U. S. 197, 40 L. Ed. 940, 16 Sup. Ct. 666, 5 Int. Com. Rep. 405 (1896), the complaint was originally made " by certain corporations of New York, Philadelphia and San Francisco, known as boards of trade, or chambers of commerce, which appear to be composed of merchants and traders in those cities, engaged in the business of reaching and supplying the consumers of the United States with imported luxuries, necessities, and manufac- tured goods generally, and as active competitors with the merchants at Boston, Montreal, Philadelphia, New Orleans, San Francisco, Chicago, and merchants in foreign countries who import direct on through bills of lad- ing issued abroad." The defendants argued that the complaint was not legally made. The Commission and, subsequently the courts, held that the complaint might be entertained. In the Supreme Court Mr. Justice Shiras said: "We shall assume, in the disposition of the present case, that a valid complaint may be made before the Commission, by such trade organizations, based on a mode or manner of treating import traffic by a defendant company, without disclosing or containing charges of spe- cific acts of discrimination or undue preference, resulting in loss or damage to individual persons, corporations, or associations. We do not wish to be understood as implying that it would be competent for the Conimis- [956] Chap. XXXIV] Peocedure. [§§ 1054, 1055 sion, witliout a complaint made before it, and without a hearing, to sub- ject common carriers to penalties.'' § 1054. State Railroad Commission. The repeal of the law creating the railroad commission of Florida does not operate as a withdrawal or dismissal of a complaint brought in its name before the Interstate Commerce Commission for the real parties in interest. Railroad Commission of Florida v. Savannah, F. & W. R. R., 3 Int. Com. Rep. 688, 5 I. C. C. 136 (1891). § 1055. Complainant not coming with clean hands. The defendant has sometimes objected to the maintenance of the com- plaint on the ground that the complainant did not come before the Com- mission with clean hands. Thus in the case of the Interstate Commerce Commission v. Southern Pacifie Company, 132 Fed. 829 (1904), there was involved an order of the Commission forbidding the enforcement by de- fendants therein of a rule whereby they reserved to themselves, as initial carriers, the right of routing citrus traffic beyond their own lines and denied this privilege to shippers. The defendants contended that, even if the rule was unlawful, the complainants (shippers) were not entitled to relief, because they had used the privilege of routing for the purpose uf securing rebates and desired to retain it for that purpose. In overruling this contention the court said: "With reference to defendants' conten- tion, that the complainants before the Interstate Commerce Commission were there with unclean hands, it is only necessary to say, that, in this court, the Commission represents the public at large and therefore no participation by said complainants in the unlawful practice of rebates could bar relief." A similar objection was made in the case of Tift v. Southern Railroad, 10 1. C. C. Rep. 548 (1905). The complainants were members of an association whicli, it was claimed, constituted an illegal monopoly. The Commission held that this fact was immaterial. Mr. Commissioner Clem- ents said: "A proceeding like the present before this Commission, al- though instituted by and in the name of parties complaining of injury to themselves from alleged violations of law, is not a strictly private or per- sonal suit into which a, party complainant must enter with " clean hands,' but is a proceeding for the enforcement of a public duty as well as of an individual or private right. " The act to regulate commerce provides that this Commission ' may institute an inquiry of its own motion ' into a matter of the kind involved in this ease ' in the same manner and to the same effect as though com- plaint had been made..' and that, where complaint is made, such complaint shall not, ' at any time be dismissed because of the absence of direct [O.-.T] §§ 1056, 1057] Railkoad Rate Regflatioit. [Chap. XXXIV damage to complainants.' In these cases, therefore, the complaint is in the nature of an information and the complainants occupy, in part, at least, the attitude of informers." After citing the decision of the Circuit Court just examined, he continued : " The same principle applies in a case like the present before this Commission. The complainants represent ' the public at large ' as well as themselves. The public interested includes consignees, aonsumers and others, as well as shippers and producers or manufacturers." And see to the same effect Chicago Live Stock Exchange V. Chicago G. W. R. R., 10 I. C. C. Rep. 428 (1905). A forliori the fact that others associated with the complainants are acting illegally will not affect the validity of the complaint. Thus the fact tha^ the members of a corporation organized to promote the market- ing of live stock at a, given city are violating the anti-trust law will not prevent the corporation from maintaining a proceeding to correct an un- reasonable freight rate on live stock shipped to such city. Cattle Raisers' Assoc. V. Fort Worth & D. C. R. R., 7 I. C. C. Rep. 513 (1900). So the fact that a certain association constitutes an illegal monopoly will not affect the right of certain members of the association, constituting but a portion of its membership, to complain. Tift v. Southern R. R., 10 I. C. C. Rep. 548 (1905). § 1056. Proper parties defendant. Where a through rate is in question, all the carriers participating in the rate are proper parties, and may be joined as defendants. Warren-Ehret Co. V. Central R. R., 8 I. C. C. Rep. 598 (1900) ; Cattle Raisers' Assoc, v. Chicago, B. & Q. R. R., 10 I. C. C. Rep. 83 (1904) ; Texas & P. R. R. v. Interstate Commerce Com., 162 U. S. 197, 40 L. Ed. 940, 16 Sup. Ct. 666; 5 Int. Com. Rep. 405 (1896). § 105T. Necessary parties defendant. All carriers whose appearance is necessary to settle the controversy must of course be present. Riddle v. Pittsburgh & L. E. R. R., 1 Int. Com. Rep. 773, 1 I. C. C. 490 (1888); Michigan Congress Water Co. v. Chicago & G. T. R. R., 2 Int. Com. Rep. 428, 2 I. C. C. 594 (1889). And no carrier can be affected by the order of the Commission unless he was a party to the proceeding. Poughkeepsie Iron Co. v. New York C. & H. R. R. R., 3 Int. Com. Rep. 248, 4 I. C. C. 195 (1890). The reason for securing the appearance of all interested carriers is clear. The reasonableness of rates cannot be fairly determined in a proceeding to which some of the parties responsible for such rates are not parties. New Orleans Cotton Exch. v. Cincinnati, N. 0. & T. P. R. R., 2 Int. Com. Rep. 289, 2 I. C. C. 375 (1888); Michigan Congress Water Co. v. Chicago & G. T. R. R., 2 Int. [958] Chap. XXXIV] Peoceduee. [§§ 1058, 1059 Com. Rep. 428, 2 I. C. C. 594 (1889} ; Kentucky & I. Bridge Co. v. Louis- ville & N. R. R., 2 Int. Com. Rep. 102, 2 I. C. C. 162 (1888). " When complainants desire to test the justice or legality of the through rates from Frankfort to New York, the necessity of bringing in the parties who make the rates, not for forty-six miles merely but for the whole dis- tance, is obvious. They must be brought in, first, because they have a right to be heard, and second, because an order made and purporting to control their action when they were not parties would be improper on its face, and in a, legal sense ineffectual. If such an order could have any effect as against the initial road, it would only be to prevent its agents naming to shippers when they called for it an aggregate through rate; it would not prevent its making the same rate as now to South Wanatah, nor preclude the connecting road from making rates independently from South Wanatah eastward." Allen v. Louisville N. A. & C. R. R., 1 Int. Com. Rep. 621, I I. C. C. 199 (1887). So where a leased road is made the party defendant, the operating road should be added as a party. Boyer v. Chesapeake, 0. & S. W. Ry., 7 I. C. C. Rep. 55 (1897). § 1058. Supervening receivership. The fact of a receivership for a defendant carrier subsequent to com- plaint should not interfere with the progress of a proceeding brought merely for the purpose of railway regulation. Trammell v. Clyde Steamship Co., 4 Int. Com. Rep. 120, 5 I. C. C. 324 (1892). Or for violations of the act in general. Troy Board of Trade v. Alabama Midland Ry., 4 Int. Com. Rep. 348, 6 L C. C. 1 (1894). § 1059. One of several joint parties. But it is not necessary that all carriers should be joined as defendants who would be proper parties to the proceedings. Thus where a complaint is made of rates fixed by an association of carriers, it is not necessary to join all the carriers in the association; the one carrier against which the particular complaint is directed may be the only defendant. Page v. Delaware, L. & \V. R. R., 6 I. C. C. Rep. 548 (1896). But see Minneapolis Chamber of Commerce v. Great Northern Ry., 4 Int. Com. Rep. 230, 5 I. C. C. 571 (1892). So a railroad company which participated in through rates is not a necessary, even if it is a proper, party to a proceeding by the Interstate Commerce Commission against another company for disobedience of an order of the Commission in the matter of such ratts. Texas & P. 11. Co. V. Interstate Commerce Commission, 162 U. S. 197, 40 L. Ed. 940, IG Sup. Ct. 666, 5 Int. Com. Rep. 405 (lSI)(i). And one or more of several connecting carriers need not be made parties to a proceeding before the Interstate Commerce Commission against another connecting carrier for [959] § 1060] EaileoAd Rate Reuulation. [Ckap. XXXIV unlawful discrimination in rates between places wholly on its own line as compared with the through rate over the connecting lines. Daniels v. Chi- cago, R. I. & P. R. R., 458, 6 l.C. C. Rep. 458 (1895). See to the sama effect Independent Relief Assoc, v. ^^'estern N. Y. & P. R. R., 6 I. C. C. Rep. 378 (1895). So where one railroad company owns a eontrollins; interest in a subsidiary company while service of complaint on the con- trolling company may not be legal service upon a subsidiary company, it does in fact, for all practical purposes, inform the other company of the proceedings. Mayor and City Council of Wichita v. Atchison, T. & S. F. R. B., 9 I. C. C. Rep. 534 (1903). But it is sometimes inconvenient to get all the carriers before the Com- mission at the same time; and a hearing of a complaint against one of a number of connecting carriers may be the only practical thing. So in an early proceeding to correct a classification by the initial carrier of freight which, before reaching its destination, must pass over the roads of several carriers, it was stated by the Commission that all such carriers should be made parties; yet where the initial carrier alone is made defendant, it was held that the proceeding was not therefore defective. Hurlburt v. Lake Shore & M. S. R. R., 2 Int. Com. Rep. 81, 2 I. C. C. 122 (1888). In a case soon after decided the Commission in a similar case said that an order might issue against tlie respondents, and the cause be held for the purpose of bringing such other carriers into it to be proceeded against unless they comply with the order. Bates v. Pennsylvania R. R., 2 Int. Com. Rep. 715, 3 I. C. C. 435 (1889). And this procedure is now well settled. Thus while a railroad company operating its road as part of a through line in connection with other carriers, defendants in a case brought to test the legality of a through charge over such line, is a proper party, it is not a necessary party to the proceeding. Warren-Ehret Co. v. Central R. R.. 8 I. C. C. Rep. 598 (1900) ; and in proceedings to determine the reasonable- ness of a through rate as augmented by an alleged unlawful terminal charge, all the carriers participating in the through rate are not necessary parties ; the only necessary parties defendant, are the carriers who retain the term- inal charge for their own use. Cattle Raisers' Assoc, v. Chicago, B. & Q. R. R., 10 I. C. C. Rep. 83 (1904). § 1060. Parties must have an interest. Only persons having some legal interest in the controversy can be joined as parties defendant. For this reason the receiver of a railroad company is not, after his discharge, either a proper or necessary party defendant to an action for a rebate of freight under a contract made by him. He is not personally liable on contracts officially made by him; and his official con- nection with the controversy having ceased he is not interested. Bayles v. Kansas Pacific R. R., 13 Colo. 181, 2 Int. Com. Rep. 643 (1889). [960] C!hap. XXXIV] Pkoceduee. [|§ 1061-1064 § 1061. Intervening parties. It is not necessary for a carrier to be made a party defendant in order to secure a hearing before the Commission; all persons having an interest in a question pending before the Commission may appear when the case is submitted, without being made formal parties. Hurlburt v. Lake Shore & M. S. E. R., 2 Int. Com. Rep. 81, 2 I. C. C. 122 (1888). TOPIC D OEDEE OF PEOCEDUEE, [See Rules in Appendix.] § 1062. Default. The petition will be dismissed if the complainant fails to appear at the hearing. Jackson v. St. Louis, A. & T. Ry., 1 Int. Com. Rep. 599 (1887) ; or if he admits the legality of the defendant's acts. Re Export Trade of Boston, 1 Int. Com. Rep. 25, 1 I. C. C. 24 (1897) ; or totally fails to pro- duce any evidence to prove the issue. Holbrook v. St. Paul, M. & M. R. R., 1 Int. Com. Rep. 323, 1 I. C. C. 102 (1887) ; Leonard v. Union Pacific Ry., 1 Int. Com. Rep. 627 ( 1887 ) ; Rice v. Louisville & N. R. R., 1 Int. Com. Rep. 722 (1888). § 1063. Stay of proceedings. The Commission may in a proper case stay the proceedings and hold the case open until a future time. So where a similar case had been heard by the Commission and an order made and a petition to enforce the order was pending in the courts, the present case was stayed until final determination of the petition in the courts. Southern Paint & G. Co. v. Lake Erie & W. R. R., 6 I. C. C. Rep. 284 (1894). And so where it seemed best the Commission having indicated its view of the question, recommended the carriers concerned to amend their tariffs in accordance with the opinion to expressed, and meanwhile held the case open for future application of the parties. Paine Bros. & Co. v. Lehigh Valley R. R., 7 I. C. C. Rep. 213 (1897) ; and see Rea v. Mobile & 0. R. R., 7 I. C. C. Rep. 43 (1897). § 1064. Continuance for settlement. Where a carrier at the hearing agrees to conform to the desires of the Commission, no order will be made at the time, but the case will be con- tinued to give the carrier an opportunity to remove the cause of complaint. Hot Springs v. Western N. C. R. R., 1 Int. Com. Rep. 316 (1887) ; Hol- brook V. St. Paul, M. & M. Ry., 1 Int. Com. Rep. 323, 1 I. C. C. 102 (1887) ; Re Alleged Unlawful Transportation Charges, 6 I. C. C. Rep. 624 (1896). [961] §§ 1065-1067] Eaileoad Eate Eegulation. [Chap. XXXIV TOPIC E EVIDENCE Al>rD BUEDEN OF PEOOF. [See Appendix.] § 1065. Testimony on both sides should be introduced. It is not proper for railroad companies' to withhold the larger part of their evidence from the Interstate Commerce Commission, and first adduce it in the Circuit Court in proceedings by the Commission to enforce its order; but the purposes of the act of Congress to regulate commerce call for a full inquiry by the Commission in the first instance. " The Com- mission is an administrative board, and the courts are only to be resorted to when the Commission prefers to enforce the provisions of the statute by a direct proceeding in the court, or when the orders of the Commission have been disregarded. The theory of the act evidently is, as shown by the provision that the findings of the Commission shall be regarded as prima facie evidence, that the facts of the case are to be disclosed before the Commission. We do not mean, of course that either party, in a trial in the court, is to be restricted to the evidence that was before the Commis- sion, but that the purposes of the act call for a full inquiry by the Com- mission into all the circumstances and conditions pertinent to the questions involved." Shiras, J., in Cincinnati, N. 0. & T. P. R. R. v. Interstate Commerce Commission, 162 U. S. 184, 40 L. Ed. 935, 16 Sup. Ct. 700, 5 Int. Com. Rep. 391 ( 1896) . See Spartanburg Board of Trade v. Richmond & D. R. R., 2 Int. Com. Rep. 193, 2 I. C. C. 304 (1888). § 1066. Acts of Commission need not be proved. Contracts and tariffs filed with the Commission under the Act to Regu- late Qommerce, § 6, may be considered, although not specifically introduced in evidence on the hearing. Boston Fruit & P. Exch. v. New York & N. E. R. R., 3 Int. Com. Rep. 493, 4 I. C. C. 664 (1891) ; and see Re Rates and Charges on Food Products, 3 Int. Com. Rep. 151, 155, 4 I. C. C. 116 (1890). I 1067- Rules of evidence. The ordinary rules of evidence are enforced in proceedings before the Commission. Thus the rule as to parol evidence appears to be enforced. So terms of art, or terms peculiar to any occupation or business, used in a classification sheet to designate the product of a particular employment, are supposed to be understood in that employment; and it is not competent for railroad experts, when the meaning of the classification is questioned, to testify in what sense they are understood in classification circles. Hurl- burt v. Lake Shore & M. S. R. R., 2 Int. Com. Rep. 81, 2 I. C. C. 122 (1888). On the same general principle, unauthorized declarations of a depot agent, implying that a tank car which has returned from one long journey [962] Chap. XXXIV] Peoceduee. [§ 1068 18 in a safe condition to be loaded and started on another long run. are not binding upon the railway company. Michigan Congress Water Co. v. Chicago & G. T. R. R., 2 Int. Com. Rep. 428, 2 I. C. C. 594 (1889). § 1068. Privilege against self-crimination. A witness is protected by the constitutional provision from being com- pelled to disclose the circumstances of his offense, or the sources from which or the means by which evidence of its commission, or of his connection with it, may be obtained or made eilectual for his conviction. A statutory enactment must afford absolute immunity against future prosecution for the offense to which a criminating question relates, in order to supplant the constitutional privilege of a person to refuse to be a witness against him- self; and the provision of United States Revised Statutes, § 860, that the evidence of a person shall not be used against him in any proceeding for a crime or penalty or forfeiture, does not take away the constitutional privi- lege of a person that he shall not be compelled in any criminal case to be a witness against himself. So in an investigation by a grand jury of alleged violations of the Act of Congress to Regulate Commerce of February 4, 1887, against a, railway company, a person engaged in commission business is privileged, under U. S. Const. 5th amend., from answering as a witness as to whether he had obtained a rate of transportation of grain on any railroad coming from a point outside of the State, less than the tariff or open rate, and questions of a similar character, if he declines to answer on the ground that his answer might tend to criminate him. Counselman v. Hitchcock, 142 U. S. 547, 35 L. Ed. 1110, 12 Sup. Ct. 195, 3 Int. Com. Rep. 816 (1891). As a. result of this decision, the act above recited was passed; and it was held that the constitutional guaranty of protection against being com- pelled in any criminal case to be a witness against one's self is sufficiently satisfied by the provision of the act. Brown v. Walker, 161 U. S. 591, 40 L. Ed. 819, 16 Sup. Ct. 644, 5 Int. Com. Rep. 369 (1896). It was argued that the statute did not fully protect the witness, since his testimony might subject him to infamy and disgrace; but the court held that the fact that a witness cannot be shielded by statute from the personal disgrace or oppro- brium attaching to the exposure of his crime does not render a statute exempting him from prosecution therefor insufficient to satisfy the constitu- tional guaranty of protection against being compelled to be a witness, against himself. " A person who commits a criminal act is bound to con- template the consequences of exposure to his good name and reputation, and ought not to call upon the courts to protect that which he has himself esteemed to be of such little value. The safety and welfare of an entire community should not be put into the scale against the reputation of x self-confessed criminal, who ought not, either in justice or in good morals, to refuse to disclose that which may be of great public utility, in order that [963] § 1069] Eaileoad Eate Regulation. [Cbap. XXXIV his neighbors may think well of him. The design of the constitutional privilege is not to aid the witness in vindicating his character, but to protect him against being compelled to furnish evidence to convict him of a criminal charge. If he secure legal immunity from prosecution, the pos- sible impairment of his good name is a penalty which it is reasonable he should be compelled to pay for the common good. If it be once conceded that the fact that his testimony may tend to bring the witness into disre- pute, though not to incriminate him, does no entitle him to the privilege of silence, it necessarily follows that if it also tends to incriminate, but at tha same time operates as a pardon for the offense, the fact that the disgrace remains no more entitles him to immunity in this case than in the other." It was farther argued that the immunity did not extend to prosecutions in State courts. The court expressed the opinion that the statute would aflford protection even in the State courts; but even if it did not the con- stitutional requirement would not extend to the case. The bare possibiliy that by disclosure a witness may be subjected to the criminal laws of some other sovereignty, and that he may be put to the annoyance and expense of pleading his immunity by way of confession and avoidance, notwith- standing the law has given him immunity from prosecution therefor, is not sufficient to render such immunity insufficient to satisfy the constitutional guaranty of protection against being compelled to be a witness against himself. On the whole case, therefore, the Supreme Court held that a person could be compelled to answer. " If, as was justly observed in the opinion of the court below, witnesses standing in Brown's position were at liberty to set up an immunity from testifying, the enforcement of the interstate commerce law or other analogous acts, wherein it is for the interest of both parties to conceal their misdoings, would become impossible, since it is only from the mouths of those having knowledge of the inhibited con- tracts that the facts can be ascertained. While the constitutional pro- vision in question is justly regarded as one of the most valuable preroga- tives of the citizen, its object is fully accomplished by the statutory immu- nity, and we are therefore of opinion that the witness was compellable to answer." § 1069. Production of books and papers. The rules of the Commission for the granting of a subpoena duces tecum are thus explained by the Commission. In the courts of the United States the practice appears to be for the application for a subpoena duces tecum to be made to the court, or the judge thereof, by petition supported by affi- davit, unless the petition be the official statement of a district attorney, or other prosecuting public officer, of the facts therein alleged, and the facts set out in the petition must describe the books or papers called for with [964] Ohap. XXXIV] Procedure. [§ 1069 that degree of certainty which is practicable, considering all the circum- stances of the case, so that the witness may be able to know what is wanted of him, and to have the books and papers at the trial, in order that they may be used if necessary before the tribunal in which the pro- ceeding is pending. United States v. Babcock, 3 Dill. C. C. 566. In section 869 of the Revised Statutes of the United States, a prima facie case must be made to the effect that the " paper, writing, written instrument, book or other document is in the possession or power of ths witnesses, and that the same if produced will be competent and material evidence for the party applying therefor," before the subpoena duces tecum is issued. In proceedings between parties where it is sought to compel parties who are not carriers subject to the act, or who are strangers to the proceed- ings, to produce books, papers, or documents, a proper rule is for an ap- plication to be made in writing to the Commission specifying, as nearly as may be, the books, papers, or documents, for the production of which the subpoena duces tecum is desired, accompanied by an affidavit that the books, papers, or documents described, are in the possession of the witness, or under his control, and setting forth facts which make a prima facii case that these contain evidence that is material and necessary to the party seeking their production, in the pending proceeding. Such a rule will not only conduce to the proper dispatch of business, and to the ends of justice, but it will guard the issue of such process against a latitude that may be useless or oppressive. Witnesses as well as parties, and fre- quently strangers, have rights in all such matters, and any rule upon the subject must be such as will have a due regard for the rights of all in- terested, while at the same time it reaches, with proper dispatch, the • ends of justice, and the rule thus indicated is one of substance and not mere form. The test of such an application for the compulsory production of book^, papers and documents is: Does it make a prima facie case that they are in the possession or under the control of the witnesses, what they are by name, description, or such reference to them or to their contents as will indicate what said books or papers are, no matter by what name they may be called by those making or holding them, and setting forth facts which show that the same, if produced, will be competent and material evidence for the party applying therefor ? Rice v. Cincinnati, W. & B. R. R., 2 Int. Com. Rep. 584, 3 I. C. C. 186 (1889). An application to the Interstate Commerce Commission for subpoenas duces tecum may be denied, as applicable to contracts and papers of third persons not before the Commission, on the ground of injustice that might be done such persons. Haddock v. Delaware, L. & W. R. R., 3 Int. Com. Rep. 302, 4 I. C. C. 206 (1891). [965] .§ lOYO] Eaileoad Eate Eegulation. [Cbap. XXXIV § 1070. Order to carrier to produce books. Dififerent principles, however, apply to the ease where the Commission is asked to order production of books by the carrier. " The twelfth section of the Act to Regulate Commerce contemplates that ' the books ' of the carrier shall be admissible' in evidence for whatever light they will throw upon the transactions in question, as much so aa the tariffs, schedules, rate sheets, contracts, or agreements the carrier may have made bearing in any way upon any of such transactions. These books, whether made up from shipping tickets, way bills, expense bills, or otherwise, are supposed to give the exact particulars of the consignment, showing tlie weight, rate, and amount of charges to be paid to the company's agent, and are put in this enduring form at the time of the consignment, as part of the transac- tion, upon rates that the law requires to be open and public, and thus they give a history of the details of the transaction. The relation that these books bear to every such transaction, and the attitude that those occupy in making and keeping them, under such circumstances, not only to the shipper and consignee, but to the public, would seem to fairly indicate that the rule as to a prima facie showing for their production when necessary to be used as evidence in a pending proceeding, to which the car- rier is a party, should for obvious reasons not be as stringent as in the ease of parties who occupy no such attitude or , relation to the transactions, or who are strangers to the proceedings. It appears to us to be suffi- cient in such a, case for the application to indicate in a general way what books of the carrier it is desired should be produced, and that there is reason to believe, and that the applicant does believe, that in the course of the hearing they will become of service on account of the light they will throw upon the questions in controversy in the proceeding, and as an evidence of good faith in making the application, the applicant should make an affidavit as part of the application, that such application is made in good faith, and not for the purpose of vexing or harassing the defend- ant, and that, generally speaking, upon such a showing as this the pro- cess should issue for the production of the books, unless the number of books called for should be so large, or from other exceptional circum- stances, the Commission should order the testimony to be taken at such place as would avoid oppression in producing the books at a far-distant hearing, and expedite the progress of the investigation. We have seen cases in our experience where carriers, at the instance of complaining pe- titioners, were required to produce their books at a distance of hundreds of miles for the purposes of evidence at a hearing and when thus produced were not even opened by those at whose earnest call they were brought; and it would seem that there ought to be some safeguard in the shape of a rule," Bragg, Commissioner, in Rice v, Cincinnati W. & B. R. R., 2 Int. Com, Rep, 584, 594, 3 I, C. C. 186 (1889). [966] Ohap. XXXIV] Peoceduue. [§§ 1071, 1072 § 1071. Methods of avoiding inconvenience of producing all books. In order to avoid the inconvenience indicated at the end of the pre- ceding section, various modes of procedure have been suggested by the Commission. The parties might, for example, take depositions, by con- sent, in advance of the hearing; or witnesses might be subpoenaed from the different companies proceeded against, and a notice served with the subpoena requiring the witness to furnish the published rates and tarifTs of such company, for a specified period, and also requiring them to furnish statements of the actual charges made and car facilities furnished, during such period, to the persons named in the application, if different from the published tariffs and schedules. The Commission, having suggested these modes of procedure, added : " If a railroad company, or its officers, should refuse to furnish the proper evidence from its books in some such reason- able manner as is here indicated, it might then become necessary to resort to harsher proceedings, either by an examination of its books by a rep- resentative of the Commission, or by requiring the production of tha books by compulsory process, and if need be, through the exercise of the authority of the courts, as provided in the statute." Bragg, Commis- sioner, in Rice v. Cincinnati, W. & B. R. R., 2 Int. Com. Rep. 584, 595, 3 I. C. C. 186 (1889). He added, however, that no railroad had yet refused to exhibit its books, and a petitioner would doubtless have no difficulty in obtaining any material and proper evidence in either of the modes indicated. § 1072. Petitioner thus gets all material and proper evidence. The commissioner continued : " The documentary evidence called for from the books of the defendants, omitting such portions of it as we indi- cate to be immaterial and unimportant, according to what its import may be, may have a verj- legitimate bearing upon many, if not all, of the ques- tions involved in these proceedings. They may be the best and only evi- dence that can be obtained upon some of these issues, and whatever in- formation, if any, they contain upon any of these subjects the defendant carriers ought not to hesitate to furnish, and if they refuse to do this, upon a proper application, they will of course be compelled to do so by due process of law. " Every purpose, however, that can be reached in these proceedings can be attained by proving the rates actually charged, if there were any such, to certain shippers or consignees that were different from the published tariff rates, or .the preferential facilities, if there were any such, that were furnished by the defendants to .some shippers or consignees, and not to others, or the comparative rates on the different commodities named in the complaints, and to designated points. We do not see the neces- sity or importance of showing, in all the minuteness of detail specified [n [967] §'§ 1073, 1075] Raileoad Eate Eegulation. -{Chap. XXXIV the application, the innumerable shipments over the various lines that were made for a period of many years before the Act to Regulate Com- merce took eflfect, as well as since that date. ... It seems to us suffi- cient for all the purposes of these eases to show the rates published, tha rates actually charged, and the facilities furnished from and to desig- nated points since the Act to Regulate Commerce went into effect, and, for whatever light these may throw upon the question of the reasonableness and justness of the rates, and the fairness of the facilities afforded, by way of comparison, what these were for a reasonable time— for example, a period of twelve months before the Act to Regulate Commerce went into effect." Bragg, Commissioner, in Rice v. Cincinnati, W. & B. R. R., 2 Int. Com. Rep. 584, 595, 3 I. C. C. 186 (1889). § 1073. Examination of witnesses upon prepared statements. The usual procedure is for witnesses who are officers and agents of the carriers to come prepared with sworn statements taken from the books as to what they actually show. Examination and cross-examination verifies these statements and shows what supplements, if any, they need; these sworn supplements are furnished, and if all this is not found suffi- cient, the books are produced. If the need of such statements is developed in the course of the hearing, they are prepared and furnished. This prac- tically satisfies the parties without the burden and expense to the car- riers which an actual production of all the books would cause. Rice v. Cincinnati, W. & B. R. R., 2 Int. Com. Rep. 584, 595, 3 I. C. C. 186 (1889). § 1074. Hearing held where books are kept. If a production of the books is necessary in any case, the Commission would be disposed to hold the hearing, or at least order the testimony to be taken, at such place as would reduce the trouble and inconvenience, " for it must be apparent that the mere labor of searching out the entries in these books and getting them together from the vast accumulations of a railroad office, running through long periods of time, would be enor- mous, and that their production at a far distant point, for the purposes of a hearing, in indefinite number and quantity, such as are called for by this application, might be unjustly oppressive, as well as very seriously inconvenient." Bragg, Commissioner, in Rice v. Cincinnati, W. & B. R. R., 2 Int. Com. Rep. 584, 595, 3 I. C. C. 186 (1889). § 1075. Adverse interest of witnesses not to be considered. "In proceedings like these, which are judicial in their nature, and fairly governed by the rules and principles of law we have stated, it could not be said to be a sufficient excuse for making a preliminary order at [968] Chap. XXXIV] Peocedtjbe. [§ 1076 this stage of the proceedings for a general production of books, papers, and documents, such as is here asked for, that petitioner is apprehensive that witnesses might be unfriendly, and refuse to answer proper ques- tions, or to give proper information. It is not to be assumed in advance that any railroad officer or agent, any more than any other witness, will refuse to respond to any question put to him, unless upon the advice of the counsel of the company that the question is improper. The proba- bility would seem to be that the testimony of witnesses (taken at the railroad offices) would be as fully brought out by deposition, as at the open sessions of the Commission, for counsel would know very well that nothing was to be gained by giving improper advice in any spirit of liti- gious antagonism, and that the very refusal to testify freely might con- stitute a valid ground for compulsory proceedings, such as in the present state of the ease would be unwarranted." Bragg, Commissioner, in Rice V. Cincinnati, W. & B. R. R., 2 Int. Com. Rep. 584, 596, 3 I. C. C. 188 (1889). § 1076. Rights of parties must be preserved. " But while the defendants are entitled to have, as they must receive, the protection that the law affords against oppressive and unwarranted orders, for wh.at has not yet been shown to be the necessary production of their books and papers in these proceedings, it is only proper to state tliat the petitioner who is here challenging an investigation of their rates and methods, in the course of legal procedure, has rights under the law for the production of evidence, material and necessary, in relation to his complaints, if it exists in their books and records, which are entitled to equal protection and assertion. In obtaining such evidence, if it exists, he is not to be burdened with methods of procedure oppressively expensive to him, and which unnecessarily delay the investigation, for if his com- plaint should turn out to be warranted to any considerable extent, then all such unnecessary delays cannot be otherwise than ruinously injurious to him, and to others who refine and ship coal oil, as he does, in barrels; nor can the fact be overlooked that if his complaints are not well founded it is peculiarly within the power of defendants who are carriers to show it without any great or expensive delays about it. To any extent that they can fairly and Justly save time, labor, or expense to complainant, or to their companies, by giving to him, in response to any calls he may make, statements of facts shown in their books, records, or files, which may probably have importance on the hearing, the officers and agents of the respondents under the direction of respondents ought to give such state- ments, and ought to do so as promptly as may be found reasonably prac- ticable. In other words, they ought to demonstrate a willingness to fa- cilitate the investigation instead of assuming an attitude that may tend at every step to embarrass the proceedings. It seems also to us that in [969] § 1077] Eaileoad Eate Eegdlation. [Chap. XXXIV these cases, as in others that have been pending before us, that the influ- ence, eftorts, and co-operation of counsel of the opposing parties might go very far to obviate expense and delay in all such matters as the mere pro- duction of statements of facts from entries in books and records, about the materiality and competency of which there can be no serious question. Much unnecessary controversy, inconvenience and delay might well be avoided in the first instance, as well as in subsequent stages of proceed- ings, if carriers would exhibit without technical objection, what their books show in reference to a transaction in question, to any one who calls for the information in good faith, believing, perhaps erroneously, that it is, or may be, important to his interests, and when the application is seasonably and properly maae, with a due regard for the convenience of the carrier's agents and officers. The instances are numerous in which it would probably put the controversy at an end, or, if not, that the party would not then trouble the carrier for the production of the books. Such books, made up and kept as we have stated, in so far as they chronicle current rates, facilities fxirnished, or the general movements of freight, are in the nature of semi-public records. " If parties and their counsel should follow the rules we have indicated, and adopt the suggestions we have made, we have no doubt that the ends of justice will be reached thereby with all proper dispatch, and that much inconvenience, expense, and delay will be avoided; but if this is not done, and a prima facie case is made by the complainant for the production of books, papers, tariffs, contracts, agreements, and documents relating to the matters under investigation in these proceedings, they will have to be produced; or, if during the course of these investigations, the evidence adduced shall show that any books, papers, tariffs, contracts, agreements, and documents relating to the matters in controversy in these proceed- ings are material and competent evidence, and needed for the purposes of the investigation, that itself will be a sufficient showing for their pro- duction, and they will have to be produced, unless counsel for the oppos- ing parties shall agree that sworn statements of the facts they contain bearing upon the questions involved may be prepared and used as evi- dence in lieu of them." Bragg, Commissioner, in Rice v. Cincinnati, W. & B. R. R., 2 Int. Com. Rep. 584, 596, 3 I. C. C. 186 (1889). § 1077- Presumptions. Voluntary continuance of u given rate for a long time by a carrier, while not conclusive, creates a presumption that the rate is reasonable. Re Export & Domestic Rates, 7 I. C. C. Rep. 214 (1897) ; Holmes v. South- ern R. R., 8 I. C. C. Rep. 561 (1900) ; National Hay Assoc, v. Lake Shore & M. S. R. R., 9 I. C. C. Rep. 264 (1902). The presumption is in the nature of an admission by the carrier, and therefore exists only in a case where the carrier alters a long-existing rate by raising it. If, on the [970] Cliap. XXXIV] Peoceduee. [§ 1078 other hand, the carrier voluntarily reduces a rate, in the absence of evi- dence of another_ reason for the reduction, it will be presumed that the former rate was unreasonably high. Holmes v. Southern R. R., 8 I. C. C. Rep. 561 (1900). This presumption, however, being based on an admission of the carrier, is confined to cases where the prior rate was established and continued by the voluntary act of the carrier; it does not attach in a case where such rates have been established by carriers in compliance with the decision and order of the Commission. Proctor & Gamble Co. v. Cincinnati, H. & D. R. R., 9 I. C. C. Rep. 440 (1902). A presumption of fact may be raised by the disproportion of two rates upon comparison. So where there is a great disproportion between two rates on the same road, or on different parts of the same line, there is a presumption against the reasonableness of the higher rate. Samuels f. Louisville & N. R. R., 4 Int. Com. Rep. 420 (1893) ; Troy Board of Trade v. Alabama Midland Ry., 6 I. G. C. Rep. 1 (1894); James v. Canadian Pac. R. R., 4 Int. Com. Rep. 274, 5 I. C. C. 612 (1893) ; Rea v. Mobile & O. R. R., 7 I. C. C. Rep. 43 (1897). So where certain rates were artifi- cially enhanced by a traffic association for the purpose of carrying out an agreed division of territory betwen railroads, the rates were presumably unreasonable. Freight Bureau v. Cincinnati, N. 0. & T. P. R. R., 6 I. C. C. Rep. 195 (1894). In the same way disproportion between rates on similar commodities will lead to a presumption against the higher rate. So where grain and grain products are classified alike, they are presump- tively entitled to equal rates; and if a. difference is made by a carrier, it assumes the burden of sustaining it by satisfactory evidence. McMorran V. Grand Trunk Ry., 2 Int. Com. Rep. 604, 3 I. C. C. 252 (1889). § 1078. Burden of proof. Complainant has burden of establishing his case. Where a claim for reparation is made in it complaint of unreasonable railroad rates, the bur- den of proof is on complainant te prove the rates unreasonable. Harding V. Chicago & A. R. R., 1 Int. Com. Rep. 375 (1887) ; Perry v. Florida, C. & P. R. R., 3 Int. Com. Rep. 740, 5 I. C C. 97 (1891) ; Brownell v. Co- lumbus & C. M. R. R., 4 Int. Com. Rep. 285, 5 I. C. C. 638 (1893). He has also the burden of showing what a reasonable rate would be, so as to show the excess. Holmes v. Southern R. R., 8 I. C. C. Rep. 561 (1900). And so a railroad company which seeks to release itself from its agreement to deliver goods for a specified freight rate, on the ground that the con- tract is illegal because the rate specified is less than that fixed by the In- terstate Commerce Commission, has tlie burden of proving that the con- tract was necessarily unlawful, and not merely that it might have been so. Southern Pacific Co. v. Redding (Tex. Civ. App.), 43 S. W. 1061 (1897). [971] §§ 1079', 1080] Railroad Rate Regulation. [Chap. XXXIV But in complaints founded on the fourth section of the act when the complainant shows a greater rate for a short haul the burden of proof is on the carrier to justify any departure from the general rule prescribed by the statute by showing that the circumstances and conditions attending the long and short hauls respectively are substantially dissimilar. Re Louisville & Nashville K. Co., 1 Int. Com. Rep. 278, 1 I. C. C. 31 (1887) ; Spartanburg Board of Trade v. Richmond & D. R. R., 2 Int. Com. Rep. 193, 2 I. C. C. 304 (1888) ; Re Chicago, S. P. & K. C. R. R., 2 Int. Com. Rep. 137, 2 I. C. C. 231 (1888); Raworth v. Northern Pacific R. R., 3 Int. Com. Rep. 857, 5 I. C. C. 234 (1892) ; Phillips v. Louisville & N. R. R., 8 L C. C. Rep. 93 (1898). TOPIC F FINDING OF THE COMMISSION. § 10Y9. Dismissal when order unnecessary. When upon investigation of a complaint the carrier finds that the griev- ance once existed, but has been removed by the carrier, the petition will be dismissed. Fulton v. Chicago, S. P. M. & D. R. R., 1 Int. Com. Rep. 375, 1 I. C. C. 104 (1887) ; Lincoln Board of Trade v. Union P. R. R., 2 Int. Com. Rep. 101, 2 I. C. C. 229 (1888) ; Harris v. Duval, 2 Int. Com. Rep. 514 (1889) ; Pennsylvania Co. v. Louisville, N. A. & C. R. R., 2 Int. Com. Rep. 603 (1889) ; Rawson v. Newport News & M. V. R. R., 2 Int. Com. Rep. 626 (1889) ; Michigan Box Co. v. Flint & P. M. R. R., 6 I. C. C. Rep. 335 ( 1895 ) ; Re Tariffs & Classifications of Pa. R. R., 7 I. C. C. Rep. 177 (1897); Boyer v. Chesapeake, 0. & S. W. Ry., 7 I. C. C. Rep. 55 (1897)"; Paine v. Lehigh Valley R. R., 7 L C. C. Rep. 218 (1897); Montell V. Baltimore & 0. R. R., 7 I. C. C. Rep. 412 (1897) ; Wichita v. Atchison, T. & S. F. R. R., 9 I. C. C. Rep. 507 ( 1903 ) ; Chicago Live Stock Exchange v. Chicago G. W. Ry., 10 I. C. C. Rep. 428 (1905). This is true though the grievance was removed after the beginning of the litiga- tion. Michigan Box Co. v. Flint & P. M. R. R., 6 I. C. C. Rep. 335 (1895) ; and even after the hearing. Manufacturers & Jobbers' Union v. Minneapo- lis & S. L. Ry., 1 Int. Com. Rep. 630 (1887); Boyer v. Chesapeake, 0. & S. W. Ry., 7 1. C. C. Rep. 55 (1897). Similarly a complaint will be dismissed as to one carrier out of several defendants where it appears that such carrier did not participate in the rates in question. Chicago Live Stock Exchange v. Chicago G. W. Ry., 10 I. C. C. Rep. 428 (1905). § 1080. Reparation. The Act to Regulate Commerce clearly confers authority upon the Com- mission to award damages in eases brought before it. Such an award is simply a recommendation, which can only be enforced by a suit at law [972] Chap. XXXIV] Peoceduee. [§ 1081 aflfording full opportunity for a jury trial. The act in this respect ia constitutional and valid. Cattle Raisers' Assoc, v. Chicago, B. & Q. U. R., 10 I. C. C. Rep. 83 (1904). Under this provision, reparation vpill be. ordered equal to the amount of any overcharge which the Commission finds to have been made. Macloon v. Chicago & N. W. Ry., 3 Int. Com. Rep. 711, 5 I. C. C. 4 (1891) ; Rea v. Mobile & 0. Ry., 7 I. C. C. Rep. ■'55 (1897); Grain Shippers' Assoc, v. Illinois C. R. R., 8 I. C. C. Rep. 158 (1899); Chicago F. P. C. Co. v. Chicago & N. W. Ry., 8 I. C. C. Rep. 316 (1899) ; Roth v. Texas & P. Ry., 9 I. C. C. Rep. 602 (1903) ; Gardner v. Southern R. R., 10 I. C. C. Rep. 342 (1904) ; Pitts v. Atchison, T. & S. F. R. R., 10 I. C. C. Rep. 691 (1905) ; Pitts v. St. Louis & S. F. R. R., 10 I. C. C. Rep. 684 (1905) ; Hope Cotton Oil Co. v. Texas & P. Ry., 10 I. C. C. Rep. 696 (1905). Under the act as first passed the Commission had held that it had no power to consider a claim for damages. Heck v. East Tennessee, V. & G. R. R., 1 Int. Com. Rep. 775, 1 I. C. C. 495 (1888) ; Council v. Western & A. R. R., 1 Int. Com. Rep. 638, II. C. C. 339 (1887); Riddle v. New York, L. E. & W. R. R., 1 Int. Com. Rep. 787, 1 I. C. C. 594 (1888). While the Commission found as a fact that the charges of defendant were in some instances unreasonable, it made no attempt to formulate an order, as it had no power to prescribe the rate that should be put into effect; but it held that complainant might apply to it for reparation in case it should thereafter be compelled to pay rates in excess of those indi- cated. Barrow v. Yazoo & M. V. R. R., 10 I. C. C. Rep. 333 (1904). Reparation may also be awarded for damages caused by other viola- tions of the act besides overcharge; for instance, for failure to furnish cars. Glade Coal Co. v. Baltimore & 0. R. R., 10 I. C. C. Rep. 226 (1904) ; Paxton Tie Co. v. Detroit S. R. R., 10 I. C. C. Rep. 422 (1904). The efi'eet of an advance in through rates after the Supreme Court had dismissed a proceeding to have certain terminal charges declared unjust and unlawful, which dismissal was upon the ground that there had been a, reduction in the through rate greater than the terminal charge, cannot be determined, in a proceeding in the same suit for reparation, as regards territory to which the reduction in the through rate did not apply, but is a, matter for independent inquiry in a new proceeding. Cattle Raisers' Assoc. V. Chicago, B. & Q. R. R., 10 I. C. C. Rep. 83 (1904). § 1081. Proof of damage required. Both the duty to make reparation and the amount of reparation to be made must be established by evidence. If the proof fails to establish either point satisfactorily the suit will be dismissed without prejudice. Freeman v. Atchison, T. & S. F. R. R., 7 I. C. C. Rep. 202 (1897) ; Com- mercial Club of Omaha v. Chicago & N. W. Ry., 7 I. C. C. Rep. 386 (1897) ; Castle V. Baltimore & O. R. R., 8 I. C. C. Rep. 333 (1899). Or the case [973] §:§ 1082, 1083] Eaileoad Rate Ebgulation. [Chap. XXXIV may, in the discretion of the Conimission, be continued for further testi- mony. Business Men's League of St. Louis v. Atchison, T. & S. F. E. E., 9 I. C. C. Rep. 318 (1902); Richmond Elevator Co. v. Pere Marquette E. E., 10 I. C. C. Rep. 629 ( 1905 ) ; Dennison L. & P. Co. v. Missouri, K. & T. Ey., 10 I. C. C. Eep. 337 (1904). So proceedings before the Inter- state Commerce Commission against common carriers for discriminations and preferences will be stayed until final determination by the courts in suits pending therein for the enforcement of an order of the Commission, compliance with which by ea!rriers operating in the territory will remove the discriminations and preferences complained of. Southern Paint & G. Co. V. Lake Brie & W. Ey., 6 I. C. C. Eep. 284 (1894). § 1082. Conditions of granting reparation. No reparation will be granted, though the Commission finds that the rates are unreasonable, unless it be found that the rates were unreason- ,able at the time they were paid. Grain Shippers' Assoc, v. Illinois Cent. R. E., 8 I. C. C. Eep. 158 (1899). Nor where the injury for which repara- tion is asked occurred through the fault of the complainant. Gardner v. Southern R. R., 10 I. C. C. Eep. 342 (1904). Nor where the claim for reparation has already been settled between the parties. Stahl v. Oregon Ey. & Nav. Co., 1 Int. Com. Eep. 314 (1887) ; Sayles v. New York, N. H. & H. R. E., 9 L C. C. Eep. 492 (1903). § 1083. Finding of Commission does not work an estoppel. The proceedings before the Commission not being strictly judicial, the doctrine of estoppel by judgment cannot properly be applied to the find- ings of the Commission. In Toledo Produce Exchange v. Lake Shore & M. S. E. R., 3 Int. Com. Eep^ 830, 5 L C. C. 166 (1892), it was argued by the defendants that the complainant was estopped from maintaining his complaint because in the cases of the Boston Chamber of Commerce against these defendants he was one of the committee appointed by the Chamber of Commerce to prosecute those cases and verified the petitions, and sub- sequently after investigation the Commission dismissed the petitions. Mr. Commissioner McDill said : " The doctrine of estoppel of record does not seem applicable to the case under consideration. It is applied to the reeord and judgment of both general and inferior courts. The Commission is not a court. It is a, special tribunal whose duties though largely ad- ministrative are sometimes semi or quasi-judicial. It is required to inves- tigate and report. The law creating the Commission does not mention its final act as a judgment. It renders no judgment, enters no decree. From these considerations it is not believed that the rule of estoppel by record, at all times technical in character, can be invoked by the defendants. It is true that the conclusive effects of judgments have been accorded and extended to the rulings of certain officials of the general government when [9Y4] Chap. XXXIV] Peoceduke. [§§ 1084, 1085 exercising functions which are judicial in their nature; as to the decisioa of the United States Commissioner of Patents in granting and extending a patent, Providence Rubber Co. v. Goodyear, 76 U. S. Wall. 788, 19 L. Ed. 566; and to the decision of the ConaptroUer of the Currency upon mas- ters within his jurisdiction in respect to the national currency, Casey /. Galli, 94 U. S. 673, 24 L. Ed. 168, it will be found that in such cases the statute contemplated the act of the officer as final, but the whole scope and spirit of the " Act to Regulate Commerce " seems to stamp the report and order of the Commission as in no sense final in the sense that the judgment of a court is final, except where the parties impressed by the wisdom and justice of the order acquiesce therein in cases like those here under consideration. It is therefore held that nothing in the record of the Boston Chamber of Commerce cases, as compared with that of the case under consideration, estops Mr. Kemble from maintaining the complaint made by him." § 1084. Difference of parties. Even if the doctrine of estoppel by" record can ever be applied to the findings of the Commission, it can only be done when the parties are the same. One who appeared before the Interstate Commerce Commission in a representative capacity as a member of a committee of a complaining mercantile society, in proceedings which were dismissed, is not thereby estopped in a similar case brought by him as an individual. Toledo Pro- duce Exeh. v. Lake Shore & M. S. R. R., 3 Int. Com. Rep. 830, 5 I. G. C. 166 (1892). Mr. Commissioner McDill said: "In the Boston Chamber of Commerce cases Mr. Kemble was only related to those cases as a member of that body and one of its committee, while he makes this complaint in- dividually, and as a shipper and dealer in the character of goods, which he alleges is subjected to an unreasonable and unjustly discriminative rate. The character of his relation to the cases, is entirely different. In the one it is representative; in the other individual and personal." § 1085. How far party may reopen case. It is generally true that the findings of the Commission will not con- clude the unsuccessful party for all time. Conditions of transportation vary from time to time, and rates should ordinarily be adjusted to such changed conditions, and it is possible, therefore, that the petitioners may be able to show that a change has taken place so that the contention which was formerly unsuccessful may now be reasonable and just. Rice v. Western N. Y. & P. R. R., 2 Int. Com. Rep. 496, 3 I. C. C. 87 (1889) ; In- terstate Commerce Com. v. Louisville & N. R. R., 73 Fed, 410, 5 Int. Com. Rep. 656 (1896). It is not to be understood, however, that the findings have no binding eflTect whatever. If a matter has once been investigated by the Commis- [975] § 1086] Raileoad Rate Regulation. [Chap. XXXIV sion and a finding made, the same question will not afterwards be dif- ferently decided unless new evidence is presented, even though it arises upon the complaint of other parties. This principle was carefully con- sidered by the Commission in Board of Railroad Commissioners v. Atchi- son, T. & S. r. R. R., 8 I. C. C. Rep. 304 (1899). Mr. Commissioner Prouty said: " In 1890 exactly this question was presented and decided by this Com- mission in the casei of Kauffman Milling Co. v. Missouri P. R. Co., 4 I. C. C. 417, 3 Int. Com. Rep. 400. The territory involved was identical. The differential was the same then as now. The claims of the parties upon that hearing were in no material respect different from those which have been made upon this trial. It did not appear in the present pro- ceeding that any new conditions had come- into existence, or that old con- ditions had been essentially modified. " Questions coming before this body are not of a character that the de- cision in one case is necessarily controlling in all similar cases. Its de- cisions can hardly be said to have the effect of an estoppel, nor is there the same reason for applying the maxim stare decisis which exists in courts of law. Conditions continually vary at different times and in dif- ferent localities. But when in a case like this the relation in freight rates determines where and how business shall be done, the decisions of this Commission fixing or approving a given relation should only be reversed for imperative reasons. Ten years ago this differential was approved. It may well be that since then money has been invested and industries built up upon the strength of that approval. In the absence of some showing that new conditions have intervened, or that the effects of the original holding have been other than were anticipated, we think that that case must control the disposition of this." And upon the precise point litigated and decided the finding may be a complete bar to further proceedings before the Commission. The defend- ant, if the finding is against him, may disregard it, and the question must then be taken to the courts, where the finding is not binding. If the finding is against the complainant it is final; and in any case if the complainant has his option of suit or complaint to the Commission, his appeal to the Commission bars him from suit. So the final judgment in a suit or proceeding before the Interstate Commerce Commission, unreversed and remaining of record in full force and effect, is a bar to an action in the United States Circuit Court brought to recover damages from the same violation of the Act to Regulate Commerce. Riddle v. New York, L. E. & W. R. R., 3 Int. Com. Rep. 230 (1889). § 1086. New petition may be filed. When new conditions have arisen since the original investigation and report of the Commission neither the parties, as has been seen, nor others, [976] Chap. XXXIV] Peoceduee. [§ 1087 are bound by the former finding. It follows that the new conditions need not be presented in a petition for a rehearing; a new petition may be filed, and this would seem to be the better course. This is clearly true where the parties to the new application were not parties to the former complaint; the new parties should file a new complaint, and if upon this new complaint it should appear that any conclusion in the former case so decided has been erroneous, the Commission would feel it to be a duty to correct such conclusion. Re Petition of Toledo Produce Exchange, ii Int. Com. Rep. 412, 2 I. C. C. 588 (1889). § 1087. Reopening a case for rehearing. An application to the Commission to reopen a case for rehearing is ad- dressed to its discretion, like a similar application to a court; and will bj decided upon the same considerations. A petition to reopen a case that has been decided, and for a rehearing, should show prima facie that some material testimony has been overlooked or misapprehended, or some error in the findings of fact or conclusions of law. When the application is iii- suflicient in these respects, and only asks for a rediseussion of the facts and law already considered, with no offer of new evidence that can change the result, being therefore, in substance, that a different conclusion should be reached upon the same facts, the application will be denied. Myers v. Pennsylvania Co., 2 Int.' Com. Rep. 544 (1889). So a, case before the Interstate Commerce Commission will not be re- opened in a supplementary proceeding brought simply to secure reparation, for the purpose of ruling on questions not decided in the original case, where the petition for reparation was not filed until long after the original decision had been rendered and the offending carrier had complied there- with. Rice V. Western N. Y. & P. R. R., 6 I. C. C. Rep. 455 (1895). And after a complaint upon elaborate pleadings and proofs has been heard and determined by the Commission, an application for a rehearing, made only by those who were not parties to the proceeding, will not be granted. Re Petition of Toledo Produce Exchange, 2 Int. Com. Rep. 412, 2 I. C. C. jb8 (1889). The Commission, however, will grant a rehearing if it is in the inter- ests of justice. This may be the case, even though the finding of the Com- mission has been reviewed by the courts. In the case of Page v. Delaware, L. & W. R. R., 6 I. C. C. Rep. 548 (1896), it appeared that the Circuit Court had refused to enforce the original order of the Commission, which found the rates on window shades excessive, on the ground that the order applied to all shades, whereas it ought not to apply to the highest priced shades. The Commission reopened the case, granted a rehearing, modified its order so as to except from it shades valued at more than $6.00 per dozen, and renewed the order with this modification., [977] § 1088] Eaileoad E-ate Eegulation. [Ckap. XXXIV If upon a rehearing of a ease before the Interstate Commerce Commis- sion, additional evidence warrants a, finding contrary to what appeared and was found in the original hearing, the former order may be vacated. Bates V. Pennsylvania R. R., 3 Int. Com. Rep. 296, 4 I. C. C. 281 (1890). The general principle upon which petitions for rehearing would be dealt with was stated by the Commission in the first case of the sort, Rid- dle V. Pittsburgh & L. E. R. R., 1 Int. Com. Rep. 773, 1 I. C. C. 490 (1888), as follows: "When we have patiently and laboriously sifted out all the material facts necessary to fairly and justly present the merits of the controversy, with our conclusions thereon, we have done all that the statute authorizes or requires us to do. The statute deals with the sub- stance of things, and contemplates, as far as this is possible, methods of procedure that are speedy and which come at once to the very right of questions arising in the transportation of persons and freight; and while in its administration we will always cheerfully and carefully examine and consider all applications for rehearings by a, party to any proceeding decided by us who will point out any errors he may think we may have committed, either of law or fact, with a view to their prompt correc- tion, if found to exist, yet we will not in any proceeding direct a rehear- ing involving the expense to parties of appearing before us for a rear- gument of the case and the further consumption of time on our part, which belongs to the public unless satisfied that such reargument might have the efl'ect of changing the result of what we have already done." § 1088. Form and requisites of petition for rehearing. After a case has been decided by the Interstate Commerce Commission, a petition to open it for further testimony and a rehearing should be veri- fied, and should indicate the nature of the new testimony and its purpose; and although technical rules of procedure are not insisted on, and equi- table considerations largely enter into the question of rates, such an in- formal application would not of itself be considered. But when a ques- tion of general public interest is involved, the Commission, in its own dis- cretion and in furtherance of justice, may open a case to give parties the benefit of a more extended investigation of the same subject matter; and this was done in a case where other parties in the same business had filed similar petitions, and the question was to be thoroughly reconsidered in connection with these other petitions. Rice v. Western N. Y. & P. R. R., 2 Int. Com. Rep. 496, 3 I. C. C. 87 (1889). A petition or motion for rehearing cannot be granted on mere allegation of error in the findings of fact; and such a petition or motion must be supported by proof of new facts or by specifically pointing out facts al- ready in evidence showing prima facie at least that there was such error. Proctor V. Cincinnati, H. & D. R. Ry., 3 Int. Com. Rep. 374, 4 I. C. 0. 87 (1890). [978] CHAPTER XXXV. JUDICIAL REMEDIES. § 1091. Provisions of the statute. 1092. Amendments of 1906. 1093. Jurisdiction and general principles. 1094. Remedy in equity. 1095. Mandamus. 1096. Action for damages. 1097. Criminal prosecution. 