Hate OJoUcgc of Agriculture Stijutu, 5J- 1- aitbratg Cornell University Library HE 2710.F82 A selection of cases under the Interstat 3 1924 013 953 660 Ml Cornell University Library The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924013953660 A SELECTION OF CASES UNDER THE Interstate Commerce Act EDITED BY ' FELIX FRANKFURTER BYRNE PROFESSOR OP ADMINISTRATIVE LAW IN HARVARD UNIVERSITY In the law we only occasionally can reach an absolutely final and quantitative determination, because the worth of the competing social ends which respectively solicit a judgment for the plaintiff or the defendant cannot be reduced to mmiber and accurately fixed. The worth, that is, the intensity of the competing desires, varies with the various ideals of the time, and, if the desires were constant, we could not get beyond a relative decision that one was greater and one was less. But it is of the essence of improvement that we should be as accurate as we can. Mb. Justice Holmes. Second Edition CAMBRIDGE HARVARD UNIVERSITY PRESS 1922 Copyright, 1922 By Felix Feankfueter THE PLIMPTON PRESS NORWOOD • MASS - U • S • A NOTE TO SECOND EDITION According to authoritative estimates the volume of interstate traffic in the United States is about three-fourths of the whole. This means that three-quarters of the country's transportation business, — not to mention other vast interstate utilities, such as the telegraph, the express service, the pipe lines, — are subject to the control of governmental regulation. Ample a priori justifica- tion would thus exist for systematic study, according to proved methods of legal education, of that body of law through which this governmental control is exercised. Such justification has been confirmed by eight years of experience, at the Harvard Law School and elsewhere throughout the country, in including in their curricula the body of law consisting of the successive Inter- state Commerce Acts and their interpretative enforcement by the Interstate Commerce Commission and Courts, to which the Railroad Labor Board has now been added. Many modifications and additions to this body of law — adjudications involving old legislation, and new legislation which extends the scope as well as the details of Federal regulation — have called for this revision of the original selection of cases. The new edition follows the original outline because the basic elements of the body of law under consideration, as seen in 1914, have not been fundamentally altered in the interval. The suc- cessive Acts regulating Interstate Commerce have for a period of thirty-five years — barring the brief intermission of Federal Rail- road Administration, born of the War and only shortly surviving it — followed a coherent and progressive evolution. With all its changes and extensions, the Transportation Act of 1920 is only the last in a series of consistently developing statutes. The major lines of chief concern to lawyers — the jurisdiction and procedure of the Interstate Commerce Commission, the legal re- lation between Conomission and Courts — are substantially main- tained. Some of the chief issues raised by the new Act have already received judicial settlement. Questions still open, or that will be opened froni time to time, will, it may be confidently IV NOTE TO SECOND EDITION suggested, find their answers through, and as a part of, a coherent body of living law. I am greatly obliged to Professor Homer B. Vanderblue of the School of Commerce, Northwestern University, for generous help in suggesting rate cases before the Interstate Commerce Com- mission (Chap. Ill, infra) found especially useful by him. It needs hardly to be added that in the use of this collection of cases an indispensable complement is the compilation of the Interstate Commerce Acts, published by the Government. F. F. Hakvaed Law School, September, 1922. NOTE TO FIRST EDITION The original Interstate Commerce Act has now been on the statute books for twenty-eight years. Since then, by successive amendments, the scope of the Act has-been greatly extended, both as to the kinds of the utilities affected and as to the extent of the regulation of their 'business. As a result, the vast and increasing volume of utility enterprise which transcends the confines of a single state, (and even intrastate business which is inseparably connected with or affects interstate commerce), is now governed by a single act and is primarily enforced by a single tribunal. The real scope and meaning of the Act must be sought in a mass of decisions through which there is gradually emerging a body of principles. The intrinsic importance of the subject, the part it plays, and. the greater part it is likely to play, in the work of the modern lawyer, calls for the training of men equipped to partici- pate in its enforcement as lawyers, administrators, and judges. In other words, the subject calls for organized, systematic study as one of the most vital branches of the law. Such study is the more imperative now that the Interstate Commerce Act and the experience of its enforcement have, mutatis mutandis, served as the basis for the far-reaching regulation of interstate indus- trial business embodied in the Federal Tr.ade Commission Act of September 26, 1914, as well as for the regulation of state utilities, through the more recent state utility commission statutes. The present selection of cases has been prepared for use in the Harvard Law School. The generous co-operation of Mr. Max Lowenthal of the New York Bar has made this collection possible at this time. • F. F. Cambridge, January, 1915 TABLE OF CONTENTS CHAPTER • PAGE I. Scope of Commerce Regulated by the Act 1 1. Kinds of Carriers 1 2. Kinds of Commerce . .... .... 23 3. "Railroad" and "Transportation" . 160 II. Duties op Carhier Under the Act 212 1. Services to be Rendered . . . 212 2. Equality of Service 269 3. Maintenance of Competition .... . . . 322 III. Functions op the Interstate