1098. Procedure under the Elkins act. 1099. Enforcement of order of the Commission. § 1091. Provisions of the statute. Action for damages. — That in case any common carrier sub- ject to the provisions of this act shall do, cause to be done, or permit to be done, any act, matter, or thing in this Act pro- hibited or declared to be unlawful, or shall omit to do any act, matter, or thing in this Act required to be done, such common carrier shall be liable to the person or persons injured thereby for the full amount of damages sustained in consequence of any such violation of the provisions of this Act, together with a reasonable counsel or attorney's fee, to be fixed by the court in every case of recovery vphich attorney's fee shall be taxed and collected as part of the costs in the case. That any person or persons claiming to be damaged by any common carrier subject to the provisions of this Act may either make complaint to the Commission as hereinafter provided for, or may bring suit in his or their own behalf for the recovery of the damages for which such common carrier may be liable under the provisions of this act, in any district or circuit court of the United States of competent jurisdiction ; but such person or per- sons shall not have the right to pursue both of said remedies, [9Y9] § 1091] Kaileoad Rate Regulation. [Chap. XXXV and must in each case elect which one of the two methods of procedure herein provided for he or they will adopt. In any such action brought for the recovery of damages the court before which the same shall be pending may compel any director, oificer, receiver, trustee or agent of the corporation or company defendant in such suit to attend, appear, and testify in such case, and may compel the production of the books and papers of such corporation or company party to any auch suit ; the claim that any such testimony or evidence may tend to criminate the person giving such evidence shall not excuse such witness from testifying, but such evidence or testimony shall not be used against such person on the trial of any criminal proceeding. (Interstate Commerce Act, sections 8 and 9.) Criminal clauses. — Sec. 10. That any common carrier sub- ject to the provisions of this act, or whenever such common car- rier is a corporation, any director or officer thereof, or any re- ceiver, trustee, lessee, agent, or person, acting for or employed by such corporation, who, alone or with any other corporation, company, person, or party, shall wilfully do or cause to be done, or shall willingly suffer or permit to be done, any act, matter, or thing in this act prohibited or declared to be unlawful, or who shall aid or abet therein, or shall wilfully omit or fail to do any act, matter, or thing in this act reqiaired to be done, or shall cause or willingly suffer or permit any act, matter, or thing so directed or required by this act to be done not to be so done, or shall aid or abet any such omission or failure, or shall be guilty of any infraction of Itis act, or shall aid or abet therein, shall be deemed guilty of a misdemeanor, and shall upon conviction thereof in any district court of the United States, within the jurisdiction of which such offence was com- mitted, be subject to a fine of not to exceed five thousand dol? lars for each offence : Provided, That if the offence for which any person shall be convicted as aforesaid shall be an unlawful discrimination in rates, fares, or charges, for the transportation of passengers or [980] Chap. XXXV] Judicial Eemedies. [§ 1091 property, such person shall, in addition to the fine hereinbefore provided for, be liable to imprisonment in the penitentiary for a term of not exceeding two years, or both such fine and im- prisonment, in the discretion of the court. Any common carrier subject to the provisions of this act, or, whenever such common carrier is a corporation, any officer or agent thereof, or any person acting for or employed by such corporation, who, by means of false billing, false classification, false weighing, or false report of weight, or by any other de- vice or means, shall knowingly and wilfully assist, or shall willingly suffer or permit, any person or persons to obtain transportation for property at less than the regular rates then established and in force on the line of transportation of such common carrier, shall be deemed guilty of a misdemeanor, and shall, upon conviction thereof in any court of the United States of competent jurisdiction within the district in which such of- fence was committed, be subject to a fine of not exceeding five thousand dollars or imprisonment in the penitentiary ■ for a term of not exceeding two years, or both, in the discretion of the court, for each offence. Any person and any officer or agent of any corporation or company who shall deliver property for transportation to any common carrier, subject to the provisions of this act, or for whom as consignor or consignee any such carrier shall transport property, who shall knowingly and wilfully, by false billing, false classification, false weighing, false representation of the contents of the package, or false report of weight, or by any other device or means, whether with or without the consent or con- nivance of the carrier, its agent or agents, obtain transporta- tion for such property at less than the regular rates then estab- lished and in force on the line of transportation, shall be deemed guilty of fraud, which is hereby declared to be a mis- demeanor, and shall, upon conviction thereof in any court of the United States of competent jurisdiction within the district in which such offence was committed, be subject for each offence [981] § 1091] Kaileoad Rate Regulation. [Chap. XXXVj to a fine of not exceeding five thousand dollars or imprisonment in the penitentiary for a term of not exceeding two years, or both, in the discretion of the court. If any such person, or any officer or agent of any auch coi^ poration or company, shall, by payment of mdney or other thing of value, solicitation or otherwise, induce any common carrier subject to the provisions of this act, or any of its officers or agents, to discriminate unjustly in his, its, or their favor as against any other consignor or consignee in the transportation of property, or shall aid or abet any common carrier in any such unjust discrimination, such person, or such officer or agent of such corporation or company, shall be deemed guilty of a mis- demeanor, and shall, upon convictron thereof in any court of the United States of competent jurisdiction within the district in which such offence was committed, be subject to a fine of not exceeding five thousand dollars, or imprisonment in the penitentiary for a term of not exceeding two years, or both, in the discretion of the court, for each offence ; and such person, corporation, or company shall, also, together with said common carrier, be liable, jointly, or severally, in an action on the case to be brought by any consignor or consignee discriminated against in any court of the United States of competent juris- diction for all damages caused by or resulting therefrom. [Inteirstate Oommerce Act, section 10, as amended by sec- tion 2, act of March 2, 1889.] Corporation liable: penalties. — That anything done or omitted to be done by a corporation common carrier, subject to the Act to regulate commerce and the acts amendatory thereof, which, if done or omitted to be done by any director or officer thereof, or any receiver, trustee, lessee, agent, or person acting for or employed by such corporation, would constitute a misdemeanor undef said acts or under this Act, shall also be held to be a mis- demeanor committed by such corporation, and upon conviction thereof it shall be subject to like penalties as are prescribed in said acts or by this Act with reference to such persons, except [982] Chap. XXXV] Judicial Eemedies. [§ 1091 as such penalties are herein changed. The willful failure upon the part of any carrier subject to said acts to file and publish the tariffs or rates and charges as required by said acts or strictly to observe such tariffs until changed according to law, shall be a misdemeanor^ and upon conviction thereof the corporation offending shall be subject to a fine of not less than one thousand dollars nor more than twenty thousand dollars for each offense ; and 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 to the transportation of any property in interstate or foreign commerce by any common carrier subject to said Act to regulate commerce and the acts amendatory thereof 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 thereof, or whereby any other advantage is given or discrimina- tion is practiced. Every person or corporation, whether carrier or shipper, 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 nor more than twenty thousand dollars: Provided, that any person, or any officer or director of any corporation subject to the provisions of this Act, or the Act to regulate commerce and the acts amendatory thereof, or any receiver, trustee, lessee, agent, or person acting for or employed by any such corporation, who shall be convicted as aforesaid, shall, in addidon to the fine herein provided for, be liable to imprisonment in the peniten- tiary for a term of not exceeding two years, or both such fine and imprisonment, in the discretion of the court. Every viola- tion of this section shall be prosecuted in any court of the United States having jurisdiction of crimes within the district in which such violation was committed, or through which the transporta- tion may have been conducted; and whenever the offense 13 [983] § 1091] Eaileoad Rate Regulation. [Chap. XXXYi begun in one jurisdiction and completed in another it may bei dealt with, inquired of, tried, determined, and punished in either jurisdiction in the same manner as if the offense had been actually and wholly committed therein. In construing and enforcing the provisions of this section, the act, omission or failure of any officer, agent, or other person acting for or employed by any common carrier, or shipper, act- ing within the scope of his employment, shall in every case be also deemed to be the act, omission, or failure of such carrier or shipper as w6ll as that of the person. Whenever any carrier files with the Interstate Commerce Commission or publishes a particular rate under the provisions of the Act to regulate commerce or acts amendatory thereof, or participates in any rates so filed or published, that rate as against such carrier, its officers or agents, in any prosecution begun under this Act shall be conclusively deemed to be the legal rate, and any de- parture from such rate, or any offer to depart therefrom, shall be deemed to be an offense under this section of this Act. Any person, corporation or company who shall deliver prop- erty for interstate transportation to any common carrier, subject to the provisions of this Act, or for whom as consignor or con- signee, any such carrier shall transport property from one State, Territory, or the District of Columbia to any other State, Terri- tory, or the District of Columbia, or foreign country, who shall knowingly by employee, agent, officer, or otherwise, directly or indirectly, by or through any means or device whatsoever, re- ceive or accept from such common carrier any sum of money or any other valuable consideration as a rebate or offset against the regular charges for transportation of such property, as fixed by the schedules of rates provided for in this Act, shall in addi- tion to any penalty provided for by this Act forfeit to the United States a sum of money three times the amount of money so re- ceived or accepted and three times the value of any other con- sideration so received or accepted, to be ascertained by the trial court ; and the Attorney-General of the United States is author- [984] Chap. XXXV] Judicial Kembdies. [§ 1091 ized and directed, whenever he has reasonable grounds to be- lieve that any such person, corporation, or company has knovr- ingly received or accepted from any such common carrier any sum of money or other valuable consideration as a rebate or off- set as aforesaid, to institute in any court of the United States of competent jurisdiction, a civil action to collect the said sum or sums so forfeited as aforesaid ; and in the trial of said action all such rebates or other considerations so received or accepted for a period of six years prior to the commencement of the action, may be included therein, and the amount recovered shall be three times the total amount of money, or three times the value of such consideration, so received or accepted, or both, as the case may be. [Act of February 19, 1903 (Elkins Act), section 1, as amended by Act of June 29, 1906, section 2. J Interested persons may be made parties. — That in any pro- ceeding for the enforcement of the provisions of the statutes relating to interstate commerce, whether such proceedings be instituted before the Interstate Commerce Commission or be begun originally in any Circuit Court of the United States, it shall be lawful to include as parties, in addition to the carrier, all persons interested in or affected by the rate, regulation, or practice under consideration, and inquiries, investigations, orders, and decrees may be made with reference to and against such additional parties in the same manner, to the same extent, and subject to the same provisions as are or shall be authorized by law with respect to carriers. [Act of February 19, 1903 (Elkins Act), section 2. J Injunction against violation of the Act. — That whenever the Interstate Commerce Commission shall have reasonable ground for belief that any common carrier is engaged in the carriage of passengers or freight traffic between given points at less than the published rates on file, or is committing any discriminations forbidden by law, a petition may be presented alleging such facts to the Circuit Court of the United States sitting in equity having jurisdiction ; and when the act complained of is alleged [985] §1091] Eaileoad Rate -Regulation. [Chap. XXXV to have been committed or as being cominitted in part in more than one judicial district or State, it may be dealt with, in- quired of, tried, and determined in either such judicial district or State, whereupon it shall be the duty of the court summarily to inquire into the circumstances, upon such notice and in such manner as the court shall direct, and without the formal plead- ings and proceedings applicable to ordinary suits in equity, and to make such other persons or corporations parties thereto as the court may deem necessary, and upon being satisfied of the truth of the allegations of said petition said court shall enforce an observance of the published tariffs or direct and require a discontinuance of such discrimination by proper orders, writs, and process, which said orders, writs and process may be en- forceable as well against the parties interested in the traffic as against the carrier, subject to the right of appeal as now pro- vided by law. It shall be the duty of the several district at- torneys of the United States, whenever the Attorney-General shall direct, either of his own motion or upon the request of the Interstate Commerce Commission, to- institute and prosecute such proceedings, and the proceedings provided for by this Act shall not preclude the bringing of suit for the recovery of dam- ages by any party injured, or any other action provided by said Act approved February fourth, eighteen hundred and eighty- seven, entitled an Act to regulate commerce and the acts amend- atory thereof. And in proceedings under this Act and the acts to regulate commerce the said courts shall have the power to compel the attendance of witnesses, both upon the part of the carrier and the shipper, who shall be required to answer on all subjects relating directly or indirectly to the matter in contro- versy and to compel the production of all books and papers, both of the carrier and the shipper, which relate directly or indirectly to such transaction ; the claim that such testimony or evidence may tend to criminate the person giving such evidence shall not excuse such person from testifying or such corporation producing its books and papers, but no person shall be prose- [98G] Chap. XXXV] Judicial Remedies. [§ 1091 cuted or subjected to any penalty or forfeiture for or on account of any transaction, matter, or thing concerning which he may testify or produce evidence documentary or otherwise in such proceeding: Provided, that the provisions of an Act entitled " An Act to expedite the hearing and determination of suits in equity pending or hereafter brought under the Act of July sec- ond, eighteen hundred and ninety, entitled ' An Act to protect trade and commerce against unlawful restraints and monopo- lies, ' An Act to regulate commerce,' approved February fourth, eighteen hundred and eighty-seven, or any other acts having a like purpose that may be hereafter enacted, approved February eleventh, nineteen hundred and three," shall apply to any case prosecuted under the direction of the Attorney-General in the name of the Interstate Commerce Commission. [Act of Feb- ruary 19, 1903 (Elkins Act), section 3. J Sec. 4. That all acts and parts of acts in conflict with the pro- visions of this Act are hereby repealed, but such repeal shall not affect causes now pending nor rights which have already ac- crued, but such causes shall be prosecuted to a conclusion and such rights enforced in a manner heretofore provided by law and as modified by the provisions of this Act. [Act of Febru- ary 19, 1903 (Elkins Act), section 4.] Expediting trials. — In any suit in equity pending or hereafter brought in any Circuit Court of tlie United States under the act entitled " An Act to protect trade and commerce against unlawful restraints and monopolies," approved July second, eighteen hundred and ninety, " An Act to regulate commerce," approved February fourth, eighteen hundred and eighty-seven, or any other acts having a like purpose that hereafter may be enacted, wherein the United States is complainant, the Attor- ney-General may file with the clerk of such court a certificate that in his opinion, the case is of general public importance, a copy of which shall be immediately furnished by such clerk to each of the circuit judges of the circuit in which the case is pending. Thereupon such case shall be given precedence over [987] § 1091] Kaileoad Rate Eegxjlation. [Chap. XXXV others and in every way expedited, and be assigned for hear- ing at the earliest practicable day, before not less than three of the circuit judges of said circuit, if there be three or more ; and if there be not more than two circuit judges, then, before them and such district judge as they may select. In the event the judges sitting in such case shall be divided in opinion, the case shall be certified to the Supreme Court for review in like manner as if taken there by appeal as hereinafter provided. [Act of February 11, 1903, section 1.] Appeals. — That in every suit in equity pending or hereafter brought in any Circuit Court of the United States under any of said acts, wherein the United States is complainant, includ- ing cases submitted but not yet decided, an appeal from the final decree of the Circuit Court will lie only to the Supreme Court and must be taken within sixty days from the entry thereof : Provided, That in any case where an appeal may have been taken from the final decree of a Circuit Court to the Circuit Court of Appeals before this act takes effect, the case shall proceed to a final decree therein, and an appeal may be taken from such decree to the Supreme Court in the manner now provided by law. [Act February 11, 1903, section 2.] Upon the request of the Commission, it shall be the duty of any district attorney of the United States to whom the Com- mission may apply to institute in the proper court and to pros- ecute under the direction of the Attorney-General of the United States all necessary proceedings for the enforcement of the provisions of this act and for the punishment of all violations thereof, and the costs and expenses of such prosecutions shall be paid out of the appropriation for the expenseei of the courts of the United States. [Interstate Commerce Act, section 12.J Complaint for nori-payment of damages. — That if, after hearing on a complaint made as provided in section thirteen of this Act, the Commission .shall determine that any party com- plainant is entitled to an award of damages under the pro- visions of this act for a violation thereof, the Commission shall [988] Chap. XXXV] Judicial Kemedies. [§ 1091 make an order directing the carrier to pay to the complainant the sum to which he is entitled on or before a day named. If a eairier does not comply with an order for the pay- ment of money within the time limit in such order, the com- plainant, or any person for whose benefit such order was made, may file in the Circuit Court of the United States for the dis- trict in which he resides or in which is located the pirincipal operating ofiioe of the carrier, or through which the road of the carrier runs, a petition setting forth briefly the causes for which he claims damages, and the order of the Commission in the premises. Such suit shall proceed in all respects like other civil suits for damages, except that on the trial of such suit the findings and order of the Commission shall be prima facie evidence of the facts therein stated, and except that the peti- tioner siiall not be liable for costs in the Circuit Court nor for costs at any subsequent stage of the proceedings unless they accrue upon his appeal. If the petitioner shall finally prevail he shall be allowed a reasonable attorney's fee, to be taxed and collected as a part of the costs of the siuit. All complaints for the recovery of damages shall be filed with the Commission within two years from the time the cause of action accrues, and not after, and a petition for the enforcement of an order for the payment of money shall be filed in the Circuit Court within one year from the date of the order, andi not after: Provided, That claims accrued prior to the passage of this Act may be presented within one year. Parties. — In such suits all parties in whose favor the Com- mission may have made an award for damages by a single order may be joined as plaintiffs, and all of the carriers parties to such order awarding such damages may be joined as defend- ants, and such suit may be maintained by such joint plaintiffs and against such joint defendants in any district where any one of such joint plaintiffs could maintain such suit against •any one of such joint defendants ; and service of process against any one of such defendants as may not be found in the district [9S9] § 1091] Kaileoad Kate Eegulation. [Chap. XXXY ■where the suit is brought may be made in any district where such defendant carrier has its principal operating office. In case of such joint suit the recoveiry, if any, may be by judg- ment in favor of any one of siuch plaintiffs, against the de- fendant found to be liable to such plaintiff. Service of order of Commission,. — Every order of the Com- mission shall be forthwith served by mailing to any one of the principal officers or agents of the carrier at his usual place of business a copy thereof; and the registry mail receipt shall be prima facie evidence of the receipt of such order by the carrier in due course of mail. Suspension or modification of orders of Commission. — The Commission shall be authorized to suspend or modify its orders upon such notice and in such manner as it sihall deem proper. Duty of carrier to comply with order. — It shall be the duty of every common carrier, its agents and employees, to observe and comply with such orders so long as the same shall remain in effect. Penalty for failure to comply with order. — Any carrier, any officer, representative, or agent of a carrier, or any receiver, trustee, lessee, or agent of either of them, who knowingly fails or neglects to obey any order made under the provisions of sec- tion 15 of this Act', shall forfeit to the United States the sum of five thousand dollars for each offense. Every distinct vio- lation shall be a separate offense, and in cas^ of a continuing violation each day shall be deemed a separate offense. The forfeiture provided for in this Act shall be payable into the treasury of the United States, and shall be recoverable in a civil suit in the name of the United States, brought in the district where the carrier has its principal operating office, or in any district through which the road of the caiTier runs. Prosecution for. failure to comply with order. — It shall be the duty of the various district attorneys, under the direction of the Attorney-General of the United States, to prosecute for the recovery of forfeitures. The costs and expenses of such prose- [090] Chap. XXXV] Judicial Kemedies. [§1091 cution shall be paid out of the appropriation for the. expenses of the courts of the United States. The Commission may, with the consent of the Attorney-General, employ special counsel in any proceeding under this Act, paying the expenses of such employment out of its own appropriation. " If any carrier fails or neglects to obey any order of the Commission, other than for the payment of money, while the same is in effect, any party injured thereby, or the Commission in its own name, may apply to the Circuit Court in the district where such carrier has its principal operating office, or in which the violation or disobedience of such order shall happen, for an enforcement of such order. Such application shall be by petition, which shall state the substance of the order and the respect in which the carrier has failed of obedience, and shall be served upon the carrier in such manner as the court may di- rect, and the court shall prosecute such inquiries and make such investigations, through such means as it shall deem needful in the ascertainment of the facts at issue or which may aris'e tipon the hearing of such petition. If, upon such hearing as the court may determine to be necessary, it appears that the order was regularly made and duly served, and that the carrier is in disobedience of the same, the court shall enforce obedience to such order by a writ of injunction, or other proper process, mandatory or otherwise, to restrain such carrier, its officers, agents, or representatives, from further disobedience of such order, or to enjoin upon it, or them, obedience to the same; and in the enforcement of such process the court, shall have those powers ordinarily exercised by it in compelling obedience to its writs of injunction and mandamus. Appeal. — From any action upon such petition an appeal shall lie by either party to the Supreme Court of the United States, and in such court the case shall have priority in hexiring and determination over all other causes except criminal causes, but such appeal shall not vacate or suspend the order appealed from. [991] § 1091] Raileoad Eate Kegtj/.axion. [Chap. XXXV Venue. — The venue of suits brought in any of the circuit courts of the United States against the Commission to enjoin, set aside, annul, or suspend any order or requirement of the Commission shall be in the district where the carrier against whom such order or requirement may have been made has its principal operating office and may be brought at any time after such order is promulgated. And if the order or requirem^ent has been made against two or more carriers then in the district where any one of said carriers has its principal operating office, and if the carrier has its principal operating office in the Dis- trict of Columbia then the venue shall be in the district where said carrier has its principal office ; and jurisdiction to hear and determine such suits is hereby vested in such courts. Expediting suits. — The provisions of ' An Act to ecxpedite the hearing and determination of suits in equity, and so forth,' approved February eleventh, nineteen hundred and three, shall be, and are hereby, made applicable to all such suits, including the hearing of an application for a preliminary injunction, and are also made applicable to any proceeding in equity to enforce any order or requirement of the Commission, or any of the pro- visions of the Act to regulate commerce approved February fourth, eighteen hundred and eighty-seven, and all acts amenda- tory thereof or supplemental thereto. It shall be the duty of the Attorney-General in every such case to file the certificate provided for in said expediting Act of February eleventh, nine- teen hundred and three, as necessary to the application of the provisions thereof, and upon appeal as therein authorized to the Supreme Court of the United States, the case shall have in such court priority in hearing and determination over all other causes except criminal causes. Injunction granted only after hearing. — " Provided, that no injunction, interlocutory order or decree suspending or re- straining the enforcement of an order of the Commission shall be granted except on hearing after not less than five days' notice to the Commission. An appeal may be taken from any inter- [992] Chap. XXXV] Judicial Remedies. [§ 1091 locutory order or decree granting or continuing an injunction in any suit, but shall lie only to the Supreme Court of the United States : Provided further, that the appeal must be taken within thirty days from the entry of such order or decree and it shall take precedence in the appellate court over all other causes, except causes of like character and criminal causes. Schedules and returns of carrier's evidence. — " The copies of schedules and tariffs of rates, fares, and charges, and of all contracts, agreements or arrangements between common carriers filed with the Commission as herein provided, and the statistics, tables, and figures contained in the annual reports of carriers niade to the Commission, as required by the provisions of this Act, shall be preserved as public records in the custody of the secretary of the Commission, and shall be received as prima facie evidence of what they purport to be for the purpose of in- vestigations by the Commission and in all judicial proceedings ; and copies of or extracts from any of said schedules, tariffs, contracts, agreements, arrangements, or reports made public records as aforesaid, certified by the secretary under its seal, shall be received in evidence with like effect as the originals." [Interstate Commerce Act, section 16, as amended by Act of June 29, 1906, section 5.J Mandamus to compel transportation or facilities. — That the Circuit and District Courts of the United States shall have jurisdiction upon the relation of any person or persons, firm, or corporation, alleging such violation by a common carrier, of any of the provisions of the Act to which this is a supplement, and all acts amendatory thereof, as prevents the relator from hav- ing interstate traffic moved by said common carrier at the same rates as are charged, or upon terms or conditions as favorable as those given by said common carrier for like traffic under sim- ilar conditions to any other shipper, to issue a writ or writs of mandamus against said common carrier, commanding such com- mon carrier to move and transport the traffic, or to furnish cars or other facilities for transportation for the party applying for [993] § 1092] Eaileoad Eate Eegulation. [Chap. XXXV, the writ. Provided, that if any question of fact as to the proper compensation to the common carrier for the service to be en- forced by the writ is raised by the pleadings, the writ of per- emptory mandamus may issue, notwithstanding such question of fact is undetermined, upon such terms as to security, payment of money into the court, or otherwise, as the court may think proper, pending the determination of the question of fact: Pro- vided, that the remedy hereby given by writ of mandamus shall be cumulative, and shall not be held to exclude or interfere with other remedies provided by this Act or the act to which it is a supplement. [Act of March 2, 1889, being section 23 of the . Interstate Commerce Act. J That all existing laws relating to the attendance of witnesses and the production of evidence and the compelling of testimony under the Act to regulate commerce and all acts amendatory thereof shall apply to any and all proceedings and hearings under this Act. [An Act of June 29, 1906, section 9.] That all laws and parts of laws in conflict with the provisions of this Act are hereby repealed, but the amendments herein provided, for shall not affect causes now pending in courts of the United States, but such causes shall be prosecuted to a conclu- sion in the manner heretofore provided by law. [Act of June 29, 1906, section 10.] § 109'2. Amendments of 1906. Sections 8, 9, 10, 12 of the original act, sections 2 to 4 of the Elkins act, the act of February 11, 1903, for expediting trials, and the act of March 2, 1889, granting mandamus to compel transportation, are un- amended. The principal amendments to section 1 of the Elkins act and to section 16 of the original act, are as follows: 1. The punishment of imprisonment for giving or receiving rebates is restored. 2. An additional penalty is imposed on the shipper in the form of the forfeiture of three times the amount received by way of rebate. 3. A statute of limitations is provided. In the original act no pro- vision for limitation of suits was included. 4. A penalty is imposed for failure by a carrier to comply with the [994] Chap. XXXV] Judicial Kemedies. [§ 1093 order of the Commission, and provision is made for recovery of the pen- alty at suit of the Attorney-General. 5. Court review of the orders of the Commission is regulated. Pro- cedure being by injunction against the enforcement of such orders, it is provided that such injunction shall be granted only upon hearing and after due notice to the Commission. §; 1093. Jurisdiction and general principles. The jurisdiction of the Federal courts under this section does not de- pend upon diverse citizenship, but upon the jurisdiction over commerce; and this is sufficient to sustain the jurisdiction of the Circuit Court, inde- pendent of the citizenship of the parties to the controversy, since it in- volves a federal question. Kentucky & I. Bridge Co. v. Louisville & N. R. R., 37 Fed. 567, 2 L. R. A. 289, 2 Int. Com. Rep. 351 (1889). Indeed, even if it is begun in a State court, a suit to recover damages for acts which constitute a violation of the Interstate Commerce Act, the construc- tion of which it in dispute between the parties, present a Federal ques- tion for which it may be removed to a Federal court. Lowry v. Chicago, B. & Q. R. R., 40 Fed. 83, 4 Int. Com. Rep. 435 (1891). Even if the reme- dies prescribed by the act are not applicable to a particular case arising under its provisions, this does not deprive the United States Circuit Court of jurisdiction, since by the Judiciary Act such courts are given jurisdiction of all controversies arising under any act of Congress. Little Rock & M. R. R. V. East Tennessee, V. & G. R. R., 47 Fed. 771, 4 Int. Com. Rep. 261 (1891). And the remedies given by the act are intended to sup- plement, not to supplant, the existing remedies. Little Rock & M. R. R. V. East Tenn. V. & G. R. R., 47- Fed. 771, 4 Int. Com. Rep. 261 (1891) ; Tift V. Southern Ry., 123 Fed. 789 (1903). And the United States Circuit Court has jurisdiction to enforce any rights arising under the interstate commerce law, although the same rights may have existed at common law. Toledo, A. A. & N. M. R. R. v. Pennsylvania Co., 54 Fed. 730, 5 Int. Com. Rep. 522 (1893). The principal office is the^ one where its principal officers have their business domicil, the meetings of stockholders, directors, and executive committee are held, the stock books kept and the dividends declared, rather than the place where the subordinate officers in charge of the oper- ating, traffic, and accounting departments of the business, discharge their duties. Interstate Commerce Commission v. Texas & P. Ry., 4 Int. Com. Rep. 62 (1892). A United States Circuit Court has jurisdiction of a bill by the Interstate Commerce Commission to enforce its order against a rail- road company which has its principal office in another district, where such company in connection with other companies operates all their roads under a common management or arrangement in making the interdicted rates, although such company by itself has been guilty of no violation of [995] § 1094] Eaileoad Eate Eegulation. [Chap. XXXV, the order in the district. Interstate Commerce Commission v. Southern Pacific Co., 74 Fed. 42 (1896). Newly organized companies into which the railroads of two companies, violating an order of the Interstate Commerce Commission in pursuance of a common .arrangement between them and other roads, pass, are prop- erly made defendants in a, suit to enforce the order of the Commission. Interstate Commerce Commission v. Western N. Y. & P. R. R., 82 Fed. 192 (1897). The statute of limitations of the State in which the offense' was com- mitted applies in actions under the Interstate Commerce Act to recover back freight paid to a carrier in excess of that charged other shippers, since no period of limitation is named in the act itself. Copp v. Louis- ville & N. R. R., 50 Fed. 164, 4 Int. Com. Rep. 805 (1892) ; Ratican v. Terminal Assoc, 114 Fed. 666 (1902). See Carter v. New Orleans & N. E. R. R., 143 Fed. 99 (1906). Under the amendments of 1906 a, two-year term of limitation is provided. The Judiciary Act of 1887, passed subsequently to the Interstate Com- merce Act, modified the procedure on appeal provided in the latter; and the appeal now lies from the Circuit Court to the Circuit Court of Ap- peals. Interstate Commerce Commission v. Atchison, T. & S. F. R. R., 149 U. S. 264, .37 L. Ed. 727, 13 Sup. Ct. 837, 4 Int. Com. Rep. 347 (1893). If thfe decision of the Circuit Court, afiirming the validity of an order of the Interstate Commerce Commission, made under a misconception of the extent of its powers, is erroneous, it should be reversed by the Circuit Court of Appeals and the order set aside and the cause remanded to the Commission in order that the latter, if it saw fit, might proceed therein ac- cording to law; and the Circuit Court of Appeals should not undertake of its own motion to find and pass upon the questions of fact involved which were not considered by the Commission. Texas & P. R. R. v. Inter- state Commerce Commission, 162 U. S. 197, 40 L. Ed. 940, 16 Sup. Ct. 666, 5 Int. Com. Rep. 405 (1896). By an amendment of 1903, an appeal lies directly from the Circuit Court to the Supreme Court. § 1094. Remedy in equity. A mandatory injunction, compelling the carrier to carry at a certain rate, cannot be issued, since the court has no greater power than the Com- mission to fix a rate. Southern Pac. Co. v. Colorado F. & I. Co., 101 Fed. 779, 42 C. C. A. 12 (1900). An injunction against violating a proper order of the Commission will be granted, nor will it alter the duty of the court to enjoin the violation of the order that another wrongdoer is also violating it. Interstate Commerce Commission v. Texas & P. R. E., 52 Fed. 187, 4 Int. Com. Rep. 114 (1892). See Re Transportation of Coal & Mine Supplies, 10 I. C. C. Rep. 473 (1905). The injunction must be di- rected against specific acts; a carrier cannot be enjoined in general from [996] Chap. XXXV] Judicial Eemedies. [§ 1095 violating the act in any particular. New York, N. H. & H. R. R. v. In- terstate Commerce Com., 200 U. S. 361, 26 Sup. Ct. 272 (1906). A preliminary injunction never issues as of right, but rests in the sound discretion of the court. In order to obtain it, the plaintiff should show either that his right is very clear, or that the injunction will operate with but little injury to the defendant, if granted, and that, if refused, the injury to himself will be very great. Where the inconvenience to result ia equally divided, or the preponderance is in favor of the defendant, it will ha refused. Neither is a plaintiff entitled to preliminary injunction where his rights depend upon unsettled and disputable questions of law. Upon a motion for preliminary injunction the comparative inconvenience and in- jury to the parties must be looked at, and the injunction will not be granted when the injury to the defendant is likely to be greater than the benefit to the complainant. It has therefore been held that under section 16 of the act no preliminary injunction will be issued. The questions involved are for the first time presented for judicial determination, as the Interstate Commerce Com- mission is an administrative body, and not a court. In the first place, the petitioner is entitled to a speedy hearing, and delay of the injunction for a short time will not seriously injure him; while on the other hand the injury to the defendant will be serious if it finally appears that the injunction is not warranted. The injunction, if issued, would stand for some time, and the total amount of money lost by the carrier will be very large, and not possible otherwise to collect; a long adherence to the lower schedule of rates will make it very difficult to restore the old rates'; and the establishment of the lower rates may involve a readjustment of rates over a large territory. As a result of such considerations the courts have held that only a final injunction after hearing on pleadings and proofs would be granted. Shinkle, W. & K. Co. v. Louisville & N. R. R., 62 Fed. 690, 5 Int. Com. Rep. 282 (1894); Interstate Commerce Commission v. Cincinnati, N. 0. & T. P. Ry., 64 Fed. 981, 5 Int. Com. Rep. 131 (1894). § 1095. Mandamus. The Federal courts have no power, on application by the Commission, to compel a carrier to file the reports called for by section 20 of the act. Knapp v. Lake Shore & M. S. Ry., 197 U. S. 536, 49 L. Ed. 870, 25 Sup. Ct. 538 (1905). The act itself confers authority on the courts to grant a writ of man- damus on relation of an individual where unjust discrimination is made out, but only when that is done. United States v. Delaware, L. & W. R. R., 40 Fed. 101 (1889) ; In re Morris, 40 Fed. 824, 2 Int. Com. Rep. 617 (1889). It will not lie to enforce mere private contractural obligations, and therefore the writ was refused where the relator complained that he did not receive his fair share of cars according to a contract between the [997] §§ 1096, 1097] Kaileoad Kate Regulation. [Chap. XXXV carrier and various shippers of coal and coke for furnishing cars in propor- tion to the number of coke ovens operated. United States v. Norfolk & W. Ry., 138 Fed. 849 (1905). So where the court is asked to grant a writ of mandamus to compel a fair distribution of cars, it will not be granted unless unjust discrimina- tion is alleged and proved; but if it is proved the writ will be granted. United States v. Norfolk & W. Ry., 109 Fed. 831 (1901), 143 Fed. 266 (1906). § 1096. Action for damages. While the remedy by way of damages for unlawful rates is utterly in- adequate and inconsistent, it is apparently the remedy prescribed by the Act to Regulate Commerce, and the only remedy which the shipper has against the exaction of an unreasonable interstate rate. McGrew v. Mis- souri P. Ry., 8 I. C. C. Rep. 630 (1901). The pendency of a suit before the federal courts bars proceedings before the Commission; but a suit m the State court does not have that eflfect. Gallogly v. Cincinnati, H. & D. Ry., 11 I. C. C. Rep. 1 (1905). The measure of damages, where unjust discrimination is found, is the difference paid by the plaintiff and the favored shippers for like services. Junod v. Chicago & N. W. Ry., il Fed. 290 (1891). For form of complaint, see Kimavey v. Terminal Ry. Assoc, 81 Fed. 802 (1897). Since the remedy is given only to an injured party, a plaintiff in order to recover must show not only the wrong of the car- rier but that the wrong has operated to his injury. Parsons v. Chicago & N. W. Ry., 167 U. S. 447, 42 L. Ed. 232, 17 Sup. Ct. 887 (1897). Section 12 of the act is constitutional and valid, so far as it authorizes or requires the circuit courts of the United States to use their process in aid of inquiries before the Interstate Commerce Commission. Interstate Commerce Commission v. Brimson, 154 U. S. 447, 38 L. Ed. 104, 14 Sup. Ct. 1125, 4 Int. Com. Rep. 545 (1894). An action by the district attorney may be maintained in the name of the United States. United States v. Missouri Pac. R. R., 65 Fed. 903, 5 Int. Com. Rep. 106 (1894). And the Commission need not first investigate tne case. Ibid. § 109Y. Criminal prosecution. It was said in United States v. Michigan Central R. R., Fed. , 3 Int. Com. Rep. 287 (1890), that a railroad company cannot be indicted for violation of the act; but this seems to be a mistake. United States v. Cleveland, C. & S. R. R., Fed. , 3 Int. Com. Rep. 290 (1890). But a carrier which has conformed to the ruling of the Commission should not be prosecuted for alleged violation of law in that respect, which occurred before such ruling was made and under a construction of the law then [998] Chap. XXXV] Judicial Ebmedies. [§ 1097 approved by the carrier's counsel. Slater v. Northern P. R. R., 2 Int. Com. Rep. 243 (1888). An indictment will lie against any officer, director, agent, or employe of a carrier who aids and abets in violation of the Inter- state Commerce Law, as well as against the carrier, such officers and employes having knowledge that they are engaged in an illegal act. United States V. Cleveland, C. & S. R.' R., 3 Int. Com. Rep. 290 (1890) ; United States V. Mellen, 53 Fed. 229, 4 Int. Com. Rep. 247 (1802) ; United States V. Howell, 50 Fed. 21, 4 Int. Com. Rep. 818 (1892). The proof, as in all criminal cases, should be clear and leave no reasonable ground for doubt as to their guilty knowledge of the illegality of the act, and men who occupy merely clerical positions, who are only the instruments which carry out an unlawful action or contract made by their superior officers, which they do not concoct, should not be punished for violation of the Interstate Commerce Act, except where the proof of guilty knowledge and participa- tion is clear. United States v. Michigan Central R. R., 43 Fed. 26, 3 Int. Com. Rep. 287 (1890). So collecting and receiving freight charges does not subject one who had nothing to do with fixing the rates, to indictment under the long and short haul clause of the Interstate Commerce Act, although the rates are within the prohibitions of that Act. United States v. Mellen, 53 Fed. 229, 4 Int. Com. Rep. 247 (1892). But one overt act need be proved to sustain an indictment for conspiring to violate the United States Act of March 2, 1889, against obtaining transportation for property over railroads at less than regular rates. United States v. Howell, 156 Fed. 21, 4 Int. Com. Rep. 818 (1892). When an agent of a railroad is prosecuted under the Interstate Commerce Act, it is not necessary either to allege or prove that the particular unlawful act complained of was done under authority conferred by its principal or by its direction; it is sufficient to show that the accused was in fact an agent of a railroad subject to the act, and that the wrong was commited under color of his office or agency. United States v. Tozer, 39 Fed. 904, 2 Int. Com. Rep. 422 (1889). An indictment against an express company for violation of the Interstate Commerce Act, inasmuch as the liability of such companies under the act must depend on the manner in which the business is conducted, — as, for instance, where it is conducted by railroad companies, — must show by proper averment the facts to bring the case within the law. United States v. Morsman, 42 Fed. 448, 3 Int. Com. Rep. 112 (1890). A conviction for criminal violation of the section of the Interstate Com- merce Act which prohibits undue or unreasonable preferences or advan^ tages cannot be sustained upon the finding of a jury that a certain charge was an unreasonable preference, if no standard of comparison is estab- lished by which such unreasonableness is shown with definiteness and cer- tainty. Tozer v. United States, 52 Fed. 917, 4 Int. Cora. Rep. 245 (1892). The objection that an indictment under the long and short haul clause of [999] § 1098] Kaileoad Kate Kbgulation. [Chap. XXXV the Interstate Commerce Act is an attempt by the government to interfere with the revenues of the railroad contrary to the terma of the contract under which it was built cannot be raised upon a motion to quash. United States V. Mellen, 53 Fed. 229, 4 Int. Com. Kep. 247 (1892). The venue of the indictment is the place where the illegal act is done. In an indictment for securing transportation at less than legal rates by false billing, the oflFence is committed where the property is delivered for transportation. Davis v. United States, 104 Fed. 136, 43 C. C.-A. 443 (1900). The form of indictment for various violations of the act was considered in United States v. Tozcr, 39 Fed. 904, 2 Int. Com. Rep. 422 (1889). It was there held that an indictment for unjust discrimination, under section 2, need not aver by what particular device the defendant managed to dis- criminate in favor of a particular shipper; that a count under section 9 is sufficient if it shows with requisite certainty, by any apt language, that the accused has committed an act which gives one shipper or class of ship- pers an advantage, or s>ubjects others to a disadvantage; that a count under section 3, charging the subjection of a certain locality to an undue prejudice by charging its merchants a higher rate for transporting property to a certain point than was exacted from residents of a certain other locality, must show with precision that the lower rate was for transporta- tion between the same points as the higher rates ■; that counts under section 2 for " undue and unreasonable preference,'' and " for undue or unreason- able prejudice or disadvantage," need not allege that the service for which a different rate was charged was rendered " under substantially similar circumstances and conditions," — those words being found only in section 4, in relation to greater charge for shorter haul; and that a. count under section 6, alleging the allowance of a rate less than the established and published rate which " was in force on that day," suffi- ciently negatives the inference that the rate might have been reduced by the carrier without notice, as permitted by that section. For other cases in which the form of indictment was considered, see United States v. Han- ley, 71 Fed. 672 (1896) ; United States v. DeCoursey, 82 Fed. 302 (1897). § 1098. Procedure under the Elkins Act. The provisions of the Elkins Act apply not only to violations of the In- terstate Commerce Law subsequent to its enactment, but to every violation, whether previously or subsequently. United States v. Michigan Cent. K. R., 122 Fed. 544 (1903). A suit to enjoin a common carrier from dis- criminating between localities in violation of the Act to Regulate Commerce could not be brought on behalf of the United States by its law officers at the request of the Interstate Commerce Commission prior to the passage of this act. Such a suit having been brought before the act and a decree granting the relief prayed for having been made in the Circuit [1000] Chap. XXXV] Judicial Eemedies. [§ 1099 Court, the deerae was reversed; but the new remedies given by the act are so far made applicable to prior pending proceedings by section 4 of the act that the cause will be remanded for further procedings consistent with the- Act to Regulate Commerce as originally enacted and subsequently amended by the Elkins Act. Missouri Pacific Ry. v. United States, 189 U. S. 274, 47 L. Ed. 811, 23 Sup. Ct. 507 (1903). But cis an injunction is issued only against present or threatened acts, none will be issued under these cir- cumstances unless the illegal act is continuing. United States v. Atchison, T. & S. F. Ry., 142 Fed. 176 (1905). For form of a bill under this act, see United States v. Milwaukee R. T. Co., 142 Fed. 247 (1905). Section 3 of the act applies to all discrimination forbidden by law. Interstate Commerce Commission v. Chicago G. W. Ry., 141 Fed. 1003 (1905). § 1099. Enforcement of order of the Commission. The shipper, if reparation is not made, may bring an action at law. This action may be brought by any beneficiary of an order, even if he was not a party to the proceedings before the Commission. Thus shippers whose claims for reparation for damages for wrongful charges for trans- portation of oil covered by an order of the Interstate Commerce Commis- sion, but who have not been served in the reparation proceedings before the Commission, may, upon failure of the carriers to properly refund exces- sive charges, proceed on the basis of reparation prescribed on such order to enforce their claims in the courts as provided by law. Independent Ref. Assoc. V. Western N. Y. & P. R. R., 6 I. C. C. Rep. 378 (1895). The better practice, however, at least in a case of any doubt, is for all shippers to file intervening petitions before the Commission and obtain individual orders for reparation, upon which they may proceed in court. Cattle Raisers' Assoc, v. Chicago, B. & Q. R. R., 10 I. C. C. Rep. 83 (1904). The bona fides of a complaint of discrimination by a carrier cannot be attacked in the Circuit Court by impeaching the good faith of those who in the first instance induced the Interstate Commerce Commission to take action under the provisions of the Interstate Commerce Law for the lodg- ing by any person of complaints with the Commission, and that no com- plaint shall be dismissed because of the absence of direct damage to the complainant, but that the Commission may institute any inquiry on its own motion, and requiring the Commission, if the- law has been violated, to notify the carrier to cease from further violation, and, in case of its refusal, to apply by petition to a Circuit Court in equity to enforce its order. Interstate Commerce Commission v. Detroit, G. H. & M. R. R., 57 Fed. 1011, 4 Int. Com. Rep. 722 (1893). The common form of proceeding for enforcing the order of the Commis- sion is under the provision giving the Commission the power to apply to the courts. Under this provision of the act the findings of fact of the Commission are not conclusive in proceedings before the court even if [1001] § 1099] Eailboab Rate Regulation. [Chap. XXXV the court finds that the matter was fully and fairly investigated by the Commission. The court must still independently investigate the whole merits of the controversy and form an independent judgment upon them; and in such investigation the findings of fact made by the Commission are only prima facie evidence, and additional evidence may be introduced. Inter. Com. Coram, v. Alabama Mid. Ky., 168 U. S. 144, 42 L. Ed. 414, 18 Sup. Ct. 45, B. & W. 433 (1897) ; Kentucky & I. Bridge Co. v. Louis- ville & N. R. E., 37 Fed. 567, 2 L. R. A. 289, 2 Int. Com. Rep. 351 (1889) ; Interstate Commerce Commission v. Lehigh Valley R. R., 49 Fed. 177, .'i Int. Com. Rep. 796 (1892) ; Interstate Commerce Commission v. Atchison, T. & S. F. R. R., 50 Fed. 295, 4 Int. Com. Rep. 323 (1892). The opinion of the Interstate Commerce Commission has not the effect of a judicial determination, and in a, proceeding to enforce it the court proceeds to jear the complaint de novo. Shinkle, W. & K. Co. v. Louisville & N. R. R., 62 Fed. 690, 5 Int. Com. Rep. 282 (1894). The conslusions of the Com- mission are, however, prima facie correct, and in a suit to enforce its orders the burden rests upon the company to show them to be erroneous. Inter- state Commerce Commission v. Louisville & N. R. R., 118 Fed. 613 (1902). The mere opinion of the Commission, however, not being a finding of fact, is not admissible in evidence and will not be considered by the court. Western N. Y. & P. R. R. v. Penn. Refining Co., 137 Fed. 343 (1905). It is not necessary to file with a petition for the enforcement of an order of the Interstate Commerce Commission the transcript of the evi- dence taken before it, under the statute making the findings of fact of the Commission prima facie evidence of the matter stated; but either party may introduce and use as evidence any competent and relevant testimony taken before the Commission. The court may reject any portion which is irrelevant or incompetent. If any evidence has been taken ex parte in the proceedings before the Commission, the court may require that there shall be full opportunity for cross-examination before it will be received or considered. Interstate Commerce Commission v. Cincinnati, N. 0. & T. P. R. R., 64 Fed. 981, 5 Int. Com. Rep. 131 (1894). As the findings of fact ar^ not conclusive against the carrier, so they are not conclusive in its favor. Therefore a demurrer will not lie to a petition by the Interstate Commerce Commission to compel a railroad company to desist from exacting unreasonable rates on the ground that the Commis- sion's findings of fact does not support its order if the findings expressly state that the charge made is unreasonable, although the findings may not appeal to the judgment of the court upon the merits. Interstate Commerce Commission v. Chicago, B. & Q. R. R., 94 Fed. 272 (1899). The enforcement of the order of the Commission alone being within the power of the court, it cannot modify such order. Therefore the court can- not, upon a certificate of the Interstate Commerce Commission that in making an order which the court is asked to enforce the Commission did [1002] Chap. XXXV] Judicial Kemedies. [§ 1099 not design to make it so broad as its terras import, enforce the order in such restricted sense, where it otherwise would not be enforceable. Inter- state Commerce Commission v. Delaware, L. & W. E. R., 64 Fed. 723, 5 Int. Com. Rep. 146 (1894). And where the order of the Commission is based on an erroneous construction of the statute, by reason of whicii error it has declined adequately to find the facts, the courts will not pro- ceed to an original investigation of the facts which should have been passed upon by the Commission, but will correct the error of law com- mitted by that body, and, after doing so, dismiss the application without prejudice to the right of the Commission to make a, further investigation of the facts. The defendant is entitled to have its defense considered, in the first instance at least, by the Commission upon a full consideration of all the circumstances and conditions upon which a legitimate order could be founded. The question whether certain charges were reasonable or other- wise, whether certain discriminations were due or undue, are questions of fact, to be passed upon by the Commission in the light of all facts duly alleged and supported by competent evidence; and it did not comport with the true scheme of the statute that the courts should undertake to find and pass upon such questions of fact on appeal. East Tennessee, V. & G. Ry. V. Interstate Commerce Commission, 181 U. S. 1, 45 L. Ed. 710, 21 Sup. Ct. 516 (1901). So where the Commission has made an order upon one ground, the courts may enforce the order upon another ground. The courts are not confined to the ground alleged by the Commission. If a, court finds that the for- bidden practice of the carrier is in itself for any reason illegal as a viola- tion of the act, the order might be valid and be a lawful order, although the Commission gave a Avrong reason for making it. If it held the practice to be a violation of one section, the order to desist might be valid if, instead of the section named by the Commission, the court should find that the practice was a violation of another section of the act. All the facts being brought out before the Commission or the court, the court could decide whether the order was a lawful one, without being confined to the reasons stated by the Commission. Southern Pacific Co. v. Interstate Commerce Commission, 200 U. S. 536, 26 Sup. Ct. 330 (1906). [1003] TITLE II. State Statutes AFrBCTiNG Rates. CHAPTER XXXVI. STATE STATUTES AGAINST EXTORTIONATE RATES. 1100. Introduction. § 1112. Missouri. 1101. Alabama. 1113. New York. 1102. Arkansas. 1114. North Carolina 1103. Florida. 1115. North Dakota. 1104. Georgia. 1116. South Carolina. 1105. Illinois. 1117. Tennessee. • 1106. Iowa. 1118. Texas. 1107. Kansas. 1119. Vermont. 1108. Kentucky. 1120. West Virginia. 1109. Massachusetts. 1121. Wisconsin. 1110. Minnesota. 1122. Conclusion. 1111. Mississippi. § 1100. Introduction. In this chapter are collected representative extracts from State statutes against the charging of extortionate rates by common carriers. It is, of course, universal common law that a common carrier shall not demand unreasonable prices ; and in so far as these statutes reiterate this principle, they are simply declaratory of the common law. The chief object of these clauses is to provide more adequate methods for the en- forcement of this law. Thus it is not uncommon to provide for the imposition of a penalty for extortion, sometimes a very heavy one, and in some States an increasing one for successive offenses. More common still is the provision giving to the in- jured party the right to recover double or treble damages, and, in addition, usually, his reasonable attorney's fees. [1004] Chap. XXXVI] State Statutes. [§§ 1101, 1102 % 1101, Alabama. Any person or corporation engaged in the business of trans- porting passengers or freights over any railroad in this State, who shall exact and receive for such transportation more than just compensation therefor, or demands more than the rates specified in any bill of lading issued for such freights, or who, for his own advantage, or for the advantage of any connecting line, or of any person or locality, shall make any unjust dis- crimination in such transportation, against any individual, corporation, or locality, such overcharge or discrimination to be determined by the jury, is guilty of extortion, and is liable to the party injured for double the damages sustained. [Civil Code (1896), section 3460]. In such suit, the fact that the rates or terms, in respect to which the extortion is alleged, had been previously approved by the railroad commissioners is prima facie evidence that the same were not extortionate; nor shall any rate or charge for the transportation of freight over any railroad be held or considered extortionate or excessive, if in the absence of any unjust discrimination, it appears from the evidence that the net earnings of such railroad for transporting freights on the basis of such rate or charge, together with the net earnings thereof from its passengers and other traffic does not amount to more than a fair and just return on the value of such railroad, its appurtenances and equipments. [Ibid, section 3461.] See Mobile & 0. R. R. v. Dismukes, 94 Ala. 131 (1891), pointing out that these sections cannot apply to interstate commerce. § 1102. Arkansas. Sec. 6309. All charges made for any service rendered, or to be rendered, in the transportation of passengers or property 'on any railroad in this State, or in connection therewith, or for the receiving, delivering, or storage, or handling of such property, shall be reasonable and just, and every unjust and [1005] § 1103] Kailkoad Kate Kegujlation. [Chap. XXXVI unreasonable charge for such service is prohibited and declared to be unlawful. [Digest Statutes (1894), section 6309.J Sec. 6191. The legislature may, when any such railroad shall be opened for use, from time to time, alter or reduce the rates of toll, fare, freight, or other profits upgn such road, but the same shall not, without the consent of the corporation, be so reduced as to produce with said profits less than fifteen per centum on the capital actually paid in, nor unless, on an examination of the amounts received and expended, to be made by the Secretary of State, he shall ascertain that the net income divided by the company from all sources for the year then last past shall have exceeded an annual income of fifteen per cent, upon the capital of the corporation actually paid in. [Ibid, section 6191.] The standard of reasonableness is discussed in St. Louis & S. F. Ry. v. Gree, 54 Ark. 101, 15 S. W. 18 (1895). § 1103. Florida. From and after the taking effect of this Act, if any railroad, railroad company, or common carrier, organized, or that may be hereafter organized, or exist, in this State under any act of incorporation or general law of this State now in force, or which may hereafter be enacted, or any railroad, railroad company, or common carrier, organized, or which may be hereafter organ- ized under the laws of any other State, and doing business in this State, shall charge, collect, demand or receive more than a fair or reasonable rate of toll or compensation for the trans- portation of passengers or freight of any description, or for the use and transportation of any railroad car upon its tracks, or any of the branches thereof, or upon any railroad within this State which it has the right, license or permission to use, oper- ate or control; the same upon conviction thereof shall be dealt with as hereinafter provided for. [Laws of 1899 (No. 39), ch. 4700, section 3.] [1006] Chap. XXXVI] State Statutes. [§§1104,1105 § 1104. Georgia. That from and after the passage 8f this Act, if any railroad corporation organized or doing business in this State under any Act of incorporation or general law of this State now in force, or which may hereafter be enacted, or any railroad corporation organized, or which may hereafter be organized under the laws of any other State and doing business in this State, shall charge, collect, demand or receive more than a fair and reasonable rate of toll or compensation for the transportation of passengers or freight of any description, or for the use and transportation of any railroad cars upon the track or any branches thereof, or upon any railroad within this State which it has the right, licenses or permission to use, operate or control, the same shall be deemed guilty of extortion, and upon conviction thereof shall be dealt with as hereinafter provided. [Acts of 1878-79, No. 269, section iii.J A written contract of affreightment stipulated that if the goods were loaded in a box car the rate should be so much per 100 pounds actual weight, and if loaded on a flat car so much per 100 pounds for 10,000 pounds. The actual weight of the consignment was 1,550 pounds, and the carrier loaded a part in a box car and part on a flat car, in a way to make the freight more than it would have been if the whole consignment had been loaded on either car. It was held that this was an overcharge, and that plaintiff, after paying the whole charge and complying with Civ. Code, § 2316, was entitled to recover the overcharge and the penalty prescribed by said act. Stewart v. Comer, 100 Ga. 754, 28 S. E. 461 (1897). § 1105. Illinois. If any railroad corporation, organized or doing business in this State under any Act of incorporation, or general law of this State, now in force or which may hereafter be enacted, or any railroad corporation organized or which may hereafter be organized under the laws of any other State, and doing busi- ness in this State shall charge, collect, demand or receive more than a fair and reasonable rate of toll or compensation, for the [1007] §§ 1106, 1107] Raileoad Eate Regulation. [Chap. XXXVI transportation of passengers or freight, of any description, or for the use and ';ransportation of any railroad car upon its track, or any of the branches thereof, or upon any railroad within this State which it has the right, license or permission to use, operate or control, the same shall be deemed guilty of extortion and upon conviction thereof shall be dealt with as hereinafter provided. [Annotated . Statutes (1896) ch. 114, 1 16Y.] This provision is constitutional. Chicago, B. & Q. R. R. v. Jones, 149 111. 361, 37 N. E. 247 (1894). It will be enforced in all proper cases. St. Louis, A. & T. II. R. R. v. Hill, 14 111. App. 579 (1884). But there is no extortion when the rates fixed by the Commission are not exceeded. Chicago, B. & Q. R. R. v. People, 77 111. 443 (1875). And extortion must be shown. Illinois & St. L. R. R. v. Beaird, 24 111. App. 322 (1888). § 1106. Iowa. All charges made for any service rendered or to be rendered in the transportation of passengers or property in this State, or for the receiving, delivering, storage or handling of such prop- erty, shall be reasonable and just, and every unjust and un- reasonable charge for such service is prohibited and declared to be unlawful. [Code (1897) section 2123.J The rates fixed by the Commissioners are, both as to the shipper and carrier, only presumptively reasonable, and if such Commissioners' rate.^ are in fact excessive, such overcharges may be recovered by the shipper. Barris v. Chicago, B. & Q. R. R., 102 Iowa, 278, 71 N. W. 339 (1897). The law requires reasonable rates, and the defendant may show that the rate fixed by the Commission is unreasonable. The prima facie evidence that it is reasonable will not prevail when it is shown that it is in fact not so. Burlington, C. R. & N. R. Co. v. Dey, 82 Iowa, 312, 48 N. W. 98 (1892). § 1107. Kansas. No railroad company shall charge, demand or receive from any person, company or corporation an unreasonable price for the transportation of persons and property, or for the hauling or storing of freight, or for the use of its cars, or for any priv- [1008] Cliap. XXXVI] State Statutes. [§§ 1108-1110 ilege of its service afforded by it in the transaction of its busi- ness as a railroad company; and upon complaint in writing made to the Board of Railroad Commissioners that an unreason- able price has been charged, such board shall investigate said complaint, and, if sustained, shall make a certificate under their seal setting forth what is a reasonable charge for the service ren- dered, which shall be prima facie evidence of the matter therein stated. [General Laws (1901) section 5981.J § 1108. Kentucky. If any railroad corporation shall charge, collect or receive more than a just and reasonable rate of toll or compensation for the transportation of passengers or freight in this State, or for the use of any railroad car upon its tracks or upon any track it has control of, or the right to use in this State, it shall be guilty of extortion. [Compiled Statutes (1894), section 816. J The validity of this section was questioned in Louisville & N. R. R. v. Com., 99 Ky. 132, 35 S. W. 129 (1897). But see McChord v. Louisville & N. R. R., 183 U. S. 483, 46 L. Ed. 289, 22 Sup. Ct. 165 (1901), overruling Louisville & N. Ry. v. McChord, 103 Fed. 216 (1900). § 1109. Massachusetts. A railroad corporation may establish for its sole bene- fit, fares, tolls and charges upon all passengers and prop- erty conveyed or transported on its railroad, at such rates as may be determined by its directors, and may from time to time by its directors regulate the use of its road, but such fares, tolls and charges, and such regulations, shall at all times be subject to revision and alteration by the general court or by such officers or persons as it may appoint for the purpose, anything in the charter of a railroad corporation to the contrary notwith- standing. [Revised Laws (1902) ch. Ill, sec. 225. j § 1110. Minnesota. All charges made by any such carrier for the transportation of passengers or property whether over one or more railroads, [1009] §§ 1111, 1112] Kaileoad Rate Regulation. [Chap. XXXVI or in connection therewith, or for the receiving, delivering, storage or handling of such property shall be equal and reason- able, and every unequal or unreasonable charge for such service is prohibited. One car-load of freight of any kind or class shall be transported at as low a rate per ton, and per ton mile, as any greater number of carloads of the same kind and class from and to the same points of origination and declaration. [Revised Laws (1905), section 2007.] § 1111. Mississippi. The track of every railroad which' carriesi persons or prop- erty for hire, is a public highway, over which all persons! have eq-isil rights of transportation for themselves and their property, and for passengers, freight and cars, on the payment of reasonable compensation to the railroad for such transporta- tion; and if any railroad corporation, or person managing a railroad, shall demand and receive more than reasonable com- pensation for the services rendered in transportation of pass- engers or freight, or more than allowed by the tariff of rates fixed by the Commission, or by such person or corporation with its approval, or more than the rate specified in a bill of lading issued by authority of the railroad. Such person or corpora- tion, in either case, shall be guilty of extortion, and may be punished therefor criminally, besides being liable civilly. [An- notated Code (1902), section 4287.] § 1112. Missouri. All railways heretofore constructed or that may hereafter be constructed in this State, are hereby declared to be public high- ways, and all individuals, companies, corporations, trustees, re- ceivers and lessees running and operating cars and trains upon such railways, for the transportation of freight and- passengers upon such railways, are hereby declared to be common carriers. All charges made for any services rendered in the transporta- tion of freight on such railways, including the receiving, deliv- [1010] Chap. XXXVI] S.TATE Statutes. [§§1113,1114: ering, storing and handling of such property, shall be reasonable and just; and all unreasonable and unjust charges for such ser- vice are prohibited and declared unlawful. [Revised Statutes (1899) section 1128.J § 1113. New York. The legislature may when any such railroad shall be open for use, from time to time, alter or reduce the rate of freight, fare or. other profits upon such road; but the same shall not, without the consent of the corporation, be so reduced as to pro- duce with such profits less than ten per centum per annum on the capital actually expended, nor unless on an examination of the amounts received and expended, to be made by the board of railroad commissioners, they shall ascertain that the net income derived by the corporation from all sources, for the year then last past shall have exceeded an annual income of ten per centmn upon the capital of the corporation actually expended. [Birdseye (3d ed.) vol. Ill, p. 2942, § 38.J § 1114. South Carolina. That from and after the passage of this Act, if any railroad doing business in this State, or any such company organized under tlie laws of any other State and doing business in this State, shall charge, collect, demand or receive more than a fair and reasonable rate or toll or compensation for the transporta- tion of passengers or freight of any description, or for the use and transportation of any railroad car upon its track or any of the branches thereof or upon any railroad in this State which has the right, license or permission to use, operate or control the same, [it] shall be deemed guilty of extortion, and upon conviction thereof shall be fined not less than five hundred nor more than five thousand dollars. [Laws of 1899, ch. 164, sec- tion 13. J The standard of reasonableness is discussed in Matthews v. Board of Corp. Commrs., 106 Fed. 7 (1901). [1011] §§ 1115, 1118] Eaileoad Eate Regulation. [Chap. XXXVI § 1115. North Dakota. All charges made for any service rendered or to be rendered by any railroad, railroad corporation or common carrier, sub- ject to the provisions of this act in the transportation of passen- gers or property in this State as aforesaid, or in connection therewith, or for the receiving, delivering, storage or handling of such property, shall be reasonable and just; and every un- just and unreasonable charge for such ser^'ice is prohibited and declared to be unlawful. [Laws of 1897, chap. 115, sec. 6. J § 1116. South Carolina. If any railroad corporation, organized or doing business in this State, under the act of corporation, or general law of this State now of force, or which may hereafter be enacted, or any railrcad corporation organized, or which may hereafter be organized, under the laws of any other State, and doing busi- ness in this State, shall charge, collect, demand or receive more than a fair and reasonable rate of toll or compensation for transportation of passengers or freight of any description, or for the use and transportation of any railroad car upon its tracks, or any of its branches, or upon any railroad within this State which it has the right, license or permission to use, operate or control, the same shall be deemed guilty of extor- tion, and upon conviction thereof shall be fined in a sum not less than one hundred nor more than one thousand dollars. [Civil Code (1902), sec. 2083.J § 1117. Tennessee. If any railroad corporation shall charge, collect, or receive more than a just or reasonable rate of toll or- compensation for the transportation of passengers or freight in this State, or for the use of any railroad car upon its track, or upon any track it has control of or the right to use in this State, it shall be deemed guilty of extortion, which is hereby prohibited and declared unlawful. [Laws of 1897, chap. 10', sec. 16.] § 1118. Texas. If any railroad company, subject to this chapter, or its agent or officer, shall hereafter charge, collect, demand or receive [1012] Chap. XXXVI] State Statutes. §1119 from any person, company, firm or corporation a greater rate, charge or compensation than that fixed and established by the Railroad Commission for the transportation of freight, pas- sengers, or cars, or for the use of any car on the line of its railroad, or any line operated by it, or for receiving, forwarding, handling or storing any such freight or ears, or for any other service performed or to be per- formed by it, such railroad company and its said agent and ofiicer shall be deemed guilty of extortion and shall forfeit and pay to the State of Texas a sum not less than $100 nor more than $5,000. [Revised Statutes (1895), art. 4573.] In Wright v. Howe (Tex. Civ. App.), 24 S. W. 314, it was held that these sections against railroad companies for overcharges and unjust dis- crimination in the shipment of freight, have no application to interstate commerce. § 1119. Vermont. A railroad corporation may establish for its sole benefit a toll upon all passengers and property carried by it at such rates as are determined by the directors) of the corporation; and may regulate such conveyance and transportation, the weight of loads, and other things in relation to the use of the road as the directors determine. The Supreme Court, at any tenu thereof, on application in writing of three or more free- holders of the State, and due notice thereof to any person or corporation operating the railroad complained of, may from time to time, upon hearing before said court or upon report of three commissioners appointed by said court for that purpose, alter or reduce the toll of any railroad operated in this State. [General Statutes (1894), section 3896.] If the application is granted, the court shall make an order fixing the rates of toll and render judgment for the applicants to recover their costs, and in addition thereto such damages as the court deems just. Any person or persons refusing to per- form the order of the court in the premises shall be in contempt, and the Supreme Court shall have full chancery powers for the enforcement of any order, judgment or decree under this section. [Ibid, section 3S9Y.] [1013] §§ 1120, 1122] Eaileoad Eate Eegulation. [Chap. XXXVI § 1120. West Virginia. Eailroads heretofore or hereafter constructed in this State are hereby declared public highways, and shall be free to all per- sons for the transportation of their persons and property there- on, under such regulations as now are, or may be, prescribed by law ; but nothing in this section contained shall be construed to exempt any person from the payment of the lawful charges for such transportation. [Code of 1899, ch. 54, section 71.] Code provision imposing a penalty of $500 upon railroads for overcharge in freight or passenger rates, does not apply to an overcharge by a con- ductor in violation of the company's rates and 'rules, which the company IS not shown to have ratified. Hall v. Norfolk & W. R. Co., 44 W. Va. 36, 28 S. E. 754 (1897). § 1121. Wisconsin. Every railroad is hereby required to furnish reasonably ade- quate service and facilities, and the charges made for any ser- vice rendered or to be rendered in the transportation of pass- engers or property or for any service in connection therewith, or for the receiving, switching, delivering, storing or handling of such property, shall be reasonable and just, and every unjust and unreasonable charge for such service is prohibited and de- clared to be unlawful. [Laws 1905, ch. 362, section 3.] ■ § 1122. Conclusion. The temper of the public in regard to unjustifiable charges by railv^ay companies is well shown by these extracts from vari- ous statutes of the various States. Such extortion is regarded as more dangerous to the well being of society than many crimes. At the same time those States are to be commended which provide guides for the conduct of the common carrier, setting maximum rates either by legislation or through commissions; for it is generally held, as it plainly ought to be, that in charging no more than such rates the carrier will not be guilty of extortion. [1014] • CHAPTER XXXVII. STATE STATUTES AGAINST PERSONAL DISCRIMINATION. 1131. 1132. 1133. 1134. 1135. 1136. 1137. 1138. 1139. 1140. 1141. 1142. 1143. 1144. 1145. 1146. 1147. Introduction. Alabama. Arkansas. California. Delaware. Florida. Georgia. Illinois. Indiana. Iowa. Kansas. Kentucky. Louisiana. Massachusetts. Michigan. Minnesota. Mississippi. 1148. Missouri. 1149. Nebraska. 1150. New Hampshire 1151. New Mexico. 1152. North Carolina. 1153. North Dakota. 1154. Ohio. 1155. Oregon. 1156. Pennsylvania. 1157. South Carolina. 1158. South Dakota. 1159. Tennessee. 1160. Texas. 1161. Utah. 1162. Virginia. 1163. Wisconsin. 1164. Conclusion. § 1131. Introduction. It was seen in a former portion of this book when the com- mon law principles for the prevention of discrimination were under discussion that the American States were divided into two' substantially equal groups upon the question whether there was any common law against discrimination as such. That equality no longer remains; for in most of the jurisdic- tions where the courts were hesitant about declaring that the common law had developed a rule against discrimination by its own processes, the legislatures have stepped in with positive prohibitions against discriminations of all sorts. And in those jurisdictions which had already held that most discrimination was contrary to common law principles, the common law was reinforced by detailed reiteration. [1015] § 1134] Railroad Rate Regulation. [Chap. XXXVII § 1132. Alabama. 3462. Every person or corporation owning or operating a railroad in this State, must publish, by posting at all the freight depots along the line of such railroad, the tariffs or rates for the transportation of freight thereon, showing rates for each class, and including general and special rates; and from such tariffs no reduction shall be made in favor of any person which is not also made in favor of all other persons or corporations by change in such published rates. Special rates, if so published, may be given to any person or corporation to aid in any in- dustrial enterprise in this State. [Civil Code (1896), sec. 3462.J ISTothing in this code shall be construed as to prevent any person or corporation owning or operating a railroad from trans"- porting freight or passengers free of charge. [Ibid, 3463. J All discrimination is illegal that is not based upon difference in the cost of service. Lotspeich v. Central Ry. & B. Co., 73 Ala. 306' (1882). And although reductions may by statutory proviso be made to aid industrial enterprises, they ought to ' be >made without discrimmation. Louisville & N. Ry. v. Fulgham, 91 Ala. 555, 8 So. 803 (1890). § 1133. Arkansas. All individuals, associations and corporations shall have equal rights to have persons and property transported over railroads in this State, and no unjust or undue discrimination shall be made in charges for, or in facilities for transportation of freight or passengers within the State. . . . But excursion, im- migration and commutation tickets may be issued at special rates. [Digest of Statutes (1894), sec. 6301.J § 1134. California. ~No discrimination in charges or facilities for transporta- tion shall be made by any railroad or other transportation company between places or persons or in the facilities for the transportation of the same classes of freight or passengers within this State, or coming from or going to any other State. [1016] Chap. XXXVII] State Statutes. [§ 1135 Excursion and commutation tickets may be issued at special rates. [Constitutioii(1880), Art. XII, sec. 21.J § 1135. Delaware. No railroad or railway corporation organized under this Act shall charge, demand, or receive from any person, company, or corporation for the transportation of passengers or property a greater sum than it shall charge or receive from any other per- son, company or corporation for like service, from the same place, under like conditions, under similar circumstances, and for the same period of time. For every violation of the pro- visioh of this section such corporation shall be liable to the party suffering thereby in double the entire amount so charged to such party, to be recovered before any court having jurisdiction thereof, provided, however, that nothing in this section shall be construed to prohibit the carriage or handling of persons or property free or at reduced rates for the United States, State or municipal governments, or to or from fairs and expositions for exhibitions thereof; or the free carriage of destitute and home- less persons transported by charitable societies and the neces- sary agents employed in such transportation ; or the issuance of mileage, excursion or commutation passenger tickets; nor to prohibit any such corporation from giving reduced passenger rates to ministers of religion solely engaged in ministerial duties or to the United States, State or municipal governments ; nor to prohibit any such corporation from giving free carriage to their own officers and employees ; or to prevent the principal officers of any such corporation from exchanging passes or tickets with other railroad corporations for their officers and employees ; nor to prohibit any such corporation from giving reduced rates of transportation to other railroad corporations for railroad con- struction, material, equipment, or supplies. [Laws of 1901, section: 97.] [1017] § liatij Eaileoad Rate Regulation. [Chap. XXXVII § 1136. Florida. That if any railroad, railroad company or other common car- rier as aforesaid, shall make any unjust discriminations in its rates or charges of toll, or compensation for the transportation of passengers or freight of any description, or for the use and transportation of any railroad car upon any railroad, or upon any of the branches thereof, or upon any railroad or steamship lines connected therewith, which it has a right, license or per- mission to operate, use or control within this State, the same shall be guilty of violating the provisions of this Act, and upon conviction thereof, shall be dealt with as hereinafter provided. [Laws of 1899 (N"o. 39), ch. 4Y00, section 4. J ISTothing in this act shall prevent the common carrier subject thereto from the carriage, storage or handling of property free or at reduced rates for charitable purposes, or to or from fairs or expositions for exhibition thereat, or free carriage of desti- tute or homeless persons transported by charitable societies and the necessary agents employed in such transportation, or the issu- ance of mileage, excursion or commutation or round trip passen- ger tickets, or from giving reduced rates to ministers of religion, or from giving free passes to their own officers or employees, and their immediate families dependent upon them, or to prevent the principal officers of any railroad company or companies from exchanging passes or tickets with other railroad companies for their officers and employees or free passes or reduced rates to persons in charge of live stock shipped from point of ship- ment to destination and return, or from issuing second-class tickets at a lower rate of fare, than for first-class, for the holders of which second-class tickets so issued only second-class accom- modations shall be allowed. [Ibid, section 19.] Formerly, as may be seen in Johnson'v. Pensaoola & P. R. R., 16 Fla. 623. 26 Am. Rep. 731 (1878), discrimination was not held illegal in itself in Florida unless the party discriminated against was treated outrageously. [3018] Chap. XXXVII] State Statutes. [§§ 1137, 1138 § 1137. Georgia. If anj railroad corporation as aforesaid shall make any un- just discrimination in its rates or charges of toll for the trans- portation of passengers, or freight of any description, or for the use and transportation of any railroad car on its said road, or upon any of the branches thereof, or upon any railroads con- nected therewith within this State the same shall be deemed guilty of having violated the provisions of this Article, and upon conviction thereof shall be dealt with as hereinafter provided. [Code (1895), section 2188. J Personal discrimination is forbidden in Georgia both by common law and by statute. See Logan v. Central Ry. & B. Co., 74 'Ga. 684 (1885), and Savannah F. & W. Ry. v. Burdiek, 94 Ga. 775, 21 S. E. 995 (1894). § 1138. Illinois. If any such railroad corporation aforesaid shall make any unjust discrimination in its rates or charges of toll, or compen- sation, for the transportation of passengers, or freight of any description, or for the use and transportation of any railroad cars upon its said road, or upon any of the branches thereof, or upon any railroads connected therewith, which it has the right, license or permission to operate, control or use, within this State, the same shall be deemed guilty of having violated the provi- sions of this act, and upon conviction thereof shall be dealt with as hereinafter provided. Provided, however, that nothing herein contained shall be so construed as to prevent railroad corporations from issuing com- mutation, excursion or thousand-mile tickets, as the same are now issued by such corporations. [Annotated Statutes (1896), ch. 114, section 167.] Personal discrimination is contrary to the law of Illinois, both common and statutory. Chicago & A. E. R. v. People, 67 111. 16, 16 Am. Rep. 599 (1873) ; People v. Chicago & A. R. R., 67 111. 118 (1873). Differences in the cost of service may, however, be taken into account. Chicago & A. R. R. V. Coal Co., 79 111. 121 (1875) ; Savitz v. Ohio & M. Ry., 150 111. 208, 37 N. E. 235, 27 L. R. A. 626 (1894), affirming 49 111. App. 315 (1892). [1019] § 1139] Eaileoad Kate Regulation. [Chap. XXXVII § 1139. Indiana. If any railroad subject hereto, directly or indirectly, oi; by any special rate, rebate, drawback, or other device, shall charge, demand, collect or receive from any person, firm or corporation a greater or less compensation for any service rendered or to be rendered by it than it charges, demands, collects or receives from any other person, firm or corporation for doing a like and con- temporaneous service in the transportation of a like kind of traffic under substantially similar circumstances and conditions, such railroad shall be deemed guilty of unjust discrimination, which is hereby prohibited. That nothing in this Act shall prevent the carriage, storage or handling of property free or at reduced rates for the United States, state or municipal governments, or for charitable pur- poses, or to or from fairs and expositions for exhibition thereat, or the free carriage of destitute and homeless persons trans- ported by charitable societies, and the necessary agents employed in such transportation, or the issuance of mileage, excursion or commutation passenger tickets. ]S]"othing in this act shall be construed to prohibit any common carrier from giving free passes or tickets to officers and employees of Young Men's Chris- tian Associations, reduced rates to ministers of religion or to municipal governments for the transportation of indigent per- sons, or to the inmates of the itTational Home or State Home for disabled volunteer soldiers, and of soldiers' and sailors' orphans' homes, including those about to enter and those returning home after discharge, under arrangements with the board of man- agers of said homes. Nothing in this act shall be construed to prevent railroads from giving free carriage to their own officers and employees, or to prevent the principal officers of any other railroad company or companies from exchanging passes or tickets with other railroad companies for their officers and em- ployees. [Laws of 1905, ch. 53, section 14.J Louisville, E. & St. L. R. R. v. Wilson, 132 Ind. 517, 32 N. E. 311, 18 L. R. A. 105 & N. (1892), was a case where the railroad made a rate on [1020] Chap. XXXVII] State Statutes [§ 1140 railroad ties to one shipper about 50 per cent, less than the rate to other shippers. It was held that this could not be justified by showing that the favored shipper had agreed to sell to the railroad such ties as it might want. § 1140. Iowa. If any common carrier subject to the provisions of this chap- ter shall directly or indirectly, by any special rate, rebate, draw- back or other device, charge, demand, collect or receive from any person or persons a greater or less cqmpensation for any service rendered, or to be rendered, in the transportation of passengers or property subject to the provisions of this chapter, than it charges, demands, collects or receives from any other person or persons for doing for him or them a like contemporaneous ser- vice in the transportation of a like kind of traffic, such common carrier shall be guilty of unjust discrimination, v^hich is hereby prohibited and declared to be unlavpful; but this section shall not be construed as prohibiting a less rate per one hundred poimds in a car-load lot than is charged, collected or received for the same kind of freight in less than a car-load lot. [Code (1897), section 2124. J Formerly the courts of Iowa were not opposed to various forms of dis- crimination as such. Cook v. Chicago, R. I. & P. Ey., 81 Iowa, 551, 46 N. W. 749, 25 Am. St. Rep. 512, 9 L. R. A. 764 (1890) ; Paxton v. Illinois Central R. R., 56 Iowa, 427, 9 N. W. 334 (1880). But this statute is so positive that it plainly reaches all forms of personal discrimination; the only question can be as to the details of its enforcement. In Blair v. Sioux C. & P. Ry., 109 Iowa, 369, 80 N. W. 673 (1899), it was held that interest is not recoverable on the treble damages imposed by the statute as a penalty for unjust discrimination in charges by a railroad company; and in Carrier v. Chicago, R. I. & P. R. R., 79 Iowa, 80, 44 N". W. 203 (1889), it was held that a cause of action to recover unreasonable and excessive charges accrued when the charges were paid and not when the discrimination was discovered; but where the company had fraudulently concealed the fact that the amount paid by plaintiff was unreasonable and in excess of that paid by other shippers, that the statute of limitations did not begin to run until the fact was discovered. [1021] § 1142] Railroad Eate Regulation. [Chap. XXXVII § 1141. Kansas. j!^o railroad company shall charge, demand or receive from any person, company or corporation, for the transportation of any property, or for any other service, a greater or less smn than it shall at the same time charge, demand or receive from any other person, company or corporation for a like service from the same place, or upon like conditions and under similar circum- stances ; and all concessions of Tates, drawbacks and contracts for special rates shall be open to and allowed all persons, com- panies and corporations alike. [General Statutes (1901), sec-" tion 5985.J Nothing herein or in the act to which this is supplemental shall prevent the carriage, storage or handling of freight free or at reduced rates for the State, or for city, county or town gov- ernment, or for charitable purposes, or to and from fairs and expositions for exhibition thereof, or the free carriage of desti- tute and indigent persons, or the issuance of mileage or excursion passenger tickets ; nor to prevent railroads from giving special rates or free transportation to the officers and members of the Kansas national guard, to ministers of religion, inmates of hospitals, eleemosynary, or charitable institutions, or to any rail- road officers, agents, employees, attorneys, witnesses attending court or before the commissioners on behaK of such railroad company, stockholders or directors. [Laws of 1905, ch. 340, section 12. J § 1142. Kentucky. 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 for any service rendered in the transportation of passengers or property than it charges, demands, collects or receives from any person for doing for him a like and contemporaneous service in the transporta- [1022] Chap. XXXVII] State Statutes. [§1143 tion of a like kind of traffic, it shall be deemed guilty of unjust discrimination. [Compiled Statutes (1894), section 817.] It shall be 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 resipect whatever, in the transportation of a like kind of traffic; or to subject any particular person, company, firm, corporation or locality, or any particular description of traffic to any undue or unreasonable prejudice or disadvan- tage. When one or more carloads of freight shall be trans- ported at the same time for different persons, and for each shipper a car load or more, such shipment shall be considered and taken as the same quantity of freight within the meaning of this law, and when less than a carload of freight, and over five thousand pounds, are transported at the same time for dif- ferent shippers, and for each shipper over five thousiand pounds, such shipment shall be considered and taken as the same quan- tity of freight, and when over five hundred pounds and less than five thousand pounds' are transported at the same time for different shippers, and for each shipper said quantity of freight, such shipment shall be considered and taken as the same quan- tity of freight. [Ibid, section 818.] In Louisville & N. R. R. v. Com., 46 S. W. (Ky.) 702 (1898), it was held that the requirement that the charges shall be the same for receiving, transporting and handling freight of the same class from and to the same points, " and upon the same conditions,'' relates to the receiving, loading, I'nloading transporting, hauling, delivering and handling freight, and re- quires the charges therefor to be the same for all persons alike, except, when the freight is transported from and to different points, or is of different classes, or the cost of transporting, including savings by reason of facilities furnished by the shipper is different. And in Com. v. Chesa- peake & 0. Ry., 115 Ky. 57, 72 S. W. 361 (1903), it was held that an indictment against a carrier for discrimination must allege the hauling was under the same conditions. So there cannot be a violation of the law unless different charges be made for transporting freight of the same class from and to the same points and " upon the same conditions." Louisville & N. Ry. V. Com., 105 Ky. 179, 48 S. W. 416 (1902). And an indictment for unjust discrimination in rates should particularly set forth the points [1023] § 1145] Eaileoad Rate Regulation. [Chap. XXXVII from and to which the goods were shipped and the character of the ser- vice required in each case. Louisville & N. E,y. v. Com., 108 Ky. 628, 57 S. W. 508 (1900). § 1143. Louisiana. . . . To correct abuses, and preve'iit unjust discrimination and extortion in the rates for the same, on different railroads, steamboats and other water craft, sleeping car, express, tele- phone and telegraph lines of this State. . . [Constitution (1898), article 284.J § 1144. Massachusetts. A railroad corporation shall not in its charges for the trans- portation of freight or in doing its freight business, make or give any undue or unreasonable preference or advantage to or in favor of any person, firm or corporation, nor subject any person, firm or corporation to any undue or unreasonable prejudice or disadvantage. [Revised Laws (1902), ch. Ill, section 245.] The common law of Massachusetts did not hold discrimination, as such, illegal. Fitchburg R. E. v. Gage, 12 Gray, 393, B. & W. 354 (1859). § 1145. Michigan. All railroad corporations shall grant equal facilities for the transportation of passengers and freight to all persons, com- panies, or corporations, without discrimination in favor of any individuals, companies or corporations. ~So railroad corpora- tion shall in any manner discriminate in its rates of freight tar- iff, in favor of any individual, company, or corporation doing business over its line [of] road, and shall grant the same rights and privileges to all shippers, subject to the same rates and classification, without rebate or any other special privilege or rate not extended to all other shippers in the same class, who ship a like quantity or quantities. Any railroad corporation refusing to comply with any one of the provisions of this section shall be liable to a penalty not exceeding five hundred dollars. [Compiled Laws (1897), section 6266.] [1024] Chap. XXXVII] State Statutes. [§§ 1146, 1147 § 1146. Minnesota. It shall be unlawful for any common carrier to make or give any unequal or unreasonable preference or advantage to any particular person, company, firm, corporation or locality, or any particular description of traffic in any respect whatever; or to subject any particular person, company, firm, corporation or locality to any unequal or unreasonable prejudice in any respect whatsoever. [Kevised Laws (1905), section 2009.J Nothing in this chapter shall prevent the handling free or at reduced rates for the United States, the State, or for any municipal corporation thereof, or for charitable purposes; or the issuance of mileage, excursion or commutation passenger tickets at rates equal to all ; or giving such reduced rates to min- isters of religion, sisters of charity, missionaries, students of any educational, or "inmates of any charitable institution ; nor the free transportation of passengers when allowed by lav<\ [Ibid, section 2010.J § 1147. Mississippi. It is unlawful for any railroad to make or allow any rebate or reduction from the tariffs of charges fixed or approved by the Commission, in favor of any person, place or corporation, by a change in or deviation from the rates so fixed or approved, unless such change or deviation be first allowed by the Commis- sion ; and it is unlawful for any railroad to grant free passes or tickets, or passes or tickets at reduced rates, to any person, or to transport or suffer any person to be transported free of charge, or at reduced rates not applicable to all persons alike; but this shall not prevent the transportation free of charge, or at reduced rates, of persons and freight for a scientific, religious or benevolent purpose, or for an industrial exhibition, fair or association of a public nature, nor such transportation of immi- grants, persons traveling with a view of locating immigrants, and indigent and unfortunate persons, nor shall it prevent the [1026] § 1148] Kaileoad Kate Regulation. [Chap. XXXVII sale and issuance of mileage, excursion and commutation tickets, nor the free carriage of the railroad's own officers, and of per- sons bona fide in its employment, at a salary or regular com- pensation, nor the exchange of passes or tickets with the ether railroads for their officers and employees, nor its free carriage of the class of persons- known as railroad employees, of persons injured in railroad accidents, and of the physicians and nurses attendant upon such injured persons, nor the carriage free, or at reduced rates, of the members of the families of officers and employees of the railroad ; however, these exceptions are allowed on the condition that the railroad shall report annually to the Commission all free passes granted, to whom, and for what reason granted. [Annotated Code (1902), section 4292.J § 1148. Missouri. If any such common carrier shall directly or indirectly, by any special rate, rebate, drawback or other devices, charge, de'- mand, collect or receive from any person or persons, firm or corporation a greater or less compensation for any service ren- dered in the transportation of any kind of property upon such railroad in this State than it charges, demands, collects or re- ceives from any other person or persons, firm or corporation for doing for him or them a like service in the transportation of a like kind of property under substantially like circumstances and conditions, such common carrier shall be deemed guilty of unjust discrimination, which is hereby prohibited and declared unlaw- ful. [Eevised Statutes (1899), section 1129.] In Christie v. Missouri Pac. Ry., 94 Mo. 453, 7 S. W. 567 (1888), it was held under a former condition of the law that discrimination was not proved unless it was shown that the reduced rate was not given to all. And in Rothschild v. Wabash St. L. & P. R. R., 92 Mo. 91, i S. W. 413 (1887), it was held that if circumstances appeared to explain the lower rate given to n, particular shipper the prima facie discrimination would be obviated. But these decisions may not be acceptable to the courts in the interpretation of the statute quoted above. [1026] Chap. XXXVII] State Statutes. [§§ 1149, 1150 § 1149. Nebraska. That if any coininoii carrier subject to the provisions of this act shall directly or indirectly by any special rate, rebate, draw- back or other device, charge, demand, collect, or receive from any person or persons a greater compensation for any service rendered or to be rendered in the transportation of passengers or property, subject to the provisions of this act, than it charges, demands, collects or receives from any other person or persons for doing for him or them a like and contemporaneous service in the transportation of a like kind of traffic under substantially similar circumstances and conditions, such common carrier shall be guilty of unjust discrimination, which is hereby pro- hibited and declared to be unlawful. [Compiled Statutes (1889), section 4046.J § 1150. New Hampshire. The proprietors of every railroad shall furnish to all persons reasonable and equal terms, facilities, and accommodations for the transportation of persons and property over their railroad, and for the use of depots, buildings and grounds in connec- tion with such transportation, and for the interchange of such traffic at points in connection with other railroads. [General Laws (1903), ch. 160, section l.J If the proprietors of any railroad shall n,ot comply with the provisions of the preceding section, they shall be fined not ex- ceeding one thousand ■ dollars, for each offense, and shall be liable to the party injured for his damages in an action on the case. [Ibid, section 2. J The proprietors of every railroad shall cause to be posted in their depots a table of prices for the conveyance of persons and property between the stations on their road and between such stations and the stations of other railroads with which they have a business connection. The rates shall be the same for all persons and for like descriptions of freight between the same [1027] § 1152] Railkoad Rate Regulation. [Chap. XXXVII points, and shall not be raised until after thirty days' notice posted as aforesaid. [Ibid, section 3. J Season and mileage tickets may be sold at reduced rates; and special rates may be established for passengers to attend agricultural fairs and public meetings, for parties of pleasure, and for military and other organized bodies. [Ibid, section 4. j Discrimination is defined in McDuflfee v. Portland & R. R. R., 52 N. H. 430, 13 Am. Rep. 72 (1873), as a personal difference made without justifi- cation. But in Concord & P. R. R. v. Forsaith, 59 N. H. 122, 47 Am. Rep. 181 (1879), it was held 'that the fact that one shipper made large ship- ments was sufficient to justify a difference in rates. § 1151. New Mexico. No railroad company shall charge any person, company or corporation for the transportation of any property, a greater Slim than it shall at the same time charge and collect from any other person, company, or corporation for a like service' from the same place, and upon like conditions, and all concessions of rates, drawbacks, and contracts for special rates founded upon the demands of commerce and transportaton shall be open to all persons, companies, and corporations alike. [Compiled Laws (11897), section 3911.J § 1152. North Carolina. That if any common carrier subject to the provisions of this Act shall directly or indirectly by any special rate, rebate, drawback, or other device, charge, demand, collect, or receive from any person or persons a greater or less compen- sation for any service rendered or to be rendered in the trans- portation of passiengers or property subject to the provisions of this Act than it charges, demands, or collects, or receives from any other person or persons for doing for him or them a like and contemporaneous service in the transportation of a like kind of traffic under substantially similar circumstances and condi- tions, such common carrier shall be deemed guilty of unjust dis- [1028] Chap. XXXVII] State Statutes. [§ 1153 crimination, which is hereby prohibited and declared to be un- lawful. That it shall be unlawful for any common carrier sub- ject to the provisions of this Act to make or give any undue or unreasonable preference or advantage to any particular per- son, company, firm, corporation, or locality or any particular deccription of traffic to any undue or unreasonable prejudice or disadvantage in any respect whatsoever, and any person, per- sons, company, or corporation violating the provisions of this section shall be upon conviction thereof, fined not less than one thousand nor more than five thousand dollars for each and every offense. [Laws of 1899, ch. 164, section 13. J Provided further, that the North Carolina Corporation Com- mission conjointly with such companies shall have authority to make special rates for the purpose of developing all manu- facturing, mining, milling and internal improvements in the State ; Provided further, that nothing in this Act shall prohibit railroad or s'teamboat companies from making special passenger rates with excursion or other parties, also rates on such freights as are necessary for the comfort of such parties, subject to the approval of the Commission. [Ibid, section 14.] See State v. Southern Ry., 122 N. C. 1052, 30 S. E. 133 (1898), where it was held that under a provision that no common carrier shall receive from any person any greater compensation than it charges any other per- son for a like and contemporaneous service, it is unlawful for a railroad company to issue passes, and transport people thereon free of charge. And see McNeill v. Dunham & C. Ry., 135 N. C. 682, 47 S. E. 765 (1904), where it was held that a passenger riding upon a, pass granted in viola- tion of a provision of this sort was not so in pari delicto as to disable him from recovering for negligent injuries. § 1153. North Dakota. If any railroad, railroad corporation or common carrier sub' ject to the provisions of this Act shall directly or indirectly by any special rate, rebate, drawback, or other device, charge, de- mand, collect, or receive from any person or persons a greatter or less compensation for any service rendered cjr to be rendered in [1029] § 1154] Eaileoad Eate Kegtjlation. [Chap. XXXVII the transportation of passengers or property subject to the pro- visions of this Act than it charges, demands, collects, or re- ceives from any other person or persons for doing for him or for them a like and contemporaneous! service in the transporta- tion of a like kind of traffic, it shall be deemed guilty of un- just discrimination which is hereby prohibited and declared un- lawful ; this section, however, is not to be construed as prohibit- ing a less rate per one hundred pounds in a carload lot than is charged, collected, or received from the same kind of freight in less than a carload lot. [Laws of 1897, eh. 115, section 15. J § 1154. Ohio. It shall be the duty of all railroad companies and of all persons operating a railroad to secure and extend to all per- sons, companies and corporations, the same and equal op- portunities and facilities for receiving and shipping freights of all kinds, of the same class [and the same and equal oppor- tunities and f acilitiesi for receiving and shipping freights of all kinds of the same class] , that such railroad company or the per- son operating such railroad, extends to, has used or enjoys, of and concerning freights owned by such railroad company, or the person operating such road or any of the officers or stockholders therein, or in which it, they or either of them have any interest, and any railroad company or person operating any railroad failing to comply with or observe the provisions or requirements of this section, shall be liable in a civil action to the party injured for the damages sustained, but for any violation of this section the recovery in any such action shall be not less than five hundred dollars. Annotated Statutes (1906), section 3373.] Ohio has always been one of the strongest States against personal dis- crimination; and this statute^ in so far as it states substantive law, is but declaratory of the common law; therefore it is thought advisable to subjoin citations to the principal decisions against personal discrimina- tion. In Schofleld v. L. S. & M. S. R. R., 43 Ohio St. 571, 3 N. W. 907, [1030] Chap. XXXVII] State Statutes. [§§ 1155, 1156 54 Am. Kep. 846 (1885), it was held illegal to make a reduction to one shipper of a commodity, even though he was a large shipper. This was reiterated in Bundred v. Rice, 49 Ohio St. 640, 32 N. E. 169, 34 Am. St. Eep. 589 (1892). § 1155. Oregon, It shall be unlawful for any person or persons engaged in the transportation of property as aforesaid, directly or indirectly, to allow any rebate, drawback, or other advantage, in any form, upon shipments made or services rendered as aforesiaid by him or them ; provided, that the provisions of this Act shall not apply to goods intended in good faith to be sbipped to points beyond the limits of this State; provided, that this dicrimina- tion shall be considered only as between persons when relating to similar grades of freight. [Anotated Laws (1892), section 4030.J § 1156. Pennsylvania. Any undue or unreasonable discrimination by any railroad company, or other common carrier, or any officer, superin- tendent, manager or agent thereof, in charges for, or in facilities for, the transportation of freight, within this State, or coming from or going to any other State, is hereby declared to be un- lawful. [Br. Pur. Dig. (1894), p. 1815, section 186.] In Bald Eagle V. Ry. v. Nittarey V. Ry., 171 Pa. St. 284, 33 Atl. 239 (1895), it was held that one who promised a railroad company, in con- sideration of its laying its rails to his manufactory, and furnishing him money to aid in bringing the raw material thereto, to give the company the transportation of the manufactured product to market at reasonable rates, could not avoid the contract on the ground that it deprived him of rights guaranteed by Constitution, article 17, § 3, declaring that all individuals shall have equal rights to transportation, without discrimina- tion. In Hoover v. Pennsylvania R. R., 156 Pa. St. 220, 27 Atl. 282, 36 Am. St. Rep. 43, 22 L. R. A. 263, B. & W. 410 (1893), it was held that it was not discrimination to give a lower rate on coal to manufacturers than to dealers in coal. [1031] § 1157] Eailboad Kate Kegulation. [Chap. XXXVII § 1157. South Carolina. If any railroad corporation as aforesaid, stall mate any un- just discrimination in its rate and charges of toll as compen- sation for transportation of passengers or freights of any de- scription, or for the use and transportation of any railroad car upon its said road, or upon any of the branches thereof, or upon any railroads connected therewith, which it has the right, license or permission to operate or control within this State, the same shall be deemed guilty of having violated the provisions of this chapter, and, upon conviction thereof, shall be fined in a sum not less than one hundred nor more than one thousand dollars. It shall be unlawful for any person so engaged as aforesaid, or person engaged solely in the shipment or receiving of prop^ erty directly or indirectly to allow or receive any rebate, draw- back, or other advantage, in any form, upon shipments made or services rendered or received by them as aforesaid. [Civil Code (1902), section 2084.J Provided, however. That nothing herein contained shall be so construed as to prevent such person or persons so engaged as aforesaid from issuing commutation excursion or thousand-mile tickets as the same are now issued by such corporations. [Ibid, section 2085.J Nothing in this chapter shall apply to the carriage, receiving, storing, handling, or forwarding of property carried for the United States or any State thereof, at lower rates of freight and charges than for the general public, or to the transportation of articles free, or at reduced rates of freight, for charitable pur- poses, or to or from public fairs and expositions for exhibit. [Ibid, section 2087. J Discrimination was not illegal at common law in South Carolina. Ex parte Benson & Co., 18 S. C. 38, 44 Am. Rep. 564 (1882) ; Avinger v. So. Car. R. R., 29 S. C. 265, 7 S. E. 493, 13 Am. St. Rep. 716 (1888). [1032] Chap. XXXVII] State Statutes. [§ 1158 § 1158. South Dakota. If any such railroad corporation shall charge, collect, or re- ceive for the transportation of any passenger or freight of any description upon its railroad for any distance within the State, a greater amount of toll or compensation than is at the time charged, collected, or received for the transportation in the same direction of any passenger or like quantity of freight of the same class over a greater distance of the same railroad ; or if it shall charge, collect, or receive at any point upon its railroad a higher rate of toll or compensation for receiving, handling, or delivering freight of the same class and quantity than it shall at the same time charge, collect or receive! for the transportation of any passenger or freight of any description over its railroad, a greater amount as toll or compensation than shall at the same time be charged, collected or received by it for the transporta- tion of any passenger or like quantity of freight of the same class being transported in the same direction over any portion of the same railroad of equal distance ; or if it shall charge, collect, or receive from any person or persons a higher or greater amount of toll or compensation than it shall at the same time charge, collect, or receive from any other person or persons for receiving, handling or delivering freight of the same class and like quantity, at the same point upon its railroad, . . . all such discriminating rates, charges, collections, or receipt, whether made directly or by means of any rebate, drawback or other shift or evasion, shall be deemed and taken against such railroad corporation, as prima facie evidence of unjust discrimi- nation. . . . provided, however, that nothing herein con- tained shall be construed as to prevent railroad corporations from issuing commutation, excursion, or thousand-mile tickets ; provided, the same are issued alike to all applying therefor. [Laws of 1897, ch. 110, section 28.] See Church v. Minneapolis & S. L. Ry., 14 S. D. 443, 85 N. W. 1001 (1901), holding parties to a contract violating this section in pari delicto. [1033] § 1159] Eaileoad Rate Regulation. [Chap. XXXVII § 1159. Tennessee. If any such common carrier shall directly or indirectly, by any special rate, rebate, drawback, or other device, charge, de- mand, collect, or receive from any person or persons, firm or corporation, a, greater or less compensation for any services ren- dered in transportation of any kind of property upon such rail- roads within this State than it charges, demands, collects, or receives from any other person or persons, firms, or corporations for doing for him or them a like service in the transportation of a like kind of property under substantially like circumstances and conditions, and if such common carriers make any prefer- ence between the parties aforesaid in furnishing cars or motive power for the purpose aforesaid, such common carrier shall be deemed guilty of unjust discrimination, which is hereby pro- hibited and declared unlawful. [Laws of 1897, ch. 10, section 15.J _ This Act shall not prevent any railroad company from trans- porting freight free of charge, or at reduced rates, for any relig- ious, charitable or benevolent purpose, or for any industrial ex- position, fair or association of a public nature, or for transport- ing immigrants into this State, or persons prospecting with a view of locating or bringing immigrants into this State, or for pleasure excursions.- However, nothing in this Act shall be con- strued so as to prevent the railroads of this State from giving special rates to encourage infant manufacturing industries, and for the encouragement of any other new business or industry, or for the transportation of any perishable goods; provided, that such transportation shall be furnished without discrimi- nation, and under such rules and regulations as the Commis- sion may prescribe. [Ibid, 24.] See Eagan &, B. v. Aiken, 9 Lea (77 Tenn.) 609 (1883), for a statement of the common law of Tennessee prior to this statute, which permitted many differences to be made, most of which must be forbidden by this enactment. [1034] Chap. XXXVII] State Statutes. [§ 1160 § 1160. Texas. Art. 4574. If any railroad subject hereto, directly or in- directly, or by any special rate, rebate, drawback, or other de vice, shall charge, demand, collect, or receive from any person, firm, or corporation, a greater or less compensation for any servivo rendered, or to be rendered, by it than it charges, de- mands, collects, or receives from any other person, iirm, or cor- poration for doing a like and contemporaneous service, such railroad shall be deemed guilty of unjust discrimination, which is hereby prohibited. [Revised Statutes (1898), article 45Y4.J Nothing herein shall prevent the carriage, storage, or handl- ing of freight free or at reduced rates for the State, or for any city, county or town government, or for charitable purposes, or to and from fairs and expositions for exhibition thereof, or the free carriage of destitute and indigent persons, or the issuance of mileage or excursion passenger tickets ; nor to prevent rail- roads from giving free transportation to ministers of religion, or free transportation to the inmates of hospitals, eleemosiynary and charitable institutions, and to the employes of the agricul- tural and geological departments of this State, or to peace officers of this State; and nothing herein shall be construed to prevent railroads from giving free transportation to any rail- road officers, agents, employes, attorneys, stockholders, or di- rectors, or to the Railroad Commissioners, their Secretary, clerks, and employes herein provided for, or to any person not prohibited by law; provided, they, or either of them, shall not receive from the State mileage when such pass is used. [Re- vised Statutes (189&), article 4562.J The statute does not prohibit a carrier from charging less than the maximum rates fixed by the Commission, where no discrimination appears; and where the carrier, after agreeing to carry at a. reduced rate, collects the full rate, the difference may be recovered by the shipper. Wells, Fargo Exp. Co. V. Williams (Tex. Civ. App.), 71 S. W. 314. tJnder an allegation that defendant railroad company unjustly dis- criminated against plaintiff in' charging him $50 for a shipment while it charged others for similar shipments its published rate, $35, plaintiff cannot [1035] § 1161] Kaileoad Kate Eegtjlation. [Chap. XXXVII recover for unjust discrimination, consisting in refusing plaintiff a rebate upon its establislied rate wiiicli it allowed others. Texas & P. Ry. Co. v. Langsdale, Tex. Civ. App., 30 S. W. 681. Of course, these provisions cannot apply to interstate shipments. Gulf, W. T. & P. Ey. v. Barry (Tex. Civ. App.), 45 S. W. 814 (1898) ; Fielder v. Missouri, K. & T. Ry., 92 Tex. 176, 46 S. W. 633 (1898). § 1161. Utah. No railroad company or other common carrier engaged in transportation of passengers or property shall charge, demand, or receive from any person, company, or corporation for the transportation of passengers or property a greater sum than it shall charge or receive from any other person, company, or cor- poration for like siervice, from the same place, under like condi- tions, under similar circumstances, and for the same period of time. For every transgression of the provisions of this section such common carrier shall be liable to the party suffering thereby double the entire amount so charged to such party. [Revised Statutes (1898), section 455.J Nothing in this chapter shall be construed to prohibit the car- riage or handling of property free or at reduced rates for the United States, State, or municipal governments ; or to or from fairs and exposition for exhibition thereat ; or the free carriage of destitute and homeless persons transported by charitable so- cieties, and the necessary agents employed in such transporta- tion ; or the issuance of mileage, excursion, or commutation pas- senger tickets; nor to prohibit any common carrier from giving reduced passenger rates to ministers of religion solely engaged in ministerial duties, or to the United States, State or municipal governments ; nor to prohibit railroads from giving free car- riage to their own officers and employes, or to prevent the prin- cipal officers of any railroad company or companies from ex- changing passes or tickets with other railroad companies for their officers and employes; nor to prohibit railroad companies from giving reduced rates of transportation to other railroad companies for railroad construction material, equipment or sup- plies. [Ibid, section 456.] [1036] Chap. XXXVII] State Statutes. [§§ 1162, 1163 § 1162. Virginia. If any transportation company shall, directly or indirectly, by any special rate, rebate, drawback, or other device, charge, de- mand, collect, or receive from any corporation, person, or per- sons, a greater or less compensation for any siervice rendered, or to be rendered in the transportation of passengers or prop- erty, subject to the provisions of this chapter, than it charges, demands, collects, or receives from any other corporation, per- son, or persons for doing for him or them alike and contem- poraneous service in the transportation of alike kind of traffio under substantially similar circumstances and conditions, such company shall be deemed guilty of unjust' discrimination, which is hereby prohibited and declared to be unlawful. ,[Pollard'3 Code, section 1294c, as amended Acts 1904.] § 1163. Wisconsin. If any railroad shall make or give any undue or unreasonable preference or advantage to any particualr person, firm, or cor- poration to any undue or unreasonable prejudice or disadvan- tage in any respect whatsoever, such railroad shall be deemed guilty of unjust discrimination, which is hereby prohibited and declared imlawful. [Laws of 1905, ch. 362, section 23. j It shall be unlawful for any person, firm, or corporation knowingly to accept or receive any rebate, concession, or dis- crimination in respect to transportation of any property wholly within this State, or for any service in connection therewith, whereby any such property shall, by any device whatsoever, be transported at a less rate than that named in the published tariffs in force as provided herein, or whereby any service or advantage is received other than is therein specified. Any per- son, firm, or corporation violating the; provisions of this section shall be deemed guilty of a misdemeanor, and on conviction thereof shall be punished by a fine of not less than fifty dollars [1037] § 1164] Kaileoad Rate Regulation. [Chap. XXXVII nor more than one thousand dollars for each offense. [Ibid., section 24. j § 1164. Conclusions. The development of the law against discrimination is the most important thing in the law of common carriage during the last twenty-five years. In one way or another, by common law decisions or by specific statutes, the demand of the people has made this prohibition of personal discrimination all but uni- versal law. Severe penalties are laid down against violations of this law; for the public temper is such that this is regarded as one of the most serious of industrial crimes. Specific de- tails are written in these statutes to meet, so far as possible, all the shifts and evasions which the ingenuity of railroad man- agers and favored shippers can devise. [1038] CHAPTER XXXVIII. PROHIBITION OF UNDUE PREFERENCE IN STATE STATUTES. 1171. Introduction. 1172. Arkansas. 1173. California. 1174. Connecticut. 1175. Florida. 1176. Georgia. 1177. Illinois. 1178. Indiana. 1179. Iowa. 1180. Kansas. 1181. Louisiana. 1182. Maine. 1183. Massachusetts 1184. Minnesota. 1185. Mississippi. 1186. Missouri. 1187. Nebraska. 1188. New Hampshire 1189. Nevada. 1190. New Jersey. 1191. Ohio. 1192. Oregon. 1193. Pennsylvania. 1194. Rhode Island. 1195. South Carolina. 1196. South Dakota. 1197. Tennessee. 1198. Texas. 1199. Vermont. 1200. Virginia. 1201. Wisconsin. 1202. Conclusion. § 1171. Introduction. How thorough-going is the policy against discrimination of every sort and by every metliod may be judged from the variety of the statutory provisions dealing with the subject from every conceivable method of approach. Not content with a siimple affirmation of the general rule against discriminations and un- equalities, many of the more recent codes provide, with great detail, for the various, possdbilities which may arise. Signifi- cant extracts from the statutes of various States are subjoined to show this. § 1172. Arkansas. All individuals, associations and corporations shall have equal rights to have persons and property transported over rail- roads in this State, and no unjust or undue discrimination stall [1039] § 1175] Kaileoad Eate Kegulation. [Chap. XXXVIII be made in charges for, or in facilities for transportation of freight within the State. [Digest of statutes (1904), section 6301.J § 1173. California. 'No discrimination in charges shall be made by any railroad or other transportation line between places or persons or in the facilities for the transportation of the same classes of freight or passengers within this State, or coming from or going to any other State. [Constitution (1880), article xii, section 21.] § 1174. Connecticut. E.very railroad company which refuses to transport milk for any person, on the same train and on the same conditions on which it transports milk for any other person, shall forfeit to the State twenty dollars for each offense. [General Laws (1902), section 3770.] Every such company which refuses to transport over the line of its road any railroad ties, sleepers, or material to be used in the construction or repair of any other railroad, at the same rate or price as other freight of the same class, shall forfeit to the State not less than fifty nor more than three hundred dollars. [Ibid., section 3777.] § 1175. Florida. From and after the passage of this Act, it shall be unlawful for any railroad, steamboat or transportation com- pany engaged in the transportation of passengers or freight in this State to discriminate in favor of or against any person or persons, firm, or corporation, in any manner whatever as to charges of passenger, fare, or freight transportation. [Laws of 1893 (No. 90), ch. 4204, section l.J [1040] Chap. XXXVIII] Peefeeences. [§§ 1176, 1177 § 1176. Georgia. jSTo railroad company shall discriminate in its rates or tariffs of freight in favor of any line or route connected with it as against any other line or route, nor when a part of its own line is sought to be run in connection with any other route, shall such company discriminate against such connecting line, or in favor of the balance of its own line, but shall have the same rates for all, and shall afford tlie usual and like customary fa- cilities for interchange of freight to patrons of each and all lines alike. [Code (1895), section 2214.J See Longan v. Central Ry. & B. Co., 74 Ga. 684 (1885). § 1177. Illinois. Or if it shall charge, collect, or receive, at any point upon its railroad, a higher rate of toll or compensation for receiving, handling or delivering freight of the same class and quantity than it shall, at the same time., charge, collect, or receive at any other point upon the same railroad ; or if it shall charge, collect or receive for the transportation of any passenger or freight of any description over its railroad, a greater amount as toll or com- pensation than shall at the same time, be charged, collected, or received by it for the transportation of any passenger, or like quantity of freight of the same class, being transported in the same direction, over any portion of the same railroad, of equal distance ; or if it shall charge, collect, or receive from any per- son or persons, a higher or greater amount of toll or compensa- tion than it shall, at the same time, charge, collect, or receive from any other person or persons for receiving, handling, or delivering freight of the same class and like quantity at the same point upon its railroad; or if it shall charge, collect, or receive from any person or persons, for the transportation of any freight upon its railroad, or higher or gTeater rate of toll or compensation than it shall, at the same time, charge, collect, or receive from any other person or persons, for the transporta- tion of the like quantity of freight of the same class, being ttam- [1041] § 1178] ^ Eaileoad Eate Kegulation. [Chap. XXXVIII ported from the same point, in the same direction, over equal distances o'f the same railroad ; or if it shall charge, collect, or receive from any person or persons, for the use and transporta- tion of any railroad car or cars upon its railroad, for any dis- tance, the same or a greater amount of toll or compensation than is at the same time charged, collected, or received from any other person or persons, for the use and transportation of any railroad car of the same class or number, for a like purpose, be- ing transported in the same direction, over a greater distance of the same railroad; or if it shall charge, collect, or receive from any person or persons, for the use and transportation of any railroad car or cars upon its railroad, a higher or greater rate of toll or compensation than it shall, at the same time, charge, collect, or receive from any other person or persons, for the use and transportation of any railroad car or cars of the same class or number, for a like purpose, being transported from the same point in the same direction, over an equal distance of the same railroad; all such discriminating rates, charges, col- lections, or receipts, whether made directly, or by means of any rebate, dravcback, or other sihift or evasion shall be deemed and taken against such railroad corporation as prima facie evi- dence of the unjust discrimination prohibited by the provisions of this Act. [Annotated Statutes (1896), cli. 414, section 167.] In Savitz v. Ohio & M. Ry., 150 111. 208, 37 N. E. 235, 27 L. K. A. 028 (1894), it was pointed out that where there are differences in the cost of serving there may not improperly be made corresponding differences in the rate. § 1178. Indiana. It shall be an unjust discrimination for any such railroad company to make or give any undue or unreasonable preference or advantage to any particular person, firm, corporation, or locality; in connection with the transportation of any ship- ment or shipments, or to subject any particular kind of traffic [1042] Chap.XXXVIII] Peeferejstces. [§ 1179 to any undue or unreasonable prejudice, delay, or disadvantage in any respect whatsoever. Every railroad company which shall fail or refuse, under such regulations as may be prescribed by the Commission, to receive and transport, without unreasonable delay or discrimi- nation the passengers, tonnage, and cars, loaded or empty, of any connecting line of railroad company, and every railroad company which shall, under such regulations as may be pre- scribed by the Commission, fail or refuse to transport and de- liver without! unreasonable delay or discrimination, any pas- sengers, tonnage, or cars, loaded or empty, destined to any point on or over the line of any connecting line of railroad, shall be deemed guilty of unjust discrimination : Provided, that per- ishable freights of all kinds and live stock shall have precedence of shipment. Provided further, that this shall not be con- strued as to require any railroad company to give the use of its terminal facilities to any other railroad company engaged in like business, except that if such terminal facilities are granted to one company, they shall be granted on like terms to all other companies. [Laws of 1905, ch. 53, section 14.] See Louisville, E. & St. L. R. R. v. Wilson, 132 Ind. 517, 32 N. 311, 18 L. R. A. 105 note (1892), where it was held contrary to law to enter into a special arrangement with one shipper of ties, giving him a lower rate in return for his undertaking to supply the railroad with ties at a certain rate. § 1179. Iowa. It shall be unlavrful for any common carrier subject to the provisions of this chapter to make or give any preference or ad- vantage to any particular person, company, firm, corporation or locality, or any particular description of traffic, in any respect whatsoever; or subject any particular person, company, firm, corporation or locality or any particular description of traffic, to any prejudice or disadvantage in any respect whatsoever; but this shall not be construed to prevent any common carrier [1043] § 1180] Eailboad Eate Eequlation. [Chap. XXXVIII from giving preference as to time of shipment of live stock, uncured meats, or other perishable property. [Code (1897), section 2 124. J No such common carrier shall charge, collect, demand or re- ceive more for transporting a car of freight than it at the same time charges, collects, demands or receives per ear for several cars of a like class of freight over the same railway, for the s.ame distance, in the same direction; nor charge, collect, de- mand, or receive more for transporting a ton of freight than it charges, collects, demands, or receives per ton for several tons of freight under a carload of a like class over the same railway, for the same distance, in the same direction ; nor charge, collect demand, or receive more for transporting a hundred pounds of freight than it charges, collects, demands, or receives per hunr dred for several hunderd pounds of freight, under a ton, of a like class, over the same railway, for the same distance, in the same direction; and all sfuch discriminating rates, charges, col- lections, or receipts, whether made directly or by means of any rebate, drawback, or other shift or evasion, shall be received as pnma facie evidence of the unjust discrimination prohibited by this chapter; but for the protection and development of any new industry within the State, siich railway company may grant concesisions or special rates for any agreed number of carloads, which rates shall first be approved by the board of Commissioners, and a copy thereof filed in its office. [Ibid, section 2146.] See Cook v. Chicago, R. I. & P. Ry., 81 Iowa 551, 46 N. W. 749, 25 Am. St. Rep. 512, 9 L. R. A. 764 (1890), where it was held that a railroad need not treat all its patrons upon equal terms, but might enter into special arrangements with some of them. § 1180. Kansas. Sfec. 16. It shall be unlawful for any railroad company or other common carrier to grant, or for any consignee or consignor to receive, any rebate or drawback, or enter into any arrange- [1044] Chap. XXXVIII] Peepeeences. [§ 1181 ment whereby such consignee or consignor shall, directly or in- directly receive a lower rate for transporting freight than the rate fixed by tke orders of this board or the published schedules of such railroad company. It shall be unlawful for any rail- road company or other common carrier to grant any special privileges to any person, firm, or corporation, either in the way of a preference in furnishing cars, side-track facilities, sites for elevators, mills, or warehouses, or any other form of prefer- ence, privilege, or discrimination. It shall be unlawful for any railroad company or common carrier, or any agent or employe thereof, or for any person, firm, or corporation to enter into any secret agreement with any firm, person or cor- poration for the purpose of giving any firm, person, or corpora- tion any special privileges, favors, or discriminations in favor of such firm, person, or corporation. [Laws of Kansas, 1905, ch. 340, section 16. J § 1181. Louisiana, If any railroad, express, telephone, telegraph, steamboat, or other water craft, or sleeping car company, subject hereto, directly or indirectly, or by any special rate, rebate, or other device, sliall intentionally charge, demand, collect, or receive from any person, firm, or corporation, a greater or less compensation for any service rendered by it, than it charges, decmands or receives from any other person, firm, or corporation, for doing a like and contemporaneous service, or shall violate any of the rates, charges, orders, or decisions of said Commis- sion, such railroad, steamboat, or other water craft, express, telegraph, telephone, or other company, shall forfeit and pay to the State not less than one hundred dollars, nor more than five thousand dollars, to be recovered before any court of competent jurisdiction, at the suit of the said Commission, at the domicile of the Commission or the company, or at the place where tlie complaint arises, at the option of the Commission. Provided, That whenever any rate, order, charge, rule, or regulation of [1045] § 1183] Eaileoad Kate Kegulation. [Chap. XXXVIII the Commission is contested in court, as provided for in article 285, of this Constitution, no fine or penalty for disobedience thereto, or dis.regard thereof, shall be incurred until after said contestation shall have been finally decided by the courts, and then only for acts subsequently committed. The power of the Commission S!hall affect only the transporta- tion of passengers, freight, express matter, and telegraph and telephone messages, between points within this State, and the use of such instruments within this State. [Constitution (1898), article 286.J § 1182. Maine. Every railroad doing business in the State, shall receive, for- ward and deliver to every other connecting railroad, without discrimination, all passengers, freight and merchandise vnth equal facilities and dispatch, and shall trans'port the same at rates of fare and freight as favorable as at the time are estab- lished, made, or allowed for the passengers, freight and mer- chandise transported over its road only, or received from or des- tined to any other railroad. [Revised Statutes (1903), ch. 52. section 12.] § 1183. Massachusetts. Sec. 240. Every railroad corporation shall, subject to the provisions of section two hundred and forty-five, give to all per- sons reasonable and equal terms, facilities and accommodations for the transportation upon its railroad of themselves, their agents and servants, and of their merchandise and other prop- erty and for the use of its depot and other buildings and grounds; and, at any point where its railroad connects with another railroad, it shall give reasonable and equal terms and facilities of interchange. [Eevised Laws (1902) ch. Ill, sec- tion 240.] [1046] Chap. XXXVIII] Prefeeences. [§§ 1184-1186 § 1184. Minnesota. It shall be unlawful for any common carrier to make or give any unequal or unreasonable preference or advantage to any particular person, firm, corporation, or locality, or any particular description of trafiic in any respect vyhatsoever ; or to subject any particular person, company, firm, corporation or locality to any unequal or unreasonable prejudice in any respect ■whatsoever. [Eevised Laws (1905), section 2009. J § 1185. Mississippi. Or if any railroad shall, for its advantage, or for the ad- vantage of a connecting line, or for that of any person, locality, or corporation, make any discrimination in transportation against any person, locality, or corporation unless authorized by the Commission. . . . Such person or corporation, in either case shall be guilty of extortion, and may be punished therefor criminally, besides being liable civilly. [Annotated Code (1902), section 4287.] See, for a discussion of discrimination in handling traffic, Alabama & V. Ry. V. Railroad Commission, 38 So. 356 (1905), and Gilliland v. Illinois Central Ry., 32 So. 910 (1903). § 1186. Missouri. It shall be unlawful for any common carrier to charge, collect, mand or receive more for transporting a ton of freight than it at the same time charges, collects, demands or receives per car for several cars of a like class of freight over the same railroad, for the same distance, in the same direction, under substantially similar circumstances and conditions; or to charge, collect, de- mand or receive more for transporting a ton of freight than it charges, collects, demands or receives per ton for several tons of freight, under a carload, of a like class of freight over the same railroad, for the same distance, in the same direction, un- der substantially similar circumstances and conditions; or to charge, collect, demand or receive more for transporting a hun- [1047] § 1186] Kailkoad Kate Kegulation. [Chap. XXXVIII died pounds of freight than it charges, collects, demands or receives per hundred for several hundred pounds of freight, under a ton, of a like class of freight, over the same railroad, for the same distance, in the same direction, under substantially similar circumstances and conditions. All such discrim- inating rates, charges, collections or receipts, whether made directly or by means of any rebate, drawback or other shift or evasion, shall be deemed and taken against such railroad company as prima facie evidence of the unjust discrimination prohibited by this article; Provided, however, that for the protection and development of any new industry within this State, such railroad company may grant concessions in special rates for any agreed number of car- loads, but such special rates as aforesaid shall first be approved by the board of railroad commissioners and a copy thereof filed in the office thereof. [Revised Statutes (1899), section 1130. J It shall be unlawful for any such common carrier to charge, collect, demand or receive more for the transportation of any car of freight composed of several diiferent classes of merchan- dise or freight, transported for the same owner to the same des- tination, than it at the same time charges for the transportation of a carload of freight of the highest class of merchandise or freight contained in said carload of mixed freight: Provided, however, that such common carrier shall hot be liable for any damages or loss in transportation growing out of or that is the natural and direct result of shipping the said several classes of freight in one car. [Ibid, section 1131. J It shall be unlawful for any such common carrier to charge, collect, demand or receive more for the transportation of less than a carload of freight when shipped to one owner, to one des- tination, than it at the same time charges for a carload of like freight, or when the car is loaded with freight of several classes, more than it charges for the transpor- tation of a carload of the highest class of freight shipped in said car of mixed freight: Provided, that nothing in this sec- [1048] Chap. XXXVIII] Peefeeeitces. [§§ 11S7, 1188 tion shall be construed to forbid a railway company from trans- porting freights in carload lots at a less rate per hundred pounds than it charges, demands and receives per hundred pounds for like class of freight in quantities less than a carload. [Ibid, section 1132.] In Rothschild v. Wabash, St. L. & P. R. R., 92 Mo. 91, 4 S. W. 418 ( 1887 ) , differences in the circumstances were held to justify differences in rates. § 1187. Nebraska. That it shall be unlawful for any common carrier subject to the provisions of this act to make or give and preference or ad- vantage to any particular person, company, firm, corporation, or locality, or any particular description of traffic, in any respect whatsoever, or to subject any particular person, company, firm, corporation or locality, or any particular description of traffic, to any prejudice or disadvantage in any respect whatsoever. Every common carrier subject to the provisiions of this act shall, according to their respective powers, afford all reasonable, proper and equal facilities for the interchange of traffic between their respective lines, and for the receiving, forwarding, and delivering of passengers and property to and from their several lines and those connecting therewith, and shall not discriminate in their rates and charges between such contracting lines ; but this shall not be construed as requiring any such common car- rier to give the use of its tracks or terminal facilities to another engaged in like business. [Compiled Statutes (1899), section 4047.] § 1188. New Hampshire. Every railroad corporation which shall contract with any person for the transportation of milk in large quantities over any portion of its railroad shall establish a tariif for the trans- portation of milk by the can over the same portion of its rail- road with fairly proportionate advantages and facilities in every [1049] § 1190] Kaileoad Kate Keuulation. [Chap. XXXVIII respect ; but the receipt of milk in large quantities by a railroad corporation from another railroad corporation at the point of intersection of their railroads, and the transportation of the same over a part of its railroad, shall not be deemed to require the corporation to establish a tariff under the foregoing provi- sion. [General Laws (1903), ch. 160, section 21.] See Concord & P. R. E. v. Forsaith, 59 N. H. 122, 47 Am. Rep. 181 (1879) J holding the general principle of the common lajv to be that special reductions may be made to large shippers. § 1189. Nevada. It shall be unlawful for any person or persons engaged alone or associated with others in the transportation of property by railroad, whose railroads are wholly or in part in the State of Nevada, from any boundary of said State to any point in said State, or from any point in said State to any other point in said State, directly or indirectly, to charge to or receive from any person or persons any greater or less rate or amount of freight, compensation, or reward than is charged to or received from any other person or persons for like and contemporaneous service in the carrying, receiving, delivering storing or handling of the same ; and all persons engaged as aforesaid, shall furnisih, without discrimination, the same facilities for the carriage, receiving, delivery, storage, and handling of all property of like character, carried by him or them and shall perform with equal expedition the same kind of services connected with the contemporaneous transportation thereof as aforesaid. [Gen- eral Statutes (1885), section 894.J § 1190. New Jersey. All companies whose railroads cross, intersect or join shall deliver to and receive from each other and forward to their des- tination all property intended for points on their respective roads with the same dispatth and at a rate of freight not ex- ceeding the local tariff rate charged to other persons on similar [1050] Chap. XXXVIII] Preferences. [§§ 1191, 1192 property received at and forwarded from tlie same point. [Laws of 1903, eh. 257, section 44.] § 1191. Ohio. Every company whose line of road, or any part thereof, is within this State, shall so employ its rolling stock used for the transportation of freight as to afford aS ample facilities for the transportation of local and way freight, delivered to or dis- charged by it along its line of road, as it affords for the trans- portation of through freight, in proportion to the amount of its rolling stock, and shall not give facilities for transportation to either class of freight in preference to the other. [Annotated Statutes (1906), section 3373.] In state v. Cincinnati, 'N. 0. & T. P. Ry., 47 Ohio St. 130, 23 N. E. 928, B. & W. 400 (1890), it was held that all shippers of oil must be treated without undue prejudice, both those who had tank cars and those who had not. See also Baltimore & 0. R. R. v. Diamond Coal Co., 61 Ohio St. 242, 55 N. E. 616 (1899), where it was held that a railroad company whose line extends to a point of intersection with a canal of the State cannot make a valid contract to repay to a shipper a portion of the freight paid by him, it being the regular rate posted by the 'company and received from other shippers; such contract being prohibited by the sec- tions of the Revised Statutes to prevent discrimination in rates of carriage. § 1192. Oregon. It shall be unlawful for a person or persons engaged alone or associated with others in the transportation of property by rail- road in the State of Oregon to charge to or receive from any person or persons any greater or less rate or amount of freight compensation or reward than is by him or them charged to or received from any other person or persons for like and contem- poraneous service in carrying, receiving, storing, or handling the same. . . . And all persons engaged as aforesaid shall furnish, without discrimination, the same facilities for carriage, receiving, delivering, storage, and handling all prop- erty of like character carried by him or them, and shall perform [1051] § 1193] Eaileoad Eatb Eegulation. [Chap. XXXVIII with equal expedition the same kind of services connected with contemporaneous transportation thereof as aforesaid. !N"o break, stoppage, or interruption, nor any contract, agreement, or un- derstanding, shall be made to prevent the carriage of any prop- erty from being treated as one continuous carriage, in the mean- ing of this act, from the place of shipment to the place of desti- nation, unless such stoppage, interruption, contract,, agreement, or understanding was made in good faith for some practical and necessary purposes, without any intent to avoid or interrupt such continuous carriage, or to evade any of the provisions of this act, unless prevented by unavoidable accident. [Annotated Laws (1892), section 4030.J Goods intended by the shipper to be sent from points in the Willamette valley, above Portland, directly to San I'rancisco, or other points 'beyond the limits of the State, via Portland, may be carried from Corvallis to the latter place without reference to this act. Ex Parte Koehler, 25 Fed. 74 (1887). Apparently shippers ■who belong to different classes may be given dif- ferent rates in Pennsylvania, even although the freight shipped is of the same sort. See Hoover v. Pennsylvania E. E., 156 Pa. St. 220, 27 At). 282, 36 Am. St. Rep. 43, 22 L. R. A. 263 (1893) ; and Bald Eagle V. Ky. V. Nittany V. Ry., 171 Pa. St. 284, 33 Atl. 239 (1895). §' 1193. Pennsylvania. ISTo railroad company, or other common carrier, engage^* in the transportation of property, shall charge, demand or receive from any person, company or corporation, for the transportation of property, or for any other service, a greater sum than it shall charge or receive from any other person, company, or corpora- tion for a like service, from the same place, upon like condi- tions, and under similar circumstances ; and all concessions in rates and drawbacks shall be allowed to all persons, companies or corporations alike, for such transportation and service, upon like conditions, under similar circumstances and during the same period of time. Nor shall any such railroad company or common carrier make any undue or unreasonable discrimiua- [1052] Chap. XXXVIII] Pkefeeences. [§§ 1191, 1195 tion between individuals, or between individuals and transpor- tation companies, or the furnishing of facilities for transporta- tion. Any violation of this provision shall make the offending company or common carrier liable to the party injured for damages treble the amount of injury suffered. [Br. Pur. Di- gest (1894), p. 1815, section 187.] § 1194. Rhode Island. i^o railroad corporation shall contract to furnish facilities for the transportation of milk, or shall carry it in large quanti- ties over any portion of its line, without at the same time estab- lishing a tariff under which it will receive, forward and deliver milk by the can over the same portion of its line and for any person tendering the same, so that the milk by the can shall be carried under fairly proportionate advantages in every respect, including price, time, and reasonable care for the same, as the milk carried in large quantities or under contract. [General Laws (1896), ch. 187, section 35.] § 1195. South Carolina. It shall be unlawful for any such person or j^ersons so en- gaged as aforesaid to charge, collect or receive for the trans- portation of any passenger or freight of any description upon its railroad for any distance within this State the same or a greater amount of toll or compensation than is at the same time charged, collected or received for the transportation of any pas- senger of the same class or like quantity of freight of the same class over a greater distance of the same railroad ; or to charge, collect or receive at any point upon its railroad a higher rate of toll or compensation for receiving, handling or delivering freight of the same class and quantity than it shall at the same time charge, collect or receive at any point upon the same railroad ; or to charge, collect or receive for transporta- tion of any passenger or freight of any description over its rail- [1053] § 1195] Eailboad Kate Eegulation. [Chap. XXXVIII road a greater amount as toll or compensation than sihall at the same time be charged, collected or received by it for the trans- portation of any passenger of the same class or like quantity of freight of the same, class being transported over any portion of the same railroad of equal distance; or to charge, collect or re- ceive from any person or persons a higher or greater amount of toll or compensation than it shall at the same time charge, collect or receive from any other person or persons for receiv- ing, handling or delivering freight of the same class and like quantity at the same time upon its railroad; or to charge, col- lect or receive f rom^ any person or persons for the transportation of any freight upon its railroad a higher or greater rate of toll or compensation than it shall at the same time charge, collect or receive from any person or persons for the transportation of a like quantity of freight of the same class being transported from the same point over equal distances of the same railroad ; or to charge, collect or receive from any person or persons for the use and transportation of any railroad car or cars upon its railroad for any distance the same or a greater amount of toll or compen- sation than is at the same time charged, collected or received from any other person or persons for the use and transportation of any railroad car of the same class or number for a like pur- pose being transported over a greater distance of the same rail- road ; or to charge, collect or receive from any person or persons for the use and transportation of any railroad car or cars upon its railroad a higher or a greater rate of toll or compensation than it shall at the same time charge, collect or receive from any other person or persons for the use and transportation of any railroad car or cars of the same class or number for a like pur- pose being transported from the same point over an equal dis- tance of the same railroad. And all such discriminating rates, charges, collections or receipts, whether made directly or by means of any rebate, drawback or other shift or evasion, shall be deemed and taken against such person or persons so engaged as aforesaid as prima facie evidence of the unjust discrimina- [1054] Chap. XXXVIII] Peefjseences. [§§ 1196, 1197 tion prohibited by the provisions of this Article. [Civil Code (1902), section 2085.J § 1196. South Dakota. Or to charge, collect, demand or receive more for transport- ing a ton of freight than it charges, collects, demands or receives per ton for several tons of freight under a carload of a like class of freight over the same railroad for the same distance, in the same direction, or to charge, collect, demand or receive more for transporting a hundred pounds of freight than it charges, col- lects, demands or receives per hundred for several hundred pounds of freight, under a ton, of a like class of freight over the same railroad, for the same distance, in the same direction ; all such discriminating rates, charges, collections or receipts whether made directly or by means of any rebate, drawback, or other shift or evasion, shall be deemed and taken against such railroad company as prima facie evidence of the unjust dis- crimination prohibited by this Act; provided, however, that for the protection and development of any new industry within this state, such railroad company may grant concessions or special rates for any agreed number of carloads, but such special rates aforesaid shall first be approved by the Board of Railroad Commissioners, and a copy thereof filed in the office thereof. [Laws of 1897, ch. 110, section 29.] § 1197. Tennessee. It shall be unlawful for any corporation to make or give any undue or unreasonable preference or advantage to any particu- lar person or locality, or any particular des'cription of traffic, or to subject any particular person, company, firm or cor- poration or locality, or any particular description of traffic or any undue or unreasonable prejudice or disadvantage. [Laws of 1897, ch. 10', section 17.] [1055] § 1199] Eaileoad Eate Eegulation. [Chap. XXXVIII § 1198. Texas. It shall also be an unjust discrimination for any such rail- road to make or give any undue or unreasonable preference or advantage to any particular person, company, firm, corporation, or locality, or to subject any particular description of traffic to any undue or unreasonable prejudice, delay, or disadvantage in any respect whatsoever. Every railroad company vsrhich shall fail to refuse, under such regulations as may be prescribed by the Commission, to re- ceive and transport vpithout delay or discrimination, the passen- gers, tonnage and cars, loaded or empty, of any connecting line of railroad, and every railroad which shall, under such regula- tions as may be prescribed by the Commission, fail and refuse to transport and deliver without delay or discrimination, any passengers, tonnage or cars, loaded or empty, destined to any point on or over the line of any connecting line of railroad, shall be deemed guilty of unjust discrimination ; provided, perishable freights of all kinds and live stock shall have precedence of shipment. [Eevised Statutes (1895), art. 4574.] In one case hfeld that the terms " delay " and " discrimination " were to be used as convertible, and that delay was discrimination, within the terms of the statute; and hence, delay in a shipment having been admitted, it was proper to direct a verdict for plaintiff. Gulf, C. & S. F. Ry. Co. v. Lone Star Salt Co., 26 Tex. Civ. App. 531, 63 S. W. 1025 (1901). Also held in another case that a railroad company giving a preference to one shipper over another in the order of time of forwarding goods delivered for transportation shall be liable for all losses resulting from the delay, and also liable to a penalty for each act of discrimination, are valid. Hill & Morris v. St. Louis Southwestern Ry. Co. of Texas, (Tex. Civ. App.), 75 S. W. 874 (1904). § 1199. Vermont. Sec. 3902. A person or corporation operating a railroad shall give to all persons reasonable and equal terms, benefits, facilities and accommodations for the transportation of themselves, their agents and servants, and of merchandise and other property upon siich 1 ailroad ; and for the use of the depots, buildings and [1056] Chap. XXXVIII] Peefeeences. [§§ 1200, 120i grounds thereof ; and, at any point where such railroad connects with another railroad, reasonable and equal facilities of inter- change. [General Statutes (1894), section 3902.] § 1200. Virginia. 3. It shall be unlawful for any transportation company to make or to give any undue or unreasonable preference or advan- tage to any particular person, company, firm, corporation, or locality, or to any particular description of traffic, in any respect whatsoever, or to subject any particular person, company, firm, corporation, or locality, or any particular description of traffic, to any undue or unreasonable prejudice or disadvantage in any respect whatsoever. [Pollard's Code, section 1294c, as amended 1904.J § 1201. Wisconsin. If any railroad, or any agent or officer thereof, shall directly or indirectly, by any special rate, rebate, draw- back, or by means of false billing, false classifioaition, false weighing, or by any other device whatsoever, charge, demand, collect or receive from any person, firm or cor- poration a greater or leas compensation for any service ren- dered or to be rendered by it for the transportation of persons or property or for any service in connection therewith, than that prescribed in the published tariffs then in force, or established as provided herein, or than it charges, demands, collects, or receives from any other person, firm or corporation for a like and contemporaneous service, such railroad shall be deemed guilty of unjust discrimination, which is hereby prohibited and declared to be unlawful, and upon conviction thereof shall forfeit and pay into the State treasury not less than one hundred dollars nor more than ten thousand dollars for each offense ; and any agent or officer so offending shall be deemed guilty of a mis- demeanor and upon conviction thereof shall be punished by a [1057] § 1202] . Eaileoad Eate Eegtjlation. [Chap. XXXVIII fine of not less than fifty dollars nor more than one hundred dollars for each offense. It shall be unlawful for any railroad to demand, charge, col- lect or receive from any person, firm or corporation a less com- pensation for the transportation of property or for any service rendered or to be rendered by said railroad, in consideration of said person, firm or corporation furnishing any part of the facilities incident thereto; provided nothing herein shall be construed as prohibiting any railroad from renting any facilities incident to transportation and paying a reasonable rental there- for. [Laws of 1905, eh. 362, section 22.J § 1202. Conclusion. In general, it may be said that it is the expressed desire of the majority of people in most States that there shall be an aggress- ive campaign carried on against all forms of discriminations and preferences. It has been discovered that there are many and devious ways of creating undue preference and priority between shippers and industries, and the will of the people, it is plain, is that all this should be brought to an end by whatever method it is practised. [1058] CHAPTER XXXIX. STATE STATUTES AGAINST LPCAL DISCRIMINATION, § 1211. 1212. 1213. 1214. 1215. 1216. 1217. 1218. 1219. 1220. 1221. 1222. 1223. 1224. 1225. 1226. Introduction. Arkansas. California. Connecticut. Illinois. Indiana. Iowa. Kansas. Kentucky. Louisiana. Massachusetts. Michigan. Minnesota. Mississippi. Missouri. Nebraska. 1227. 1228. 1229. 1230. 1231. 1232. 1233. 1234. 1235. 1236. 1237. 1238. 1239. 1240. 1241. 1242. Nevada. New Hampshire. New Jersey. North Carolina. North Dakota. Ohio. Pennsylvania. South Carolina, South Dakota. Tennessee. Texas. Vermont. Virginia. West Virginia. Wisconsin. Conclusion. § 1211. Introduction, It has been remarked often in the course of this treatise that there is not much common law against local discrimination as such. So far as the common law is concerned, it is enough if the various rates charged for transportation to various localities are reasonable in themselves. Perhaps it may be said to be im- plied in this that the different rates in the schedule shall not be outrageousily disproportionate in their relations to one an- other, but this goes to the extreme limit of the common law. "Within the last twenty-five years, however, there has been growing up a system of statutory prohibition of local dis- crimination, until local discrimination is forbidden in more than twenty-eight of the States. These provisions in each State are of two general types, more or less elaborately worked out in the different States. Most States forbid both (1) giving undue preference to certain localities, and also (2) charoing [1059] §§ 1212-1214] Eaileoad Eate Regulatiok. [Chap. XXXIX more for a short haul than for a long haul. The extracts given in this chapter will show into how much detail this goes in some jurisdictions and how general the prohibitions are in others. § 1212. Arkansas. Persons and property transported over any railroad shall be delivered at any station at charges not exceeding the charges for transportation of persons and property of the same class in the same direction to any more distant station. [Digest of Statutes (1894), section 6301. J g 1213. California. Persons and property transported over any railroad, or by any other transportation company or individual, shall be de- livered at any station, landing or port at charges not exceeding the charges for the transportation of persons and property of the same class, in the same direction, to a more distant station, port or landing. [Ck)nstitution (1880), article xii, section 21.J § 1214. Connecticut. No railroad company shall charge or receive, for the trans- portation of freight to any station on its road, a greater sum than is at the time charged or received for the transporta- tion of the like kind and quantity of freight, from the s^ame original point of departure and under similar circumstances, to a station at a greater distance on its road in the same direction. Two or more railroad companies, whose roads connect, shall not cliarge or receive, for the transportation of freight to any station on the road of either of them, a greater sum than is at the time charged or received for the transportation of the like kind and quantity of freight, from the same original point of departure and under similar circustances, to a station at a greater distance on the road of either of them in the same [lOGO] Chap. XXXIX] State Statutes. [§ 1215 direction. In the construction of this section the sum charged or received for the transportation of freight shall include all terminal charges ; and the road of a company shall include all the road in use by it, whether owned or operated under a con- tract or lease. [General Statutes (1902), section 3772.J § 1215. Illinois. If any such railroad corporation shall charge, collect or re- ceive for the transiportation of any passengers, or freight of any description, upon its railroad, for any distance, within this State, the same, or a greater amount of toll or compensation than is at the same time charged, collected, or received for the trans- portation, in the same direction, of any passenger, or like quantity of freight of the same classi, over a greater distance of the same railroad. . . . All such discriminating rates, charges, collections, or receipts, whether made directly or by means of any rebate, drawback, or other shift or evasion, shall be deemed and taken as prima facie evidence of the unjusit disr criminations prohibited by the provisions of this Act, and it shall not be deemed a sufficient excuse or justification of such discrimination on the part of such railroad corporation, that the railway station or point, at which it shall charge, collect, or receive the siame or less rates of toll or compensation, for the transportation of such passenger or freight, or for the use and transportation of such railroad car the greater distance than for the longer distance, is a railroad station or point at which there exists competition with any other railroad or means of transportation. [Annotated Statutes (1896), ch. 114, section 168.J .The leading ease under this provision is Illinois Cent. Ry. v. People, 121 111. 304, 12 N. E. 670 (1887). It was held in that case that charging ten cents per hundred pounds for carrying coffee in sacks from C. to M., 173 miles, while charging another shipper sixteen cents per hundred from C. to K., 56 miles, was illegal discrimination. This involved applying strictly the provision that competitive conditions between railways at M. could not be urged in excuse, and it was immaterial that M. and K. were [1061] §§ 1216, 1217] Railroad Rate Regulation. [Chap. XXXIX not competing localities in the grocery trade. See also Chicago & A. R. E,. V. People, 67 111. 11, 16 Am. Rep. 599 (1873). But in Savitz v. Ohio & M. R. E., 150 111. 208, 37 N. E. 235, 27 L. R. A. 626 (1894) this was held to make out only a prima facie case, the less cost of handling the particular long distance shipment in question was allowed to be shown. For it is not a discrimination merely that is prohibited by the statute but an " unjust " discrimination. A railroad may properly charge a less rate per mile for longer distances than it charges for shorter. St. Louis, Alton, etc., R. R. Co. V. Hill, 14 111. 579 (1884). § 1216. Indiana. It shall be unjust discrimination for any railroad company subject hereto to charge or jeceive any greater compensation in the aggregate for the transportation of like kind of property or passengers for a shorter than for a longer distance over the same line in the same direction, the shorter distance being included in the longer : Provided, That upon application to the Commission any railroad company may in special cases, to prevent manifest injury, be authorized by the Commissiion to charges less for longer than for shorter distance for transporting persons and property, and the Commission shall, from time to time, prescribe the extent to which such designated railroad may be relieved from the operation of this subdivision: Pro- vided, That no manifest injustice shall be imposed upon any person at intermediate points. Provided, further. That noth- ing shall be so construed as to prevent the Comiriission from ap- proving what are known as "group rates" on any of the rail- roads in the State. [Laws of 1905, ch. 53, section 14.] § 1217. Iowa. It shall be unlawful for any common carrier subject to the provisions of this chapter to charge or receive any greater com- pensation in the aggregate for the transportation of pasisengers or a like kind of property for a shorter than a longer distance over its railroad, all or any portion of the shorter haul being included within the longer, and shall charge no more for trans- porting freight to or from any point on its railroad than a fair [1062] Chap. XXXIX] State Statutes. [§§ 1218, 1219 and just rate, compared with the price it charges for the same kind of freight transportation to or from any other point [Code (1897), sec. 2126.] In Blair v. Sioux City & P. Ry., 109 Iowa, 369, 80 N. W. 673 (1899), it was held that a petition alleging that two railroad companies voluntarily established joint rates, and charged plaintiff a rate in excess of the same joint rates on like shipments, at the same time, which were made to other points, for like distances, over their lines of road, makes a prima facie case showing discrimination. § 1218. Kansas. ISTor shall it charge more for transporting freight from any point on its line than a fair and just proportion of the price it charges for the same kind of freight transported from any other point; nor shall it be lawful to charge a greater freight rate to- haul any class of goods for a shorter distance than for a longer one in the same general direction under like conditions, and over the same system of road in Kansas, except by the consent of the commissioners. [General Laws (1901), section 5985, Laws of 1901, chap. 286, section 25. J § 1219. Kentucky. It shall be unlawful for any person or corporation owning or operating a railroad in this State, or any common carrier, to oharge or receive any greater compensation in the aggregate for the transportation of passengers, or of property of like kind, under substantially similar circumstances and conditions, for a shorter than for a longer distance over the same line, in the same direction, the shorter being included within the longer dis- tance; but this shall not be construed as authorizing any com- mon carrier, or person, or corporation owning or operating a railroad in this State to receive as great compensation for a shorter as for a longer distance; provided, That upon appli- cation to the railroad commission, such common carrier, or per- son, or corporation owning or operating a railroad in this State may, in special cases, after investigation by the commission, []063] § 1219] Kaileoad Rate Regulation. [Chap. XXXIX be authorized to charge less for longer than for shorter dis- tances for the trans'portation of passengers or property; and the Commission may from time to time prescribe the extent to which such common carrier, or person, or corporation, owning or operating a railroad in this State may be relieved from the operations of this section. [Constitution, sec. 218. J If any person owning or operating a railroad in this State, or any common carrier, shall charge or receive any greater com- pensation in the aggregate for the transportation of passengers or property of like kind, under substantially similar circum- stances and conditions, for a shorter than for a longer disr tance, over the same line, in the same direction, the shorter being included within the longer distance, such person shall for • each offense be guilty of a misdemeanor, and fined not less than $100 nor more than $500, to be recovered by indictment in the Franklin Circuit Court or the Circuit Court of any county into or through which the railroad or common carrier so violating runs or carries on its business. Upon complaint made to the railroad commission that any railroad or common carrier has violated the provisions of this section, it shall be the duty of the commission to investigate the grounds of complaint, and if, after such investigation, the commission deems it proper to exonerate the railroad or common carrier from the opera- tion of the provisions of this section, an order in writing to that effect shall be made by the commission, and a copy thereof delivered to the complainant and the railroad or common car- rier, and the same shall be published as a part of the report of the commission; and after such order, the railroad or carrier shall not be prosecuted or fined on account of the complaint made. If the commission, after investigation, fails to exonerate the railroad or carrier from the operation of the provisions of this section, an order in writing to that effect shall be made by the commission, and a copy thereof delivered to the com- plainant and the railroad or common carrier, and the same shall be published as a part of the report of the commission; [1064] Chap. XXXIX] State Statutes. [§ 1219 and after such order, it shall be the dutj^ of the commission to furnish a statement of the facts, together with a copy of its order, to the grand jury of any county, the Circuit Court of ■which has jurisdiction, in order that the railroad company or carrier may be indicted for the offense; and the commission s'hall use propert efforts to see that such company or carrier is indicted and prosecuted. [General Laws (1894), sec. 820.] In Illinois C. Ky. v. Com., 23 Ky. Law Rep. 544, 63 S. W. 448 (1901), it was held that (1) Const., § 218, and Ky. St., § 820, ijrohibiting a com- mon carrier charging more for a short haul than for a long haul, where the shorter distance is included in the longer distance, are not in conflict with the Constitution of the United States or any act of Congress ; that ( 2 ) the Railroad Commissioners may consider the application of a railroad com- {)any, and determine that for the present and future it shall be relieved of the operation of those provisions of the Constitution and statutes in the transportation of a particular commodity between certain points; that (3) the action of the Railroad Commissioners, in exonerating a common carrier from the operation of those sections of the Constitution and stat- utes, is not retrospective, and does not relieve the carrier of punishment for past offenses; and that (4) a railroad company may be indicted for charging more for a short haul than for a long haul, in violation of Constitution, § 218, and Ky. St., § 820, without recommendation by the Railroad Commission. But it was held in Louisville & N. Ry. v. Walker, 23 Ky. Law Rep. 453, 63 S. W. 20 (1901), that Const., § 218, did not apply unless the shorter was included within the longer distance, and that a carrier did not violate the law where the long haul is altogether on its main line, while the short haul originates on a branch road, as the shipment is an entirety, and cannot be split into parts to bring it within the law. Again, a joint traffic arrangement, by which connecting carriers haul from ii point on one road to a point on the other road for less than the first carrier charges from the same point on its road to its terminus, between the points, is not in violation of St., § 820, making it an of- fense for a carrier to charge more for hauling for a, shorter than for ii longer distance " over the same line " in the same direction, the shorter being included in the longer distance, as is held in Com. v. Chesapeake & 0. Ry., 115 Ky. 57, 72 S. W. 361 (1903). Nor does Const., § 215, pro- viding that all railway companies shall transport freight of the same class for all persons from and to the same points and upon the same conditions, in the same manner, and for the same charges, prohibit a rail- way company from charging a through rate which is less than the sum of [1065] § 1220] Railroad Kate Regulation. [Chap. XXXIX the local rates between the two points, as the recent case of Southern Ry. in Ky. v. Com., 25 Ky. Law Rep. 1078, 77 S. W. 207 (1903), decides. On the other hand it is established by Louisville & N. Ry. v. Com., 21 Ky. Law Rep. 232, 51 S. W. 164, 1012 (1899), and by Louisville & i^J Ry. V. Com., 20 Ky. Law Rep. 1380, 46 S. W. 707, 47 S. W. 210, 598 (1898), that competition does not justify a carrier in charging more for a shorter than for a longer distance, as the words " substantially similar circum- stances and conditions " relate to the actual cost of transportation. By a parity of reasoning, however, it is held in Louisville & N. Ry. v. Com., 20 Ky. Law Rep. 1099, 48 S. W. 416 (1898f, and in Louisville & N. Ry. v. Com. (Ky. App.), 46 S. W. 702 (1898), that if there is dissimiliarity of conditions of shipment, so that the longer shipment is really the cheaper to handle, none of these clauses apply. As to respective powers under these sections it was held in Louisville & N. Ry. V. Com., 20 Ky. Law Rep. 1380, 47 S. W. 598 (1898), that under Const., § 218, prohibiting common carriers from charging more for a short than for a long haul, but providing that the Railroad Commission may in " special cases " grant relief from the operation of the section, the action of the Commission in refusing such relief cannot be reviewed by the courts. And in Illinois C. Ry. v. Com., 23 Ky. Law Rep. 1159, 64 S. W. 975, it was held that, as no indictment could be returned by the grand jury for a violation of the statute until the Railroad Commission had refused to exonerate the carrier, such statute is not violative of Const., § 218, prohibiting any common carrier from charging more for transport- ing pas&engers or property for a shorter than for a longer distance, and providing that the Railroad Commission may prescribe the extent to which a carrier may be relieved from the operation of the section since the question as to what penalty shall be imposed, or when, is left to the dis- cretion of the Legislature. See also as to remedies under these sections Louisville & N. Ry. v. Com., 106 Ky. 633, 46 S. W. 702 (1898) ; Hutcheson v. Louisville & N. R. R. (Ky.), 63 S. W. 33 (1901); Louisville & N. R. R. v. Com. (Ky.), 71 S. W. 910 (1903) ; and McChord v. Cincinnati, N. 0. & T. P. R. R., 183 U. S. 483, 46 L. Ed. 289, 22 Sup. Ct. 165 (1901). § 1220. Louisiana. The power and authority is hereby vested in the Commis- sion, and it is hereby made its duty ... to prevent such companies from cliarging any greater compensation in the aggregate for the like kind of property or pas&engers, or mes- sages, for a shorter than a longer distance, over the same line, unless authorized by the Commission to do so in special cases. [Constitution (1898), Art. 284.] [1066] Chap. XXXIX] State Statutes. [§§ 1221, 1222 § 1221. Massachusetts. No railroad corporation shall charge or receive for the trans- portation of freight to any station on its road a greater amount than is at the time charged or received for the transportation of the like class and quantity of freight from the same original point of departure to a station at a greater distance on its road in the same direction. Two or more railroad corporations whose roads connect shall not charge or receive for the trans- portation of freight to any station on the road of either of them a greater amount than is at the time charged or received for the transportation of the like class and quantity of freight from the siame original point of departure to a station at a greater distance on the road of either of them in the same di- rection. In the construction of this section, the amount charged or received for the transportation of freight shall include all terminal charges; and the road of a corporation shall include all the road in use by it, whether owned or operated under a contract or lease. [Eevised Laws (1902), oh. Ill, sec. 243.] In Com. V. Worcester & N. R. R., 124 Mass. 561 (1878), it was held that this section applied only to the transportation of freight by such a corporation as a common carrier over its own road, and not over other railroads, for which it charged, and received nothing except as collecting agent of the corporations owning such other railroads. § 1222. Michigan. That it shall be unlawful for any railroad company doing business in this State, operating the shortest com- peting line of railroad, to charge a greater amount of toll or compensation for the transportation of freight from any non- competing point on its line of railroad than it shall charge at the nearest railroad competing point on its line of road in op- posite direction, to that from which such freight is to be moved, when of the same class, in like quantity, and for the same destination in this State. It is also hereby further pro- vided that whenever freight is taken from any point on the [1067] § .1223] Kaileoad Rate Eegulation. [Chap. XXXIX longer competing line or lines, that where the distance from such shipping point to the place of destination does not exceed the entire length of the shortest competing line, then the same rule shall apply as is provided in this section for the shortest competing line as to rates of freight. [Compiled Laws (1897), sec. 5247.] § 1223. Minnesota. No carrier shall charge or receive greater compensation for the transportation of passengers or of like kind or class and quantity of property, for a shorter than for a longer distance over the same line, the shorter being included within the longer distance; but this shall not be so construed as authorizing any carrier to charge or receive ^ great compensation for a shorter as for a longer distance; but upon application to the Commis- sion such carrier, in special cases, after investigation by the commission, may be authorized to charge less for longer than for shorter distances, for the transportation of passengers or prop- erty ; and the Commission may from time to time prescribe the extent to which such designated carriers may be relieved from the operation of this section. ISTo carrier shall charge or receive any greater compensation per ton per mile for contemporaneous transportation of the same class of freight for a longer than for a shorter distance over the same line in the same general direc- tion, or from the same original point of departure, or to the same point of arrival; but this shall not be construed so as to authorize any carrier to charge as high a rate per ton, per mile, for a longer as for a shorter distance. [Revised Laws (1905), section 2017.J , In State ex rel. v. Minneapolis & St. L. R. R., 80 Minn. 191, 83 N. W. 60, 89 Am. St. Rep. 514 (1900), it waa shown that the tariff rate on coal from D. to N. was $2.50 and from D. to twenty-one stations along the same lines, the most southerly being B., 1 12 miles beyond N., the rate was the same. The court inclined to support this schedule upon the commer- cial necessities of the situation, citing Steenerson v. Gt. Northern Ry., 69 Minn. 353, 72 N. W. 713 (1897). [1068] Ckap. XXXIX] State Statutes. [§§ 1224, 1225 § 1224. Mississippi. Or if any railroad shall, for its advantage, or for the advan- tage of a connecting line, or for that of anj person, locality or corporation, make any discrimination in transportation against any person, locality or corporation, unless authorized by the Commission, or if any railroad company shall charge more for a short haul than for a long one, imder substantially similar circumstances and conditions, without the sanction of the Com- mission, such person or corporation, in either case, shall be guilty of extortion, and may be punished therefor criminally, besides being liable civilly. [Annotated Code (1892), section 4287.] See Alabama & V. Ry. v. Railroad Commissioners, 38 So. 356 ( 1905 ) . § 1225. Missouri. Discrimination between persons or localities prohibited. — It shall be unlawful for any such common carrier to make or give any undue or unreasonable preference or advantage to any par- ticular person, company or firm, corporation or locality, in the transportation of goods, wares and merchandise of any char- acter, or to subject any particular person, firm, corporation or locality, or any particular description of traffic, to any undue or unreasonable prejudice or disadvantage with respect to such transportation ; and all such common carriers shall afford equal facilities for the interchange of traffic between their respective lines and for receiving, forwarding and switching cars and de- livering property to and from their lines, and to and from other lines and places connected therewith, and shall not discriminate in their accommodation, rates or charges between such connect- ing lines and places. But this provision shall not be construed as requiring such common carriers to give the use of their tracks or terminal facilities to other common carriers engaged in a similar business. [Eevised Statutes (1899), section 1133.] [1069] § 1226] Eailkoad Kate Regulation. [Chap. XXXIX Discrimination — long and short haul. — It shall be unlawful for any such common carrier to charge or receive any greater compensation in the aggregate for the transportation of like kinds of property under similar circumstances and conditions for a shorter than for a longer distance over the same line in the same direction : Provided, however, that nothing contained in this section shall apply to the carriage, storage or handling of property, either free or at reduced rates, for the United States, for the State of Missouri, or for any fair, exposition, religious, scientific, benevolent! or charitable purpose. [Ibid, section 1134.] The ruling case in the construction of these sections seems to be Cohn V. St. Louis, I. M. & S. Ey., 181 Mo. 30, 79 S. W. 961 (1904). There it was held that in an action against a railroad company for the violation of Rev. St. 1899, § 1133, prohibiting railroads from giving any unreasonable advantage to any locality, or subjecting any locality to unreasonable disad- vantage, and section 1134, prohibiting them from charging higher rates for a shorter than for a longer haul, a petition alleging that the defendant has charged the plaintiffs a higher rate for shipping freight from a certain point to their station than its published tariffs from the same point in tho same direction to stations at a greater distance — specifying the difference in the charges, and the amount on which the excessive freight was paid, and alleging that merchants doing business at the other points were given an undue advantage over plaintiffs — sufficiently states in what way they were injured by defendant's 'acts. And where a railroad company charges higher rates for carrying freight a less distance than its published rates for carrying it a greater distaece in the same direction over the same road, it violates these sections, though it does not actually carry any freight the greater distance. See to this affect Seawell v. Kansas City, F. S. & M. Ey., 119 Mo. 222, 24 S. W. 1002 (1893). Compare McGrew v. Missouri P. Ry., 177 Mo. 533, 76 S. W. 995 (1903). § 1226. Nebraska. That it shall be unlawful for any common carrier subject to the provisions of this Act to charge or receive any greater com- pensation in the aggregate for the transportation of passengers or of like kind of property, under substantially similar circum- stances and conditionsif or a shorter than for a longer distance over [1070] Ckap. XXXIX] State Statutes. [§§ 1227, 1228 the same line, in the same direction, the shorter being included within the longer distance; but this shall not be construed as authorizing any common carrier within the terms of this Act to charge and receive as great compensation for a shorter as for a longer distance: Provided, however, that upon application to the board appointed under the provisions of this aot, such com- mon carrier may, in special cases after investigation by the board, be authorized to charge less for longer than for shorter distances for the transportation of passengers or property; and the board may from time to time prescribe the extent to which such designated common carrier may be relieved from the oper- ation of this section of this Act. [Compiled Statutes (1899), section 4048, ch. 72, art. viii, section 4.j § 1227. Nevada. It shall be unlawful for any person or persons engaged in the transportation of property, as provided in section one of this Act, to charge or receive any greater compensation per carload, or part thereof, of similar property, for carrying, receiving, storing, forwarding, or handling the same for a shorter than for a longer distance in one continuous carriage. [General Statutes (1885), section 897.] § 1228. New Hampshire. No railroad corporation shall charge or receive for the trans- portation of freight to any station on its road in this State a greater sum, including terminal charges, than is at the same time charged or received for the transportation of the like class and quantity of freight from the same original point of departure to a station in this State at a greater distance in the same direction on its road. This provision shall apply to corpo- rations operating two or more connecting railroads in this State as if the railroads belonged to or were operated by a single cor- poration. [Public Statutes, ch. 160, section 19.] [1071] §§ 1229, 1230] Kaileoad Kate Kegulation. [Chap. XXXIX The principal case upon this section is Osgood v. Concord R., 63 N. U. 255 (1884), where it was held that a railroad which charges and receives for the transportation of a carload of merchandise to a station on its road where 'the merchandise is delivered and is accepted by the consignees, more than it charges for such transportation of similar goods for a greater distance, it liable to the penalty imposed by statute for such dis- proportionate charge, although by the original contract for transportation the merchandise was to have been transported to a more distant station. § 1229. New Jersey. ISTo company shall charge or receive any greater rate of com- pensation for transportation of property between way stations or between a terminal station and a way station than for trans- portation of such property between terminal stations. [Laws of 1903, ch. 257, section 44.J § 1230. North Carolina. That it shall be unlawful for any common carrier subject to the provisions of this Act to charge or receive any greater com- pensation in the aggregate for the transportation of passengers or of like kind of property under substantially similar circum- stances and conditions for a shorter than for a longer distance over the same line in the same direction, the shorter being in- cluded within the longer distance, but this shall not be construed as authorizing any common carrier within the terms of this Act to charge and receive as great compensation for a shorter as for a longer distance: Provided, however, that upon application to the commission appointed under the provisions of this Act such common carrier may, in special cases, after investigation by the commissioner be authorized to diarge less for longer than for shorter distances for the transportation of passengers or prop- erty ; and the Commission may from time to time prescribe the extent to which such designated common carrier may be relieved from the operation of this section of this Act: P'rovided, that nothing in this Act contained shall be taken as In any manner abridging or controlling the rates of freights charged by any [1072] Chap. XXXIX] State Statutes. [§§ 1231, 1232 railroad in this State for conveying freight which comes from or goes beyond the boundaries of the State and on which freight less than local rates on any railroad carrying the same are charged by such railroads. But said railroad company shall possess the same power and right to charge such rates for carry- ing such freight as they possessed before the passage of this Act. [Laws of 1899, ch. 164, section 14.J See No. Carolina Corp. Com. v. Atlantic C. L. Ry., 137 N. C. I. 49 S. E. 191 (1904). § 1231. North Dakota. It shall be unlawful for any railroad, railroad corporation or common carrier, subject to the provisions of this Act, to charge or receive any greater compensation in the aggregate for the transportation of passengers or of a like kind of property for a shorter than for a longer distance over its railroad, all or any portion of the shorter haul being included within the longer. And said railroad, railroad corporation, or common carrier shall charge no more for transporting passengers or freight to or from any point on its railroad than a fair and just rate as compared with the price it charges for the same kind of trans- portation to and from any other point. [Laws of 1897, ch. 115, section 17. J § 1232. Ohio. ISTo company or person owning, controlling, or operating a railroad, in whole or in part, within this State, shall charge or receive for transportation of freight for any distance within this State a larger sum than is charged by the same company or person for the transportation in the same direction, of freight of the same class or kind, for an equal or greater distance over the same railroad and connecting lines of railroad; and every such company or person who violates, or permits to be violated, the provisions of this section, shall forfeit and pay to the party aggrieved a sum equal to double the amount of the overcharge, [1073] § 1233] Eaileoad Rate Regulation. [Chap. XXXIX but in no case less than twenty-five dollars, and shall also for every such unlawful act, forfeit and pay to the State a penalty of not less than one hundred nor more than one thousand dol- lars, to be recovered in a civil action, brought in the name of the State, by the prosecuting attorney of the county wherein such offense was committed, as a part of his official duties, whenever compliant is made to him, and he is satisfied that the provisions of this section have been violated. [Annotated Revised Statutes (1906), section 3373.] § 1-263. Pennsylvania. All individuals, associations and corporations shall have equal right to have persons and property transported over railroads and canals, and no undue or unreasonable discrimination shall be made, in charges for, or in facilities for transportation of freight or passengers, within the State, or coming from or go- ing to any other State. Persons and property transported over any railroad shall be delivered at any station, at charges not ex- ceeding charges for transportation of persons and property of the same class in the same direction to any more distant station ; but excursion and commutation tickets may be issued at special rates. [Constitution (1874), art. 17, section 3.] This provision was held efficient in itself without aneilliary legislation in Central Iron Works v. Pennsylvania R. R., 2 Dauph. Co. 308, 17 Pa. Co. Ct. 651, 5 Pa. Dist. 247 (1895). In that case plaintiff averred in it* bill that defendant allowed favored individuals, associations and corpora- tions upon their semi-bituminous coal, carried and transported to P. and G. piers, from their mines situated in the several coal regions, a secret rate not exceeding $1.10 per gross ton, and from the W. region a rate noL exceeding $1.35 per gross ton, while for the same class and quality of coal, transported from the same regions, in the same direction, to a less distant point, the plaintiff had been, and was still, compelled to pay a rate of $1.47 and $1.76, respectively, per gross ton, contrary to the provisions of section 3, article 17, of the Constitution, and askedr for an injunction to restrain the defendants from making such charges. Defendants demurred, but decision was given for plaintiffs. [1074] Chap. XXXIX] State Statutes. [§§ 1234, 1235 § 1234. South Carolina. It shall be unlawful for any person or persons in the trans- portation of property as provided in section 2083 of this chap- ter, to charge or receive any greater compensation for carrying, receiving, storing, forwarding or handling articles of the same character and description for a shorter than a longer distance in one continuous carriage ; and the road of a corporation shall include all the road in use by such corporation, whether owned or operated under a contract or lease by such corporation : Pro- vided, That nothing in this chapter contained shall be construed so as to require any corporation or combination of corporations to regulate their charges for shorter distances by their propor- tion of through rates between terminal or junctional competi- tive points: Provided, further. That if one corporation should use, operate or otherwise control, wholly or in part, several lines or div^isions of hitherto independent railroads within the State the Commission may, in their discretion, conjointly with the said corporations, fix rates of toll or compensation for freigiht traffic on each of said hitherto independent lines or divisions; Provided, further, That the railroad commission conjointly with the railroad companies, shall have authority to make special rates for the purpose of developing all manu- facturing, mining, milling and internal improvements in this State. [Civil Code (1902), section 20'86.J In Sternberger v. Cape F. & Y. V. R. R., 29 S. C. 510, 7 S. E. 846 (1888), it was held in refusing relief claimed under this section that where freight was shipped from one point in South Carolina to another point in that State was necessarily carried in part over railroads lying in another State, such commerce was interstate business, and therefore that the freight charges in such case were beyond the jurisdiction of the State Railroad Commission. The general doctrine had already been established in Rail- road Commissioners v. Railroad Company, 22 S. C. 220 (1884), and Hall V. So. Carolina R. R., 25 S. C. 564 (1886). § 1235. South Dakota. If any such railroad corporation . . . shall charge, collect or receive from any person or persons for the transporta- [1075] § 1236] Railroad Kate Eegulation. [Chap. XXXIX tion of any freight upon its railroad, a higher or greater rate of toll or compensation than it shall, at the time, charge, col- lect or receive from any other person or persons for the trans- portation of the like quantity of freight of the same class, being transported from the same point in the same direction over equal distances of the same railroad, or if it shall charge, collect or receive from any person or persons for the use and transportation of any railroad car or cars upon its railroad, for any distance, a greater amount of toll or compc-nsation than is at the same time charged, collected or received from any other person or persons, for the use and transportation of any rail- road car of the same class or number, for a like purpose, being transported in the same direction, over a greater distance of the same railroad; ... all such discriminating rates, charges, collections or receipts whether made' directly or by means of any rebate, drawback, or other shift or evasion, shall be deemed and taken against such railroad corporation, as prima, facie evidence of the unjust discriminations prohibited by the provisions of this Act; and it shall not be deemed a sufficient excuse or justification of such discrimination on the part of the said railroad corporation that the railroad station or point at which it shall charge, collect or receive less com- pensation in the aggregate for the transportation of such pas- senger or freight or for the use and transportation of such rail- road car the greater distance, than for the shorter distance, is a railroad station or point at which there exists competition with any other railroad or means of transportation. [Laws of 1897, chap. 110, section 28.J § 1236. Tennessee. If any person owning or operating a railroad in this State, or any common carrier shall charge or receive any greater com- pensation in the aggregate for the transportation of passengers or property of like kind, under substantially like circum- [1076] Chap. XXXIX] State Statutes. [§§ 1237, 1238 stances and conditions, for a shorter than a longer distance over the same line in the same direction, the shorter being in- cluded -within the longer distance, such person or common car- rier shall, for each offense, be guilty of a misdemeanor and fined, not less than $100 nor more than $500. [Laws of 1897, chap. 10, section 18. J See Ragan v. Aiken, 77 Tenn. (9 Lea) 609, 42 Am. Rep. 684 (1882). § 1237. Texas. It shall also be an unjust discrimination for any railroad subject hereto to charge or receive any greater compensation in the aggregate for the transportation of like kind of property or passengers for a shorter than for a longer distance over the same line; provided, that upon application to the Commissiion any railroad may in special cases, to prevent manifest injury, be authorized by the Commission to charge less for longer than for shorter distances for transporting persons and property, and the Commission shall from time to time prescribe the extent to which such designated railroad may be relieved from the operations of this provision ; provided that no manifest in- justice shall be imposed upon any citizen at intermediate points. Provided, further, that nothing herein shall be so construed as to prevent the Commission from making what are known as " group rates " on any line or lines of railroad in this State. [Revised Statutes (1895), art. 4574 (3). J § 1238. Vermont. A railroad corporation whose railroad is located in the State, shall not charge a larger sum for freight, merchandise, or pas^- sengers thereon for a less distance, to or from a way station on said road, than is charged for a greater distance; and in case of a violation of this provision, the 'excess so charged may be recovered from said corporation, by the party aggrieved, in an action for money had and received, with costs. [Vermont Statutes (1894), section 3901.J [1077] §§ 1239, 1240] Eaileoad Eate Kegulation. [Chap. XXXIX Two or more corporations whose roads connect shall not charge or receive for the transportation of freight to any sta- tion on the road of either of them a greater sum than is at the time charged or received for the transportation of the like class and quantity of freight from the same original point of de- parture to a station at a greater distance on the road of either in the same direction. [Ibid, section 3903. j § 1239. Virginia. It shall be unlawful for any transportation company doing business in this State to take, charge, or receive any greater compensation in the aggregate for the transportation of pas- sengers of the same class or property along the same line in the same direction for a shorter than for a longer distance, the shorter being included within the longer distance. But this section, shall not be construed as authorizing any such com- pany to charge and receive as great compensation for a shorter as for a longer distance: provided, however, that upon appli- cation to the State Corporation Commission any such com- pany may, in sipecial cases, after investigation by the said Com- mission, be authorized to charge less for longer than for shorter distances for the transportation of passengers or property, and the said Commission may, from time to time, subject to the provisions of the Constitution, prescribe the extent to which such designated company may be relieved from the operation of this section. [Pollard's Code, section 1294:C, as amended (1904).] § 1240. West Virginia. All railroad corporations whose lines of road shall extend into or through this State and which extensions are incorpor- ated by the laws of this State or any other State, or the United States, shall take and transport passengers and freight when offered: provided, that such railroad corporation shall not be permitted to charge for the transportation of freight and pas- [1078] Chap. XXXIX] State Statutes. [§§ 1241, 1242 sengers, or either, a less sum from one terminug of their road to the other, than, from an intermediate station to either ter- minus thereof, nor a greatei- sum for the transportation of freight and passengers, or either, from any intermediate station to either terminus of the road, or from either terminus to an intermediate station, or from one intermediate station to an- other, than from any intermediate station to either terminus or from either terminus to any intermediate station, or from one intermediate station to another, where the distance is less. [Code (1899), chap. 54, p. 602, Laws of 1872-3, chap. 227.J § 1241. Wisconsin. Whenever passengers or property are transported over two or more connecting lines of railroad between points in this State, and the railroad companies have made joint rates for the transportation of the same, such rates and all charges in con- nection therewith shall be just and reasonable, and every unjust and unreasonable charge is prohibited and declared to be un- lawful; provided, that a less charge by each of said railroads for its proportion of such join rates than is made locally be- tween the same points on their respective lines shall not for that reason be construed as a violation of the provisions of this Act, nor render such railroads liable to any of the penalties hereof. [Laws of 1905, chap. 362, section 5.J § 1242. Conclusion. It must be obvious from an examination of these extracts from the statutes of twenty-nine States that public opinion has gone further than the common law in dealing with dis- crimination. The general clauses against showing undue or unreasonable preference or priority to any locality, or localities are significant, altliough the phraseology is so cautious in most of them that any justifiable differences may be made, and one State specifically saves group rates, it will be remembered. The specific provisions against charging more for a short haul than [1079] § 1243] Eaileoad Kate Kegulation. [Chap. XXXIX 1 for the long haul within -which it is included constitute the most characteristic feature in these statutes resipecting local discrimination, and the fact that there is a deeip-rooted preju- dice against this practice in rate making must be faced. In some States it will have been noticed the legislatures have provided that competition at the more distant point shall not justify making a lower rate for a longer haul. Altogether, some law against local discrimination is certain to be a permanent limitation upon the making of railroad rates. [1080] CHAPTER XL. RATE REGULATION BY STATE KALROAD COMMISSIONS. 1251. Introduction 1252. Alabama. 1253. California. 1254. Florida. 1255. Georgia. 1256. Illinois. 1257. Indiana. 1258. Iowa. 1259. Kansas. 1260. Kentucky. 1261. Louisiana. 1262. Maine. 1263 Minnesota. 1264. Mississippi. 1265. Missouri. 1266. Nebraska. 1267. New Hampshire 1268. North Carolina. 1269. North Dakota. 1270. South Carolina. 1271. Tennessee. 1272. Texas. 1273. Virginia. 1274. Wisconsin. 1275. Washington. 1276. Conclusion. § 1251. Introduction. In this chapter are collected some extracts from the statutes of yarioois States, showing the powers of the State commissions in dealing with railroad rates. Miost States have a railroad commission, or commissioner. In some States these officers have little or no power to pass upon the rates established by the railroads; but in the majority of States which have rail- road commissioners, these officers have power of one sort or another to review the rates fixed by the carrier. The extent of the powers granted to these commissions differs widely. In some States they have no more power than to determine upon complaint made to them whether the rates charged by the rail- road are unreasonable; in other States they have the power to fix the rates which the railroad shall be allowed to charge in substitution for the rate of which complaint is now made. Most exacting of all are certain States which give to their commis- sions power to establish complete schedules of rates for all transportation by rail within the State or which enact by [1081] §§ 1252, 1253] Kaileoab Kate Regulation. [Chap. XL primary legislation sucli complete schedules of rates, giving the commission po-^er to revise them. Statutes of this last sort are too elaborate for inclusion here ; all that is attempted is to give some general idea of the power of the State commissions in passing upon railroad rates. § 1252. Alabama. It is the duty of the railroad commisaioners to consider and carefully revise all tariffs of charges for trangportation made by any person or corporation owning or operating a railroad in this State; and if, in their judgment, any such charge is more than just compensation for the service for which it is pro- posed to be made, or amounts to unjust discrimination against any person, locality or corporation, they shall notify the party making the same of the changes necessary to reduce the rate to jusit compensation, or to avoid unjust discrimination, and when such charges are made, or when none are deemed proper and expedient, they shall append to the tariff of charges a certifi- cate of their approval; and they shall exercise a watchful and careful supervision over all tariffs and their operation, and revise the same, from time to time, as justice to the public and the railroads may require, and increase or reduce any of the rates, as experience and business operations may show to be just, but in revising the tariff, the commissioners shall take into consideration the nature of the service to be performed, the entire business of the railroad, and its earnings from passengers and other traffic, and so revise the same as to allow a fair and just return on the value of the railroads, its appurtenances and equipments. [Laws of 1903, No. 94, section 10.] § 1253. California. Said commissioners shall have^the power and it shall be their duty to establish rates or charges for the transportation of passengers and freight by railroads or other transportation com- panies, and publish the same from time to time with such [1082] Chap. XL] Rate Regulation. [§ 1254 changes as they may make. [Constitution (1880), art. 13 section 22.J In Southern Pae. Ry. v. Railroad Comm'rs, 78 Fed. 236 (1896), it was held that the railroad commission could not so reduce rates as to leave to the railroad less than enough to pay all proper annual chares, includ- ing a fair return upon its investment. § 1254. Florida. That said eommissiioners shall make and furnish to each railroad corporation doing business in this State, as soon as practicable, a printed or written schedule of just and rea- sonable rates and charges for transportation of freights, pas- sengers, and cars, on its railroad or railroads under its control or management,, and such schedule, certified by the chairman of the commissioners, shall be admitted in evidence without necessity for other proof, and shall in all siuits brought against any railroad corporation wherein is involved the rates of any such railroad corporation for the transportation of freight of any description, or charges for the transportation or use of any kind of car upon the tracks of any railroad or any of the branches thereof, or for the transportation of any pasBenger or passengers, or for any unjust discrimination in relation thereto, be deemed and taken in all the courts of this State as prima facie evidence that the rates fixed in such schedule are just and reasonable rates of charges for the transportation of freight, cars and passengers upon the railroads, and said commissioners shall, as often as circumstances may require, change or revise any schedule or schedules, and furnish all railroad companies doing business in this State with notice of such changes or re- visions and such notice shall state the time when such changes or revisions shall go into effect. [Laws of 1899 (No. 39), chap. 4700.J In State ex rel. v. Seahoard Air Line, 38 So. 658 (1904), it was held that the burden was upon the railroad company to prove that the specific rate prescribed by the Railroad Commission, together with the other rateg prescribed by it, deprives the company of the rates guaranteed to it by [1083] §§ 1255, 1256] Railroad Rate REGtrLATiON. [Chap. XL the Federal Constitution. See, also, Pensaeola & A.'R. R. v. Florida, 27 Fla. 403, 5 So. 833 (1889). I § 1255. Georgia. That the said railroad eoimnissioners are hereby author- ized and required to make for each of the railroad corpora- tions doing business in this State, as soon as practicable, a schedule of just and reasonable rates of charges for the trans- portation of passengers and freights and cars on each of said railroads; and said schedule shall, in suits brought against any such railroad corporations wherein is involved the charges of any such railroad corporation for the transportation of any passenger or freight or cars, or unjust discrimination in rela- tion thereto, be deemed and taken in all courts of this State as sufficient evidence that the rates therein fixed are just and reasonable rates of charges for the transportation of passengers and freights and cars upon the railroads ; and said commission- era shall, from time to time, and as often as circumstances may require, change and revise said schedules. [Acts of 1878-79, No. 269, section 6.] See State v. Wrightsville & T. R. R., 104 Ga. 437, 30 S. E. 891 (1900), as to the limitations upon this power, holding that the Commission cannot require the making of joint through arrangements. But see Augusta B. Co. V. Central of Ga. Ry., 121 Ga. 48, 48 S. E. 714 (1904), holding that the Commission has power to issue rules against preferential rates. § 1256. Illinois. The railroad and warehouse commissioners are hereby di- rected to make for each of the railroad corporations doing busi- ness in this State, as soon as practicable, a schedule of reason- able maximum rates and charges for the transportation of passengers and freights and cars of each of said railroads; and said schedule shall in all suits brought against such railroad corporations wherein is in any way involved the charges of any such railroad corporation for the transportation of any passengers or freight or cars, or unjust discrimination in [1084] Chap. XL] Kate Regulation. [§ 1257 relation thereto, be deemed and taken in all courts of this State as prima facie evidence that the rates fixed therein are reasonable maximum rates of charges for the transportation of passengers and freights and cars upon the railroads for which aaid schedules may have been respectively prepared. Said commissioners shall, from time to time, as often as cir- cumstances may require, change and revise said schedules. [Annotated Code (1896), chap. 114, | 173.J This legislation is constitutional. Chicago, B. & Q. R. R. v. Jones, 149 111. 361, 37 N. E. 247 (1894) ; Ruggles v. Illinois, 108 U. S. 526, 27 L. Ed. 812 (1882). See, as to the functions of the Commission, St. Louis, A. & T. H. R. R. V. Hill, 11 111. App. 248 (1883), and St. Louis & C. R. R. V. Blackwood, 14 111. App. 503 (1884). § 1257. Indiana. The Commission shall have power as hereinafter provided and it shall be its duty from time to time, to alter, change, amend or abolish any classification or rate established by any railroad company or companies whenever found to be unjust or discriminative, and such amended, altered or new classifica- tions or rates shall be put into effect by said railroad company or companies. The Commission may adopt and enforce such rules, regula- tions and modes of procedure as it may deem proper, to hear and determine complaints that may be made against the classi- fications or the rates maintained by the common carriers subject to the provisions of this Act, or against the rules, regulations and determinations of the Commission. The Commission shall enforce as hereinafter provided, reasonable and just rates of charges for each railroad company subject hereto for the use or transportation of loaded or empty cars on its roads ; and may so enforce for each railroad, or for all railroads alike, reasonable rates for storing and handling of freight and for the use of cars not unloaded after forty-eight hours' notice to the consignee, not to include Sundays or legal holidays. The Commission shall enforce reasonable rates, as hereinafter provided, for the trans- [1085] § 1257] Kaileoad Eate Eegulation. [Chap. XL portation of passengers over each or all of the railroads subject hereto, which rates shall not exceed the rates fixed by law. The Commission shall have power to enforce reasonable rates, tolls or charges for all other service performed by any railroad sub- ject hereto. The provisions of this section shall be construed to mean that the Commission shall have power to correct, alter, change, or establish rates, charges, classifications, rules or regulations where the railroads or express companies respectively, or any of them, fail to have just and reasonable and indiscriminative rates, charges, classifications, rules and regulation [s] in operation and effect, and shall exercise such power only where some person or corporation is injuriously affected by such rate, charge, classifi- cation, rule, or regulation, shall have filed with said Commission a written verified complaint setting forth the unreasonable char- acter of the rate, charge, classification, rule or regulation com- plained of, and when any such complaint shall have been filed, the said Commission shall have power to proceed to hear and determine said complaint and consider the reasonableness of such rate, charge, classification, rule or regulation, after the notice provided for in section 4 of this Act has been given, and after such hearing shall make such corrections, alterations, changes or new regulations, or any part thereof as may be neces- sary to prevent injustice and discrimination to the party com- plaining : Provided, that any such rate, charge, or classification, rule or regulation shall have been changed or modified by any order of said commission, such order shall operate for the benefit of all persons or corporations, situated similarly with said com- plaining party and on the line of said railroad complained of : Provided further. That at any hearing provided for in this sec- tion, all oral testimony heard by the Commission shall be taken down in shorthand, and all documentary evidence heard or con- sidered, and all pleadings and other papers pertaining to such hearing shall be kept on file in the office of the Commission, so that a complete transcript of all such proceedings, including all [1086] §§ 1258, 1259] Kaileoad Rate Eegulation. [Ch£ip. XL the evidence, may be made whenever required. [Acts of 1905, ch. 53, section 3.] § 1258. Iowa. Commissioners' schedules of rates — effect. The schedules of reasonable maximum rates of charges for the transportation of freight and cars, together with the classification of such freights now in effect, shall remain in force until changed by the board according to law, which, in all actions brought against railway corporations, wherein there are involved the charges thereof for the transportation of any freight or cars, or any unjust discrimination in relation thereto, shall be taken as prima facie evidence in all courts that the rates fixed therein are reasonable and just maximum rates of charge for which said schedules have been prepared. The board shall from time to time, and as often as circumstances may require, change and re- vise such schedules, but the rates fixed shall not be higher than established by law. [Code (1897), section 2138.] The general principles to be employed by the courts in passing upon tho rates by the Commission are set forth in Chicago & N. W. Ry. v Dey, 35 Fed. 866 (1888). A schedule of rates under this section having been adopted by the Commissioners, remains in force until the publication of a change in rates as herein provided. Hopper v. Chicago, M. & St. P. Ry., 9 Iowa, 639, 60 N. W. 487 (1898). § 1259. Kansas. Sec. 4. The power ana authority is hereby vested in the Board of Railroad Commissioners, and it is hereby made its duty to supervise all railroad freight and passenger schedules of rates, tariffs, and classifications, and all rules and regulations govern- ing car service, the transfer and switching of cars from one rail- road to another at junction points or where entering the same city or town, all charges to be made therefor, as well as the rules and regulations adopted by any railroad company for the operation of its road in the running of trains. It shall be the duty of said board, from time to time, to alter, change or amend Chap. XL] Eate Regulation. [§1260 any such schedule, classification, rate, rule or regulation estab- lished by any railroad company or companies which the board, upon complaint as hereinafter provided, may find to be un- reasonable, imjust or discriminative; and such amended, altered or new schedule, classification or rate, rule or regulation shall be put into effect by such railroad company or companies within not more than thirty days after receiving written notice of the order of the board : Provided, That before such order is made by the board, notice and a hearing shall be given, as required in section 9 of this Act. [Laws of 1905, ch. 340.J §^ 1260. Kentucky. When complaint shall be made to the Railroad Commission, accusing any railroad company or corporation of charging, col- lecting or receiving extortionate freight or passenger rates, over its line or lines of railroad in this commonwealth, or when said Commission shall receive information, or have reason to believe that such rate or rates are being charged, collected or received, it shall be the duty of said Commission to hear and determine the matter ,as speedily as possible. They shall give the company or corporation complained of not less than ten days' notice, by letter mailed to an officer or employee of said company or cor- poration, stating the time and place of the hearing of same ; also the nature of the complaint or matter to be investigated, and shall hear such statements, argument or evidence offered by the parties as the Commission may deem relevant, and should the Commission determine that the company or corporation is, or has been guilty of extortion, said Commission shall make and fix a just and reasonable rate, toll or compensation which said railroad company or corporation may charge, collect or receive for like services thereafter rendered. The rate, toll or compensation so fixed by the Commission shall be entered and be an order on the record book of their office, and signed by the Commission and a copy thereof mailed to an officer, agent or employee of the railroad company or corpora- [1088] Chap. XL] Rate Regulation. [§ 1261 tion affected thereby, and shall be in full force and effect at the expiration of ten days thereafter, and may be revoked or modi- fied by an order likewise entered of record. [Laws of 1900, ch. 2, section 1.] See McChord v. Cincinnati, N. 0. & T. P. R. R., 183 U.IS. 483, 46 L. Ed. 289, 22 Sup. Ct. 165 (1901), reversing Louisville & N. Ry. v. McChord, 103 Fed. 216 (1900), and holding that no repeal of the provisions of Ky. Gen. Stat. 1894, § 819, that prosecution by indictment of railroad com- panies for charging unlawful rates shall be had only on recommendation or request of the railroad commission, and also for an action in the name of the commonwealth on information filed by the board of railroad commis- sioners, I was effected by K.y. act March 10, 1900, providing for the fixing of rates by such Commission, although, while repeating many of the pro- visions of the section, it omitted these provisions. § 1261. Louisiana. Art. 284. The power and authority is hereby vested in the Commission and it is hereby made its duty, to adopt, change or make reasonable and just rates, charges and regulations; to govern and regulate railroad, steamboat and other water craft, and sleeping-car, freight and passenger traffics, and service, express rates, and telephone and telegraph charges, to inspect railroads and to require them to keep their tracks and bridges in a safe condition, and to fix and adjust rates between branch or short lines and the great trunk lines with which they connect, and to enforce the same by having the penalties hereby pre- scribed inflicted through the proper courts having jurisdiction. The Commission shall have power to adopt and enforce such reasonable rules and regulations and modes of procedure, as it may deem proper for the discharge of its duties and to hear and determine complaints that may be made against the classifica- tion or rates it may establish, and to regulate the mode and man- ner of all investigations and hearings of railroad companies and other parties before it, in the est'ablishment of rates, orders: charges and other acts, required or authorized by these pro- visions. They shall have power to summon and compel the at- [1089] § 1262] Raileoad Rate Regulation. [Chap. XL tendance of witnesses, to swear witnesses, and to compel the pro- duction of books and papers, to take testimony under Commis- sion and to punish for contempt as fully as is provided by law for the district courts. [Constitution (1898), art. 284.J That power and authority is hereby vesbed in and given to the Railroad Commission of Louisiana and it is' hereby made its duty to require all railroad and other common carriers doing business in this State, upon the demand of any^person or per- sons, firm, partnership or corporation to adopt and make, and thereafter, when necessary, to change reasonable and just joint through rates and charges for the transportation of freight be- tween points within this State, whether such shipments be made entirely by railroads or by water transportation, or partly by railroads and partly by water, or whether, when made by rail- roads alone, such freight is forwarded in carloads or less than carload shipments. — [Acts of 1904, ISTo. 24, section l.J § 1262. Maine. Any railroad corporation may establish and collect, for its sole benefit, fares, tolls and charges, • upon all passengers and property conveyed and transported on its railroad, at such rates as may be determined by the directors thereof, and shall have a lien on its freight therefor ; and may from time to time by itsi directors regulate the use of its road ; Provided, That such rates of fares, tolls and charges, and regulations are at all times sub- ject to alteration by the legislature, or by such officers or persons as the legislature may appoint for the purpose, anything in the charter of such, corporation to the contrary notwithstanding ; and Provided further. That upon what shall, at any time, be deemed by the railroad commissioners a sufficient complaint, by inter- ested and responsible parties, that the tolls are unreasonably high, said commissioners may revise and establish them, after due notice and hearing, for a time not exceeding one year. But the commissioners before directing said hearing, shall give op- [1090] Chap. XL] Kate Eequlation. [§1263 portunity to the company complained of, to repiy to the charge. [Kevised Statutes (1903), ch. 52, section 1.] See State v. Goold, 53 Me. 279 (1865). § 1263. Minnesota. Upon the verified complaint of any person or of any corpora- tion, private or municipal, that any tariff of rates, fares or charges, or any part thereof, or of any classification is unequal or unreasonable, the Commission shall proceed to investigate the matters alleged in such complaint, and for the purposes of such investigation they may require the attendance of witnesses and the production of books, papers and documents. If, upon the hearing, such tariff of rates, fares, or charges, or any part thereof, or of such classification, is found to be unequal or un- reasonable, the committee shall make an order stating wherein the same are so unequal or unreasonable, and shall make a tariff of rates, fares, charges and classification which shall be substi- tuted for the tariff so complained of. The tariff so made by the Commission shall be deemed prima facie reasonable in all courts and shall be in full force during the pendency of any ap- peal or other proceedings to review the action of the Commission in establishing the same. [Revised Laws (190.5), section 1969. Any common carrier desiring to change or discontinue any published rate, charge or classification, minimum weight or rule governing the same to which it is a party, shall make application to the Commission in writing, stating the changes in rules, rates, charges or clasifications desired, giving the reasons for such change. Upon receiving such application, the Commission shall fix a time and place for hearing, and give such notice to in- terested parties as it shall deem proper and reasonable, and after hearing all the evidence offered^, if the Commission find that it is reasonable, fair and just to both shippers and carriers that the change should be allowed as asked for, it shall grant the ap- plication ; otherwise, it shall deny the same, or may grant the [1091] § 1264] Railroad Rate Regulation. [Chap. XL same in a modified form. Passenger rates are not affected by this Act. [Laws of 1905, ch. 176, section 5.] The leading eases in Minnesota upon the power of the Commission in dealing with rates are Steenerson v. Gt. Northern Ry., 69 Minn. 353, 72 N. W. 713 (1897), and State v. Minneapolis & St. L. Ky., 80 Minn. 191, 83 N. W. 60, 89 Am. St. Rep. 514 (1900). The doctrine of these cases is that particular rates may be reduced by the Commission provided that a fair return is left upon the schedule as a whole. And it is regarded that a fair return is left when a reasonable percentage upon the replace- ment value of the property is earned over necessary annual expenditures. § 1264. Mississippi. It is the duty of every railroad to furnish to the Commission its tariff of charges for transporting passengers and freight from point to point within, and from points without' to points Avithin, and from points within to points without the State, and including all joint tariffs with connecting lines; and the Commission shall revise such of said tariffs as are not subject to the exclusive regulation of Congress, and determine whether or not, and in what particular, any of the charges are more than reasonable compensation for the services to be rendered, and whether or not discrimination be made improperly against any person, corporation or locality ; and it shall require the proper corrections to be made; and when the tariffs have been corrected, the Commission shall append to each its certificate of approval; and the Commission shall fix and regulate tariffs of charges for all railroads which fail to furnish their tariffs as required. In revising, fixing and regulating charges for transiportation, the Commission shall take into consideration the character and nature of the service to be rendered, and the entire business of the railroad, and its earnings from all kinds of traffic ; and shall so revise, fix and regulate the charges as to allow reasonable compensation for the services to be ren- dered. It sihall exercise a watchful and careful supervision over the tariffs of charges of every railroad, and shall revise the same from time to time, as justice to the public and the rail- [1092] Chap. XL] Eate Eegulation. [§§ 1265, 1266 road may require, and shall increase or reduce any of the rates, experience and business operations show to be just. In fixing joint tariffs of rates, for connecting lines, the Commission shall determine the proportion to be charged by each of the rail- roads. The Commission shall regulate and fix the rates to be charged on short hauls in excess of what may be charged on long hauls, and it shall determine in all cases whether the cir- cumstances and conditions be or be not siubstantially similar. [Annotated Code (1902), section 4290.J The State has the right, as a general proposition, to prescribe the eoni- penseition a railroad shall receive for carrying passengers and freight within its borders. Stone v. Yazoo R. R. Co., 62 Miss. 607 (1884). The State may supervise railroads, and regulate their charges through a Commission. Stone v. Natchez R. R. Co., 62 Miss. 646 (1884). And the State may give the Commission povper to rectify abuses in rates. Alabama Ry. v. Railroad Com., 38 So. 356 (1905). § 1265. Missouri. Said railroad commissioners shall have power to classify all articles of freight transported on any railroads or parts of railroads, owned, leased, or occupied in the State, except the articlesi in the special classes D, E, G and H, placing said articles in either of the general classes herein provided for, or in any of said special classes, except D, E, G and H ; and are further empowered and authorized to reduce said rates on any of said railroads or parts of railroads, either in general or in special classes, whenever in their judgment, it can equitably be done. [Eevised Statutes (1899), section 12 04. J § 1266. Nebraska. That the board hereby created shall have authority to inquire into the management of the business of all common carriers subject to the provision of this Act, and shall keep itself in- formed ag to the manner and method in which the same is conducted, and shall have the right to obtain such common car- riers full and complete information necessary to enable the [1093] § 1267] Raileoad Eate Regulation. [Chap. XL board to perform the duties and carry out the objects for which it was created ; and for the purposes of this Act the board shall have power to require the attendance and testi- mony of .witnesses and the production of all books, papers, tar- iffs, contracts, agreements and documents relating to any mat- ter under investigation, and to that end may invoke the aid of any of the District Courts in thisi State, or of the S'Upreme Court, in requiring the attendance and testimony of witnesses, and the production of books, papers and documents under the provisions of this section; and any court of competent juris- diction, within the jurisdiction of which such inquiry is car- ried on, may, in case of contumacy or refusal to obey a sub- poena issued to any common carrier subject to the provisions of this Act or other person, issue an order requiring such com- mon carrier or other person to appear before said board (and produce books and papers if ordered) and give evidence touch- ing the matter in question; and any failure to obey such order of the court may be punished by such court as a contempt thereof. The claim that any such testimony or evidence may tend to criminate the person giving such evidence shall not excuse such witness from testifying; but such evidence or tes- timony sihall not be used against such person on the trial of any criminal proceeding. [Compiled Statutes (1899), sec- tion 4056.] See State v. Sioux City, etc., R. R., 46 Neb. 682, 65 N. W. 766 (1896), and Smyth v. Amea, 169 U. S. 466, 42 L. Ed. 819, 18 Sup. Ct. 418 (1898), for general principles to be employed in passing upon the jeasonablenesa of rates. § 1267. New Hampshire. In such case, if a railroad corporation shall not establish a tariff for the transpor^tation of milk by the can, or if any person is aggrieved by the tariff established, the board of railroad commissioners, upon petition, after notice and hear- ing, shall establish such tariff as they shall deem to be fairly [1094] Chap. XL] Kate Eegulation. [§ 1268 proportionate to the rates charged by the corporation for the transportation of milk in large quantities, and shall notify the corporation thereof. [General Laws (1903), chap. 160, sec- tion 22. J § 1268. North Carolin.a. That the said Commission is hereby empowered and di- rected: (1) To make reasonable and just rates of freight, passenger and express tariffs for railroads, steamboats, canal and express companies or corporations, and all other transi- portation companies or corporations engaged in the carriage of freight, express or passengers: Provided, That in fixing any maximum rate or charge or tarifE of rates or charges for any common carrier, persion or corporation subject to the provisions of this Act the said Commission shall take into consideration if proved or may require proof of the fair value of the property of such carrier, person or corporation used for the public in the consideration of such rate or charge or the fair value of the service rendered as in determining the fair value of the prop- erty so being used for the convenience of the public. It shall furthermore consider the original cost of the construction thereof and the amount expended in permanent improvements thereon and the present compared with the original cost of construction of all its property within the State of North Carolina ; the provable earning capacity of such property under the particular rates proposed and the sum required to meet the operating expenses of such carrier, person or corporation and all other facts that will enable them to determine what are reasonable and just rates, charges and tariffs. [Laws of 1899, chap. 164, section 2.] The powers of this Commission were considered at length in Matthews V. Board of Corp. Comm'rs, 106 Fed. 7 (1901). It was held in that ease that the Commission must not so reduce rates as to prevent the railroad from earning a fair return upon the present value of its property, but that rates on a particular article might be fixed at any reasonable rate pro- vided the schedule as a whole produced an adequate return. [1095] §§ 1269, 1270] Eaileoad Eate Kegulation. [Chap. XL § 1269. North Dakota. Before proceeding to make such examination, in accord- ance with such application or petition, said commissioners shall give to the petitioners and the railroad, railroad corporation, or co'mmon carrier reasonable notice in writing of the time and place of entering upon the same. If, upon such an examin- ation, it shall appear to said commissioners that the com- plaint alleged by the applicant or commissioners is well founded they shall so adjudge, and shall inform the corporation operat- ing such railroad or such railroad corporation or common car- rier of their adjudication within ten days, and shall also report their doings to the governor, as provided in the second section of the Act. [Laws of 1897, chap. 115, section 8.] The powers of this Commission under the various clauses of Laws of 1897, Ch. 115, were discussed in No. Pacific Ey. v. Keyes, 91 Fed. 47 (1898), where it was held that the railroad must be left a, fair return upon their State business without regard to their interstate business. § 1270. South Carolina. The commissioners elected as hereinbefore provided shall, as provided in the next section of this chapter, make reason- able and just rates of freight and passenger tariffs, to be ob- sierved by all railroad companies doing business in this State on the railroads therein, but said passenger rates shall not ex- ceed the maximum prescribed in section 2165; they shall make reasonable and just rules and regulations to he observed by all railroad companies doing business in this State, as to charges to any and all points for the necessary hauling and delivery of all freights ; shall make such just and reasonable rules and regulations as may be necessary for preventing unjust discrimination in the transportation of freight and passengers on the railroads in this State ; shall have the power to make just and reasonable joint rates for all connecting roads doing business in this State, as to all traffic or business passing from one of said roads to another, and to require the making of such connection at intersecting points of the schedules of trains as the public convenience may in their judgment demand: Pro- [1096] Chap. XL] Eate Eegulation. [§1271 vided, however, That before applying joint rates to roads that are not under the management and control of one and the same company the commissioners shall give thirty days' notice to said roads of the joint rate contemplated and of its division between said roads, and give hearing to roads desiring to object to the same; shall make reasonable and just rates of charges for use of railroad cars carrying any and all kinds of freight and passengers on saiA. railroad, no matter by whom owned or carried, and shall make just and reasonable rules and regu- lations to be observed by said railroad companies or railroads, to prevent the giving or paying of any rebate or bonus, directly or indirectly, and from misileading or deceiving the public in any manner as to the real rates charged for freight and pas- sengers : Provided, That nothing in this chapter shall be taken as in any manner abridging or controlling the rates for freight charged by any railroad company in this State for carrying freight which comes from or goes beyond the boundaries of the State, and on which freight less than local rates on any railroad carrying the same are charged by such railroad, but said railroad companies shall possess the same power and right to charge such rates for carrying such freights as they possessed before the passage of this chapter, and commissioners shall have full power, by rules and regulations, to designate and fix the difference in rates of freight and passenger transporta- tion to be allowed for shorter and longer distances on the same or different railroads, and to ascertain what shall be the limit of longer and shorter distances. [Civil Code (1902), section 2092.] § 1271. Tennessee. And it shall be the duty of said Commission to exercise a careful and watchful supervision over every such tariff or charges from time to time, as justice to the public and each of said railroads may require, and to increase or reduce any of said rates according as experience and business operations may [1097] § 1272] Eaileoad Eate Eegulation. [Chap. XL show to be just; and said Commission shall accordingly fix the tariffs of charges for these railroads failing to furnish tariff of charges as above required. [Laws of 1897, chap. 10, section 22a. J § 1272. Texas. The power and authority is hereby vested in the Eail- road Commission of Texas, and it is hereby made its duty, to adopt all necessary rates, charges and regulations to govern and regulate railroad freight and passenger tariffs, the power to correct abuses and prevent unjust discrimination and eixtortion in the rates of freight and passenger tariffs on the different railroads in this State, and to enforce the same by having the penalties inflicted as by this chapter prescribed through proper courts having jurisdiction. 1. The said Commission shall have power, and it shall be its duty, to fairly and justly classify' and subdivide all freight and property of whatsoever charaoter that may be transported over the railroads of this State into such general and special classes or subdivisions as may be found necessary and ex- pedient. 2. The Commission shall have power, and it shall be its duty, to fix to each class or subdivision of freight a reasonable rate for each railroad subject to this Act for the transportation of each of said classes and subdivisions. [Eevised Statutes (1895), art. 4562.J In Railroad Commission v. Weld & N., 96 Tex. 394, 73 S. W. 529 (1903), it was held that plaintiff in an action against the Railroad Com- mission does not, as required by Rev. St. 1895, art. 4566, show that the freight rate on cotton made by it is unreasonable and unjust to him be- cause there is no car rate, and because it is the same amount per 100 pounds whether pressed to a density of 40 pounds to the cubic foot, as shipped by him, or to a density of only 221/2 pounds, as shipped by others. In Gulf, C. & S. F. Ry. v. State (Tex. Civ. App.), 73 S. W. 429 (1903), it was held that where corn was reconsigned at T., a point within the State, the interstate shipment terminated at T., and that the further ship- [1098] Chap. XL] Eate Eegulation. [§§ 1273, 1274 ment to G. was intrastate business, for which defendant was only en- titled to charge the rate fixed by the Texas Railroad Commission. The fullest discussion of the powers of this Commission is to be found in Metropolitan Trust Co. v. Houston & T. C. R. R., 90 Fed. 683 (1898), where it is held that the Commission must not so reduce rates as to de- prive the railroad of a fair return upon its investment. § 1273. Virginia. The Commission shall have the power, and be charged with the duty, of supervising, regulating and controlling all trans- portation and transmission companies doing business in this State, in all matters relating to the performance of their public duties and their charges therefor, and of correcting abuses therein by such companies; and to that end the Commission shall, from time to time, prescribe, and enforce against such companies, in the manner hereinafter authorized, such rates, charges, classifications of traffic, and rules and regulations, and shall require them to establish and maintain all such public service, facilities and conveniences, as may be reasonable and just, which said rates, charges, classifications, rules, regula- tions and requirements, the Commission may, from time to time to come, alter or amend. All rates, charges, classifications, rules and regulations adopted, or acted upon, by any such company, inconsistent with those prescribed by the Commis- sion, within the scope of its authority, shall be unlawful and void. [Constitution (1904), section 156 (6). J § 1274. Wisconsin. Section 14. Whenever, upon an investigation made under the provisions of this Act, the Commission shall find any existing rate or rates, fares, charges or classifications, or any joint rate or rates, or any regulation or practice whatsoever affecting the transportation of persons or property, or any service in con- nection therewith, are unreasonable or unjustly discriminatory, or any service is inadequate, it shall determine and by order fix a reasonable rate, fare, charge, classification or joint rate [1099] § 1275] Eaileoad Eate Kegulation. [Chap. XL to be imposed, observed and followed in the future in lieu of that found to be unreasonable or unjustly discriminatory, and it shall determine and by order fixe a reasonable regulation, practice or service to be imposed observed and followed in the future, in lieu of that found to be unreasonable, or unjustly discriminatory, or inadequate as the ease may be, ^and it shall cause a certified copy of each such order to be delivered to an officer or station agent of the rail- road affected thereby, which order shall of its own force take effect and become operative twenty days after the ser- vice thereof. All railroads to which the order applies shall make such changes in their schedule on file as may be neces- sary to make the same conform to said order, and no change shall thereafter be made by any railroad in any such rates, fares or charges, or in any joint rate or rates, without the approval of the Commission. Certified copies of all other orders of the Commission shall be delivered to the railroads affected thereby in like manner, and the same shall take effect within such times thereafter as the Commission shall prescribe. [Laws of 1905, chap. 362.] § 1275. Washington. That the freight and passenger tariffs, charges for trans- portation of loaded or empty cars, charges for demurrage, and reciprocal demurrage, truckage, train service, waiting rooms for passengCirs and rooms for freight and baggage at all sta- tions of railroads, and charges for each kind and class of prop- erty, money, papers, packages and all other things to be charged for and received by each express company on all such property, money, papers, packages and things which by the contract to carry are to be transported by said express company, to be de- manded, collected, enforced, or performed by railroad or ex- press companies shall be just, fair, reasonable, and sufficient, and the said Railroad Commission of Washington is hereby vested with power and authority, upon complaint made as here- [1100] Chap. XL] Rate Regulation. [§ 1276 inafter provided or by inquiry upon their own motion, after a full hearing, to make any finding declaring any existing rate for the transportation of person or property, or any regulation whatsoever affecting said rate or charge for transportation of loaded or empty cars or demurrage or reciprocal demurrage or the suflSciency of the train service and waiting rooms for pas- sengers and rooms for freight and baggage to be unreasonable, or unjustly discriminatory, or insufficient, and to declare and order what shall be a just and reasonable rate, practice, regula- tion or thing to be charged, imposed, enforced, or performed or followed in the future in the place of that found to be un- reasonable or unjustly discriminatory or insufficient; and the order of the Commission shall of its own force take effect and become operative twenty days after notice thereof has been given to the railroad or express company affected thereby ; which said order shall be served on railroad and express companies by delivery of a certified copy thereof under the seal of the Commission, either to the attorney for the railroad or express company or the said company itself. [Laws of 1905, ch. 81, section 3. J § 1276. Conclusion. Certain generalizations may be drawn from this collection of statutory provisions. In the first place the general powers of these commissions are considerable and are increasing. In a majority of States they have power to pass upon rates ; and in a majority of these they have power to fix rates, their power in this last respect being established with greater detail than ever before, many States within a few years having passed new and sweeping legislation. Upon the whole,- the tendency of the times is plainly to give to the Railroad Commissions the power to fix rates. [iioi:i CHAPTER XLI, STATUTORY PROVISIONS FOR COURT REVIEW. 1281. Introduction. 1282. Alabama. 1283. Arkansas. 1284. Florida. 1285. Indiana. 1286. Kansas. 1287. Louisiana. 1288. Minnesota.- 1289. Mississippi. § 1290. Missouri. 1291. North Carolina. 1292. North Dakota. 1293. South Dakota. 1294. Texas. 1295. Virginia. 1296. Washington. 1297. Wisconsin. 1298. Conclusion. § 1281. Introduction. It has appeared at various points in the course of this treatise that it is practically impossible under our American consti- tutional system to exclude altogether the possibility of resort to the judicial courts by complainants who seek to show that they are being deprived of life, liberty and property without due pro- cess of law. For the courts consistently maintain the position in recent times that there is deprivation of property if the rates which a railroad establishes are interfered with in an outrageous manner without showing of justification. In recognition of this situation it has become common in the more recent statutes to accept the conditions frankly, and to provide a regular method of access to the courts. Extracts from these statutes are in- cluded in this chapter, so that the reader may study this matter comparatively, if he be so minded. § 1282. Alabama. That whenever any person or corporation operating a railroad fails or refuses to comply with any order of the Railroad Com- mission, it shall be the duty of said Commission, through its presi- dent to certify to the attorney-general the facts of such failure [1102] Chap. XLI] Statutoey Pbovisions. [§ 1282 or refusal together with a certihed copy of the order made by said Commission in such matter, whereupon it shall be the duty of the attorney-general or some attorney at law, to be by him ap- pointed, to immediately file in the circuit, chancery, city court or court of like jurisdiction, appropriate pleadings in the way of complaint, petition, or bill as may be in accordance with the rules of pleading and practice in such cases, or cases of similar nature, setting out the name and the style of the case heard be- fore the railroad commission, the relief asked for, and the order of the Commission granting such relief, or if such order is made by the Commission on its own motion, such statement shall simply set out the order of the Commission, the name of the railroad or railroads to which such order was directed, with the averment that said railroad or railroads have refused or failed, within the time required by such order to comply therewith, and conclude with the prayer that such railroad or railroads be compelled by mandamus or injunction to carry out said order of the Railroad Commission. [Laws of 1903, l^o. 94, section 25. J That upon the trial of said cause the order of the railroad commission shall be prima facie evidence that the thing ordered to be done was correct, reasonable, and just, and the burden of showing that such order is not correct, reasonable and just shall be upon the railroad or railroads failing or refusing to comply with the order of said Railroad Commission. [Ibid, section 26.] That upon the final hearing of said cause either party may appeal within thirty days from the judgment of said court to the Supreme Court of Alabama. Said Railroad Commission may take such appeal without filing any bond. But said rail- road or r.ailroads shall, before taking such appeal, be required to enter into bond with good and sufficient security in such sum as may be required by the judge of the court trying such case, and which, in the judgment of said judge, may be sufficient to pay the costs of said suit and all damages growing out of said suit to any person by reason of the delay of the enforcement of [1103] § 1283] Eaileoad Eate Kegulation. [Chap. XLI the order of said Kailroad Commission, and said bond to be approved by said judge of said court. [Ibid, section 29.] § 1283. Arkansas. The Commission shall institute such action and actions for the recovery of the penalties prescribed in this act, through tbe prosecuting attorney of the proper district, and no such suit shall be dismissed or compromised v?ithout the consent of the court and of said commissioners; and the prosecuting attorney shall be allowed a fee by the court not to exceed twenty-five per cent, of the amount collected ; and if any prosecuting attorney shall neglect for fifteen days after notice to bring suit, the Com- mission may employ some other attorney at law to bring the same, who shall be allowed a fee therefor to be fixed by the court, not to exceed twenty-five per cent, of the amount collected, and in such case the prosecuting attorney shall not interfere: Provided, That' in all trials of cases brought for a violation of any tariff charges by said Commission, it may be shown in de- fense that such tariff so fixed was unjust. [Digest of Statutes (1904), section 6380.] If any person or corporation operating a railroad or express company in this State, or any receiver, trustee, or lessee of any such person of corporation as aforesaid, shall violate any of the provisions of said act, or aid or abet therein, or shall violate the tariff of charges as fixed by the Commission, or any of the rules regarding railroads or expressi companies as made by said Commission, and for which there is no other penalty prescribed in this act, such person or corporation, or receiver, trustee, or lessee shall be liable to a penalty not less than five hundred nor more than three thousand dollars for each violation of this act, or such tariff of charges or rules and regulations, and such pen- alty may be recovered by an action to be brought in the name of the State of Arkansas, in the county in which such violation may occur. The Commission shall institute such action and actions for the recovery of the penalties prescribed in this act, [1104] Chap. XLI] Statutory Peovisions. [§§ 1284, 1285 through the presecuting attorney of the proper district, and no such suit shall be dismissed or compromised without the consent of the court and of said commissioners ; and the prosecuting at- torney shall be allowed a fee by the court not to exceed twenty- five per cent, of the amount' collected, and if any prosecuting at- torney shall neglect for fifteen days after notice to bring suit the commission may employ some other attorney at law to bring the same, who shall be allowed a fee therefor to be fixed by the court, not to exceed twenty-five per cent, of the amount collected, and in such case the prosecuting attorney shall not interfere: Provided, That in all trials of cases brought for a violation of any tariff charges by said commission, it may be shown in de- fense that such tariff so fixed was unjust. [Ibid, 6831. J § 1284. Florida. The said railroad commissioners are hereby vested with judi- cial powers to do or enforce or perform any function, duty, or powers conferred upon them by this act to the exercise of which judicial power is necessary. [Laws of 1899, ch. 4700 (No. 39), section 22. J Appeals by either party shall be from judgments, orders, and decrees of inferior courts in all suits and cases brought under the provisions of this act to the same extent that appeals lie in similar suits and cases brought under any other law in this State, and not otherwise. [Ibid, section 23.] § 1285. Indiana. If any railroad company or other corporation or party in interest shall be dissatisfied with any rate, classification, rule, charge, or general regulation made, approved adopted, or or- dered by the Commission, such dissatisfied conjpany or party may, within sixty days after any such action has been taken by the Commission, procure from the secretary of the Commission, whose duty it shall be to furnish the same, a complete tran- script of all the proceedings of the Commission relative thereto, [1105] § 1285] Kaileoad Kate Regulation. [Chap. XLI and if he or it so desires a copy of all the evidence heard or considered by the Commission at the hearing at which such ac- tion or decision was made, which evidence shall be incorporated into such transcript, and such dissatisfied company or party may file said transcript, with a concise written statement of its or his causes of complaint against the action of the Commission, in the office of the clerk of the appellate court of Indiana within thirty days after procuring the same and not later than ninety days after the action of the Commission complained of has been spread upon its resords. Said complaining company or party shall, at the time of filing such transcript, give or cause to be given to said Commission written notice thereof, and shall, within five days thereafter, file proof of such notice in the office of said clerk of the appellate court, who shall, ten days there- after, or upon the appearance of said Commission to said appeal, place said cause upon the docket of the said appellate court for hearing and determination. The commission shall be made a party to such proceeding in the appellate court and shall defend the same. [Laws of 1905, ch. 53, section 6. J Provided, however. That if at the time of filing a transcript in the office of the clerk of the appellate court of Indiana, as provided in section 6, appealing from the action of said Commis- sion in fixing or changing any rate or charge of any common carrier for the transportation of freight or passengers, the rail- road company or other common carrier filing such petition shall also file a bond in such amount as shall be fixed by the coart and with surety to the satisfaction of such court, conditioned for the payment to the commission for the use of all persons who may be injuriously affected by such proceeding, of any and all amounts in which any of such persons may be damaged thereby, and for the refunding to each shipper or passenger of all over- payments of freight or passenger charges made by him to such complaining carrier pending such proceeding, and for the prompt payment of all penalties provided for herein, to which any or all such shippers may be entitled, then, in such case the [1106] Chap. XLI] Statutoey Provisions. [§§ 1286, 1287 said complaining carrier may charge to and collect from all shippers of freight and all passengers on its said line or lines, the same rate for freight received hy it and transported, or the same passenger rate that existed before the making of the order by the said Commission which is complained of in said proceeding until such proceeding is finally determined by said court. [Ibid, sec- tion 6 1-2.J § 1286. Kansas. In case any railway company shall charge and receive any rate for the transportation of freight in excess of the rate au- thorized by the board of Railroad Commissioners, and if the rate authorized by the board of Railroad Commissioners shall be rea- sonable and just, then said railroad company shall repay the amount so charged or received in excess of the rate fixed by the board of railroad commissioners, on demand therefor; and in case of failure to repay any such amounts within thirty -days after such demand, the amount thereof may be recovered to- gether with reasonable attorney fees in an action brought for that purpose in any court of competent jurisdiction : Provided, That if such railroad company shall within thirty days after such decision or determination by said board bring suit to test the reasonableness of such rates, no suit shall be brought for said excess imtil such rates have been adjudicated. [Laws of 1905, ch. 340, section 9.J § 1287. Louisijana. If any railroad, express, telephone, telegraph, steamboat and other water craft, or sleeping-car company, or other party in interest, be dissatisfied with the decision or fixing of any rate, classification, rule, charge, order, act, or regulation, adopted by the Commission, such party may file a petition setting forth the cause or causes of objection to such decision, act, rule, rate, charge, classification, or order, or to either or all of them, in a court of competent jurisdiction, at the domicile of the Commis- [1107] § 1288] Kaileojio Rate REOiiXATioisr. [Chap. XLI sion, against said Commission as defendant, and either party to said action may appeal the case to the Supreme Court of the State, without regard to the amount involved, and all such cases, both in the trial and appellate courts, shall he tried summarily, and hy preference over all other cases. Such cases may be tried in the court of the first instance either in chambers, or at term time; Provided, All such appeals shall be returned to the Su- preme Court within ten days after the decision of the lower court; and where the Commission appeals, no bond shall be re- quired. [Constitution (1898), article 285. J § 1288. Minnesota. Any party to a proceeding before the Commission and affected by any order thereof not administrative, or any party affected by the order, or the attorney-general, may appeal therefrom to the District Court of the county in which the complainants or a majority of them, reside, or in case none of them reside in the State, to the District Court of any county in which the carrier or warehouseman, if a corporation, has an ofEce, agent, or place of business, at any time within thirty days after service of such Drder upon him as in this chapter provided by service of written notice of appeal upon the secretary of the Commission. Such secretary shall thereupon file with the clerk of such court all papers and records in the proceeding. [Revised Laws (1905), section 1971. J Upon filing such notice with proof of service with the clerk, the matter shall be pending as a civil action in such court. The court shall try the case de novo and render such order therein as may be just and proper, which shall stand in place of the original order. No such appeal shall stay or supersede the order appealed from, unless the court, upon hearing and notice to the adverse party, shall so direct. [Ibid, section 1972.] Any party to an appeal or other proceeding in the District Court under the provisions of this chapter may appeal from the final judgment, or from any final order therein, in the same [1108] Chap. XLI] Statutory Provisions. [§ 1289 cases and manner as in civil actions. ISTo bond shall be requi*red from the Commission, and no such appeal shall stay the opera- tion of such order or JTidgment unless the District or Supreme Court shall so direct, and unless the carrier appealing from a judgment or order fixing rates for transportation of persons or property shall give, bond in a sum and with sureties approved by a judge of the court ordering the stay, conditioned that the appellant will refund to the person entitled thereto any amoimt received for such transportation above the amount finally fijsed by the court. Any person paying such excessive charges shall have a claim for the excess, whether paid under protest or not, and, unless refunded within thirty days after the written de- mand made after final judgment, may recover the same by action against such carrier, or such carrier and the sureties on such bond. The appeal may be filed in the Supreme Court be- fore or during any term thereof, and shall be immediately en- tered on the calendar and heard upon such notice as the court may prescribe. [Ibid, section 1980. J In Steener&on v. Gt. Northern Ry., 69 Minn. 353, 72 N. W. 713, B. & W. 333 (1897), it was held that the fixing of rates was a legislative or ad- ministrative act, not a judicial one, and under the Constitution the court cannot place itself in tlie position of the Commission, and try de novo the question what are reasonable rates; but upon appeal the court should only seek to know whether the rates fixed by the Commission are un- reasonble and confiscatory. Later in State ex rel. v. Minneapolis & St. L. R. R., 80 Minn. 191, 83 N. W. 60 ( 1900 ) , it was said that the rates made by the Commission were prima facie reasofiable, the burden being upon the carrier to prove the contrary; but the carrier, it was held, was entitled to an examination into the facts of the case, in the course of which evidence de novo might be taken. § 1289. Mississippi. The Commission may apply to the Circuit or Chancery Court, by proper proceeding, for aid in the enforcement of obedience to its process, and to compel compliance with the law and its lawful orders, decisions and determinations; and said courts [1109] § 1290] Kaileoad Rate Eegulation. [Chap. XLI shall have jurisdiction to grant aid and relief in such cases, subject to right of appeal to the Supreme Court by the party ag- grieved. [Annotated Code (1902), section 4286.J § 1290. Missouri. Where the complaint involves either a private or a public question as aforesaid, and the commissioners have made a law- ful order or requirement in relation thereto, and where such common carrier, or the proper officer, agent or employee thereof, shall violate, refuse or neglect to obey any such order or re- quirement, it shall be lawful for the board of railroad commis- sioners, or any person or company interestd in such order or requirement, to apply in a summary way, by petition, to any circuit court at any county in this State into or through which the line of railway of the said common carrier enters or runs, alleging such violation of said obedience, as the case may be; and the said court shall have power to hear and determine the matter on such short notice to the common carrier complained of as the court shall deem reasonable. And such notice may be served on such common carrier, its officers, agents, or serv- ants in such manner as the court may direct; and said court shall proceed to hear and determine the matter speedily in such manner as to do justice in the premises ; and to this end said court shall have power, if it thinks fit, to direct and prosecute in such mode and by such persons as it may appoint, all such in- quiries as may seem needful to enable it to form a just judg- ment in the matter of such petition. On such hearing the re- port of said Commissioners shall be pritna facie evidence of the matter therein stated ; and if it be made to apipear to the court on such hearing, or on report of such persons appointed as aforesaid, that the lawful orders or requirements of such Com- missioners drawn in question have been violated or disobeyed, it shall be lawful for such court to issue a writ of injunction or other proper process, mandatory, or otherwise, to restrain such common carrier from further continuing such violation of such [1110] Chap. XLI] Statutory Peovisions. [§ 1291 order or requirement of said commissioners and enjoin obedience to the same. . . When the subject in dispute shall be of the value of one hundred dollars or more, either party to such proceeding before such court may appeal to the proper appellate court in the State, in the same manner that appeals are taken from such courts in this State in other proceedings involving like sums of money ; but such appeal shall not operate to stay or supersede the order of the court or the execution of any vyrit or process thereon, unless stay of proceedings be ordered by the court from which the appeal is taken, or by the appellate court to wliich the appeal is taken, upon the application of the appeal- ing party. Whenever any such petition shall be filed by the commissioners as aforesaid, it shall be the duty of the attorney- general, when requested by said commissioners, to prosecute tlie same. All proceedings commenced upon such petition shall, upon application of the petitioner, be advanced upon the docket and take precedence of any other case upon the docket except criminal cases. [Eavised Statutes (1899), section 1150. J § 1291. North Carolina. The schedule containing rates fixed by said Commission shall, in suits brought against any such company wherein is involved the charges of any such company for the transportation of any passenger or freight or cars, or unjust discrimination in relation thereto, to be taken in all courts of this State as prima facie evidence that the rates therein fixed are just and reason- able rates of charges for the transportation of passengers and freights and cars upon the railroads : Provided, That any com- pany may appeal to the judge of the Superior Court in term time and thence to the Supreme Court from any determination of the Commission fixing or refusing to change the rate of freight or fare. [Laws of 1899, ch. 164, section 7.] [1111] §§ 1292, 1293] Kailkoad Kate Eegulation. [Chop. XLI § 1292. North Dakota. Any railroad, railroad corporation, or common carrier subject to the provisions of this article, or any other person interested in the order made by the commissioners of railroads may appeal to the district court of the proper county in the judicial district of this State from which the complaint arose, and which is the subject and basis of the order, from any order made by the com- missioners of railroads regulating or fixing its tariffs or rates, fares, charges, or classifications, or from any other order made by said commissioners under the provisions of this article by serving a notice in writing upon the secretary of said commissioners, or any one of said commissioners, within twenty days after such railroad, railroad corporation, or common carrier shall receive notice from such commissioners of the making and entry of such order. . . . Any railroad, railroad corporation, or common carrier, the commissioners of railroads, or any party interested in the decision of said court may appeal from the decision of the district court to the supreme court of this State by serving a notice of such appeal upon the opposite party within twenty days after the rendition of such decision and ser- vice of notice thereof. [Revised Codes (1899), section 3039.] § 1293. South Dakota. Whenever any common carrier, as defined in and subject to the provisions of this article shall violate or refuse or neglect to obey any lawful order or requirement of the said board or rail- road commissioners, it shall be the duty of said commissioners, and lawful for any company or person interested in such order or requirement, to apply in a summary way, by petition to the Circuit Court in any county of this State in which the common carrier complained of has its principal office, or in any county through which its line of road passes or is operated, or in which the violation or disobedience of such order or requirement may happen, alleging such violation or disobedience as the case may [1112] Chap. XLI] Statutory Pkovisions. [§ 1293 be; and the said court shall have power to hear and determine the matter on such short notice to the common carrier com- plained of as the court shall deem reasonable, and such notice may be served on such common carrier, it or its officers, agents, or servants in such manner as the court shall direct; and said court shall proceed to hear and determine the matter speedily as a court of equity and without the formal pleadings and pro- ceedings applicable to ordinary suits in equity, but in such man- ner as to do justice in the premises ; and to this end such court shall have power, if it think fit, to direct and prosecute in such mode and- by such persons as it may appoint all such inquiries as the court may think needful to enable it to form a just judg- ment in the matter of such petition ; and on such hearing the report of such commissioners shall be prima facie evidence of the matter therein, or in any order made by them stated ; and if it be made to appear to such court that on such hearing on the report of any such person or persons that the order or require- ment of said commissioners drawn in the question has been violated or disobeyed, it shall be lawful for such court to issue a writ of injunction or other proper process, mandatory or other- wise, to restrain such common carrier from further continuing such violation or disobedience of such order or requirement of said Commission and enjoining obedience to the same ; and in case of any disobedience of such writ of injunction or other proper process, mandatory or otherwise, it shall be lawful for such court to issue writs of attachment, or any other process of said court incident or applicable to writs of injunction or other proper process, mandatory or otherwise, against such common carrier, and, if a corporation, against one or more of the direc- tors, officers, or agents of the same, or against any owner, lessee, trustee, receiver, or other person failing to obey such writ of in- junction or other process, mandatory or otherwise ; and said court may, if it think fit, make an order directing such common carrier or other person so disobeying such writ of injunction or [1113] § 1294J Eaileoad Rate Regulation. [Chap. XLI other process, mandatory or otherwise, to pay such sum of money not exceeding for each carrier or person in default the sum of one thousand dollars for every day after a day to be named in the order that such carrier or other person shall fail to obey such injunction or other process, mandatory or otherwise; and such moneys shall, upon the order of the court, be paid into the treasury of the county in which the action was commenced, and one-half thereof shall be transferred by the county treasurer to the State treasury ; and the payment thereof may, without pre- judice to any other mode of recovering the same, be enforced by attachment or order, in the nature of a writ of execution in like manner, as if the same had been recovered by a final decree in personat'n in such court, saving to the commissioners and to any other party or person interested (in?) the right to appeal to the Supreme Court of the State under the same regulations now provided by law in relation to appeals to said court as to security for such appeal, except that in no case shall security for such appeal be required when the same is taken by said commis- sioners. [Political Code, section 449.] § 1294. Texas. If any railroad company or other party at interest be dis- satisfied with the decision of any rate, classification, rule, charge, order, act, or regulation adopted by the commission, such dis- satisfied company or party may file a petition setting forth the particular cause or causes of objection to such decision, act, rate, rule, charge, classification, or order, or to either or all of them, in a court of competent jurisdiction in Travis county, Texas, against said Commission as defendant. Said action shall have precedence over all other causes on the docket of a different nature, and shall be tried and determined as other civil causes in said court. Either party to said action may appeal to the appel- late court having jurisdiction of said cause, and said appeal shall be at once returnable to said appellate court, at either of its terms, and said action so appealed shall have precedence in said [1114] Chap. XLIJ 8tatutoey Peovisions. [§ 1295 ■ appellate court of all causes of a different character therein pending: Provided, That if the court be in session at the time such right of action accrues, the suit may be filed during such term and stand ready for trial after ten days' notice. [Kevised Statutes (1895, article 4565. j In Railroad Commission v. Houston & T. C. R. R., i90 Tex. 340, 38 S. W. 750 (1890), it was held as to proceedings under this section that, if any railroad company is dissatisfied with any rule or regulation adopted by the railroad commission, it may file a petition in court, stating its ob- jections, on the trial of which the burden shall be on the plaintiflf to show that the rule or regulation is unjust and unreasonable, and that the court in which such petition is filed has jurisdiction to determine whether the regulation is unreasonable and unjust. And in Railroad Commission v. Weld, 96 Tex. 394, 73 S. W. 529 (1903), it was held that under Rev. St. 1895, art. 4505, authorizing an action against the Railroad Commission by a party dissatisfied with a rate made by it, in which such party must show that the rate is unreason- able and unjust to him, the inquiry is not limited to whether the rate ia so unreasonable and unjust as to amount to the taking of property with- out due process of law. § 1295. Virginia. From an action of the Commission prescribing rates, charges or classifications of traflSc, or affecting the train schedule of any transportation company, or requiring additional facilities, con- veniences or public service of any transportation or transmission company, or refusing to approve a suspending bond, or requir- ing additional security thereon or an increase thereof, as pro- vided for in sub-section e of this section, an appeal (subject to such reasonable limitations as to time, regulations as to pro- cedure,. and provisions as to costs, as may be prescribed by law) may be taken by the corporation whose rates, charges, classifi- cations of traffic, schedule, facilities, conveniences or service, are affected, or by any person deeming himself aggrieved by such action, or (if allowed by law) by the Commonwealth. Until otherwise provided by law, such appeal shall be taken in the manner in which appeals may be taken to the Supreme Court of [1115] § 1295] Railroad Rate Regulation. [Chap. XLI Appeals from the inferior courts, except that such an appeal shall be of right, and the Supreme Court of Appeals may provide by rule for proceedings in the matter of appeals in any particular in which the existing rules of law are inapplicable. If such appeal be taken by the corporation whose rates, charges or classi- fications of traffic, schedules, facilities, conveniences or service are affected, the Commonwealth shall be made the appellee ; but, in the other cases mentioned, 4he corporation so affected shall be made the appellee. The general assembly may also, by general laws, provide for appeals from any other action of the commis- sion, by the Commonwealth or by any person interested, irre- spective of the amount involved. All appeals from the Com- mission shall be to the Supreme Court of Appeals only ; and in all appeals to which the Commonwealth is a party, it shall be represented by the attorney-general or his legally appointed representative. No court of this Commonwealth (except the Supreme Court of Appeals, by way of appeals as herein author- ized), shall have jurisdiction to review, reverse, correct or annul any action of the Commission within the scope of its authority or to suspend or delay the execution or operation thereof, or to enjoin, restrain or interfere with the Commission in the per- formance of its official duties : Provided^ however^ That the writs of Mandamus and prohibition shall lie from the Supreme Court of Appeals to the Commissioij in all cases where such writs, respectively, would lie to any inferior tribunal or officer. Upon the granting of an appeal, a writ of supersedeas may be awarded by the appellate court, suspending the operation of the action appealed from until the final disposition of the appeal; but, prior to the final reversal thereof by the appellate court, no action of the Commission prescribing or affecting the rates, charges, or classifications of traffic of any transportation or transmission company shall be delayed, or suspended, in its operation, by reason of any appeal by such corporation, or by reason of any proceedings resulting from such appeal, until a suspending bond shall first have been executed and filed with, [1116] Chap. XLI] Statutoky Provisions. [§§ 1296, 1297 and approved by, the Cormnission (or approved on review by the Supreme Court of Appeals) , payable to the Commonwealth, and sufficient in amount and security to insure the prompt refund- ing by the appealing corporation to the parties entitled thereto of all charges which such company may collect or receive, pend- ing the appeal, in excess of those fixed, or authorized, by the final decision of the court on appeal. [Constitution (1904), art. 12, section 156.] § 1296. Washington. Any railroad or express company affected by the order of the commission and deeming it to be. contrary to the law, may insti- tute proceedings in the superior court of the Stat© of Washing- ton in the county in which the hearing before the commission upon the complaint had been held, and have such order reviewed and its reasonableness and lawfulness inquired into and deter- mined. [Laws of 1905, chap. 81, section 3. J § 1297. Wisconsin. Any railroad or other party in interest being dissatisfied with any order of the Commission fixing any rate or rates, fares, charges, classifications, joint rate or rates, or any order fixing any regulations, practices or service, may commence an action in the Circuit Court against the Commission, as defendant, to vacate and set aside any such order on the ground that the rate or rates, fares, charges, classifications, joint rate or rates, fixed iu such order, is unlawful, or that any such regulation, practice or service, fixed in such order, is unreasonable, in which action the complaint shall be served with the summons. If, upon the trial of such action, evidence shall be introduced by the plaintiff which is found by the court to be different from that offered upon the hearing before the commission, or additional thereto, the court before proceeding to render judgment, unless the par- ties to such action stipulate in writing to the contrary, shall transmit a copy of such evidence to the commission, and shall [1117] § 1298] Kaileoad Rate Eegulation. [Chap. XLI stay further proceedings in said action for fifteen days from the date of such transmission. Upon the receipt of such evidence the commission shall consider the same, and may alter, modify, amend or rescind its order relating to such rate or rates, fares, charges, classification, joint rate or rates, regulation, practice or service complained of in said action, and shall report its action thereon to said court within ten days from the receipt of such evidence. [Laws of 1905,' ch. 362, section 16.] § 1298. Conclusion. In general it may be said that the tendency in this legislation is to give the right of access to the courts only under strict limit- ations. There are various specific points which the legislators have had in mind during recent years ; the tendency has been to circumscribe the various possibilities of the situation, to the end that the process shall be effectual; moreover, it is meant that the railroads shall gain nothing by delay, the provision that they shall file bond being common. But from a broader point of view what is most significant is the ideas held as to the proper relations between the commissioners and the courts. Current opinion as expressed in these statutes plainly is that the decision of the commission shall be given every presumption, the concep- tion being that the decision rests with them in the first instance and that the attitude of the courts should be that there is a re- viewing authority to prevent plain injustice. . [1118] PART II. [Validity of Statutes. CHAPTER XLII. STATUTORY REGULATION OF RATES AND THE CONSTITUTION, TOPIC A NATURE OF THE POWER TO FIX BATES. § '1301. Regulation of rates by the State. 1302. Power to pass on reasonableness of rates. 1303. Power to fix rates. 1304. Power to fix rates not a judicial power. 1305. Power to fix rates not strictly legislative. 1306. Power to fix rates executive or administrative. TOPIC B METHOD OF EXERCISING THE POWER TO FIX RATES. § 1307. Fixing rates by statute. 1308. Legislation must be general. 1309. Fixing rates by subordinate body. 1310. Fixing rates by municipal or other local government. 1311. Fixing rates by inferior courts. 1312. Fixing rates by administrative commissions. 1313. Duty of the courts to pass on reasonableness of rates. TOPIC C CONSTITUTIONALITY OF RATES FIXED BY GOVERNMENT. SUB-TOPIC 1 GENERAL CONSIDERATIONS. § 1314. Unconstitutional act absolutely void. 1315. Suit against State official to declare rate void. 1316. Function of the courts in declaring rate void. 1317. Rate constitutional as to one road, not as to another. 1318. Statute constitutional in part. [1119] § 1301] Raileoad Rate REGtm-ATioK'. [Chap. XLII SUB-TOPIC 2 SEPAEATION OF GOVEENMENTAL POWEES. 1319. Delegation of rate-making power. 1320. Delegation of power without appeal to the courts. 1321. Temporary interruption of appeal to the courts. 1322. Action of the rate-making body as evidence of reasonableness. 1323. Confusion of the powers of government. SUB-TOPIC 3 OBLIGATION OF CONTEACTS. § 1324. Charter of corporation as contract against rate-fixing. 1325. No contract without express provision. 1326. Conferring ordinary powers does not create contract. 1327. Contracts made by municipal ordinance. 1328. Charter by Congress. 1329. Non-user and waiver of the privilege cf exemption. 1330. Assignment of privilege of exemption. SUB-TOPIC 4 PEOTECTION OF PEOPEETT. § 1331. Unreasonably low rates constitute a taking of property. 1332. The doctrine of the " Granger Cases." 1333. Early modification of the doctrine. 1334. The rule finally established. 1335. Exceptional rates forbidden. TOPIC D CONSTITUTIONAL POWEE OF CONGKESS OVEE INTEESTATE BATES. § 1336. Power to fix rates appears to be given to the Congress. 1337. Power to fix rates is inherent in legislative power to regulate carriage. 1338. Congress allowed to fix maximum rates. 1339. Power of Congress to fix rates for interstate commerce has been assumed. TOPIC A — KATURE OF THE POWEE TO FIX BATES. § 1301. Regulation of rates by the State. The basis of the right of the State to regulate the rates of public-service companies is the principle first clearly appre- hended and expressed by Lord Hale in his treatise De Portihus [1120] Chap. XLII] Validity of Statutes. [§ 1302 MariSj^ that when property is affected with a public interest it ceases to be juris privati only. " Property," as Mr. Chief Jus- tice Waite has said, " does become clothed with a public interest when used in a manner to make it of public consequence and affect the community at large. When, therefore, one devotes his property to a use in which the public has an interest he, in effect, grants to the public an interest in that use, and must submit to be controlled by the public for the common good, to the extent of the interest he has thus created."^ And again, " Common carriers exercise a sort of public office, and have duties to per- form in which the public are interested. Their business is therefore ' affected with a public interest.' "* § 1302. Power to pass on reasonableness of rates. The simplest form in which the power to regulate rates can be exercised is that adopted by the common law, that is, the action of the courts, declaring a rate exacted by a carrier unreasonable upon suit of the party who has been called upon to pay it. Such power has been exercised by the courts of common law from the beginning of their history.* It has always been recognized that if a carrier attempted to charge a shipper an unreasonable sum, the courts had jurisdiction to inquire into that matter, and to award to the shipper any amount exacted from him in excess of a reasonable rate.^ This power, which has aptly been called a visitorial power of the State,® is only one example of the gen- eral power of the State to oversee the acts of those who are en- 1 Cited in Munn v. Illinois, 94 U. S. 113, 24 L. Ed. 77, B. & W. 71 (1876). 2Munn V. Illinois, 94 U. S. 113, 126, 24 L. Ed. 77, B. & W. 71 (1876). 3 See, generally. Chapter II, supra. 4 Waite, C. J., in Railroad Commission Cases, 116 U. S. 307, 29 L. Ed. 636, 6 Sup. Ct. 334 (1886). B Brewer, J., in Reagan v. Farmers' L. & T. Co., 154 U. S. 362, 38 L. Ed. 1014, 14 Sup. Ct. 1047 (1893). 8 Williams, J., in Brymer v. Butler Water Co., 179 Pa. 231, 36 Atl. 249, 36 L. R. A. 260, B. & W. 330 (1897). [1121] §§ 1303, 1304] Eaileoad Eate Eegulation. [Chap. XLII gaged in its public service, and to make sure that they really serve the public interests; and this power has been fully dis- cussed in the earlier portions of this treatise. § 1303. Power to fix rates. The power of the State over public service employments is not limited to its power to pass on the reasonableness of rates after they have, been established; the power to initiate action, to fix rates in the first instance by way of regulating action, is fully recognized at common law and by the general practice of all common-law countries.^ In the middle ages, charges were fixed, if at all, by local bodies. Perhaps the earliest regulation of the rates of carriage by fixing the maximum rates specifically by statute occurred in England in 1692.* Since that time the right to fix charges by the State seems never to have been questioned, though lawyers have sometimes differed as to the legality of some particular method of fixing the charges. § 1304. Power to fix rates not a judicial power. The earliest action of the State in dealing with rates was doubtless the action of the courts in passing upon the reasonable- ness of rates fixed by the carrier, and in Munn v. Illinois® it was insisted that the power over rates was a judicial power, and could not be exercised by the legislature. But the Court held otherwise. The line of argument was as follows : In common- law countries this power has been exercised from time imme- morial by the legislature, which has fixed a maximum beyond which charges are unreasonable. Granting the power to regu- late at all, the power to fix rates follows, since that is one means of regulation. The power of the common law to affect rates by providing that they must be reasonable is admitted; but this is ^ See, generally, Chapter XXVI, supra. 8 3 W. & M. c. 12, § 24. 9 94 U. S. 113, 133, 24 L. Ed. 77, B. & W. 71 (1876). [1122] Chap. XLII] Validity of Statutes. [§ 1305 itself a regulation. If, then, rates are and always have been regulated by law, that law, like any other, may be changed by the legislature, since no one has a vested _ interest in any rule of the common law. A legislative regulation of rates is there- fore a mere instance of a change in the common law, which it is entirely within the power of the legislature to make; and in doing so it is not exercising judicial functions. This view of the question has been universally followed,-^*' The distinction between legislative and judicial functions is a vital one, and cannot be altered either by legislative act or by judicial decree.-'^ Legislation prescribes rules for the future ; litigation determines rights and wrongs for the past. To pre- scribe a tariff of rates for the future is therefore not a judicial act ; to determine whether existing or prescribed rates and charges are unreasonable, on the other hand,. is a judicial act.^^ § 1305. Power to fix rates not strictly legislative. But while the power to fix rates may be exercised directly by the legislature, it is not, strictly speaking, a legislative power ; but rather a so-called administrative function. Mr. Justice Brewer in the Circuit Court, in Chicago & N. W. E.y. V. Dey,^* used on this point language which has often been quoted : " While, in a general sense, following the language of the Supreme Court, it must be conceded that the power to fix rates is legislative, yet the line of demarkation between legisla- 10 Interstate Commerce Commission v. Cincinnati, N. 0. & T. P. R. R., 167 U. S. -190, 42 L. Ed. 243, 17 Sup. Ct. 896 (1897) ; Louisville & N. R. R. V. Brown, 123 Fed. 946 (1903); State v. Wilson, 121 N. C. 472, 28 S. E. 553 (1897). 11 Western Union Tel. Co. v. Myatt, 98 Fed. 335 (1899). 12 Reagan v. Farmers' L. & T. Co., 154 U. S. 362, 38 L. Ed. 1014, 14 Sup. Ct. 1047 (1894); Smyth v. Amos. 169 U. S. 466, 42 L. Ed. 819, 18 Sup. (t. 418 (1S98); Wheeler v. No. Col. Irr. Co., 10 Colo. 582, 17 Pac. 487 (1888) ; Brush E. I. Co. v. Consolidated T. & E. Co., 15 N. Y. Supp. '811 (1891). 13 35 Fed. 866, 874 (1888). [1123] § 1306] Eaileoad Rate Regulation. [Chap. XHI tive and administrative functions is not always easily discerned. The one runs into the other. The law books are full of statutes unquestionably valid, in which the legislature has been content to simply establish rules and principles, leaving execution and details to other officers. Here it has declared that rates shall be reasonable and just, and committed what is, partially at least, the mere administration of that law to the railroad commis- sioners. Suppose, instead of a general declaration that rates should be reasonable and just, it had ordered that the rates should be so fixed as to secure to the carrier above the cost of carriage 3 per cent, upon the money invested in the means of transportation, and then committed to the board of railroad com- missioners the fixing of a schedule to carry this rule into effect, would not the functions thus vested in such a board be strictly administrative? While, of course, the cases are not exactly parallel, yet the illustration suggests how closely administrative functions press upon legislative power, and enforce the con- viction that that which partakes so largely of mere administra- tion should not hastily be declared an unconstitutional delega- tion of legislative power." The difficulty felt in this passage in distinguishing legislative and administrative functions is a real one ; but it is usually not necessary to make a sharp distinction, and for the present it is enough to point out that the function, while not judicial, is not in the strict sense legislative.'* §: 1306. Power to fix rates executive or administrative. Where it is necessary to find a place for the rate-fixing power in one of the three departments into which government' is com- monly divided, it undoubtedly forms part of the executive de- partment. We have seen that the power is neither judicial nor legislative; it does not involve the power to make laws, or to 14 Western Union Tel. Co. v. Myatt, 98 Fed. 335 (1899), [1124] Chap. XLII] Validity of Statutes. [§ 1307 interpret and apply them, but to aid in carrying the laws into effect.^^ TOPIC B METHOD OF EXERCISING THE POWEE TO FIX BATES. § 1307. Fixing rates by statute. In the United States, where the division of powers is strictly enforced, it is well settled that the legislature has power to limit the amount of charges by railroad companies for the trans- portation of persons and property within its own jurisdiction, unless restrained by some contract or other in the charter of the railroad.-' 15 In re Railroad Comrs., 15 Neb. 679, 50 N. W. 276 (1883) ; Nebraska Tel. Co. V. Cornell, 59 Neb. 737, 82 N. W. 1 (1900). 1 United States : Munn V. Illinois, 94 U. S. 113, 24 L. Ed. 77 (1876), affirm- ing Munn V. Peo., 69 111. 80; Chicago, B. & Q. R. R. v. Iowa, 94 r. S. 155, 24 L. Ed. 94 (1876); Peik v. Chicago & N. W. Ry., 9-1 U. S. 164, 24 L. Ed. 97 (1876) ; Winona & S. P. R. R. v. Blake, 94 U. S. 180, 24 L. Ed. 98 (1876); Ruggles ». Illinois, 108 U. S. 526, 531, 27 L. Ed. 812, 2 Sup. Ct. 832 (1883), affirming Ruggles v. Peo., 91 111. 256; Railroad Commission Cases, 116 U. S. 307, 29 L. Ed. 636, 6 Sup. Ct. 334 (1886); Dow v. Beidelman, 125 U. S. 680, 31 L. Ed. 841, 8 Sup. Ct. 1028 (1888) ; Chicago, M. & S. P. Ry. v. Minnesota, 134 U. S. 418, 33 L. Ed. 970, 10 Sup. Ct. 462 (1889); Chicago & G. T. Ry. v. Wellman, 143 U. S. 339, 36 L. Ed. 176, 12 Sup. Ct. 400 (1892), affirming 0. u. 83 Mich. 592, 47 N. W. 489; Budd v. New York, 143 U. S. 517, 36 L. Ed. 384, 12 Sup. Ct. 468 (1892), affirming People v. Budd, 117 N. Y. 1, 22 N. E. 670, B. & W. 79; Chesapeake & P. Tel. Co. v. Manning, 186 U. S. 238, 46 L. Ed. 1144, 22 Sup. Ct. 881 (1902). Fedebal Courts: Atlantic & P. Co. v. United States, 76 Fed. 186 (1896). State Coubts: ^rfconsos— Missouri Pac. Ry. v. Smith, 60 Ark. 221, 29 S. W. 752 (1895). /nrfia /(O—Hockett v. State, 105 Ind. 250, 5 N. B. 178 (1885). Massachusetts— Sa.wjer v. Davis, 136 Mass. 239 (1884). Michigan— Vmgree v. Michigan Cent. R. R., 118 Mich. 323, 76 N. W. 635 (1898). [1125] § 1308] Eailkoad Rate Regulation. [Chap. XLII § 1308. Legislation must be general. In Lake Shore & Michigan Southern Railway v. Smith,^ the court considered the constitutionality of a statute which com- pelled the railroad to sell 1,000-i^ile tickets at a reduced rate. The majority of the court held that the legislature having al- ready adopted a schedule of maximum rates it could not make statutory exceptions. Mr. Justice Peckham said : " We cannot regard this exceptional legislation as the exercise of a lesser right which is included in the greater one to fix by statute maxi- mum rates for railroad companies. The latter is a power to make a general rule applicable in all cases, and without dis- crimination in favor of or against any individual. It is the power to declare a general law upon the subject of rates beyond which the company cannot go, but within which it is at liberty to conduct its work in such a manner as may seem to it best suited for its prosperity and success. This is a very different power from that exercised in the passage of this statute. The act is not a general law upon the subject of rates, establishing maximum rates, which the company can in no case violate. The legislature, having established such maximum as a general law, now assumes to interfere with the management of the com- pany while conducting its affairs pursuant to and obeying the statute regulating rates and charges, and notwithstanding such rates it assumes to provide for a discrimination — an exception in favor of those who may desire and are able to purchase tickets at what might be called wholesale rates ; a discrimination which operates in favor of the wholesale buyer, leaving the others sub- ject to the general rule. And it assumes to regulate the time in which the tickets purchased shall be valid, and to lengthen it to double the period the railroad company has ever before pro- vided. It thus invades the general right of a company to con- duct and manage its own affairs, and compels it to give the use of its property for less than the general rate to those who come 2 173 U. S. 684, 43 L. Ed. 858, 19 Sup. Ct. 565 (1899). [1126] ■Chap. XLII] ' Validity of Statutes. [§ 1309 within the provisions of the statute ; and to that exteat it would seem that the statute takes the property of the company without due process of law." To make it clear that this language applied only to the case of an attempted statutory exception to the general schedule of charges, the learned judge added: " We speak of the general right of the company to conduct and manage its own affairs ; but, at the same time, it is to be' understood that the company is subject to the unquestioned jurisdiction of the legislature in the exercise of its power to provide for the safety, the health, and the convenience of the public, and to prevent improper ex- actions or extortionate charges from being made by the com- pany." § 1309. Fixing rates by subordinate body. It is much more convenient for the legislature to confer on a subordinate administrative body the power to fix rates than to do so itself. This has been done in England by placing the power in the Board of Trade, one of the executive or rather ad- ministrative departments of the government. In this country, the power has, in the last quarter century, not infrequently been referred to an administrative commission. The reason for delegating the power of fixing rates in detail to a commission has never been better expressed than by Mr. Justice Brewer:^ " The reasonableness of a rate changes with the changed condi- tion of circumstances. That which would be fair and reason- able to-day, six months or a year hence may be either too high or too low. The legislature convenes only at stated periods ; in this State once in two years. JiiPtice will be more likely done if this power of fixing rates is vesved in a body of continual session than if left with one meeting only at stated and long intervals. Such a power can change rates at any time, and thus meet the changing conditions of circumstances. While, • Chicago & N. W. Ry. v. Dey, 35 Fed. 866, 876 (1888). [1127] § 1310J Eaileoad Rate Eegulatios. [Chap. XJ.II of course, the argument from inconvenience cannot be pushed too far, yet it is certainly a matter of inquiry whether in the increasing complexity of our civilization, our social and busi- ness relations, the power of the legislature to give increased extent to administrative functions must not be recognized." § 1310. Fixing rates by municipal or other local government. The legislature may by statute confer the power of fixing rates upon counties, cities, or villages, or any such bodies as constitute local governments ; and the power so conferred may be exercised by the body named in accordance with the terms of the statute.* 4 United States — Freeport Water Co. v. Freeport, 180 U. S. 587, 45 L. Ed. 679, 21 Sup. Ct. 493 (1901); San Diego, L. & T. Co. v. Jasper, 1^9 V. S. 439, 47 L. Ed. 892, 23 Sup. Ct. 571 (1903) ; Capital City Gaslight Co. V. Des Moines, 72 Fed. 818, 829 (1896); Cleveland City Ry. v. Cleve- land, 94 Fed. 385 (1899). Alabanw— Crosby v. City Council, 108 Ala. 498, 18 So. 723 (1895). California — San Diego Water Co. v. San Diego, 118 Cal. 556, 50 Pac. 633, 62 Am. St. Eep. 261, 38 L. R. A. 460 (1897) ; Redlands L. & C. D. Water Co. v. Redlands, 121 Cal. 363, 53 Pac. 843 (1898). Florida — Tampa v. Tampa Waterworlcs Co., (Fla.) 34 So. 631 (1903). Illinois— Chicago, P. & P. Co. v. Chicago, 88 111. 225, 30 Am. Rep. 545 (1878); Water Co. v. Fergus, 178 111. 571, 53 N. E. 363, 69 Am. St. Rep. 315 (1899); Danville v. Danville Water Co., 180 111. 235, 54 N. E. 224, 69 Am. St. Rep. 304 (1899); Chicago Union Traction Co. v. Chi- cago, 199 111. 484, 65 N. E. 451 (1902). Iowa — Des Moines v. Des Moines Waterworks Co., 95 la. 348, 64 N. W. 269 (1895); Cedar Rapids Water Co. v. Cedar Rapids, 118 la. 234, 91 N. W. 1081 (1902). Maryland — Charles Simon's Sons Co. v. Maryland T. & T. Co., 99 Md. 141, 57 Atl. 193 (1904). Missouri — State v. Laclede Gas Light Co., 102 Mo. 472, 14 S. W. 974 (1890). Tennessee — Knoxville v. Knoxville Water Co., 107 Tenn. 647, 64 S. W. 1075 (1901). [1128] Chap. XLII] Validity of Statutes. [§§ 1311, 1312 The power is derived solely from the statute; and in the ab- sence of such authority there is no power inherent in a municipal corporation to regulate the rates of public service companies. iN^or is the power involved in the police power, the licensing power, or the general power to " regulate " corporations using the streets.^ If, however, the right to fix rates by ordinance is granted to the city it will be construed as a permanent power, not exhausted by a single act of fixing rates, but capable of being ex- ercised by revising the rates after they have been once fixed.* § 1311. Fixing rates by inferior courts. In a State where the division of powers is not strictly insisted xipon in the constitution, the power to fix rates may be conferred upon an inferior court, as in Kentucky upon the county court, with appeal to the superior courts in re^gular series.^ § 1312. Fixing rates by administrative commissions. The commonest way at present of fixing rates is to commit it to an administrative commission ; and this may be legally done.* sold Colony Trust Co. v. Atlanta, 83 Fed. 39 (1897). « Freeport Water Co. v. Freeport, 180 U. S. 587, 45 L. Ed. 679, 21 Sup. Ct. 493 (1901). 7Troutnian v. Smith, 105 Ky. 231, 48 S. W. 1084 (1899). 8 United States — Railroad Commission Cases, 116 U. S. 307, 29 L. Ed. 636, 6 Sup. Ct. 334 (1886); Reagan v. Farmers' L. & T. Co., 154 U. S. 362, 38 L. Ed. 1014, 14 Sup. Ct. 1047 (1894) ; Trammell v. Dinsmore, 183 U. S. 115, 46 L. Ed. Ill, 22 Sup. Ct. 40 (1901) ; Tilley v. Savannah, F. & M. R. R., 5 Fed. 641, 4 Woods, 427 (18S1) ; Chicago & N. W. Ry. v. Dey, 35 Fed. 866 (1888); Chicago, M. & S. P. Ry. v. Tompkins, 90 Fed. 363 (1898); Metropolitan Trust Co. v. Houston & T. C. R. R., 90 Fed. 683 (1898). Florida — McWhorter v. Pensacola & A. R. R., 24 Fla. 417, 5 So. 129, 12 Am. St. Rep. 220, 2 L. R. A. 504 (1888) ; Storrs v. Pensacola & A. R. R., 29 Fla. 617, 11 So. 226 (1892). Georgia— Georgia R. R. & B. Co. v. Smith, 70 Ga. 694 (1883). [1129] §§ 1313, 1314] Raileoad Eate Regulation. [Chap. XITT § 1313. Duty of the courts to pass on reasonableness of rates. To whatever body the power of fixing rates may be confided, it is the function of the regular courts to pass upon the reason- ableness of the rates thus established ; and the courts cannot be deprived of this power. The question of reasonableness cannot be so conclusively determined by the legislature of the State, or by regulations adopted under its authority, that the matter may not become the subject of judicial inquiry.* TOPIC C COJrSTITUTIONALITY OF BATES FIXED BY GOVEENMENT. SUB-TOPIC 1 GENEEAL CONSIDEEATIONS. § 1814. Unconstitutional act absolutely void. The general doctrine that a statute which is contrary to the constitution is void is well understood ; and it applies fully to a statutory regulation of rates. If the statute which fixes or gives power to fi^ the rate is void, the rate is not in effect, and will be disregarded by the court. It is possible, however, to provide by statute that the rate shall be binding between the parties until declared void by the courts.^ /Jimots— Chicago, B. & Q. R. E. t. Jones, 149 111. 361, 37 N. E. 247, 41 Am. St. Rep. 278, 24 L. R. A. 141 (1894). /owa— Hopper v. Chicago, M. & S. P. Ry., 91 la. 639 (1894). Minnesota — State v. Chicago, M. & S. P. R. R., 38 Minn. 281, 37 N. W. 782 (1888), reversed on another point, Chicago, M. & S. P. R. R. v. Miniiespta, 134 U. S. 418, 33 L. Ed. 970, 10 Sup. Ct. 462 ; State v. Minne- apolis & S. L. R. R., 80 Minn. 191, 83 N. W. 60 (1900). Nebraska— State v. Fremont & E. M. V. R. R.,22 Neb. 313, 23 Neb. 117. Texas — Railroad Commission v. Houston & T. C. R. R., 90 Tex. 340, 38 S. W. 750 (1897). Virginia — Atlantic Coast Line Ry. v. Commonwealth, 102 Va. 599, 46 S. E, 911 (1904). 9 Reagan v. Farmers' L. & T. Co., 154 U. S. 362, 38 L. Ed. 1014, 14 Sup. Ct. 1047 (1894) ; Smyth v. Ames, 169 U. S. 466, 42 L. Ed. 819, 18 Sup. Ct. 418 (1898). 1 Reagan v. Farmers' L. & T. Co., 154 U. S. 362, 38 L. Ed. 1014, 14 Sup. Ct. 1047 (1894). [1130] Chap. XLII] Validity of Statutes. [§§ 1:315, 1316 § 1315. Suit against State official to declare rate void. Since the rate named in an unconstitutional statute is void, a suit to restrain a State official from enforcing the rate is not a suit to restrain him in acting under a State law ; in short, it is not a suit against a State. A federal court may therefore en- tertain such a suit.^ " It is the settled doctrine of this court that a suit against individuals for the purpose of preventing them as officers of a State from enforcing an unconstitutional enactment to the injury of the rights of the plaintiff, is not a suit against the State within the meaning of that amendment."* § 1316. Function of the courts in declaring rate void. It follows that any act of rate-fixing may be attacked in any court in which the question may come up as unconstitutional and therefore void. And in almost every case where such an attack is made, it may be based upon a provision of the constitu- tion of the United States : that against impairing the obligation of contracts, depriving of equal protection of the laws, or tak- ing property without due process of law. A considerable num- ber of cases have therefore been taken to the Supreme Court of the United States and an important body of doctrine has been developed by the decisions, and will be examined at large.* 2 Reagan v. Farmers' L. & T. Co., 154 U. S. 362, 38 L. Ed. 1014, 14 Sup. Ct. 1047 (1894). 3 Harlan, J., in Smyth v. Ames, 169 U. S. 466, 42 L. Ed. 819, 18 Sup. Ct. 418 (1898). 4 Constitutional questions as to the right to regulate railroad rates are con- sidered in the following Supreme Court cases, among others : Railroad Com- mission Cases, 116 U. S. 307, sul nom. Stone v. Farmers' Loan & T. Co., 29 L. Ed. 636, 6 Sup. Ct. 334, 388, 1191 (1886) ; Dow v. Beidelman, 125 U. S. 680, 31 L. Ed. 841, 8 Sup. Ct. 1028 (1888) ; Georgia R. & Bkg. Co. v. Smith. 128 U. S. 174, 32 L. Ed. 377, 9 Sup. Ct. 47 (1888) ; Chicago, M. & St. P. Ry. V. Minnesota, 134 U. S. 418, 33 L. Ed. 970, 10 Sup. Ct. 462, 702 (1889) ; Chicago & G. T. Ry. v. Wellman, 143 U. S. 339, 36 L. Ed. 176, 12 Sup. Ct. 400 (1892); Reagan v. Farmers' Loan & T. Co., 154 U. S. 362, 38 L. Ed. 1014, 14 Sup. Ct. 1047 (1894) ; St. Louis & S. F. R. R. v. Gill, 156 U. S. 649, 39 L. Ed. 567, 15 Sup. Ct. 484 (1895) ; Covington & L. Turnp. Road Co. [1131] §§ I'SII, 1318] Kaileoad Rate Kegulation. [Chap. XLII § 1317. Rate constitutional as to one railroad, not as to an- other. If a general law is passed, fixing rates for all railroads, and it appears that the prescribed rates permit one company to do business at a profit, but another whose facilities are inferior or whose expenditures are greater cannot do business at a profit, is the whole law valid or invalid ? Or is it invalid as to one road but not as to another ? This question was raised but not decided by Mr. Justice Shiras in St. Louis & San Francisco Railway v. Gill.® The question, however, is not a very difiicult one. A general act may be inapplicable to a particular case because of some peculiarity of the case, without thereby becoming void as to all cases. If the illegality of the act is inherent in the act itself it will of course be absolutely void ; but if it results from its application to a certain case, it may be entirely legal when applied to the ordinary case. So an act fixing rates of fare for all railroads in a State might not be applicable to one particular road, because of some contract exempting the road from its operation, or because that particular road, unlike the other roads in the State, would by the operation of the act be unable to pay its. expenses. If thereafter the contract came to an end or the road became prosperous, the act would apply to the road as it had previously applied to other roads.® § 1318. Statute constitutional in part. As a statute may be inapplicable to one railroad without im- pairing its general validity, so it may be unconstitutional in one of its provisions without invalidating the rest. The effect of a single unconstitutional provision in a statute was discussed V. Sandford, 164 U. S. 578, 41 L. Ed. 560, 17 Sup. Ct. 198 (1896) ; Smyth V. Ames, 169 U. S. 466, 42 L. Ed. 819, 18 Sup. Ct. 418 (1898) ; Chicago, M. & S. P. Ry. V. Smith, 176 U. S. 167, 44 L. Ed. 418, 20 Sup. a. 336 (1900) ; Cleveland v. Cleveland City Ry.,' 194 U. S. 517, 48 L. Ed. 1102, 24 Sup. Ct. 756 (1904). 5 156 U. S. 649, 39 L. Ed. 567, 15 Sup. Ct. 484 (1895) . 6 Nebraska Tel. Co. v. Cornell, 59 Neb. 737, 82 N. W. 1 (1900). [1132] Chap. XLII] Validity of Statutes. [§ 1319 in Reagan v. Farmers' Loan & Trust Company.''^ A railroad commission was created with power to make rates reviewable in the courts, but the act contained provisions, assumed for the pur- pose of the discussion to be unconstitutional, making the rates named conclusive inter partes, and imposing excessive penalties. The court held that these provisions could be disregarded without avoiding the entire act. Mr. Justice Brewer said : " It is familiar law that one section or part of an act may be invalid without affecting the validity of the remaining portion of the statute. Any independent provision may be thus dropped out, if that which is left is fully operative as a law, unless it is evident, from a consideration of all the sections, that the legislature would not have enacted that which is within, independently of that be- yond, its power. Applying this rule, and the invalidity of these two provisions may be conceded without impairing the force of the rest of the act. The creation of a Commission, with power to establish rules for the operation of railroads, and to regulate rates, was the prime object of the legislation. This is fully ac- complished, whether any penalties 9,re imposed for a violation of the rules prescribed, or whether the rates shall be conclusive, or simply prima facie, evidence of what is just and reasonable. The matters of penalty, and the effect, as evidence, of the rates, are wholly independent of the rest of the statute." SUB-TOPIC 2 SEPAEATION OF GOVEENMENTAL POWEE. § 1319'. Delegation of rate-making power. It has already been seen that the rate-making power may be delegated to a subordinate body, whether municipal corporation or commission ; and this is not unconstitutional as a delegation of legislative power. The legislative act of requiring the rates to be reasonable is either the act of the common law or is part of the act by which the delegation of authority is conferred. The 7 154 U. S. 362, 38 L. Ed. 1014, 16 Sup. Ct. 1047 (1894). [1133] § 1320] Kaileoad Kate Kegulation. [Chap. XLII functions of such bodies in determining and fixing reasonable rates are administrative rather than legislative. The authority conferred on them relates merely to the administration in prac- tice of the general rules laid down by the common law and by the legislature. So in the Railroad Commission Cases ^ the legality of the action of the Mississippi Legislature in creating a railroad commission with power to fix rates was involved. The rate so fixed could be enforced in the courts, unless the courts should find it unjust. The delegation of the rate fixing power to a commission in this way was held to be constitutional. On this question, Mr. Justice Brewer said in Chicago & ISTorthwest- ern Railway v. Dey :^ " There is no inherent vice in such a delegation of power; nothing in the nature of things which would prevent the State by constitutional enactment, at least, from intrusting these powers to such a board ; and nothing in such constitutional action which would invade any rights guar- antied by the Federal Constitution. So that, after all, the question is one more of form than of substance. The vital ques- tion with both shipper and carrier is that the rates shall be just and reasonable, and not by what body they shall be put in force." § 1320. Delegation of power without appeal to the courts. In Chicago, Milwaukee & St. Paul Railway v. Minnesota,* the court had to pass upon the Minnesota act, which conferred upon the Railroad Commission the power to fix rates without appeal to the courts. In the opinion of the court, this was not " due process of law," and for that reason was obnoxious to the Constitution. Mr. Justice Blatchford's words show clearly that the lack of appeal to the courts on the question whether the rate fixed by the Commission was reasonable was the sole ground on 1 116 U. S. 307, 29 L. Ed. 636, 6 Sup. Ct. 334 (1886). 2 35 Fed. 866, 874 (1888). 8 134U. S. 418, 33 L. Ed. 970, 10 Sup. Ct. 462 (1889). [1134] Chap. XLII] VALimxY of Statutes. [§§ 1321, 1322 which the statute was held void. " It conflicts," he says, " with the Constitution of the United States in the particulars com- plained of by the railroad company. It deprives the company of its right to a judicial investigation, by due process of law, under the forms and with the machinery provided by the wisdom of successive ages for the investigation judicially of the truth of a matter in controversy and substitutes therefor, as an absolute finality, the action of a railroad commission, which, in view of the powers conceded to it by the State court, cannot be regarded as clothed with judicial functions or possessing the machinery of a court of justice." § 1321. Temporary interruption of appeal to the courts. Jn Reagan v. Farmers' Loan & Trust Company,* it was pro- vided that the I'ate established by the Commission should be conclusive in actions between private individuals and the com- panies, so that a rate fixed by the Commission would in fact be binding until declared unreasonable by the courts in a suit spe- cially instituted for the purpose. The court plainly intimated that this was constitutional, but did not find it necessary to decide the question. § 1322. Action of the rate-making body as evidence of rea- sonableness. It is commonly provided, as in the Interstate Commerce Act, that the rate as fixed by the Cormnission shall be taken as rea- sonable until the contrary is shown, or that the action of the Commission shall be prima facie evidence of the reasonableness of the rate as found. This is not unconstitutional ; the legisla- ture has power over the weight of evidence, and this provision is merely an exercise of that power.^ *154 U. S. 362, 38 L. Ed. 1014, 14 Sup. Ct. 1047 (1894). s Chicago, B. & Q. R. K. v. Jones, 149 111. 361, 37 N. E. 247, 41 Am. St. ■Rep. 278, 24 L. R. A. 141 (1894) ; Burlington, C. R. & M. R. R. v. Dey, 82 la. 312, 48 N. W. 98, 31 Am. St. Rep. 477, 12 L. R. A. 436 (1891). [1135] § 1323] Kaileoad Rate Regulation. [Chap. XLII It is sometimes provided that the action of the Commission should be " sufficient evidence of the reasonableness of the rates established by them." In Richmond & Danville Railroad v. Trammel,* it was claimed that this meant conclusive evidence and therefore that the action of the Commission in establishing such a rate was unconstitutional. The court, however, held that this meant merely that the action of the Commission con- stituted prima facie evidence of reasonableness which in the absence of evidence to the contrary would be sufficient to justify a verdict to that effect. § 1323. Confusion of the powers of government. An attempt has been made to create a commission which should fix rates, and should also have the powers of a court; which should first fix rates, then judicially declare them reason- able, and so fulfil the requirements of law without loss of time or hazard of strange judges. This attempt 'was made in Kansas, where th^e legislature established a Court of Visitation, gave it the ordinary constitution and powers of a court, and conferred upon it the right to issue writs and injunctions, to summon wit- nesses, and to decide between parties ; and also conferred upon it the power to fix railroad rates. This legislation was held un- constitutional, as violating -the constitutional separation of powers, since the body was to exercise both legislative and judi- cial functions.'' " Concisely stated," said District Judge Hook,* " the Court of Visitation may make laws, sit judicially upon their own acts, and then enforce their enactments which have received their judicial sanction. Can this be done ? Can there be vested in one body such a union of powers of the different departments or branches of government, to be exercised respect- ing the same subject-matter and in the same prooeeding?" 6 53 Fed. 196 (1892). 7 Western Union Tel. Co. v. Myatt, 98 Fed. 335 (1899) ; State v. Johnson, 61 Kan. 843, 60 Pac. 1060, 49 L. E. A. 662 (1900). 8 Western Union Tel. Co. v. Myatt, 98 Fed. 335, 347 (1899). [1136] Chap. XLII] Validity of Statutes. [§ 1324 The fact, however, that the Commission is given not merely the power to fix rates, but also (as is the case with the Interstate Commerce Commission) the power to hear t3ontroversies be- tween parties, does not make its organization unconstitutional, provided the power of passing on the validity of its rates is not withdrawn from the ordinary courts.® That was in fact the case with the commissions whose acts have been upheld by the Supreme Court of the United States.-'" SUB-TOPIC 3 OBLIGATIOK OF CONTEACTS. § 1324. Charter of corporation as contract against rate-fixing. A State may be disabled from fixing the rates of a railroad company by reason of some provision in its charter which con- stitutes a contract with the State. ^ Such a contract is made by a provision in a charter allowing a certain maximum charge to be made by the railroad; the charter having been accepted, the legislature cannot subsequently reduce the maximum rate.^ So where the charter provided that rates should not be so re- duced that the company should earn less than twelve per cent., this constituted a contract.* 9 Louisville & N. E. R. v. Brown, 123 Fed. 946 (1903). 10 See, for instance, the provisions of the Mississippi Act, upheld in Rail- road Commission Cases, 116 U. S. 307, 29 L. Ed. 636, 6 Sup. Ct. 334 (1886). cases cited, the following: Philadelphia, W. & B. R. R. v. Bowers, 4 Houst. Del. 506 (1873) ; Hamilton v. Keith, 5 Bush (Ky.) 458 (1869) ; American Coal Co. V. Consolidation Coal Co^, 46 Md. 15 (1877) ; Owen v. St. Louis & S. F. R. R., 83 Mo. 454 (1884) ; Camden & A. R. R. v. Briggs, 22 N. J. Law 623 (1850) ; Iron R. R. v. Lawrence Furniture Co., 29 Ohio St. 208 (1876) ; State v. Southern Pac. Co., 23 Or. 424, 31 Pae. 960 (1893) ; Attor- ney-General V. Chicago & N. W. Ry., 35 Wis. 425 (1874). iPingree v. Michigan Cent. R. R., 118 Mich. 314, 76 N. W. 635 (1898). 2 Stone V. Yazoo & Miss. R< R., 62 Miss. 607, 52 Am. Rep. 193 (1883). 3 Ball V. Rutland R. R., 93 Fed. 513 (1899). [1137] §§ 1325, 1326] Eaileoad Kate Kegulation. [Chap. XLII § 1325. No contract without express provision. A charter provision will not be construed as limiting the power of the legislature over rates unless there is an express provision to that effect; the presumption is against such limita- tion.* Thus in Georgia Railroad and Banking Company v. Smith,* the charter provided that the charge for transportation should not exceed a certain amount. The court held that this provision did not constitute a contract limiting the power of the legislature to reduce rates. Mr. Justice Field said : " If the charter in this way provides that the charges which the com- pany may make for its service in the transportation of persons and property shall be subject only to its own control up to the limit designated, exemption from legislative interference within that limit will be maintained. But to effect this result, the exemption must appear by such clear and unmistakable lan- guage that it cannot be reasonably construed consistently with the reservation of the power by the State. There is no such lan- guage in the present case." § i326. Conferring ordinary powers does not create contract. The ordinary clauses in railroad charters do not constitute a contract by the State not to regulate rates. Thus no such con- tract is created either by the grant of power to carry persons and property, or by the power to make by-laws rules and regu- lations, or by the power to fix, regulate and receive the tolls and charges. This is merely conferring on the corporation the powers that an individual carrier would have, and it leaves the corporation, like the individual carrier, subject to the regulation of the State.* i Chicago, M. & S. P. Ey. v. Minnesota, 134 U. S. 418, 33 L, Ed. 970, 10 Sup. Ct. 462 (1889). 5 128 U. S. 174, 32 L. Ed. 377, 9 Sup. Ct. 47 (1888). 6 Railroad Commission Cases, 116 U. S. 307, 29 L. Ed. 636, 6 Sup. Ct. 334 (1886). [1138] Chap. XLII] Validity of Statutes. [§ 1327 In lluggles V. Illinois^ the point was made that the legislature was restrained by contract from regulating the rates of fare by reason of a provision in the charter of the railroad giving the company the right to make by-laws, provided they were not repugnant to lawj and to establish such rates of toll as they should by their by-laws establish. The court held that immunity from legislative control is not to be presumed, and the charter would not constitute a contract exempting the company from the power of the legislature to regulate rates unless it were expressly so provided. In this case, on the other hand, it was provided that the fixing of rates by the company must be by by-law not repugnant to law; and it therefore left the legislature free to act. In Stanislaus County v. San. Joaquin and King's River Canal and Irrigation Company,® the charter gave the company power to fix rates, subject to regulation by a board of super- visors, who, however, were not to reduce the rates below a certain maximum ; it was held that this did not prevent the legislature itself from affecting the rates. " There is no promise made in the act that the legislature would not itself subsequently alter that authority." § 1327- Contracts made by municipal ordinance. A contract limiting the power over rates may be made between a city and a public service company. Before holding that such a contract exists, a court must first determine whether the city has power to make such a contract® Such power may be con- ferred on a city.'" 7 108 U. S. 526, 27 L. Ed. 872, 2 Sup. Ct. 832 (1883). 8 192 U. S. 201, 48 L. Ed. 406, 24 Sup. Ct. 241 (1903). 9 Freeport Water Co. v. Freeport, 180 U. S. 587, 45 L. Ed. 679, 21 Sup. Ct. 493 ( 1901 ) . wLos Angeles v. Los Angeles City Water Co., 177 U. S. 558, 44 L. Ed. 886, 20 Sup. Ct. 736 (1900). See, also, Walla Walla v. Walla Walla Water Co., 172 U. S. 7, 43 L. Ed. 344, 19 Sup. Ct. 77 (1898). [1139] §§ 1328, 1329] Eaileoad Bate Regulation. [Chap. XLII A city ordinance, accepted by a public service company, wbich defines the duties of the company and names a maxim am rate of compensation, constitutes a contract, and the rate named in such an ordinance cannot thereafter be diminished. ^^ There is, however, a constant tendency to find that the ordinance did not constitute a contract and that the power over rates con- tinues.^^ § 1328. Charter by Congress. The grant of a charter by Congress does not remove a railroad from the power' of a State to regulate rates within the State. -'^ Even though it is expressly provided in the charteir that Con- gress may reduce rates, this does not constitute a contract by implication that the State shall not do so.** § 1329. Non-user and waiver of the privilege of exemption. The contractual exemption from regulation of rates may, it would seem, be lost by a company by long-continued non-user (as evidence of rescission of the contract), or by waiver. In San Joaquin and King's River Canal and Irrigation Company v. Stanislaus County,*^ it appeared that by a provision in its charter the company's revenues should not be reduced so as to yield a profit of less than 1 1-2 per cent, a month. This provi- 11 Detroit v. Detroit Citizens' St. Ry., 184 U. S. 368, 46 L. Ed. 592, 22 Sup. Ct. 410 (1902) ; Cleveland v. Cleveland City Ry., 194 U. S. 517,-48 L. Ed. 1102, 24 Sup. Ct. 756 (1904), affirming 94 Fed. 385; Crosby v. City Council, 108 Ala. 498, 18 So. 723 (1895) ; State v. Laclede Gas-Light Co., 102 Mo. 472, 14 S. W. 974 (1890) ; Columbus v. Columbus Street Ry., 45 Ohio St. 98, 12 N. E. 651 (1886). 12 Freeport Water Co. v. Freeport, 180 U. S. 587, 45 L. Ed. 679, 21 Sup. Ct. 493 (1901) ; Rogers Park Water Co. v. Fergus, 180 U. S. 624, 45 L. Ed. 702,21 Sup. Ct. 490 (1901). 13 Reagan v. Mercantile Trust Co., 154 U. S. 413, 14 Sup. Ct. 1060 (1894). ■14 Smyth V. Ames, 169 U. S. 466, 42 L. Ed. 819, 18 Sup. Ct. 418 (1898). 15 113 Fed. 930 (1902). On appeal the Supreme Court held that there was no contract. Stanislaus County v. San Joaquin & K. R. C. & I. Co., 192 U. S. 201, 48 L. Ed. 406, 24 Sup. Ct. 241 (1903). [1140] Chap. XLII] Validity of Statutes. [§ 1330 sion was made in 1862, and from that time until 1896 the com- pany, fixing its own rates, never realized so much profit. In 1885 a statute was passed which provided that the rates of such companies should not be less than six nor more than eighteen per cent, a year. In 1896 the proper board made rates which yielded revenue less than eighteen per cent, a year. The court held the act legal, on the ground that the company having never for so long a period reduced its nominal right to possession had waived it. " It is perhaps true," Circuit Judge Morrow said, " that there might be cases where a corporation of the character of the complainant, having invested capital in good faith, would not be held to have waived its ultimate right to the limit of in- come pr-ovided in its charter by the acceptance of a smaller income during the progress of construction, or per- haps even longer, until its system of irrigation had brought pros- pective tracts of land under successful cultivation ;" but in this case the long-continued action of the company constituted a waiver. In Chicago Union Traction Company v. Chicago, ^® the privi- lege of charging a five-cent fare had been granted to a line leased by the Traction Company. The latter company was formed under a statute which provided that the legislature should have the right to make such regulations as it should deem desirable for carrying on its business. The court held that the privilege granted to the leased line had been waived by its lease to the Traction Company, and that the latter could not exercise it, but was subject to statutory regulation in the matter. § 1330. Assignment of privilege of exemption. The privilege of exemption is ordinarily personal with the grantee, and cannot be .assigned in case of sale, lease or con- solidation to another company which succeeds to its property 16 199 111. 484, 65 N. E. 451, 59 L. R. A. 631 (1902). [1141T § 1330] Eaileoad Kate Ep;gulation. [Chap. XLII and franchises. ' ' So a statute dividing a turnpike company into two distinct corporations, controlling different portions of the road, and providing tliat each shall retain " all the powers, rights, and capacities '' granted by the charter of the original company, does not pass to the new companies a right of exemp- tion from legislative control of tolls which was reserved to the original company hy its charter.^* And so an exemption from State regulation of the price of gas, contained in the charter of a gas company, does not extend to the plants of, and territory occupied by, certain other gas companies, not possessing siich imnlunity in their own right, when absorbed by the former com- pany under the general power of consolidation and merger con- ferred upon gas companies by an act which provided that the consolidated corporation should be subject to the legal obliga- tions of the companies absorbed. ■'^ In Chicago Union Traction Company v. Chicago,^" the question of violation of a contractual right of the company was involved. The company was lessee of two other street rail- way; both the latter had a right to charge a five-cent fare for each passenger carried, and this right in each case was alleged to have been assigned to the Traction Company. The court ex- pressed the opinion that the grant of such a privilege is personal to the grantee, and cannot be assigned. The court followed the decision in St. Louis and San Francisco Railway v. Gill,^^ and distinguished the later case of Detroit v. Detroit Citizens' Street Railway^^ on the ground that, in that case the question of the assignability of the exemption was not raised. 17 St. Louis & S. F. Ry. v. Gill, 156 U. S. 649, 39 L. EcT. 567, 15 Sup. Ct. 484 (1895). But see Ball v. Rutland R. R., 93 Fed. 513 (1899). 18 Covington & L. T. R. Co. v. Sandford, 164 U. S. 596, 41 L. Ed. 566, 17 Sup. Ct. 198 (1896). 19 People's Gaslight & Coke Co. y. Chicago, 194 U. S. 1, 48 L. Ed. 851, 24 Sup. Ct. 520 (1904). 20 199 111. 484, 65 N. E. 451, 59 L. R. .\. 631 (1902). 'ii 156 U. S. 649, ,39' L. Ed. 567, 15 Sup. Ct. 484 (1895). 22 184 U. S. 372, 46 L. Ed. 50:2. 22 Sup. Ct. 412 (1902). [1142] Chap. XLII] Validity of Statutes. [§§ 1331, 1332 SUB-TOPIC 4 PEOTECTION OF PEOPEETV. § 1331. Unreasonably low rates constitute a taking of prop- erty. When a rate is fixed so low as to impair the earning power of the corporation and render it impossible to obtain a fair return upon its investment, the rate operates a confiscation of the prop- erty invested in the business, and is unconstitutional as depriv- ing the company of its property without due process of law. As the rule is generally expressed, an unreasonably low rate is an illegal rate, whether it is fixed by the legislature itself,^ or by a municipal corporation or board,^ or by a commission.^ § 1332. The doctrine of the " Granger cases." The question ^^'as first raised for decision in the Supreme Court of the United States in the " Granger Cases," so called.* 1 Chicago & G. T. Ry. v. Wellman, 143 U. S. 339, 36 L. Ed. 176, 12 Sup. Ct. 400 (1892) ; Lake Shore & M. S. Ry. v. Smith, 173 U. S. 684, 43 L. Ed. 858, 19 Sup. Ct. 565 (1899) ; Cotting v. Kansas City S. Y. Co., 183 U. S. 79, 46 L. Ed. 92, 22 Sup. Ct. 30 (1901) ; Ball >-. Rutland R. R., 93 Fed. 513 (1899) ; Beardsley v. New York, L. E. & W. R. R., 162 N. Y. 230, 56 N. E. 488 (1900). 2 San Diego L. & T. Co. v. National City, 174 U. S. 739, 43 L. Ed. 1154, 19 Sup. Ct. 854 (1899); Cleveland G. & C. Co. v. Cleveland, 71 Fed. 610 (1896) ; Capital City Gas Co. v. Des Moines, 72 Fed. 818, 829 (1896) ; New Memphis G. & L. Co. v. Memphis, 72 Fed. 952 (1896) ; Milwaukee E. R. & L. Co. v. Milwaukee, 87 Fed. 577, B. & W. 336 (1898) ; Spring Valley W. W. V. San Francisco, 124 Fed. 574 (1903) ; Palatka Waterworks v. Palatka, 127 Fed. 161 (1903) ; Spring Valley Waterworks v. San Francisco, 82 Cal. 286, 22 Pac. 910 (1890) ; San Diego Water Co. v. San Diego, 118 Cal. 556, 50 Pac. 633, 62 Am. St. Rep. 261, 38 L. R. A. 460 (1897) ; Chicago v. Rogers Park Water Co., 214 111. 212, 73 N. E. 375 (1905) ; Des Moines Waterworks V. Des Moines, 95 la. 348, 64 N. W. 209 (1895). 3 Smyth V. Ames, 169 U. S. 466, 42 L. Ed. 819, 18 Sup. Ct. 418 (1898) ; Chicago & N. W. Ry. v. Dey, 35 Fed. 866 (1888) ; Southern Pac. Co. v. Rail- road Comrs., 78 Fed. 236 (1896) ; Haverhill G. L. Co. v. Barker, 109 Fed. 694 (1901) ; Wallace v. Arkansas Cent. R. R., 118 Fed. 422, 55 C. C. A. 192 (1902). 4Munn v. Illinois, 94 U. S. 113, 24 L. Ed. 77 (1876) ; Chicago, B. & Q. [114.^] § 1332] Kaileoad Eate Eegulation. [Chap. XLII These were appeals from the State courts of Illinois, Wisconsia, and Minnesota, and from the Federal court in Iowa. In each of these States the legislature had regulated the rates of public service companies ; in the first case a grain elevator, in the other cases a railroad. This legislation was attacked as unconstitu- tional, because a taking of the property without due process of law. The court, however, upheld the acts, on the ground that the property was affected with a public interest, and the rate for the use of it was therefore a subject of legislation. Mr. Chief Justice Waite went very far in supporting the power of the legislature. " We know," he said in Munn v. Illinois, " that this is a power which may be abused ; but that is no argument against its existence. For protection against abuses by legisla- tures the people must resort to the polls, not to the courts." Again in Peik v. Chicago & ISTorthwestern Railway he said : " Where property has been clothed with a public interest, the legislature may fix a limit to that which shall in law be reason- able for -its use. This limit binds the courts as well as the people. If it has been improperly fixed, the legislature, not the courts, must be appealed to for the change." And in Chicago, Milwaukee and St. Paul Railroad v. Ackley the court held that the railroad could charge no more than the maxim.um so fixed, even if the higher rate were reasonable. " If the company should refuse to carry at the prices fixed, and an attempt should be made to forfeit its charter on that account, other questions might arise, which it will be time enough to consider when they are presented. But for goods actually carried, the limit of the recovery is that prescribed by the statute." E. R. v. Iowa, 94 U. S. 155, 24 L. Ed. 94 (1876) ; Peik v. Chicago & N. W. Ey., 94 IT. S. 164, 24 L. Ed. 97 (1876) ; Chicago, M. & St. P. R. E. v. Ack- ley, 94 U. S. 179, 24 L. Ed. 99 (1876) ; Winona & St. P. E. R. v. Blake, 94 XT. S. 180, 24 L. Ed. 98 (1876) ; Stone v. Wisconsin, 94 U. S. 181, 24 L. Ed. 89 (1876). [1144] Chap. iXLIl] Validity of Statutes. [§ 1333 § 1333. Early modification of the doctrine. There is no doubt of the meaning of the court in these cases. The action of the legislature was deemed binding at least as between private parties, without regard to the reasonableness of the rates. This extreme view was, however, soon abandoned. In Ruggles V. Illinois,^ Mr. Justice Field in a concurring opinion, expressed the view that no unreasonable rate would be legal; and in Spring Valley Waterworks v. Schottler,^ Mr. Chief Jus- tice Waite spoke in a most conservative fashion, saying: " What may be done if the municipal authorities do not exercise an honest judgment, or if they fix upon a price which is manifestly unreasonable, need not now be considered." In the Railroad Commission Cases ^ Mr. Chief Justice Waite, however, went further and said, in language which has formed the basis of the rule as it was finally established : " It is not inferred that this power of limitation or regulation is itself without limit. This power to regulate is not a dower to destroy, and limitation is not the equivalent of confiscation. Under pre- tense of regulating fares and freights, the State cannot require a railroad corporation to carry persons or property without reward ; neither can it do that which in law amounts to a taking of private property for public use without just compensation, or without due process of law." The rule was not yet finally settled^ however. In Dow v. Beidehnan * the statute of Arkansas limiting rates of fare on railroads over a hundred miles long to three cents a mile was attacked as unconstitutional. It was shown that the income of the road under that act would not pay the interest on its bonds ; but it was not shown what actual expenditure or value the bonds represented. On this ground the court declined to enter upon the general question presented ; Mr. Justice Gray saying that 5 108 U. S. 526, 27 L. Ed. 812, 2 Sup. Ct. 832 (1883). 6 no U. S. .347, 28 L. Ed. 173, 4 Sup. Ct. 48 (1884). 7 116 U. S. 307, 331, 29 L. Ed. 636, 6 Sup. Ct. 334 (1886). 8 125 U. S. 680, 31 L. Ed. 841, 8 Sup. Ct. 1028 (1888). [1145] § 1334] Railkoad Kate Regulation. [Chap. XLII " the court has no means, if it would under any circumstances have the power, of determining that the rate of three cents a mile fixed by the legislature is unreasonable. Still less does it appear that there has been any such confiscation as amounts to a taking of property without due process of law." § 1334. The rule finally established. In Chicago, Milwaukee & St. Paul Railway v. Minnesota® the court held for the first time that after a rate is fixed by legis- lature or commission it is necessarily within the power of the courts to declare the rate illegal if it is unreasonable. " The question of the reasonableness of a rate of charge for trans- portation by a railroad company, involving, as it does, the ele- ment of reasonableness, both as regards the company and as regards the public, is eminently a question for judicial investi- gation, requiring the process of law for its determination. If the company is deprived of the power of charging reasonable rates for the use of its property, and such deprivation takes place in the absence of an investigation by judicial machinery, it is deprived of the lawful use of its property, and thus, in sub- stance and effect, of the property itself, without due process of law, and in violation of the Constitution of the United States ; and, in so far as it is thus deprived, while other persons are per- mitted to receive reasonable profits upon their invested capital, the company is deprived of the equal protection of the laws." That this was regarded as new doctrine at the time of the deci- sion by the judges who had decided the Granger and the Rail- road Commission Cases is evident from an examination of the dissenting opinion of Mr. Justice Bradley. The opinion of the majority, he said, " practically overrules Munn v. Illinois," and he reiterated the view that the fixing of rates is for the legisla- ture alone, without interference from the courts. The view of the majority has been accepted, and the present doctrine as to 9 134 U. S. 418, 33 L. Ed. 970, 10 Sup. Ct. 462 (1889). [1146] Chap. XLII] Validity of Statutes. [§ 1335 the power of the courts over rates fixed by legislature or coin- mission dates from this decision. In Reagan v. Farmers' Loan & Trust Company ^^ the court reiterated this doctrine so strongly that it can no longer be re- garded as open to question. j\lr. Justice Brewer put the whole doctrine clearly and concisely in a single sentence : " The pro- vince of the courts is not changed, nor the limit of judicial in- quiry altered, because the legislature, instead of the carrier, pre- scribes the rates." Later in the same opinion he added : " While it is not the province of the courts to enter upon the merely admin- istrative duty of framing a tariff of rates for carriage, it is with- in the scope of judicial power, and a part of judicial duty, to restrain anything which, in the form of a regulation of rates, operates to deny to the owners of property invested in the busi- ness of transportation that equal protection which is the con- stitutional right of all owners of other property. There is noth- ing new or strange in this. It has always been a part of the judicial function to determine whether, the act of one party (whether that party be a single individual, an organized body, or the public as a whole) operates to divest the other party of any rights of person or property." In Smyth v. Ames ^^ the same doctrine was elaborated, and since the decision of that case the rule has never been questioned. What rates are in fact reasonable has been considered at length in an earlier portion of this work. § 1335. Exceptional rates forbidden. In Lake Shore & Michigan Southern Railway v. Smith,^^ Mr. Justice Peckham said : " If the maximum rates are too high in the judgment of the legislature, it may lower them, provided they do not make them unreasonably low, as that term is under- 10 154 U. S. 362, 38 L. Ed. 1014, 14 Sup. Ct. 1047 (1894). 11169 U. S. 466, 42 L. Ed. 819, 18 Sup. Ct. 418 (1898). ■12 173 U. S. 684, 43 L. Ed. 858, 19 Sup. Ct. 565 (1899). [1147] § 1336] Eaileoad Eate Regulation. [Chap. XLII stood in the law; but it cannot enact a law making maximum rates, and then proceed to make exceptions to it in favor of such persons or classes as in the legislative judgment or caprice may seem proper. What right has the legislature to take from the company the compensation it would otherwise receive for the use of its property in transporting an individual or classes of per- sons over its road, and compel it to transport them free or for a less sum than is provided for by the general law ? Does not such an act, if enforced, take the property of the company with- out due process of law ? We are convinced that the legislature cannot thus interfere with the conduct of the affairs of corpora- tions." The act declared invalid in this decision was an act requiring a railroad to sell mileage books at a reduced ratfe. The decision was followed in 'New York ;^^ but the statute was held valid as to a corporation organized after the passage of the act, since the corporation became bound by its charter to comply with the act.-** TOPIC D CONSTITUTIONAL POWEE OF CONGEESS OVB» INTEESTATE BATES. § 1336. Power to fix rates appears to be given to the Con- gress. The power of Congress either directly or through a commis- sion to fix the rates of carriers in interstate carriage has been recently questioned. It would be extraordinary if such power were not granted by the Constitution. We have seen that the power existed at common law, and was exercised in England be- fore the Eeivolution, as well as in the States. At the time of the adoption of the Constitution the power was lodged in the States. It is a maxim of constitutional law that all power not 13 Beardsley v. New York, L. E. & W. R. R., 162 N. Y. 230, 56 N. E. 488 (1900). "Minor v. Erie R. R., 171 N. Y. 566, 64 N. E. 454 U902). [1148] Chap. XLII] Validity of Statutes. [§§ 1337, 1338 granted to the United States in the Constitution remains in the States ; the Constitution of the United States was a power- conferring, not a power-destroying document. But nothing can be clearer than that the right of fixing rates for interstate commerce is no longer in the States ; a fixing of rates by legis- lation or commission would be a regulation of interstate com- merce, which Congress alone has power to regulate. It would seem to follow without possibility of doubt that the power which was taken away from the States by the Constitution, be- cause it was a power to regulate commerce, was at the same time conferred, as such power, on the Congress. But as there has been no express decision to that effect, the question may be regarded as to that extent unsettled. § 1337. Power to fix rates is inherent in legislative power to regulate carriage. Legislative power over carriage, such as is given to the Con- gress by the Constitution in cases of interstate commerce, car- ries with it the power to fix rates, either directly or through a commission. " This power of regulation," said Mr. Chief Justice Waite, referring to the fixing of maximum railroad rates, " is a power of government, continuing in its nature." ^ And in the case of Munn v. Illinois, the same Judge said:^ " The controlling fact is the power to regulate at all. If that exists, the right to establish the maximum of charge, as one of the means of regulation, is implied." § 1338. Congress allowed to fix maximum rates. Congress, acting under other powers, has fixed rates, and has been sustained in so doing. Thus in Chesapeake and Potomac Telephone Company v. Manning the Supreme Court upheld J Railroad Commission Cases, 116 U. S. 307, 325, 29 L. Ed. 636 (1886). 2 94 U. S. 113, 134, 26 L. Ed. 77 (1876). [1149] § 1339] E.AILEOAD Rate Regulation. [Chap. XLlI an act of Congress which fixed telephone rates in the District of Columbia, § 1339. Power of Congress to fix rates for interstate com- merce has been assumed. Though the question has never been presented directly to the Court and made the ground of its decision, yet the Supreme Court has in its decisions obiter assumed the existence of the power. Thus in Interstate Commerce Commission v. Cincin- nati, New Orleans and Texas Pacific Railway (the Maximum Rate Case)* Mr. Justice Brewer said: "There were three obvious and dissimilar courses open for consideration. Con- gress might itself prescribe the rates; or it might commit to some subordinate tribunal this duty ; or it might leave with the companies the right to fix rates, subject to regulations and re- strictions." " The question debated is whether it vested in the Commission the power and the duty to fix rates; and the fact that this is a debatable question, and has been most strenuously and earnestly debated, is very persuasive -that it did not. The grant of such a power is never to be implied. The power itself is so vast and comprehensive, so largely affecting the rights of carrier and shipper, as well as indirectly all commercial trans- actions, the language by which the power is given had been so often used and was so familiar to the legislative mind and is capable of such definite and exact statement, that no just rule of construction would tolerate a grant of such power by mere implication. Administrative control over railroads through boards or commissions was no new thing." This language ap- pears to recognize as vested in Congress the power which in theory we have found there — the power by itself or its com- mission to fix railroad rates. 2 186 U. S. 238, 46 L. Ed. 1144, 22 Sup. Ct. 881 (1902). 4 167 U. S. 479, 494, 17 Sup. Ct. 896 (1897). [1150] -A.T>I»ENr)IX. [1151] APPENDIX A. Rules of Peaotice Before the Inteestate Commeecb Commission. Public Sessions. The general sessions of the Commission for hearing contested cases will be held at its oflSee in the Sun building, No. 1317 F street, N. W., Wash- ington, D. C, on such days and at such hour as the Commission may designate. When special sessions are held at other places, such regulations as may be necessary will be made by the Commission. Sessions for receiving, considering, and acting upon petitions, appli- cations, and other communications, and also for considering and acting upon any business of the Commission other than the hearing of contested cases, will be held at its said ofiSce at 11 o'clock a. m. daily when the Commission is in Washington. II. Paeties to Cases. Any person, firm, company, corporation, or association, mercantile, ag- ricultural, or manufacturing society, body politic or municipal organiza- tion, or the railroad commissioner or commission of any State or Terri- tory, may complain to the Commission by petition, of anything done, or omitted to be done, in violation of the provisions of the act to regulate commerce by any common carrier or carriers subject to the provisions of said act. Where a complaint relates to the rates or practices of a single carrier, no other carrier need be a party, but if it relates to matters in which two or more carriers, engaged in transportation by continuous car- riage or shipment, are interested, the several carriers participating in such carriage or shipment are proper parties defendant. Where a complaint relates to rates or practices of carriers operating different lines, and the object of the proceeding is to secure correction of such rates or practices on each of said lines, all the carriers operating such lines must be made defendants. [1153] Kaileoad Kate Regulation. When the line of a carrier is operated by a receiver or trustee, both the carrier and its receiver or trustee should be made defendants in cases involving transportation over such line. Persons or carriers not parties may petition in any proceeding for leave to intervene and be heard therein. Such petition shall set forth the peti- tioner's interest in the proceeding. Leave granted on such application shall entitle the intervener to appear and be treated as a party to the pro- ceeding, but no person, not a carrier, who intervenes in behalf of the de- fense, shall have the right to file an answer or otherwise become a party, except to have notice of and appear at the taking of testimony, produce and cross-examine witnesses, and be heard in person or by counsel on the argument of the case. UI. Complaints. Complaints of unlawful acts or practices by any common carrier, made in pursuance of section 13 of the act to regulate commerce, must be by petition, setting forth briefly the facts claimed to constitute a violation of the law. The name of the carrier or carriers complained against must be stated in full, and the address of the petitioner, with the name and ad- dress of his attorney or counsel, if any must appear upon the petition. The complainant must furnish as many copies of the petition as there may be parties complained against to be served. The Commission will cause a copy of the petition, with notice to satisfy or answer the same within a specified time, to be served, personally or by mail in its discretion, upon each carrier complained against. IV. Answers. A carrier complained against must answer within twenty days from the date of the notice above provided for, but the Commission may. In a par- ticular ease, require the answer to be filed within a shorter time. The time prescribed in any case may be extended, upon good cause shown, by special order of the Commission. The original answer must be filed with the Secretary of the Commission at its office in Washington, and a copy thereof at the same" time served, personally or by mail, upon the com- plainant, who must forthwith notify the Secretary of its receipt. The answer must specifically admit or deny the material allegations of the petition, and also set forth the facts which will be relied upon to support any such denial. If a carrier complained against shall make satisfaction before answering, a written acknowledgment thereof, showing the charac- ter and extent of the satisfaction given, must be filed by the complainant, [1154] ArPENDIS. and in that case the fact and manner of satisfaction, without other mat- ter, may be set forth in the answer. If satisfaction be made after the filing and service of an answer, such written asknowledgment must also be filed by the complainant, and a supplemental answer setting forth the fact and manner of satisfaction must be filed by the carrier. V. Notice in Nature of Demubeee. A carrier complained against who deems the petition insufficient to show a breach of legal duty, may, instead of answering, or formally demurring, serve on the complainant notice of hearing on the petition; and in sucli case the facts stated in the petition will be deemed admitted. A copy i)f the notice must at the same time be filed with the Secretary of the Com- mission. The filing of an answer, however, will not be deemed an ad- mission of the sufficiency of the petition, but a motion to dismiss for in- sufficiency may be made at the hearing. VX. Service or Papebs. Copies of notices or other papers must be served upon the adverse party or parties, personally or by mail; and when any party has appeared by attorney, service upon such attorney shall be deemed proper service upon the party. VII. Affidavits. Affidavits to any pleading or application may be made before any of- ficer of the United States, or of any State or Territory, authorized to administer oaths. VII. Amekdmentb. Upon application of any party, amendments to any petition or answer, in any proceeding or investigation, may be allowed by the Commission in its discretion. IX. Adjournments and Extensions of Time. Adjournments and extensions of time may be granted upon the appli- cation of any party m the discretion of the Commission. [1155] Kaileoad Eate Regulation. , X. Stipdlations. The parties to any proceeding or investigation before the Commission may, by stipulation in writing filed with the Secretary, agree upon the facts, or .any portion thereof involved in the controversy, which stipula- tion shall be regarded and used as evidence on the hearing. It is de- sired that the facts be thus agreed upon whenever practicable. XI. Heabings. Upon issue being joined by the service of an answer or notice of hearing on the petition, the Commission will assign a time and place for hearing the case, which will be at its office in Washington, unless otherwise or- dered. Witnesses will be examined orally before the Commission, unless their testimony be taken or the facts be agreed upon as provided for in these rules. The complainant must in all cases establish the facts alleged to constitute a violation of the law, unless the carrier complained against admits the same or fails to answer the petition. The carrier must also prove facts alleged in the answer, unless admitted by the petitioner, and fully disclose its defense at the hearing. In case of failure to answer, the Commission will take such proof of the facts as may be deemed proper and reasonable, and make such order thereon as the circumstances of the case appear to require. Cases shall be argued orally upon submission of the testimony, unless J. different time shall be agreed upon by the parties or directed by the Commission, but oral argument may be omitted in the discretion of the Commission. XII. Depositions. The testimony of any .witness may be taken by deposition, at the in- stance of a party, in any proceeding or investigation before the Commis- sion, and at any time after the same is at issue. The Commission may also order testimony to be taken by deposition, in any proceeding or in- vestigation pending before it, at any stage of such proceeding or investi- gation. Such depositions may be taken before any judge of any court of the United States, or any commissioner of a circuit, or any clerk of ;i District or Circuit Court, or any chancellor, justice, or judge of a Su- preme or Superior Court, mayor or chief magistrate of a city, judge of a County Court, or Court of Common Pleas of any of the United States, or any notary public, not being of counsel or attorney to either of the parties, or otherwise interested in the proceedings or investigation. Reasonable [1156] Appendix. notice must be given in writing by the party or his attorney proposing to take such deposition to the opposite party or his attorney of record, wnich notice shall state the name of the witness and the time and place of tlie taking of his deposition, and a copy of such notice shall be filed with the Seeretai-y. When testimony is to be taken on behalf of a common carrier in any proceeding instituted by the Commission on its own motion, reasonable notice thereof in writing must be given by such carrier to the Commission itself, or to such person as may have been previously designated by the Commission to be served with such notice. Every person whose deposition is taken shall be cautioned and sworn (or may affirm, if he so request) to testify the whole truth, and shall be carefully examined, his testimony shall be reduced to writing, which raiiy be typewriting, by the magistrate taking the deposition, or under his direction, and shall, after it has been reduced to writing, be subscribed by tlie witness. If a witness whose testimony may be desired to be taken by deposition be in a foreign country, the deposition may be taken before an officer or person designated by the Commission, or agreed upon by the parties by stipulation in writing to be filed with the Secretary. All depositions must be promptly filed with the Secretary. Xlll. Witnesses and Subpoenas. Subpoenas requiring the attendance of witnesses from any place in the United States to any designated place of hearing, for the purpose of tak- ing the testimony of such witnesses orally before one or more members of the Commission, or by deposition before a magistrate authorized to take the same, will, upon the application of either party, or upon the order of the Commission directing the taking of such testimony, be issued by any member of the Commission. Subpoenas for the production of books, papers, or documents (unless directed to issue by the Commission upon its own motion) will only be issued upon application in writing; and when it is sought to compel wit- nesses, not parties to the proceeding, to produce such documentary evi- dence, the application must be sworn to and must specify, as nearly as may be, the books, papers, or documents desired; that the same are in the possession of the witness or under his control; and also, by facts stated, show that they contain material evidence necessary to the appli- cant. Applications to compel a party to the proceeding to produce books, papers, or documents need only set forth in a general way the books, papers, or documents desired to be produced, and that the applicant be- lieves they will be of service in the determination of the case. [11.57] Kaileoad Rate Regulation. Witnesses whose testimony is taken orally or by deposition, and the magistrate or other officer taking such depositions, are severally entitled to the same fees as are paid for like services in the courts of the United States, such fees to be paid by the party at whose instance the testimony is taken. [Fees of witnesses are fixed by law at $1.50 for each day's at- tendance at the place of hearing or of taking depositions, and 5 cents per mile for going to said place from his place of residence and 5 cents per mile for returning therefrom.] XIV. Proposed Findings and Briefs. Proposed findings embracing the material facts claimed to be estab- lished by the evidence, and referring to the particular part of the rfecorJ relied upon to support each finding proposed, shall be filed by each party. Printed or written arguments or briefs may be filed by any party. A copy of the proposed findings, brief, or argument filed on behalf of any party, must at the same time be served upon the adverse party or parties, per- sonally or by mail, and notice of such service thereupon filed with the Secretary of the Commission. The time within which proposed findings and printed or written arguments or briefs shall be filed in any case will be determined by the Commission upon submission of the testimony. XV. Reheabings. Applications for reopening a ease after final submission, or for rehear- ing after decision made by the Commission, must be by petition, and must state specifically the grounds upon which the application is based. If such application be to reopen the case for further evidence, the nature and purpose of such evidence must be briefly stated, and the same must not be merely cumulative. If the application be for a rehearing, the peti- tion must specify the findings of fact and contusions of law claimed to be erroneous, with a brief statement of the grounds of error; and when any recommendation, decision, or order of the Commission is sought to be reversed, changed, or modified on account of facts and circumstances aris- ing subsequent to the hearing, or of consequences resulting from compli- ance with such recommendation, decision, or order which are claimed to justify a reconsideration of the case, the matters relied upon by the ap- plicant must be fully set forth. Such petition must be duly verified, and a copy thereof, with notice of the time and place when the application will be made, must be served upon the adverse party at least ten days before the time named in such notice. [1158] Appendix. XVI. Peintinq of Pleadings, etc. Pleadings, depositions, briefs, and other papers of importance, shall be printed or in typewriting, and when not printed only one side of the paper shall be used. XVII. Copies of Papebs ok Testimony. Copies of any petition, complaint, or answer in any matter or proceed- ing before the Commission, or of any order, decision, or opinion by the Commission, will be furnished without charge, upon application to the Secretary by any person or carrier party to the proceeding. One copy of the testimony will be furnished by the Commission for the use of the complainant, and one copy for the use of the defendant, without charge; and when two or more complainants or defendants have appeared at the hearing, such complainants or defendants must designate to whom the copy for their use shall be delivered. XVIII. Compliance with Oedees Against Cabriees. Upon the issuance of an order against any carrier or carriers, after hearing, investigation, and report by the Commission, such carrier or car- riers must promptly, upon compliance with its requirements, notify the Secretary that action has been taken in conformity with the order; and when a change in rates is required, such notice must be given in addition to the filing of a schedule or tariff showing such change in rates. XIX. Application by Caeeiers Under Proviso Clause op Fourth Section. Any common carrier may apply to the Commission, under the proviso clause ( I the fourth section, for authority to charge for the transportation of like kind of property less for a longer than for a, shorter distance over the same line, in the same direction, the shorter being included within the longer distance. Such application shall be by verified petition, which shall specify the places and traffic involved, the rates charged on sucii traffic for the shorter and longer distances, the carriers other than the petitioner which may be interested in the traffic, the character of the hardship claimed to exist, and the extent of the relief sought by the peti- tioner. Upon the filing of such a petition, the Commission will take sueli action as the circumstances of the case seem to require. [1159] Raileoad Rate Regulation. XX. Inpobmation to Paeties. The Secretary of the Commission will, upon request, advise any party as to the form of petition, answer, or other paper necessary to be filed in any ease, and furnish such information from the files of the Commission as will conduce to a full presentation of facts material to the controversy. XXI. Addbess of the Commission. All complaints concerning anything done or omitted to be done by any common carrier, and all petitions or answers in any proceeding, or appli- cations in relation thereto, and all letters and telegrams for the Commis- sion, must be addressed to Washington, D. C, unless otherwise specially directed. [1160] APPENDIX B. FoEMS IN Peoceedings Befoee the Inteestatb Commeece Commission. Complaint Against a Single Carrier. [Official blank form.] Intebstate Commeece Commission. A. B. against The Raileoad Company. The petition of the above-named complainant respectfully shows: I. That (here let complainant state his occupation and place of busi- ness ) . II. That the defendant above named is a common carrier engaged in the transportation of passengers and property by railroad between points in the State of , and points in the State of , and as such common carrier is subject to the provisions of the act to regulate commerce, approved February 4, 1887, and acts amendatory thereof or supplementary thereto. III. That {here state concisely the matters intended to be complained of. Continue numbering each succeeding paragraph as in Nos. I, II, and III). Wherefore the petitioner prays that the defendant may be required to answer the charges herein, and that after due hearing and investigation an order be made commanding the defendant to cease and desist from said violations of the act to regulate commerce, and for such other and further order as the Commission may deem necessary in the premises. (The prayer m,ay be varied so as to ask also for the ascertainment of lawful rates or practices and an order requiring the carrier to conform thereto. If reparation for any wrong or injury be desired, the petitioner should state the nature and extent of the reparation he deems proper.) Dated at , . 190—. A. B. (Complainant's signature.) [1161] Raileoad Kate Regulation. Complaint of Unreasonable Charges^ [Filed with Commission.] Interstate Commeece Commission. To the Bonorahle Interstate Commerce Commissioners: (I.) Your petitioners complain of the Oregon Railway & Navigation Company and respectfully represent: That on the 13th day of June, A. D. 1887, your petitioners slipped from the City of Colfax, in the Territory of Washington, to the City of Portland, in the State of Oregon, two car loads of wheat, to wit: 122 sacks of wheat of the weight of 20,000 pounds on one car, and 230 sacks of wheat of the weight of 30,000 pounds on the other car. That the said two car loads of wheat were loaded on said cars at your petitioners' sole expense, and were delivered to said Oregon Rail- way & Navigation Company for transportation to Portland, Oregon, as aforesaid, on said 30th day of June, A. D. 1887. That the distance from the said City of Colfax, in Washington Territory, to Portland, Oregon, does not exceed 320 miles. That the said Oregon Railway & Navigation Company, against the protests of your petitioners, have charged your pe- titioners for transporting the said two ear loads of wheat the said 320 miles, the full sum of $175, or at the rate of $7 for each ton of 200U pounds. (II.) Your petitioners further aver that it is stated in the annual re- port of the said Oregon Railway & Navigation Company for 1886, that the total cost of all property of every description owned by said Company, including ocean steamers, river and sound boats, barges and wharves, is $32,924,433.72; while its net income from railroad earnings alone was, as appears by the same report, $2,256,589.78, or 6 8/10 per cent, on the whole nominal investment of that Company, without counting its earnings from other sources. That during the same year that Company transported over its railroad lines 123,413,669 tons of freight aiid merchandise, and that the average price it received for transporting merchandise from Port- land, Oregon, to Colfax, Washington Territory, was in excess of $30 per ton. (III.) Your petitioners further allege that the rates recommended by the railroad commissioners of the State of Oregon, for the transportation of wheat from points in the State of Oregon, equi-distant from said Port- land, Oregon, with the City of Colfax, in \\'ashington Territory, and reached by the line of the Oregon Railway & Navigation Company, is $4 per ton, or $3 per ton less than the said Company has charged your pe- titioners. (IV.) Your petitioners further allege that the said Oregon Railway & Navigation Company has agreed to make a rate from points in Columbi::. county, Washington Territory, as far from Portland, Oregon, as is the City of Colfax, for the transportation of wheat and other grains over the [1162] Appendix. line of said railroad to said Portland, Oregon, of $5 per ton, while still continuing the rate from said Colfax at $7 per ton, thus charging your pe- titioners, and all other handlers of grain in Colfax, $2 per ton more for transporting their wheat the same distance than is charged the wheat raisers and buyers shipping from said points in Columbia county. (V.) And your petitioners further allege that the sum of $7 per ton for the transportation of wheat as aforesaid from Colfax, Washington Terri- tory, to Portland, Oregon, is unjust and unreasonable; and that a just and reasonable charge for such transportation is $3.50 per ton, which is approximately the rate fixed for a haul of the same distance by the Illinois State law. (VI.) Wherefore, your petitioners pray that you may direct the said Oregon Railway & Navigation Company to reimburse to your petitioner? the sum of $87.50, the sum paid by your petitioners to the said Oregon Railway & Navigation Company for the transportation of said two car loads of wheat to Portland, Oregon, in excess of a just and reasonable freight charge. And your petitoners further pray that the said Oregon Railway & Navigation Company may be required to establish a rate for tne transportation of grain from Colfax, Washington Territory, to Port- land, Oregon, not in excess of $3.50 per ton. McCLAINE, WADE & CO., By Alfred CooLiDeE, Member of Firm. Complaint of Discrimination. [Filed with Commission.] Interstate Commerce Commission. SosTON & Albany R. R. Co. V. National. Despatch Line. Boston, Mass., May 21, 1887. To the Honorable, the Interstate Commerce Commission: (I.) Respectfully represents the Boston and Albany Railroad Company, a corporation established in the States of Massachusetts and New York, that the Boston and Lowell Railroad Company, a Massachusetts corpora- tion; the Concord Railroad Company, New Hampshire corporation; the Northern Railroad Company, a New Hampshire corporation; the Central Vermont Railroad Company, a Vermont corporation, and the Grand Trunk Railway Company, established by the laws of Canada, have issued sched- ules of joint rates under the name of the National Despatch Line. [1163] Kaileoad Eatb Regulation. (II.) Under these schedules the rates from Boston to Detroit, Michigan, are: 51-45-35-24-20-18 for the six classes of freight respectively; and to Montreal, Canada, 45-40-30-23-20-18 for the six classes of freight respect- ively; while at the same time the Boston & Lowell, Concord, Northern, and Central Vermont Railroad Companies, a part of the roads included in the National Despatch Line, have made and maintained rates from Boston to St. Albans, Vermont, a station on the Central Vermont Railroad, a less distance from Boston than either Detroit or Montreal, m the same direc- tion over the £.ame line as follows: 60-50-40-27-24-17 for the six classes of freight respectively. (III.) The National Despatch Line comes into competition with the Boston and Albany Railroad Company and its connections at Detroit and other western points. (IV.) The grievance which this Company and its connections have is that the National Despatch Line makes rates to Detroit and other point.? in the West less than the Boston and Albany Railroad Company and its connections make to the same points; while at the same time a certain combination of roads, including a part of the roads in the National Des- patch Line, viz. : The Boston and Lowell, Concord, Northern, and Central Vermont Railroad Companies maintain higher rates to St. Albans and other intermediate points; that is higher rates for the short haul than for the long haul on the same line in the same direction, on the five upper classes of freight; whereas, if the rates to Detroit and other western points were made the same — no higher and no lower — than to any intermediate point on the same line in the same direction, your petitioner would have no reason to complain. (V.) With this petition and as a part of it, are sent a copy of the tariff of the National Despatch Line, No. 4, dated April 5, 1887, a copy of the affidavit of H. B. Tindall, the original of which is filed as a part ot the petition of this petitioner against the Ogdensburgh and Lake Cham- plain route, and a copy of the Boston and Albany Railroad and New York Central and Hudson River Railroad, joint west bound interstate freight tariff No. 1. BOSTON & ALBAISTY RAILROAD COMPANY, By Abthue Mills, General Traffic Manager. Commonwealth of Massachusetts, Suffolk, ss.: Sworn to before me. May 27, 1887. C. E. Stevens, Justice of the Peace, [1164] Appendix. Complaint Against Txro or More Carriers. [Official blank form.] Inteestate Commerce Commispiok. A. B. against The Railboad Company. , AND The Railboad Company. The petition of the above-named complainant respectfully shows; I. That (here let complainant state his occupation and place of busi- ness ) . II. That the defendants above named are common carriers engaged in the transportation of passengers and property, by continuous carriage or shipment, wholly by railroad {or partly by railroad and partly by water, as the case may be), Jjetween points in the State of , and points in the State of , and as such common carriers are subject to the provisions of the act to regulate commerce, approved February 4, 1887, and acts amendatory thereof or supplementary thereto. ( Then proceed as in first Form. ) Complaint of Various Wrongs. [Filed with Commission.] Interstate Commerce Commission. Plummer, Pebby & Co. V. Union Pacific R. Co. et al. To the Honorable Board of Interstate Commerce Commissioners: (I.) Your petitioners make eomplaiiit against the Union Pacific Rail- way Company, and their western connection, the Southern Pacific Rail- way Company, and allege the following facts in support of charges made against said Companies, to wit: (II.) One car of canned goods, No. 32151, Union Pacific, was purchased on board of cars at San Francisco, and shipped from that point September 10, 1887. bill of lading 13347; consignors, A. Lusk & Co.; purchasers and consignees, Plummer, Perry & Co., Lincoln, Nebraska. The shipment was taken to Omaha, Nebraska, instead of being stopped at Valley Station, and charges seventy-five cents per cwt., San Francisco to Omaha, was col- [1165] Eaileoad Eate Rbgulation. leeted and shown ag advanced charges when shipment was rebilled from Omaha to Lincoln, via Valley Station, at fifteen cents per cwt., making the through charges from San Francisco to Lincoln, ninety cents per cwt. These charges were paid under protest, in which it is claimed that the rate, San Francisco to Lincoln, should not exceed seventy-five cents per cwt. For particulars see bill of lading, expense bill and copy of protest, herewith attached. (III.) It is further stated that said Railway Companies have during this time, and are now taking canned goods in car loads from San Fran- cisco to Omaha, Sioux City, Chicago, and other jobbing points in the West, in competition with Lincoln, at seventy-five cents per cwt. Therefore, based on the above facts as stated, the complainants charge the Union Pa- cific Railway Company and the Southern Pacific Railway Company with violations of the Interstate Law as follows: (IV.) Violation of section 1. The charges made for the service rendered are unreasonable and unjust. It is claimed that a just and reasonable rate is seventy-five cents per cwt. (V.) Violation of section 2. The excessive charges demanded, collected and received, for performing a like and contemporaneous service, in the transportation of a, like kind of traffic, under substantially similar condi- tions and circumstances, is unjust discrimination. (VI.) Violation of section 3. An undue and unreasonable preference is given to firms and localities, also unreasonable prejudice and disadvantage is imposed in other respects; and greater compensation is charged and collected in the aggregate for the transportation of like kind of property, under substantially similar conditions and circumstances, for a shorter than for a longer haul. (VII.) Violation of section 6. The Railway Companies shall print, scliedules showing the rates, also they shall not charge, collect or receive, greater or less compensation than is specified in said schedules. The rate of ninety cents, as charged, collected and received, is not a, published rate. (VIII.) Violation of section 7. No stoppage or interruption shall be made to prevent continuous carriage from place of shipment to place of destination; and there shall be no intent to avoid or unnecessarily inter- rupt such continuous carriage, or to evade any of the provisions of this act. The shipment was taken to Omaha and reshipped to this point, con- trary to the wishes of the consignees, thus subjecting the consignment to an unnecessary haul from Valley Station to Omaha and return, delaying the freight to the injury of claimants and exacting additional revenue for the additional and unnecessary service performed. (IX.) Complainants also state that they have been injured by the con- tinued violations of the law since the act took effect, April 5 last, and that in consequence of said unjust discriminations that have existed and now exist against them, they have been prevented and are now being prevented [1166] Appendix. from selling goods in competition with firms doing like business in all other localities with which they come in competition. (X.) T'aerefore, complainants pray your honorable body will consider all the facts as above set forth, and will cause a copy of its findings with respect thereto to be delivered to said common carriers, together with a notice tJ, M. R. R. v. Pennsylvania Co 276, 993, 1093 Toledo Produce Exch. v. Lake Shore & M. S. R. R 974, 1033, 1083, 1084 Toledo S. & M. R. R. v. East S. & S. C. R. R 110 Toledo W. & W. R. R. v. Beggs 156, 159 Toledo, W. & W. Ry. v. Brooks 73, 157, 159, 160 Toledo, W. & W. R. Co. v. Elliott _. 723 Toledo, W. & W. Ry. v. Grush T 206, 209 Toledo, W. & W. R. R. v. Hamilton 127 Tons of Coal, 318 1-2 696, 736 Toomer v. London R. Co 759 Tower v. Utiea & S. R. R. Co ■. 80 Toy V. Long Island R. R. Co 132 Tozer v. United States 976, 1097 Tracy v. Pullman P. C. Co 96 Trade League of Phila. v. Philadelphia, W. & B. R. R 581, 934 Traders' & T. U. v. Phila. & R. R. R 1034, 1037 Trammell v. Clyde S. S. Co 477, 637, 641, 900, 1050, 1058 Trammell v. Dinsmore 323, 1312 Transportation Line v. Hope 184 Transportation of Coal, Re 1019, 1094 Transportation of Fruit, Re 95, 306, 699, 807, 921, 934, 935, 946 1014, 1034 Transportation of Immigrants, Re 980 Transportation of Salt, Re 113, 929, 934, 957 Transportation of Salt from Hutchinson, Re 934, 957 Travelers' Ins. Co. v. Austin 153 Traver v. Merrick County 47 Treadwell v. Taylor 189 Trent., etc., Nav. Co. v. Wood 174, 176 Troy B. of T. v. Alabama M. Ry 700, 898, 929, 934, 963, 982, 1058, 1077 Troutman v. Smith 401, 402, 411, 414, 1311 Truck Farmers' Assoc, v. Northeastern R. R 699, 917, 921, 934 Tunnel v. Pettijohn 131, 132 Tunney v. Midland Ry 153 Turner v. N. Car. R. R 232 Turner v. Revere W. Co 57 Tuttle V. Northern Pac. R. R 955 tJ. Ulmer v. Lime Rock R. R 106, 110 Ulric V. Lake Shore & M. S. R. R 934, 983, 984 Umatilla Co. v. Earnhardt 46 [1227] Raileoad Eate Regulation. [ebfeeences aee to sections.] Underbilling, Re 423, 955 Union Express Co. v. Graham 217 Union Express Co. v. Ohleman 181 Union of Phoenix v. Atchison, T. & S. F. R. R 934 Union Pae. Ry. v. Goodridge 319, 484, 718, 788 Union Pac. Ry. v.' Nichols .152, 156 Union Pac. Ry. v. Evans 209 Union Pac. Ry. v. Hall 278 Union Pac. Ry. v. U. S 319, 388, 393, 411, 425, 426, 430, 441, 641 Union S. S. Co. v. Ewart 125 Union Trust Co. v. Atchison 697, 700 United States v. Atchison, T. & S. F. Ry 1098 United States Commission of Fish and Fisheries, Re 1031 United States v. Babcock 1069 United States v. Chicago & N. W. Ry 950 United States v. Chicago & N. W. Ry. Co 755 United States v. Chicago, K. & S. R. R 902 United States v. Cleveland, C. & S. Ry 955, 1097 United States v. DeCoursey 1097 United States v. Delaware, L. & W. R. R 953 United States v. Delaware, L. & W. R. R 1095 United isuates v. Freight Association 835 United States v. Hanley ' 724, 943, 1097 United States v. Howell 724, 1017, 1097 United States v. Knight 894 United States v. Lehigh Valley R. R 897 United States v. Mellen 984, 1097 United States v. Michigan C. R. R 724, 729, 1097, 1098 United States v. Milwaukee R. T. Co 1098 United States v. Missouri Pac. R 1096 United States v. Morsman '. 901, 1097 United States v. Norfolk & W. Ry 272, 1095 United States v. Northern P. R. R 62 United States v. Ormsbee 19 United States v. Pacific Exp. Co 181 United States v. Seaboard Ry 900, 903 United States v. Tozer 749, 943, 952, 954, 973, 1097 United States v. Union Pacific Co 278 United States v. West Virginia N. R. R 953 United States v. Norfolk & W. R. R 218 United States v. Delaware, L. & W. R. R 808 United States Ex. Co. v. Backman 181 United States Ex. Co. v. Root 181 United States Exp. Co. v. State 181 ri228] Table of Cases. [BEFEBENCES ABE TO SECTIONS.] United States Tel. Co. v. Gildersleeve 62 Unlawful Charges for Transportation of Vegetables, Re 934 V. Van Buskirk v. Purinton 684 Vanderslioe v. The Superior 184 Van der Venter v. Chicago City R. Co 188 Van Dusan v. Grand Trunk R. Co 210 Van Horn v. Kermit 80 Vankirk v. Pennsylvania R. R 674 Van Patten v. Chicago, M. & S. P. Ry 881, 932, 1022 Varble v. Bigley 184 Vassau v. Madison E. Ry 213 Vemer v. Sweitzer 146 Vega S. S. Co. v. Consolidated E. Co Co Vermont & M. R. R. v. Fitchburg R. R 828 Verner v. Sweitzer 180 V errick v. Mo. Pac. R. R 83 Vincent v. Chicago & A. R. R 219 Vinton v. Middlesex R. R 241, 242 Violett V. Stettinius ^ 685 Virginia C. & I. Co. v. Louisville & N. R. R 1024 Vetrified Pipes, Re 688 V'lierboom v. Chapman 686 ■w.' Wade V. Lutcher C. L. Co 75, 108, 117 Wagner v. Rock Island 57 Walker v. Jackson 84 Walker v. Keenan 220, 700, 818 Walker v. Skipwith 186 Walker v. York and No. Midland Ry 872 Wallace v. Arkansas C. R. R 1331 Walla Walla v. Walla Walla M. Co 1327 Wallier v. Skipwith 128 Walsh V. Chicago, M. & S. P. Ry 235, 245 Walsh V. The H. M. Wright 80 Walaton v. Myers 184 Ward v. Fellers 689 Ward V. Folkestone W. W. Co 59 Warner v. Burlington & Mo. R. R. R 147 Warner v. New York C. & H. R. R. Co 565, 585, 593, 931 Warner v. Western Transp. Co 155 Warren Ehret Co. v. Central R. R 641, 934, 1035, 1056, 1059 Washburn v. Nashville & C. R. R 154 [1229] Eaii>eoad Rate REGULATioiir. [eefebences abb to sections.] Watauga W. Co. v. Wolfe 57, 58 Waterbury v. New York C. & H. R. R. R 73, 160 Way V. Chicago, R. I. & P. Ry 156, 157 Weeks v. New York, etc., R. Co 80 Welding v. Wagner P. C. Co 96 Wells V. American Exp. Co 181 Wellman v. Chicago & Grand Trunk Ry 457, 458, 459 Wells, Fargo Exp. Co. v. Williams 1160 Wells V. Oregon Ry. & Nav. Co 316, 319, 382, 484 Welsh V. Pittsburg, F. W. & C. R. R 127 Wells V. Steam Nav. Co 184 West Coast Co. v. Louisville & N. Ry 65 Westchester Turnpike v. Westchester County 355 Western I. & L. Co. v. Chapman 46 Western Transp. Co. v. Hoyt 686, 687, 688 Western U. T. Co. v. Call Pub. Co 62, 724, 731, 734, 736, 749 Western U. T. Co. v. Henderson 62 Western U. T. Co. v. Hyer 62 Western U. T. Co. v. Liddell 62 Western U. T. Co. v. Myatt 1304, 1305, 1322 Western U. T. Co. v. Neel 62 Western U. T. Co. v. Stevenson 62 West Virginia Co. v. Volcanic Co 43 West Va. T. Co. v. Ohio P. L. Co 43 Western U. T. Co. v. Wyatt 62 West Side E. Co. v. Consolidated T. & E. Co 53 Weymouth v. Penobscot L. D. Co 50, 89 Wheeler v. Northern Colo. Irr.^Co 46, 316, 319, 1304 Whitehead v. St. Louis, I. M.*& S. Ry 73, 76, 160 White V. Kennon 108 White V. Mary Ann 184 White V. Michigan Cent. R. R 1034 White V. Norfolk & S. R. R 123 White V. Winnisemmet Co 81, 84 White Live Stock Commission Co. v. Chicago, M. & St. P 232 Whiting V. Sheboygan Ry 281 Whitmore v. Bowman 185 Whitney v. Pere Marquette R. R 150 Whitney v. Pullman P. C. Co 96 Wholesale Grocers v. Missouri Pac. Ry 919 Wibert v. New York & E. R. R 263 Wichita v. Chicago, R. I. & P. Ry 483, 934, 981 Wichita v. Atchison, T. & S. F. R. R .934, 981, 983, 1079 Wichita v. Missouri Pac. Ry 934, 977, 981 Wichita Sav. Bank v. Atchison, T. & S. F. R. R 86 [1230] Table of Cases. [heterencbs are to sections.] Wight V. United States 724, 726, 742, 748, 755 Wilcox V. San Antonio Ry 75 Wilde V. Merchants' Dispatch Co 182 Wilder v. St. Johnsbury, etc., R. Go 210 Wilkes-Barre v. Spring Brook W. Co 314, 338, 339, 342, 352, 387, 390 392, 393, 396, 401, 403, 404, 430, 441, 446 Williams v. Branson 176 Williams v. Judge 108 Williams v. Mutual G. Co 59 Williams v. Webb 80 Williams v. Wilmington & W. R. R 86 Willis V. Atlantic, etc., Ry 75 Willson V. Rock Creek Ry 895, 901, 933, 946 Wilmington Tariff Assoc, v. Cincinnati, P. & V. R. R 973 Wilson V. Atlantic C. L. R. R 122 Wilson V. Baltimore, etc., R. Co 80 Wilson V. Brett 148 Wilson V. Grand Trunk Ry 147 Wilsons V. Hamilton 84, 127, 185 Wilton V. Middlesex R. R .73, 149, 160 \\'inona & So. v. Blake 1307, 1332, 1333 Winsor Coal Co. v. Chicago & A 840 Wise V. Ackerman 189 Witterding v. Green ' 46 Wolf Bros. V. Allegheny Valley Ry 570, 931, 934 Woodger v. Great Western R. Co 667 Wood V. Maine Central Ry 147 Woodruff S. & P. C. Co. v. Diehl 96 Woods V. Devin 145, 214 Woolsey v. Chicago, B. & Q. R. R 73, 160 Worcester Excursion Car Co. v. Pennsylvania Ry 814, 990 Wright V. Howe 1117 Wright V. Platte Co 46 Wright V. Snell 692 Wrigley v. Cleveland, C. C. & St. L. Ry 668, 934, 9.52 W. U. T. Co. V. Harding 02 Wyckoff V. Queens County Ferry Co 84, 185 Wyle V. Northern Pac. R. R 1024 Yazoo & M. V. R. R. v. Searles 682 Y. B. 43 Ed. Ill, 6, pi. 11 6 Y. B. 46 Ed. Ill, 19, pi. 19 8 Y. B. 2 Ed. IV, 13, pi. 9 8 Y. B. 11 Ed. IV, 6, pi. 10 6 [1231] Kaileoad Rate Regulation. [refebenoes abb to sections.] r. B. 22 Ed. IV, No. 9, pi. 15 8 y. B. 22 Ed. IV, 49, pi. 15 7, 9 Y. B. 11 H. IV, 45, p. 8 9 Y. B. 3 H. VI, 36, pi. 33 6 Y. B. 19 H. VI, 49, pi. 5 6 Y. B. 21 H. VI, 55, pi. 12 8 Y. B. 22 H. VI, 21, pi. 38 9 Y. B. 10 H. VII, 8, pi. 14 9 Y. B. 14 H. VII, 22, pi. 4 I 9 Yeomans v. Contra C. S. Nav ,. 152 Yellow Pine Asso. v. Illinois C. B. R 914 Yellow Pine Assoc, v. Vicksburg, S. & P. Ry 934 Z. Zachery v. Mobile & O. R. R 244, 245 Zollinger v. The Emma 144 i;i233] IISTDEX. [eefebences are to sections.] A. ACCEPTANCE OF PASSENGERS, passengers must apply at proper place, 221. passengers must enter vehicle at proper time, 216. carriage in a place not intended for passengers, 77. carriage of passengers by servant of a carrier, 73. carriage on a, construction train, 75. carriage on freight cars, 76. children riding, when accepted as passengers, 73. conductor induced to let person ride free on freight train, 73. conductor induced to let person ride free on passenger train, 73. establishment of relationship of passenger and carrier, 78. forbidden to ride on a freight train, 154. invited by a servant of the carrier, 160. riding on a hand car, 75. riding free on freight train, 73. riding on engine by consent of fireman, to shovel coal, 73. riding on engine by consent of engineer, 73. vehicle not intended for passengers, 75. ACIDS, rates on, 574. ADDITIONAL CHARGES, See ExTBA Chabqbs. AGATE WARE, rates on, 934. AGRICULTURAL IMPLEMENTS, rates on, 934. ALABAMA, statutes against extortionate rates, 1101. statutes against discrimination, 1132. power of Railroad Commission, 1252. provision for court review, 1282. ANGLE BEADS, rates on, 934. ANNUAL CHARGES, See Opeeatinq Expenses. [1233] Kaileoad Rate REstrLATiON. [befebences ake to sections.] APPLES, rates on, 934. ARKANSAS, statutes against extortion, 1102. prohibition of discrimination, 1133. prevention of undue preference, 1172. inhibition of local discrimination, 1212. powers of State Railroad Commissioners, 1288. ASBESTOS, rates on, 934. ASTRAGALS, rates on, 934. B. BAGGAGE, articles of merchandise not baggage, 146. baggage should not be carried apart from the passenger, 147. baggage in stateroom of steamer, 80. carriage of baggage is compensated, 145, 146, 147. hand baggage not generally bailed, 80. if carrier accepts articles as baggage liability attaches, 146. liability of common carriers applies to baggage, 146. liability for baggage subsequently forwarded, 147. luggage carried in car with passenger, 79. personal belongings are baggage, 145. porter's duties in sleeping car, 80. rule as to luggage carried by passenger, 80. transfer of baggage, 119, 180, 822. traveling paraphernalia are baggage, 145. to what extent money and valuables are baggage, 145. when carrier accepts extra compensation for it, 146. when railway porter takes luggage, 79. See Goods Taken. BAILMENT OP GOODS, bailment of goods requisite, 74. carriage of goods by servant of a carrier, in course of business, 72. carrier becomes responsible as such upon assuming possession, 82. carrier must control the thing carried, 74. cattle carried with a drover furnished by the owner, 83. goods taken across a ferry by the owner, 84. issue of bill of lading without receipt of goods, 86. owner accompanies the goods and retains possession, 81. owner accompanies the goods without retaining possession, 82. possession of the company's servant, 81. servant may accept goods independent of master, 72. See Goods Taker, Teanspoetation. [1234] Index. [BEFEEENCES ABE TO SECTIONS.] BAKING POWDER, classification of, 931. rates on, 934 BANANAS, classification of, 601, 931. rates on, 571, 934. BARLEY, classification of, 931. rates on, 570, 934. BARRELS, classification of, 931. rates on, 787, 934. BASING POINTS, See Grouping of Stations. BEANS, classification of, 931. rates on, 934. BEEF, classification of, 539, 540, 931. rates on, 539, 608, 934. BEER, classification of, 577. BETTERMENTS, See Consteuction Accounts. BITTERS, classification of, 931. rates on, 574. BLANKETS, classification of, 934. rates on, 934. BLIND PERSONS, See Excuses. BLINDS, classification of, 934. rates on, 934. BOARDS, classification, 931. rates on, 934. BONDED INDEBTEDNESS, outstanding bonds issued for value, 352. bonds or securities representing an expenditure actually made in good faith, 393. when bond issues do not represent actual investment in the enterprise, 391. innocent buyer of bonds, 354. [1235] Kaileoad Rate Regulation. [BEFEEENCES ABE TO SECTIONS.] BONDED INDEBTEDKESS— Continued. when interest on the mortgage debt is not earned, 388. risk to the holders of bonds much less than to the holders of stock, 393. risk by reason of depreciated security not considered, 405. refunding and redemption of bonds, 439. BOOKS, rates on, 934. BOOTS AND SHOES, rates on, 934. BOTTLES, classification of, 578, 581. rates on, 578, 934. BOX SHOOKS, classification of, 575, 599. rates on, 667, 934. BRANDY, rates on, 934. BRICKS, rates on, 607. classification of, 712. BRIDGES, toll bridges are public services, 18, 20, 27, 47. toll-bridge, not a common carrier, 85. goods carried across a bridge, 85. rates of a bridge company, 402. separate charge for crossing bridge in transit, 698. BROMINE, classification of, 574. BRONZE, classification of, 594. BRUSHES, rates on, 934. BUCKWHEAT, rates on, 934. BUGGIES, rates on, 934. O. CABBAGE, classification of, 571, 601. rates on, 034. CALIFORXIA, provisions against discrimination, 1134. prohibition of undue preference. 1173. inhibition of local discrimination, 1213. rates fixed by Railroad Commission, 1253. [1236] liSUJiX. [BEFEBENCES ABE TO SECTIONS.] CANALS, canals are public, 20, 43, canal boats, 176. canal traffic, 19. ship channel, 19. water channel or cut, 19. waterways, 20. classification in canal tolls, 553, CANDLES, rates on, 934. CANS, rates on, 934. CAPITALIZATION, 1. Enumeration of the theories for estimating capital, the various theories suggested, 331. comparison of these theories of capital charge, 332. cost of reproduction as a basis, 333, 358. money invested as a basis, 334, 338. outstanding capitalization as a basis, 335, 346. present value as a basis, 336, 352. competition of these different theories, 331, 337. 2. The original cost as the basis. the investment as the capital entitled to return, 338. what is the actual cost, 340. unusual and unprecedented expenses, 340. cost enhanced by fraudulent contract, 341. original cost not necessarily the basis of capitalization, 353, unwise construciion, 342. plant unnecessarily large, 343. portion of plant not yet in use, 344. cost of unsuccessful experiments, 345. 3. Outstanding capitalization. watered stock, 346. fictitious capitalization, 346. outstanding stock issues, 348. bonded indebtedness beyond present value, 349. Cost of buying up constituent roads of the present system, 350. 4. Present value as the basis. constitutional requirements, 352. present value may be shown to be less than actual cost, 354. original cost as evidence of actual value, 355. value returned for taxation not conclusive, 356. elements entering into the determination of present value, 357. franchise and good-will considered, 361-371. [1237] Railroad Rate Regulation. [kefebences aee to sections.] CAPITALIZATION— Continued. 5. The cost of reproduction. the Minnesota rule, 358. . cost of reproducing at present prices, 358. price of materials to-day, 358. methods of arriving at replacement value, 359. the rule held unreasonable by the federal courts, 360. explanation of the California decisions, 361. See Bonds, Cost of Consteuction, Earning Capacity, Pbanchises, Reproduction of Plant, Stocks, Valuation. CAR LOAD LOTS, difTerent classification between car load and less than car load, 597. difference in classification not essential, 598. advantages of car load traffic, 777. minimjjm car loads, 599. permission to mix car loads, 601, 778. car loaded by several shippers, 602. lower rates for shipments in bulk, 779. shipments in train loads problematical, 603, 780. See, also. Classification, Discrimination. CARRIAGE, common carriage defined, 71. 1. Carrier must control thing carried. acceptance of passengers, 75-80. bailment of goods, 81-86. common carriage where a single car is chartered, 94. employees taking entire charge of the journey, 96. 2. Transportation requisite for. conception of common carriage requires transportation, 87. carrier must undertake transportation, 87. chartered accommodations, 94. furnisher of motive power only not a carrier, 74. position of leased railways, 93. when transportation is furnished by others, 93. See Acceptance of Passengers, Bailment of Goods, Common Cabriebs, Transportation. CARRIAGES, classification of, 931. rates on, 934. CARTERS, See Teuckmbn. CARTRIDGES, rates on, 934. Index. [BEFEBENCES ABE TO SECTIONS.] CATTLE, classification of, 540, 931. rates on, 608, 934. CELERY, classification of, 931. rates on, 571, 601. CEMENT, rates on, 334. CEREALS, classification of, 591. rates on, 584, 934. CHAIRS, classification of, 583. rates on, 934. CHAMPAGNE, rates on, 934. CHARGING WHAT THE TRAFFIC WILL BEAR, what the traffic will bear as a factor, 481. essential defects in the principle, 482. value of the service to the goods, 524. legal limitations upon principle necessary, 524. limit of value of service not necessarily limit of charge, 525. trafiic will continue to move at unfair rates, 526. cost of obtaining a substitute for the service furnished, 528. See Rates. CHARTER, obligation to serve according to charter provisions, 278, 279. withdrawal from business where no charter provision, 280, 281. limitation of returns in charter, 875. charter' of corporation as contract against legislation, 1324-1330. See Constitutional Law, Withbeawai from Business. CHEESE, rates on, 934. CHEWING GUM, rates on, 934. CIDER, classification of, 574. rates on, 934. CITRUS FRUIT, rates on, 934. CLASSIFICATION, 1. General principles. classification the basis of rate-making, 490. general principles of classification, 930. various instances of classification, 931. [1239] Railroad Eate Eegtjlation. [references are to sections.] CLASSIFICATION— Continued. necessity of classification for a proper distribution, 552. the necessity of classification for convenience in rate fixing, 553. classification not unduly minute, 557. classification necessarily imperfect, 556. reasonableness of a particular rate involves proper classification, 567. justifying classification by railroads, 566. 2. Methods of classification. history of classification in the United States, 554. various classifications in different parts of the country, 554. methods of classification, 560, six general classes usually, 556. extra class divisions, 558. commodity rates, 559. classification sheet, 560. interpretation of the classification sheet, 561. adjustment of business to established classification, 563. 3. Basis of classification. elements determining difl'erence in classification, 556. classification of various goods, 565. classification according to manufacturer's representations, 564, influences determining classification, 562. comparison with other commodities, 567, 568. elements in comparison of commodities, 569. comparison of similar things, 570. perishable articles of food, 572. groceries, 573. articles shipped in glass, 574. forest products, 575. comparison of unlike things, 577. dry goods, 576. diff'erences between commodities, 578. 4. Convenience in handling. classification based on nature and size of package, 579. shipment in small packages, 580. shipment in form more convenient for handling, 581. shipment in form permitting greater car load, 582. car load rates, 597-603. classification based on volume of business, 583. large volume of traffic in a certain commodity, 584. perishable freight, 586. traflic handled in special trains, 587. special equipment not necessary for the traflSc, 588. less than usual care required, 589. [1240] Index. [EKFEBENCES ABE TO SECTIONS.] CLASSIFICATION— Continued. 5. Value of the goods. value of the goods as an element, 590. difference between values justifies difference in claasification, 891. market value rather than intrinsic value, 593. differing value of same kind of freight, 594. low value of goods as reducing classification, 595. value of the commodity not of the greatest importance, 596. 6. Difference in rate between classes. principles governing differences between classes, 604. extra class rating, 604. low grade commodities may be carried at special rates, 605. high grade commodities should not be overcharged, 606. difference between the classes should not be disproportionate, 607. principles in making rates for different commodities, 608. reasonableness tested by comparison, 609. slight differences between similar commodities, 610. See, also, Discriminations, Rates. COAL, classification of, 552, 589, 592. rates on, 416, 452, 667, 763, 934. COCOA, rates on, 934. COFFEE, classification of, 573. rates on, 934. COLD STORAGE, See Wabehouses. COLLATERAL BUSINESS, limitations upon the right to engage in an independent business, 301. carrier discriminating in favor of itself, 302, 958. railroad cutting its own rates for itself, 303, 958. charging its competitors higher relative rates, 304. whether a collateral business is ultra vires, 305. whether collateral businesses should be permitted, 306, 307. See, also, Discbimination. COLORED PERSONS, See Excuses and Discriminations. COMMODITY RATES, See Classification. COMMON CARRIERS, definitions of, 71. carriers in public employment, 10, 33, 41, 42. ' grounds of public position of carriers, 20, 34, 54, 55. carriers of both goods and passengers, 74, 75, 171, 177, 186, 188. [12411 Eaileoad Rate Eegulatiobt. [bbfebencbs are to sections.] COMMON CARRIERS— Continued. boats, 107, 174, 414. canal boats, 176. express companies, 97, 152, 181, 802, 803, 804. dispatch companies, 97, 182, 423, 808. draymen, 118, 119, 173, 179, 528, 822. fast freight lines, 97, 182, 423. ferries, 16, 27, 43, 84, 102, 107, 185, 203, 402, 414. hackmen, 187, 818. hoymen, 81, 105, 174. job vessel, 116, 175. lightermen, 81, 82, 105, 174. messenger companies, 183. Omnibus line, 180, 186. pack horses, 16, 96, 162. railroads, 16, 42, 45, 47, 61, 94, 108, 109, 110, 111, 112, 113, 178. ships, 88, 105, 116 175. skiff, 107, 174, 414. sled, 87. sloop, 116, 175. stage coaches, 180, 186, 293. / steamboats, 80, 177, 179, 181, 414, 452, 820, 821. street railways, 52, 61, 113, 188, 212, 3S9, 350. teamsters, 119, 133, 179. "^ transfer companies, 119, 180, 822. truckmen, 119, 133, 179, 528, 822. / towboats, 184. ; wagoners, 31, 87, 113, 115, 118, 173, 528, ^822. water-craft, 174, 175, 177. ^ See, also. Acceptance op Passengers, Bailment of Goods, Goods Taken, Passengers Accepted, Profession to Serve Public, Transportation Furnished. COMPENSATED CARRIAGE, common carriage is compensated carriage, 141. carrier's services in returning packages compensated, 144. carriage of children and servants, 150. common carrier of the money C. 0. D., 144. carriage is for hire unless it is otherwise agreed, 142. reasonable compensation may be recovered, 516. secret intention immaterial, 142. when empty bags are carried free, 142. COMPETITION BETWEEN CARRIERS, those who deal with a rival must be served, 292-294. freight from thpse who deal with a rival must be taken, 293. shippers by rival lines cannot be discriminated against, 757. [1242] Index. [befebences are to sections.] COMPETITION BETWEEN CARRIERS— Continued. whether lower rates may be given those who deal exclusively, 758-761. rival cannot demand use of facilities, 29S-300. protection of a collateral business from rivals, 301-307. concessions to get competitive business, 742-748. rates dictated by competitor, 530-537. competition justifies diflferenees between localities, 853-861. long and short haul rates governed by competition, 985. COMPLAINT, See Peocedubb. COMPRESSING IN TRANSIT, See Transit Peivilbges. CONCEALMENT, See Fraud. CONDITIONS PRECEDENT TO SERVICE, goods must be tendered in a proper manner, 214. goods must be tendered to the carrier at proper time, 215. transportation must be demanded at a proper place, 220. passengers must enter vehicle at the proper time, 216. goods must be tendered properly packed, 217. where freight is improperly loaded on a car by the shipper, 217. special freight may require special tender, 218. shipments in bulk should be received under proper conditions, 219. CONDUCTOR, See Employee. CONFISCATION OF PROPERTY, See Constitutional Law. CONNIVANCE, See Feaud. CONSOLIDATIONS, See Systems Operated as Units. CONSTITUTIONAL LAW, 1. Power to regulate rates. power to set aside a statutory rate, 351. power to regulate indisputable, 382. basis of power to regulate rates, 1301. power to pass on reasonableness of rates, 1302. power to fix rates, 1303. 2. Exercise of power to fix rates. fixing rates by legislation, 1307. fixing rates by subordinate body, 1309. fixing rates by municipal bodies, 1310. fixing rates by commission, 1312. power executive or administrative, 1306. power of courts to pass upon rates fixed, 1313. [1243] Raileoad Ratb Regulatiow., [beferences abb to sections.] CONSTITUTIONAL LAW— Continued. supervisory powers of the courts, 404. provisions of interstate commerce acts, 1031, et seq. provisions of state statutes, 1241, et seq. 3. Protection of property from confiscation. rates fixed must not produce a deficit, 382, 1332. taking of property to deprive the owner of fair return, 351, 1334. rates fixed should not work confiscation, 382, 1333. reasonableness of return a judicial question, 386. rates unconstitutional if confiscatory, 387, 1334. unreasonably low rates constitute taking property, 1331. 4. Impairing obligation of contracts. when charter of corporation is contract, 1324. no contract without express provision, 1325. conferring ordinary powers creates no contract, 1326. contracts made by municipal ordinance, 1327. charter by Congress, 1328. waiver of privilege, 1329. assignment of privilege, 1330. See Intebstate Commerce, Pebcentaoe of Eetubn, Taxation, Valuation. CONSTRUCTION ACCOUNTS, various betterments considered, 415, 425, 428. double tracking^ 425. maintenance of way an annual expense, 425, 426. improvements of existing plant, 426. replacement and renewals considered as repairs, 425, 437. permanent improvements should not be annual charge, 427. outright new construction considered, 429. various examples of permanent improvements, 428. CONTINUOUS CARRIAGE, See Theouqh Routing. COPPER, classification of, 594. rates on, 934. CORN, classification of, 491. rates on, 934. COST OF CONSTRUCTION, actual cost to the owners, 331. total investment sunk in the construction of the plant, 339. percentage added for engineering expenses, 340. unwise investments, 345. original cost of construction, 352. injudicious contracts, 353. poor engineering, 353. [12441 Index. [befekencbs aee to sections.] COST OF CONSTRUCTION— Continued. rascality on the part of those engaged in the construction, 353. money that has gone into the railroad, 353. original cost as evidence of actual value, 355. actual cost of the plant and property, 357. improvident construction, 360. mere cost of construction, 369. See Capitalizatiow, Earning Capacity, Repboduction of Plant, Valuation. COTTON, classification of, 557, 594. rates on, 582, 761, 934. COTTON SEED OIL, classification of, 577. rates on, 934. COWPEAS, classification of, 552, 570. rates on, 931, 934. CREAM, classification of, 578. rates on, 934. CRIMINAL PROSECUTION, See Remedies. D. DAMAGES, See Remedies. DELAWARE, statutes against discrimination, 1135. DEFENSES, See Excuses. DEMURRAGE, See Extra Charges. DEPRECIATION REQUIREMENTS, allowance for depreciation, 430. depreciation of various parts of water works, 430. depreciation of various parts of street railway, 431, 432. renewal of equipment to offset depreciation, 432. certain authorities refusing to allow depreciation, 433. contingencies fund, 432. restoration fund, 433. DISCRIMINATION BETWEEN LOCALITIES, 1. Common law situation. locality has no right to complain of rates at common law, 831. discrimination evidence that the higher charge unreasonable, 832. [1245] Kaileoad Eatb Kegulation. Leefebences are to sections.] DISCRIMINATION BETWEEN LOCALITIES— Continued. lower rate as evidence of unreasonableness of higher, 834. higher rate not necessarily unreasonable, 835. what circumstances may be considered, 836. elements affecting cost of service at one point, 837. 2. Statutory situation. provisions of interstate commerce law, 971. provisions of state statutes, 1171-1233. general principles of statutory regulation, 838, 972. what constitutes undue preference, 838, 973. reasonableness of rate per se immaterial under statute, 839. interdependence of rates to various localities, 840. instances of local discrimination, 981. what preferential rates are obnoxious, 841. discrimination explained by circumstances, 842. 3. What circumstances justify preferential rates. substantial diiference of conditions, 982. distance as a factor in the rate, 974. equalization of commercial advantages, 843, 845, 977. grouping by reason of competition in the articles transported, 846. 4. Undue •prejudice and priority. instances of local discrimination, 981. equalization of disadvantages, 844, 977. difference between through and local rates, 970. staple industry of a locality, 978. grouping stations, 846, 975. burden upon the railroad to defend discriminatory rates, 847. question of dissimilarity of condition one of fact, 848. See Long Haul akd Short Haul, Rates, Transportation. DISCRIMINATION BETWEEN PERSONS, 1. Rule against discrimination in general. early view that there was no law against discrimination as such, 712-718. discrimination as evidence of unreasonable rates, 718. outright discrimination unreasonable, 720. later rule against unreasonable differences, 713, 944. undue preferences forbidden, 721, 943. special rates may not be discriminatory, 722, 723, 943, 944. present view that discrimination illegal in itself, 723. rule forbidding discrimination goes beyond rule beginning reason- able rates, 727. economic necessity for the rule against discrimination, 724. whether the rule is limited to discrimination between competi- tors, 732. public injury by discriminations in freight rates, 728. [1246] Index. [EEFEBENCES ABE TO SECTIONS.] DISCRIMINATION BETWEEN PERSONS— Confinued. prohibition by federal statutes, 941-963. prohibition by state statutes, 1131-1176. 2. What constitutes discrimination. not all differences are disoriminatory, 731. differences in the conditions under which services are rendered, 943. if similar circumstances is discrimination, 944. reductions to get competitive business illegal, 742-745. additional services performed for certain shippers, 748. various devices for giving concessions, 786. device for concealing preference unavailing, 94-5. effect of illegality upon contract of carriage, 947. 3. Rebates to exclusive shippers. whether lower rates may be made to exclusive shippers, 756. shippers who use rival lines must not be charged more, 757. whether lower rates may be given to those who ship exclusively, 758. shippers who agree to give all their business, 750, 781. concessions to those who deal with the carrier, 7i!n. regular shipper and transient shipper, 774. 3. Concessions to large shippers. whether concessions may be made to large shippers, 7-1!). large shipper should receive no reduction, 749, 952. shippers who agree to furnish large quantities of freight, 760. reasonable differences permitted by some courts, 751. reductions to large shippers unjust to small shippers, 753. 4. Reasonable differences in rates. when commodities are of different character, 766. dieffrence in time or place, '948. difference in time or place, 948. rates should not be disproportionate, 772. whether differences in the conditions of service may be recognized, 735. consideration of the cost of serving, 773. differences in the character of the service recognized, 775. when consideration is given for reduction, 789. whether indefinite considerations can be a basis, 789. 6. Shipment in more convenient units. shipment in packages, 773, 775. in casks rather than in cases, 773. less than car load quantities, 776. shipment in car loads, 776. shipment in bulk, 779. [1247] Railroad Rate Regulatioit. [refekences are to sections.] DISCRIMINATION BETWEEN PERSONS— Continued, shipment in train loads, 780. contracts for regular shipments, 781. 6. Facilities furnished by shippers. allowance for facilities furnished by shippers, 781, 956. terminal facilities furnished by shippers, 782. transportation expenses paid by shipper, 783. rental paid on shipper's cars, 784. difference in rates unjustifiable unless both services are offered, 785. differences may be made proportionate to the cost of service, 736. 7. Special classes. emigrants given special rates, 765, 775. whether concessions may be made for special purposes, 734. concessions for special kinds of business, 762-768. concessions to manufacturing establishments, 763. whether reductions can be made for benevolent purposes, 733. carriage for governments, 960. ministers of religion, 961. officers of railroads, 962. DISPATCH COMPANIES, dispatch companies are common carriers, 182. despatch lines not forwarders, 97, 182. live stock transportation companies, 808. expenditures of dispatch lines, 423. DIVIDENDS, reasonable dividend on stock, 393, 411, 417. dividends payable not classified as annual charges, 438. rate of return upon investments prevailing in business generally, 389, larger returns in riskier enterprises, 401. usual business profit, 395. current rate of return, 394. creating a fund for payment of uniform dividends, 397, 400. six per cent., 381, 394, 395. eight per cent., 395. fifteen per cent., 402. eighteen per cent, reduced to six per cent., 385. See Peecentaqe of Return, Stock Issues. DIVIDENDS, See Percentage of Return and Stocks. DOCKS, See Wharves. DOG COLLARS, rates on, 934. [1248] Index. [eeafebences aee to sections.] DOORS, rates on, 934. DRAYMEN, See Teuckmen. DRUGS, classification of, 574. rates on, 934. DRY-GOODS, classification of, 565. rates on, 576. E. EARNING CAPACITY, the value of a railway held to depend upon what it can earn, 336, 352. fallacy of this contention, 358. probable earning capacity, 337, 352. capacity of the company to earn profits, 362. future earning capacity, 366. capitalization of the earnings, 368. EARTHENWARE, rates on, 934. EGGS, classification of, 579, 931. rates on, 579, 934. ELECTROTYPE PLATES, classification of, 594. rates on, 934. ELECTRIC PLANTS, all must be served, 60. business is public, 27, 60. discrimination forbidden, 60. electrical transmission lines, 27. electric motive power plants^ 428. electrical subways, 53. ELEVATOR CHARGES, See ExTKA Chabges. EMPLOYEES, authority of employees to accept, 104. carriage of goods by servant of carrier, 72. carriage of passengers by servant of carrier, 73. employees accepting passengers on freight trains, 76. employees of carrier, whether passengers, 153. employees cannot alter rates, 666. guests of the servants of the carrier, 160. engineer accepting passengers on locomotives, 77. [1249] EaII.IIOAD EaTE liEGULATION. [eefeeenoes aee to sections.] EMPLOYEES— Continued. invitation to children, 150. how far employees of carrier are bound not to strike, 276. riding free by connivance of the conductor, 159. shipi^er furnishes servants to manage vehicla, 92. labor cost in handling traffic, 418. ENGINEER, See Emploteb. ENVELOPES, classification of, 570. rates on, 934. EQUITABLE RELIEF, See Remedies. EVIDENCE, See Pboceduee. EXCUSES FOR REFUSAL TO SERVE, general principles governing excuses, 231. 1. Illegally involved in serving. duty not to abet illegality, 232. no right to exclude unless illegality involved, 233. where refusal is made necessary by law, 234. whether excused from serving by Sunday laws, 235. not bound to transport and deliver intoxicating liquor for illegal sale, 236. excused from carrying passengers who intend to do illegal acts, 237. may exclude gamblers, 237. 2. Protection of others served, 237. may exclude those with contagious diseases, 238. exclusion of violent persons, 238. exclusive of oflfensive persons, 238. , intoxicated persons may be excluded, 239. insult of passengers may be prevented, 239. how intoxicated persons must be treated, 241. exclusion of indecent and profane persons, 242. exclusion of dangerous articles to the vehicle, 243. 3. Applicant under disability. infirm persons, 239. insane persons may be excluded, 240. carrier's obligation to the insane man, 240. how far blind persons may be excluded, 244. how sick persons must be treated, 245. 4. Refusal upon personal grounds, 245. " scab " workmen must be taken, 241. company cannot capriciously discriminate, 246. [1250] Index. [eefeeences aee to sections.] EXCUSES FOR REFUSAL TO SERVE— Continued, refusal to carry bejause of color or race, 247. refusing distasteful people, 248. people annoying to the passengers, 241. conduct was vulgar and offensive, 249. refusing on moral grounds, 249. See Conditions Precedent, Justifications, Pbess of Business, With- drawal FEOM Service. EXPENDITURES, See CoNSTEUCTioN Accounts, Opbeating Expenses. EXPORT AND IMPORT RATE, export and import rates considered, 649. limitations upon making export and import rates, 653. import rates may be regulated by competition, 650. export rates regulated by competition, 651. foreign competition justifies only necessary diilerence, 652. foreign carriage, 894. See Discrimination, Long and Short Haul, Rate, Teanspobtation, Through Routing. EXPRESS AGENT, See Passengers. EXPRESS COMPANIES, express companies are common carriers, 181. express companies are subject to interstate commerce act, 891, 892, 901. exclusive contracts between railroads and expresses, 802-805., express car, 152. express messengers, 152. forwarding agents not carriers, 97. may refuse fish, 125. may refuse fragile articles, 131. may refuse packed parcels, 300. shipments made by rival must be taken, 297. See Common Carriers, Public Profession to Serve. EXTENT OF DUTY TO PUBLIC, See Profession to Serve. EXTRA CHARGES, additional charges within interstate commerce acts, 891. such charges must be included in rate schedules, 1011, 1014. gejieral principles as to additional charges, 693, 921. freight should cover the entire carriage usually, 697. incidental charges, 921. whether extra charges should be madCj 694. switching privileges, 936. shunting, 096. [1251] Eaileoad Eate Kegulation. [befebences abe to sections.] EXTRA CHARGES— Continued, elevator charges, 921. shoveling, 696. terminal facilities, 694, 921. icing charge, 699, 921. stockyards, 700. storage charges, 703. Demurrage of cars, 704. See Rates. r. FACILITIES, reasonable facilities required, 935. duty to furnish cars, 935. discrimination in use of cars, 953. must have adequate equipment for usual business, 264. sudden press of business as an excuse, 263. apportionment of cars to shippers, 272. duty to furnish refrigerator cars, 935. tank cars must be provided, 787. stations must be established, 226. ■ facilities furnished by shippers, 782. rental paid for shippers' cars, 784. allowance for cars or facilities furnished, 941, 956. FARES FOR PASSENGERS, the journey the unit in passenger service, 670-680. passenger cannot take two journeys for a single fare, 674. passenger cannot pay two partial fares for a single journey, 675. change of destination during the journey, 679. second journey on same train, 680. average mileage rates, 529. commutation rates, 529, 933, 963. different fares in opposite directions, — . grouped rates, 542. lower rates per mile than for long distance runs, 529, 933. mileage rates, 933, 963. party rates, 755, 963. suburban stations, 542, 933. through passenger rate apportioned, 537, 933. uniform street car fare, 542. usual rates, 522. See Passes, Tickets. FEED, classification of, 814. rates on, 934. [1252] Index. [EEFEBENCES ABE TO SECTIONS.] FERRYMEN, ferrymen are common carriers, 16, 43, 185. expenses of ferrymen, 414. allowance for risks on ferry business, 402. extent of liability of ferryman, 102. liability for horse on the ferryboat, 84. private ferries, 107. FERTILIZER, classification of, 552, 931. rates on, 934. FIXED CHARGES, See Bonds, Capitalization, Percentage op Return, Stocks. FLORIDA, statutes against extortion, 1103. prohibition of discrimination, 1136. inhibition of undue preference, 1175. regulation of railroad commission, 1254. provisions for court review, 1284. FLOUR, classification of, 573, 584, 591, 931. rates on, 540, 720, 765, 934. BREAKFAST FOODS, classification of, 577. rates on, 934. FORWARDERS, See Express Companies. FRANCHISES, principles underlying grant of franchises, 15. grant of exclusive franchises, 48. franchises for public services, 41. value of a franchise, 362. value of franchise as basis for taxation, 363. value of franchise when the property is bought, 364. value of an exclusive franchise, 365. value of a non-exclusive franchise, 366. value of a practically exclusive franchise, 367. value of franchise not considered in estimating rates, 362. amortization of franchises to be considered, 436. FRAUD, attempt to escape conductor's notice, 158. carriage of goods secured by fraud, 153-159. intending to evade fare, 156. money concealed in packages, 155. riding free by connivance of the conductor, 159. riding on invalid ticket, 157. [1253] Railroad Rate Regulation. [REFEEEKCES ABE TO SECTIONS.] FRAUD— Continued. rights of a trespasser, 159. stealing a ride, 156. FREIGHT, freight is an entirety, 686. freight is a, separate maritime interest, 683. right to the entire amount of freight, 684. right to freight on land, 685. efifect of carriage over a portion of the journey, 686. freight pro rata itineris, 686. no freight without delivery, 687. freight indivisible as a rule, 688. entire freight when goods arrive damaged, 689. paying freight pro rata, 690. See, also. Lien, Rates. FRUITS, classification of, 573, 931. rates on, 586, 934. FURNITURE, classification of, 609. rates on, 934. FURS, classification of, 565,. 606. rates on, 934. G. GAS SUPPLY, applicants must be supplied, 58, 59. business of a public nature, 58, 59. early decisions as to gas supply, 15, 21. capitalization of gas plant, 344. depreciation of plants manufacturing gas, 345, natural gas supply public, 58. plants owned by railroads, 428. supply of gas a, public service, 59. GEORGIA, statutes against extortion, 1104. prohibition of discrimination, 1137. undue preference forbidden, 1176. regulation by railroad commission, 1255. GLASS, classification of, 931. rates on, 934. GOODS TAKEN, carrier of goods, 128. cattle, 127. ri25i] Index. [eefeeences are to sections.] GOODS TAKEN— Continued. cedar lumber, 125, 132. coal in bulk, — . dangerous articles, 131. dogg, 125, 134. expressmen, 126. fragile articles, 131. fish, 125. freight cars, 129, 827, 828. goats excluded from street cars, 243. goods in bulk, 131. goods to which the profession to carry extends, 125. hackmen, 809. locomotives, 129. mail, 125. money, 126. newspapers, 130. oil in bulk, 779. other special classes of goods, 131. packet proper to be sent by a carrier, 102. rolling stock, 129. See, also. Profession to Serve Public, Trains. GRAIN, classification of, 578, 584, 931. rates on, 519, 577, 728, 744, 934. GRAIN ELEVATORS, delivery at elevator sidings obligatory, 219. elevator owners obliged to serve all that apply, 88. exclusive contracts between railroads and elevators, 819. grain elevators in public employment, 28. owners of elevators may not store own grain, 300. GRATUITOUS CARRIAGE, gratuitous carrier not u common carrier, 141. person carried gratuitously by a railroad may be passenger, 149. gratuitous carrier liable for negligence, 148. C. 0. D. transactions, 144. employees carried gratuitously, 153. passenger carried gratuitously, 149. persons riding free, 159. persons carried out of charity, 159. returning bags free, 142. when passenger with a free pass exempts the carrier from liability, 149. [1255] Railroad Eate Regulation. [refeeences ake to sections.] GROCERIES, classification of, 931. rates on, 573. GROUPING OF STATIONS, basing points justified, 638, 850, 975. equal access to central markets, 844, 977. grouping must^be reasonable, 635. competition in commodities carried to market, 634. See TEANSPOETATIOlf. H. HACKMEN, haekmen are common carriers, 187. railroads discriminating between haekmen, 809-812. HARDWARE, classification of, 931. rates on, 934. HATS, classification of, 565. rates on, 934. HAULAGE, See Tbanspobtation. HAY, classification of, 552. rates on, 934. HIDES, classification of, 931. rates on, 934. HOMINY, classification of, 585. rates on, 934. HOGS, Classification of, 931. rates on, 581. HOOPS, classification of, 931. rates on, 934. HOLDING CORPORATIONS, See Systems Opebated. HORSES, classification of, 931. rates on, 934. HONEY, classification of, 574. rates on, 934. [125G] Index. [eefebences are to sections.] HOUSEHOLD GOODS, classification of, 765. rates on, 934. HUB BLOCKS, classification of, 931. rates on, 575. I. ICE, classification of, 607, 665. rates on, 712, 934. ICING, See ExTBA Charges, Private Cab Lines. ILLEGALITY, See Excuses. ILLINOIS, statutes against extortion, 1105. prohibition of discrimination, 1138. undue preference forbidden, 1176. local discrimination inhibited, 1215. powers of railroad commission, 1256. IMPORT RATES, See Export Rates. INDIANA, prohibition of discrimination, 1139. undue preference forbidden, 1178. inhibition of local discrimination, 1216. powers of railroad comnussion, 1257. court review, 1285. INDUSTRIAL RAILWAY, discussion of industrial railways, 112. division of rate with industrial railway, 957. INSANE PERSONS, See Excuses. INTERCHANGE OF TRAFFIC, See Through Routing. INNKEEPERS, mediaeval innkeepers, 16, 20. innkeeper cannot refuse proper gue.^t, 102. duty of accepting owed only to travelers, 202. railroads favoring certain eating houses, 814. victualler, 16. INTEREST, interest upon outstanding bonds usualh' protected, 388, 411. interest on bonds considered as a fixed charge, 426. [1257] Kaileoad Rate Eegui.atiojs. [BBFEBENCES ABE TO SECTIONS.] INTEREST— Continued. more than current rates of interest not secured to bondholders, 391. usual and legal rate of interest in the locality, 391, 396, 434. four or four and one-half per cent., 348, 405. four and five per cent., 348, 394. six per cent., 394. See Bonds, Peecentage of Eetubn. INTERSTATE COMMERCE COMMISSION, provisions of statutes relating to, 1031-1032. nature of commission, 1033-1034. powers of commission, 1034. power to investigate and make orders, 1035-1037. report of commission, 1036. power over rates, 1038-1040. indication of basis for proper rate, 1040. decisions of commission as authorities, 337. attitude of the courts, 1039. See, also Constitutional Law, Peoceduee Befoee Commission. INTERSTATE COMMERCE, 1. Interstate transportation. what are states, 895. nature of interstate traffic, 896. termini within a single state, 897. breaking continuity of interstate shipment, 898. end of interstate transit, 899. 2. Division between interstate and state iusiness. alternative theories of apportionment, 463. constitutional requirement for division, 465. methods of division, 466. local freight and through freight, 466. INTOXICATED PERSONS. See Excuses. INVESTIGATION, See Peoceduee. IRRIGATION CANALS, applicants must be served, how, 46. business is public, 46. cost of system, 340-342. present value of works, 354-357. IRON, classification of, 931. rates on, 934. IOWA, statutes against extortion, 1106. \ prohibition of discrimination, 1140. [1258] Index. [reKEBENCES ABE TO SECTIONS.] IOWA— Continued. undue preference forbidden, 1179. prohibition of local discrimination, 1217. regulation by railroad commission, 1258. J. JURISDICTION, See Remedies. JUSTIFICATION FOR REFUSING SERVICE, justification for suspension of service, 2U1. whether press of business is an excuse, 262-265. whether interruption by strike is an excuse, 273-276. public duty may conflict with business policy, 291. no excuse that no proiit from running a train, 279. those who deal with a rival must be served, 292-294. passengers who come by rival lines must be taken, 293. freight must be taken from those who deal with a, rival, 294. rival must be served as one of the public, 292-294. protection of a collateral business is no justification, 301-307. rival may be refused use of facilities, 298-300. See Conditions Pbeoedent. Excuses, Press of Business, Withdbawal FBOM SEBVICE. K. KANSAS, statutes against extortion, 1107. prohibition of discrimination, 1141. undue preference forbidden, 1180. power of railroad commission, 1259. local discrimination, 1218. provision for court review, 1286. KENTUCKY, statutes against extortion, 1108. prohibition of discrimination, 1142. local discrimination forbidden, 1219. power of railroad commission, 1260. LATHS, classification of, 931. rates on, 575. LEAD, classification of, 594. rates on, 552. [1259] Kaileoad Rate E.EGULATioivr. [bepeeences are to sections.] LEASED LINES, position of leased railroads, 93. company which supplies a roadbed only, not a carrier, 901. when transportation is actually furnished by another, 901. rent of leased roads, 418, 453. rental must be fixed in good faith, 454. if rental becomes unjustifiable, 455. betterments of leased roads^ 456. See Common Caebiees, Cabbiage of Goods, Opeeatino Expenses, Sts- TEMS OpEBATBD AS UNITS. LEATHER, classification of, 931. rates on, 934. LEMONS, classification of, 601, 931. rates on, 573, 934. LENGTH OF CARRIAGE, See Teanspoetation. LIEN, lien for entire charge on every part, 691. where delivery is made of part of the goods only, 690. freight earned on a single shipment is an entirety, 691. stoppage in transitu, 691. effect of partial delivery, 690. no lien except for specific charge, 692. no general lien, 692. LIGHTERMAN, See Vessels. LIVE STOCK, classification of, 421, 539. rates on, 220, 934. LIQUORS, classification of, 593. rates on, 934. LOCAL DISCRIMINATION, See DiscEiMiNATiON Between LooalIties. LOG DRIVING CORPORATIONS, log driving a public service, when, 89. driving company not a common carrier, 89. LONG AND SHORT HAUL, long and short haul at common law, 851. 1. Extent of the rule. provisions of Interstate Commerce Act, 971. State statutes for long and short haul, 1201-1235. [1260] Index. [REFEBENCES ABE TO SECTIONS,! LONG AND SHORT HAUL— Continued. the long and short haul clauses discussed, 881. general principles governing the enforcement, 984. 2. Exceptions to the rule. limitations upon charging less for longer haul, 852. competition justifies reduction, 853, 985. competition as a factor, 854-861. potential competition, 857. competition artificially removed at the nearer point, 858. stifling of competition by consolidation, 860. carrier need not consider competition, 861. See Local Discbimination, Rates, TBANSPOBTi-TlON. LOUISIANA, statutes prohibiting discrimination, 1143. local discrimination forbidden, 1220. powers of Railroad Commission, 1261. statutory provision for court review, 1287. luMber, classification of, 326, 559, 575, 763, 931. rates on, 577, 589, 713, 934. M. MACHINERY, classification of, 763. rates on, 934. MAIL AGENT, See Passengees. MAINE, undue preferences forbidden, 1182. power of Railroad Commission, 1262. MAINTENANCE OF WAY, See CONSTEUCTION ACCOUNTB. MANDAMUS, See Remedies. MARBLE, classification of, 594. rates on 934. MASSACHUSETTS, prohibition of extortion, 1109. statutes against discrimination, 1144. undue preference forbidden, 1183. local discrimination forbidden, 1221. powers of Railroad Commission, OOOOn. [1261] Railroad Rate Regulation. [eEFERENOES ABE TO SECTIONS.] MEAL, classification of, 931. rates on, 934. MEATS, classification of, 539, 540. rates on, 934. MEDICINE, classification of, 574, 93L rates on, 593, 934. MELONS, classification of, 586. rates on, 934. MESSENGER COMPANIES, messengers are common carriers, when, 183. messenger boys held not common carriers, 183. MICHIGAN, statutes against discriminations, 1145. local discrimination forbidden, 1222. MILK, classification of, 574, 592. rates on, 424, 444, 635, 934. MILLING IN TRANSIT, See Transit Pbivilbqes. MINNESOTA, prohibition of extortion, 1110. rule as to valuation, 358. statutes against discrimination, 1146. undue preference forbidden, 1184. local discrimination forbidden, 1223. power of Railroad Commission, 1263. provision for court review, 1288. MISREPRESENTATION, See Fbaud. MISSISSIPPI, statutes against extortion, 1111. prohibition of discrimination, 1147. undue preference forbidden, 1185. local discrimination, 1224. powers of State Commission, 1264. court review, 1289. MISSOURI, statutes against extortion, 1112. prohibition of discrimination, 1148. undue preference forbidden, 1186. [1262] IlTOEX. [kbfekences ake to sections.] MISSOURI— Continued. local discrimination forbidden, 1225. power of Railroad Commission, 1265. court review, 1290. MOLASSES, classification of, 931. rates on, 934. N. l^EBRASKA, prohibition of discrimination, 1149. undue preference forbidden, 1187. local discrimination forbidden, 1226. power of Railroad Commission, 1266. NET EARNINGS, See Operating Expenses, Percentage of Return. NEW HAMPSHIRE, statutes against discrimination, 1150. undue preference forbidden, 1188. local discrimination forbidden, 1288. power of Railroad Commission, 1267. NEW JERSEY, prohibition of undue preference, 1190. local discrimination forbidden, 1129. NEW MEXICO, statute against discrimination, 1151. NEWSBOYS, See Passengers. NORTH CAROLINA, statute against extortion, 1113. prohibition of discrimination, 1152. local discrimination forbidden, 1230. powers of Railroad Commission, 1270. provision for court review, 1291. NORTH DAKOTA, statutes against extortion, 1114. prohibition of discrimination, 1153. local discrimination forbidden, 1231. power of Railroad Commission, 1269. provision for court review, 1292. OATS, classification of, 931. rates on, 934. [1263] E.AILEOAD Rate Regulation. [bEFERENCES ABE TO SECTIONS.] OBLIGATION OP CONTRACTS, See Constitutional Law. OHIO, prohibition of discrimination, 1154. undue preference forbidden, 1191. local discrimination forbidden, 1232. OIL, classification of, 574. rates on, 779, 785, 787, 934. OPERATING EXPENSES, cost of service must be earned, 411. necessary annual charges, 411. items in cost of performing service, 412. rate established by the Commission must be remunerative, 412. determination of net earnings, 413. expense of equipment and maintenance, 414. cost of rolling stock, 415. cost of materials, 415. cost of supplies, 416. salaries of officials, 417. estimating labor cost, 418. loans are not an annual charge, 419. taxes for the year are proper charges, 412, 420. losses by accident, 421. expenditures to get business, 422. advertising bills, 422. unreasonable expenditures, 423. unreasonable commissions, 424. improvident management, 424. See Constbuction Accounts, Depeeciation Requieements. ORANGES, classification of, 577. rates on, 573, 588. ORE, classification of, 594. rates on, 219, 763. OREGON, prohibition of discrimination, 1155. undue preference forbidden, 1192. P. PACKING-HOUSE PRODUCTS, classification of, 608, 931. rates on, 934. [1264] Index. [BEFESEN0E8 ARE TO SECTIONS.] PAPER, classification of, 931. rates on, 934. PARTIES, See Peocedube. PASSENGER ELEVATORS, elevators are not common carriers, 189. elevator operation requires high degree of care, 189. PASSENGERS, 1. Who are passengers. public duty was owed only to bona fide travellers, 202. establishment of relation of passenger and carrier 78. persons never accepted in a proper place not passengers, 154. carriage in a place not intended for passengers, 77. carriage on construction train, 75. carriage on freight cars, 76. riding on engine, 73. riding on hand car, 75. 2. Special classes of persons carried. public duty was owed only to bona fi,de travellers, 202. employes of the carrier, 153. express messengers, 152. mail clerks, 152. newsboySj 159, 204. person desmng to transact business, 204. persons making contracts for transporting baggage, 204. train boys, 204. servant, 150. slaves, 150. 3. Persons requiring incidental services. asking for a time-table, 206. coming to a station out of curiosity, 208. hackman who comes to a station to bring a passenger, 207. looking for freight, 206. mailing a letter, 206. person assisting or meeting passengers, 207. person helping to unload freight, 206. person desiring shelter merely, 203. rule for sleeping and parlor cars, 205. right involved is that of the passenger, 208. extent of carrier's duty to such persons, 209. 4. Invitation of the carrier's servant. guest of a servant of the carrier, 160. riding on engine by consent of engineer, 160. [1265] KAII.EOAD Kate Regulation. [BEFEEENCBS ARE TO SECTIONS.] PASSENGERS— Continued. riding free on freight train, 160. conductor induced to let person ride free on passenger train, 160. See ACCEPTANCE OF Passenqeks, Fares of Passengers, Tickets, Transportation. PASSES", public wrong in giving free passes, 729. outright discrimination between passengers, 729. statutory exceptions, 941-942, 959-902. giving frefe passes to various classes, 730. pass to milk contractor, 791. passes to officers and employees, 962. pass issued for business reasons, 143. pass issued to a drover, 143. pass for business of the road, 143. reporter's pass, 157. pass to ministers of religion, 961. limitation of liability in free pass, 149. PAVING BLOCKS, classification of, 931. rates on, 934. PEACHES, classification of, 571, 577. rates on, 587, 934. PENNSYLVANIA^ undue preference forbidden, 1193. local discrimination forbidden, 1233. PERCENTAGE OF RETURN, some return requisite, 383. adequate return ought to be left, 384. the rate return upon investments in general, 389. current rate of return is on securities of private companies, 390. prevailing rate of interest allovfed, 392. reasonable dividends allowed, 393. current rate of return, 393. rate of return dependent upon locality, 396. bad commercial conditions, 397. recoupment in prosperous times, 398. rate of return dependent upon the character of the enterprise, 401. prevailing rate of interest, 401. whether the return upon all property should be the same, 403. rate of interest dependent upon the safety of the investment, 404. general policy for allowing fair return, 406. economic considerations as to rate of return, 389. fair rate of return, 387. ' [1266] Ia'dex. [befekences aee to sections.] PERCENTAGE OF RETURN— Continued. lowest -current rate of interest, 383. five per cent., 392, 394. six per cent., 381, 394. seven per cent., 394. eight per cent., 381, 395. fifteen per cent., 402. reduction from eighteen to six per cent., 385. PERSONAL DISCRIMINATION, See DiscBiMiNATioN Between Peksons. PETROLEUM, classification of, 726, 931. rates on, 747, 934. PHOSPHATE ROCK, classification of, 931. rates on, 934. PINEAPPLES, classification of, 577, 601. rates on, 601, 934. PIPE LINES, pipe lines are in public employment, 43. pipe lines within Interstate Commerce Act, 891. PLANT, See Capitalization, Cost op Cowstbuction, RErEODcrcTiON of Plant, Valuation. PLEADINGS, PORTERS, See Pboceduee. See Passengebs. POSSESSION OF GOODS, See Bailment of Goods. POSTS, classification of, 931. rates on, 934. POTATOES, classification of, 573. rates on, 934. POULTRY, classification of, 931. rates on, 934. PRESS OF BUSINESS, lack of vehicles, 262. if adequate provision is made for usual business, 264. when expected business is not provided for, 265. sudden press of business, 263. [1267] Railroad Kate Regulation. [befeeences are to seciions.] PRESS OF BUSINESS— Continued. unexpected demand for carriage, 263. when usual business is provided for, 264. emergency must be met, 265. no part of the system should be given preference, 270. order of preference as between different classes of goods, 266. public necessities considered in determining preference, 267. live stock preferred to dead freight, 266. perishable goods go first, 266. supplies for the railroad, 267. no preference justifiable between goods of same nature, 268. reasonable facilities must be provided for each station, 269. distribution should be made among all shippers pro rata, 269. See t'ACiLiTiES. PRIVATE CAR LINES, abuses from private lines, 887. chartered accommodations, 94. express companies, 803-80S. live stock transportation companies, 808. sleeping ears, 813. refrigerator car lines, 95, 699, 921. PRODUCTION OF BOOKS, See Pbocedube. PROCEDURE BEFORE COMMISSION, provisions of statutes relating to, 1041-1042. proceedings on its own motion, 1043-1046. result of investigations, 1046. proceedings on complaint, 1047-1050. pleadings, 1050. proper parties, 1051-1061. complaint by associations, 1052-1053. complaint by State Commission, 1054. necessary parties defendant, 1057. joint parties, 1059. intervening parties, 1061. order of procedure, 1062-1064. default, 1062. stay of proceedings, 1063. continuance for settlement, 1064. evidence and burden of proof, 1065-1078. rules of evidence, 1067. privilege against self-crimination, 1068. production of books and pap'ers, 1069-1072. presumption, 1077. burden of proof, 1078. [1268] Index. [reieeenoes aee to sections.] PROCEDURE BEFORE COMMISSION— Continued. finding of the Commission, 1079-1088. reparation, 1080-1084. reopening, 1085-1088. PROFESSION TO SERVE PUBLIC, advertisement of a carrier, 101. by whom the profession must be made, 104. 1. Extent of the profession. carrier of goods, 128. carrier of live stocky 127. carrier of money, 126. carrier of newspapers, 130. carrier of passengers, 128. carrier of rolling stock, 129. 2. Nature of the employment. distinction between public branch and private spur, 114. employment in private business, 106. establishment of regular charges, 134. excursion train, 123. express and implied profession of public employment, 103, 104» industrial railways, 112. imlividual transactions, 118. intermittent employment, 115. lateral branches, 110. nature of public profession, 101 obligation to carry all goods of a class, 132. operation of branch trade, 106. permanent profession, 135. jjarticular description of goods, 125-132. private ferry, 107. private railroad, 108. private spur track, 109. professes to take goods of different sorts, 128. puuiic profession as an assumption of a public trust, 102. public spur tracks, 111. railroad not opened for passengers, 117. 3. Special arrangements, regular business, 132. ship chartered by the owner, 116. scheduled train, 124. special agreement, 133. special arrangements as to the carriage, 118, 120. circus train, 122. special train, 122. tap lines, 113. [1269] Kaii.eoad Rate Regulation. [REFEBBHCES ABE TO SECTIONS.] PROFESSION TO SERVE PUBLIC— Continued. uiidertaking to carry for any one, 105. y.'Lether the transaction is upon a public or private basis, 120. See, also. Goods Taken, Passenqebs Accepted. PROHIBITION LAWS, > See Excuses. PROVISIONS, classification of, 608. rates on, 934. PYROLIGINEOUS PRODUCTS, classification of, 577. rates on, 934. PUBLIC EMPLOYMENT, public callings and private callings, 2, 5, 11, 27, 32, 54, 66, 67. growth of the public service companies, 11, 16, 27, 31, 54, 66, 67. monopoly due to character of business, 23, 26, 31, 48, 56, 58, 61, 63. virtual monopoly the ground for regulating public callings, 5, 25, 28. 32, 47, 55, 63, 66. Associated Press, 30. bakehouse, 3. barber, 16. bridges, 17, 20, 27, 44, 47, 84, 402, 528. canals, 17, 19, 20, 178. cemeteries, 44. cold storage, 88. cotton press, 23. dining-cars, 205. drovers of cattle, 90. conduits, 27, 53. electric light plants, 27, 60, 428. electrical subvifays, 53. docks, 43, 65, 88, 105, 428, 828. gas works, 15, 21, 59, 60, 344, 345, 428. grain elevators, 28, 88, 306, 819. grist mills, 3, 47. innkeeper, 9, 10, 10, 20, 102, 202. irrigation systems, 27, 46. log drivers, 89. log slides, 87. natural gas, 58. parlor cars, 205. pipe lines, 27, 43. private cars, 806. refrigerator cars, 95. sewerage system, 27, 64. [1270] Indbx. [BETEBENCES ABE TO SECTIONS.] PUBLIC EMPLOYMENT— Continued. sleeping ears, 80, 95, 96, 205, 813. smith, 8, 10, 16. stockyards, 24, 27, 818. surgeon, 6, 16. tailor, 7, 16. telegraph lines, 20, 27, 43, 60, 62. telephone systems, 15, 27, 60, 63, 823. ticker service, 31. turnpikes, 17, 20, 43, 47, 84, 178. victualler, 9, 16, 20, 814, warehouses, 27, 29, 88, 178, 422, 428. waterways, 17, 19, 20. water works, 22, 27, 57, 60, 314, 340, 342, 354, 357, 365, 300, 367, 368, 370, 385, 387, 404, 527, 751. wharves, 43, 65, 88, 105, 428. See Common Cabriebs, Profession to Serve Public. PUBLIC PROFESSION, See Profession to Serve Public. PUBLIC SERVICE COMPANIES, See Common Cabbiees, Pbofession to Sebve Public, Public Employ- ments, Rate Regulation. B. RADIATORS, classification of, 931. rates on, 934. RAILROADS, the railroad problem, 33. public employment of the railroads, 41, 48, 55, 61. industrial railways, 112. private railroads, 108. leased railways, 93, 973. branch railways, 110. railroad system, 441. See, also, Acceptance or Passengers, Bailment of Goods, Constitu- tional Law, Discriminations, Goons Taken, Passengers Accepted, Profession to Sebve Public, Rates Established, Tbansportation Furnished. RAISINS, classification of, 931. rates on, 570. RATE OF RETURN, See Percentage of Return. [1271] Kailkoad Rate Regulation. [REFEEENCES ABE TO SECTIONS.] RATES FOR TRAKSPORTATION, general principles governing reasonableness of rates, 311, 471, 501, 913, 932. freight rates, instances, 934. 1. Fundamental limitations upon making rates. [See generally Chapters XVI-XX, and XXVIII.] company cannot make unreasonable rates, 504. reasonable rates not necessarily profitable, 505. cost of service as the basis of rate-making, 471, 507, 924, each item should bear proportionate share of the burden, 311, 474. length of haul as a factor affecting a particular rate, 176, 928. volume of traffic as a factor affecting the particular rate, 478, 927. value of the service as the basis of rate-making, 480, 925. making rates compared with levying taxes, 483. rates may be shoven to be unreasonable in themselves, 484, 919. equalization of advantage as a factor affecting the particular rate, 486. competition as a factor affecting the particular rate, 488. proportionate rates desirable, 489. classification the method of establishing the rate, 490. all factors enter into the determining of a particular rate, 491. 2. Basing rates upon cost of service. cost of carriage as a factor affecting particular rate, 474, 507, 924. lawof decreasing costs, 513. difficulties in dividing Joint costs, 508. rule of proportionality in sharing costs, 512. special expenditures in moving goods, 511. special service required, 920. peculiar expense of the particular service, 456. divisions built through a difficult territory, 458, 920. divisions in sparsely copulated territory, 459, 920. local shipments, 460, 929. 3. Rates reasonable in themselves. external standards of reasonableness, 515. the carrier is entitled to reasonable compensation, 516. customary rate presumably reasonable, 917. current rates for other transportation, 517. comparison with other rates, 919. evidence inadmissible unless conditions are similar, 518. comparison of rates between different localities, 519. principle applicable to passenger fares, 522. 4. Rates distated ly competition. rates may be made to meet competition, 530, [1272] Index. [BEFEEENCES ABE TO SECTIONS.] RATES FOR TRANSPORTATION— Continued. policy for permitting competitive rates, 531. rates must not be reduced below a remunerative basis, 533. standard rate among competing lines, 534. absence of competition does not justify increase in rates, 536. non-competitive rate must not be extortionate, 855. competition justifies reduction of rate for longer haul, 853, 986. 5. Rates designed to equalise advantages. equalization of commercial advantages, 843, 977. carriers not obliged to equalize disadvantages, 487. limited operation of the principle of equalization, 538. justification for equalizing rates, 844. relative rates adjusted from a commercial standpoint, 539. business situation considered, 540. discrimination against a staple industry. rates should not equalize differences in value, 541. 6. Nature of a rate. definition of a rate, 661. a rate as an entirety, 661. characteristics of the rate as a regulation, 662. methods of charging in rate-making, 667. a minimum rate is justifiable, 668. See Reasonableness of Rates, Teansportation, Fares foe Passengers, Freights. REASONABLENESS OF RATES, general principles governing reasonableness of rates, 311. 1. Schedule of rales as a whole. [See generally Chapters XI-XV and XXVIII.] reasonableness of the schedule as a whole, 312. elements considered in establishing general traffic, 913. tests of the reasonableness of a schedule, 313. bearing of tariff as a whole on reasonable rates, 914. fair return upon the value of the property, 313. elements are all taken into consideration, 314. virtual confiscation if rates fixed below a remunerative basis, 315. possibility of increase of business if rates are lowered, 324. interests of the public to be considered, 316. reasonableness or unreasonableness of rates, 318. 2. The particular rates considered separately. [See generally Chapters XVI-XX and XXVIII.] reasonableness of the separate rates, 319. value of the service to the person served, 320. relation of a particular rate to a whole schedule, 323. inherent difficulties in accommodating all tests, 325. See Capitalization, Percentage of Returns, Rate.s, Transportation. [1273] Baii^eoad E.ATE Regulation. [references are to sections.] REMEDIES IN JUDICIAL COURTS. provisions of federal statute, 1091-1092. jurisdiction, 1093. remedy in equity, 1094. mandamus, 1095. action for damages, 1096. criminal prosecution, 1097. procedure under Elkins Act, 1098. enforcement of order of Commission, 1099. RE-OPENING, See Procedure. REPARATION, See Procedure. REPRODUCTION OF PLANT, structural value, 331. cost of reproducing railway property, 333. decline in cost of materials, 358. the cost of constructing to-day, 359. cost of reproduction does not give the value of the property, 368. value something in excess of the cost of reproduction, 370. See Bonds, Capitalization, Cost of Construction, Earning Capacity, Stocks, Valuation. RHODE ISLAND, undue preference forbidden, 1194. ROPE, classification of, 931. rates on, 934. ROSIN, classification of, 577. rates on, 934. S. SAI,T, classification of, 559, 5T8, 931. ^ rates on, 552, 934. SAND, classification of, 763. rates on, 934. SCHEDULE OF RATES, provisions of federal statute, 1011. interpretation of classification sheet, 561.' what rates must be published, 1013-1014. posting schedules, 1016-1017. variation from schedule forbidden, 1018-1019. classification sheet not varied by contract or representation, 660, 1029. filing of schedules and agreements, 1021-1022. [1274] Index. [EEFEBENCES ABE TO SECTIONS.] SCHEDULE OF RATES— Continued. joint tariffs and schedules, 1023-1026. form of schedules, 1027-1028. See Classification. SERVANTS, SHINGLES, classification of, 575. rates on, 934. SHIPS, SICK PERSONS, See Employees. See Vessels. See Excuses. SILK, classification of, 540. rates on, 934. SINKING FUND, bonds should be refunded, not sunk, 434. sinking fund to pay off bonded indebtedness, 434. sinking fund for municipal bonds permissible, 435. amortization of franchises may be provided against, 436. SKINS, classification of, 931. rates on, 934. SLEEPING CAR COMPANY, sleeping car company is not a carrier of passengers strictly, 96. sleeping car company subject to Interstate Commerce Act, 891, 892, 901. applicants must be accepted when, 205. railroads discriminating between sleeping car lines, 813. theft from sleeping passengers, 80. SOAP, classification of, 571, 573, 931. rates on, 652, 563. SOUTH CAROLINA, prohibition of extortion, 1115. statutes against discrimination, 1157. undue preference forbidden, 1195. local discrimination forbidden, 1234. powers of Railroad Commission, 1270. SOUTH DAKOTA, statutes against discrimination, 1158. undue preference forbidden, 1196. local discrimination forbidden, 1235. powers of Railroad Commission, 1203. [1275] E.AILEOAD Ra'TE REGULATION. [BEFEEENCES ABE TO SECTIONS.] STAGE COACH, stage coach a common carrier, 186. discrimination of stage coaches, 293. coaches carrying goods, 186. omnibus line, 180. STATIONS, terminal services, 700-754. tender for carriage must be at the proper place, 221. service ordinarily only at a regular depot, 221. establishment of stations by legislation, 224. the establishment of stations must be reasonable, 223. stations at places where the public need requires them, 224. requirement of stations by the courts; conservative view, 225. progressive view of the question of stations, 226. not obliged to serve at a point off his line, 222. whether there may be carriers between certain stations only, 227. regular freight stations, 218. station side tracks, 218. See Switching, Teeminals. STAY OF PROCEEDINGS, See Pboceduee. STEAMBOATS, steamboats are common carriers, 181. steamship transportation subject to Interstate Commerce Act, 891. steamship lines owned by railroad, 452. wharves for connecting steamboats, 820, 821. STOCK, classiiicatioji of, 931. rates on, 605, 934. STOCK ISSUES, amount and market value of stock considered, 337, 340, 347, 352. fictitious stock which represents no value added to the property, 338, 346, 348, 361, 371. STOCKYARDS, duty of owners of stockyards to public, 24. preferences held permissible, 946. railroads making special arrangements with stockyards, 818. stockyards companies as terminal railways, 701. STORAGE, See Extba Chabges. STREET RAILWAYS, street railways are common carriers, 188. street railways subject to Interstate Commerce Act, 901. depreciation of street railway plants, 350. [127G] Index. [refebences aee to sections.] STKEET RAILWAYS— Continued. earnings of street railways, 339. horse railroad, 113. how fare must be tendered, 210-214. valuation of street railway plant, 350. STRIKE INTERRUPTING SERVICE, refusal to receive because of strike is not justifiable, 273. deficient service not excused by strike, 274. refusal to receive because of the violence of the strikers, 275. where strike amounts to insurrection, 275. excused in case of violent strikes, 275. how for employees of carrier are bound not to strike, 276. scab workmen must be protected, 246. SUGAR, classification of, 754. rates on, 934. SUNDAY LAWS, See Excuses. SURGICAL CHAIRS, classification of, 931. rates on, 934. SUSPENSION OF SERVICE, right to suspend service, 261. freight embargo, 262-265. in case of a strike, 273-276. giving up business over a' part of its route, 277, 280. retiring from the business altogether, 282-283. order of preference in carriage, 266-272. SWITCHING CONNECTIONS, provision in Interstate Commerce Act, 887, 911. switching privileges discussed, 936. switches for stockyards, 220, 818. special freight may require siding, 218. SYSTEMS OPERATED AS UNITS, whole systems should be taken together, 441-446, 447-450. methods of consolidation, 442. leased lines, 452-460. holding corporations, 447-452. divisions as integral parts of the whole system, 443. branch lines, 444. unprofitable portions of the line, 445. when constituent roads are operated under separate charters, 450. [1277] Kaii.road Eate Regtti^ation. [BEFEBENCES ABE TO SECTIONS.] T. TAXES, current taxes are annual charges, 310, 420. overdue taxes for past year, 420. franchise tax, 420. tax upon tangible property, 412, 420. TELEGRAPH POLES, classification of, 931. rates on, 934. TELEGRAPH SERVICE, all must be served, 62. introduction of the telegraph, 20. press associations, 30. reduction in rates to large customers, 751. telegraph companies cannot limit liability, 62. telegraphs as public services, 43. ticket service, 31. TELEPHONE SERVICE, all must be served, 63. duplication of plant unwise, 63. exclusive franchise for telephone service, 15, 27. telephone business is a public service, 27, 63. TENDER OF FARE OR FREIGHT, fare or freight may be required in advance, 210. what is sufficient tender of fare or freight, 211. tender of fare usually waived by the carrier, 214. payment should be made at once upon demand, 672. legal tender of the exact amount due, 211. tender less than the amount, 672. tender of a proper amount, 213. what denomination of money may be tendered, 212. tender of money refused as counterfeit^ 213. part of journey completed before collection of fare, 676. resumption of journey by rejected passenger, 677. TENNESSEE, statutes against extortion, 1116. prohibition of discrimination, 1159. local discrimination, 1236. powers of Commission, 1271. TERMINAL CHARGES, See Extra Chabges. TEXAS, statutes against extortion, 1117. prohibition of discrimination, 1160. [1278] Index. [eefebences are to sections., TEXAS— Continued. local discrimination forbidden, 1237. power of Commission, 1272. provision for court review, 1294. THROUGH ROUTING, goods requiring further transportation, 826. through traffic agreements, 829, 995. common arrangement, 900. through billing is enough, 903. carrier taking part in through carriage, 903. transportation in the same cars, 827, 994. such transportation held obligatory, 828. discrimination between connecting carriers, 825. through arrangements compelled, 830, 991. See Teanspobtation. TICKETS, ticket entitles passenger to carriage for a single journey, 673. stop-over only by the express permission, 674. excess fare, if no ticket, 679. commutation tickets, 529, 933, 963. drover's ticket, 158. excursion tickets, 537, 963. limited ticket, 151. mileage tickets, 754«, 933, 963. pass-ticket, 157. non-transferable ticket, 157, 158. party rate tickets, 755, 963. season ticket, 681. riding by mistake with wrong ticket, 151. intending to use a ticket wrongfully, 156. TIES, classification of, 931. rates on, 428. TIN, classification of, 594. rates on, 934. TOBACCO, classification of, 931. rates on, 934. TOLL-BRIDGES, See Bbidoes. TOMATOES, classification of, 601. rates on, 934. [1279] Railroad Eatb Regulation. [BEFBBENCES ABE TO SECTIONS.] TON MILE, basis of proportionate rate the ton mile costj 473. standard of comparison the ton mile, 473, 621. rate per ton mile is constantly growing less, 477, 622. mileage rates impractical, 623. See Rates, Tkanspoetation. TOWBOATS, when towboat is a carrier, 184. when towboat is not a carrier, 184. TRAINS, carrying passengers in freight cars, 76. cattle trains, 127. circus train, 122. construction trains, '75, 104. cost of handling trains, 511. employee's excursion train, 73. establishment of train on guaranty of an individual, 124. excursion train, 123. private excursion trains, 123. regular passenger train, 121. scheduled trains, 124. special freight trains, 122. special passenger trains, 121. trafBc handled on special trains, 587. train load rates discussed, 603, 780. See, also, Cost of Sbbvice, Goods Taken, Passbngebs Accepted, Pbo- FESSION TO Serve Public. TRANSFER COMPANIES, transfer companies are common carriers, 180. railroads discriminating between baggage transfer lines, 815. TRANSIT PRIVILEGES, reconsigned articles, 643-646. cleaning in transit, 643, 979. bagging in transit, 643, 979. compressing in transit, 643, 979, milling in transit, 643, 979. when transit is broken, 643, 979. rebate on reshipment, 645. certain objections to tne practice, 644, 976. through arrangement necessary to justify, 646. See Thbouqh Rodting, Tbanspoetation. TRANSPORTATION, 1. General principles as to mileage. [See, generally, Chapter XIX.] general standard of comparison the ton mile, 473, 621. [1280] IjS^EEX. [BEFEBENCES ABE TO SECTIONS,] TRANSPORTATION— Continued. distance is a controlling element, 621. mileage rate tends to decrease inversely with the distance, 477, 622. equal mileage rates impracticable, 623. rates are in rough proportion to distance normally, 624. passenger rates generally on a mileage basis, 632. 2. Factors modifying mileage basis. difficult charatcter of the country, 477, 625, 837, 974. competition as justifying lower rate for longer haul, 626, 7-59, 985. creation of a market by preferential rates, 630, 894, 977. low back freights justifiable back, 629. 3. Distance rates. various systems of making distance rates, 850. local rates and through rates, 622, 976, 842. the system of grouping, 490, 633, 975. grouping by reason of competition, 634. basing points established, 637, 850, 974. when uniform rate to a group of stations is justifiable, 636, 974. 4. Through rates. comparison of through rates and local rates, 627. through rate less than the sum of the separate rates, 630. carriers may combine in a joint rate, 639, 1001. the entire rate must be reasonable, 640. share of separate carrier as evidence of unfairness of entire rate, 641. through rate need not be a reduced rate, 642. joint through rate not compelled, 639, 999. See DiscEiMiNATioN Between Localities, Thbough Routing. TRUCKMEN, public employment, 173, 179. public profession, 118, 119. discrimination between draymen, 822. carters, 31. draymen, 179. truckman, 119. wagoners, 118. TUG, See TowBOAT. TURNPIKES, turnpikes are public, 20, 43. turnpike not a common carrier, 84. introduction of improved highways, 17. original railways regarded as turnpikes, 178. [1281] Eailkoad "Rate Eegulation. [BEFEBHNCES ABE TO SBCTIONS.] U. UNDERTAKING TO SERVE, See Pkofession to Sebve. UNDUE PREFERENCE, See DiSOEIMINATIONS. UNREASONABLE RATES, See Rates. UTAH, prohibition of discrimination, 1161. V. VALUATION, fair value, 331. excessive valuation, 346. present value of the property, 350. fair value, 352. reasonable value, 352. real value of the property, 352. investment far in excess of the actual value of the property, 353. valuation for taxation, 356. actual valuation, 356. eriterions of present value, 357. future values, 360. substantial values, 361. " original cost " and " present value " are not equivalent terms, 368. market value of the property, 369. value as a going concern, 369. See Bonds, Capital'zation, Cost of Constbuction, Earning Capacity, Franchises, Repboduction of Plant,, Stocks. VEGETABLES, classification of, 571, 601. rates on, 934. VERMONT, statutes against extortion, 1118. undue preference forbidden, 1199. local discrimination forbidden, 1238. VESSELS, shipmasters are common carriers, when, 116. canal boats, 176. ferries, 43, 185. lighterman, 82, 105, 174. ship, 88, 175. skiffs, 174. [1282] Index. [BEFEBENCES ABE TO SECTIONS.] VIRGINIA, statutes against discrimination, 11G2. undue preference forbidden, 1200. local discrimination forbidden, 1239. powers of Railroad Commission, 1273. WAGONERS, See Teuckmen. WAGONS, classification of, 931. rates on, 934. WAREHOUSEMEN, bonded warehouses, 49. charges made by warehousemen, 428. cold storage proprietors, 88. grain elevators, 28, 88, 819. proper expenditures by warehousemen, 422. public duty of warehousemen, 29. tobacco warehouses, 422. storage hulks not carriers, 88. warehousemen not common carriers, 88. See Public Employments, Stoeage. WASHINGTON, powers of Railroad Commission, 1275. provision for court review, 1296. WASHING POWDERS, classification of, 573. rates on, 934. WATER SUPPLY, applicants must be served, 57. annual charges of a water company, 385. business is a public employment, 22, 27, 57. cost of water works. 340-342. depreciation of plant of water company, 387. present value of water works, 354-357. rate of dividends for m water company, 404. reduction to large takers, 751. tests of reasonableness of water rents, 314. value of franchise of water company, 365-370. water system to be taken as a whole, 527. WEST VIRGINIA, statutes against extortion, local discrimination forbidden, 1240. [1283] Eaii^eoad Rate Regulation. [befbkences are to sections.] WHARVES, wharves are public, 65, 105. wharfingers not common carriers, 88. access to connecting steamboats, 820, 821. wharves constructed by railways, 428. wharf situated upon navigable water, 65. WHEAT, classification of, 570. rates on, 934. See Gbain. WINDOW SHADE, classification of, 576. rates on, 580. WINE, classification of, 931. rates on, 934. WIRE FENCE, classification of, 931. rates on, 934. WISCONSIN, statutes against extortion, 1120. discrimination forbidden, 1163. undue preference forbidden, 1201. local discrimination forbidden, 1241. powers of Railroad Commission, 1274. provision for court review, 1297. WITHDRAWAL FROM CARRIAGE, whether there is an obligation to operate whole system, 277. obligation to serve according to charter provision, 278. forfeiture of its charter may be incurred, 278. service must be continued according to charter provision, 279. mandamus to compel operation of abandoned portion of a railroad system, 279. where no mandatory charter provision, "280. partial withdrawal permitted where no charter provision, 281. public service m'ay retire from any separable part of the business, -281. whether permanent withdrawal is allowed, 282, 283. WOODENWARE, classification of, 931. rates on, 934. WOOL, classification of, 931. rates on, 934. [1284] Index, [retbbences are to sections.] WINDOW FRAMES, classification of, 568. rates on, 934. ZINC SHEETS, classification of, 931. rates on, 934. [1285] :ymi 1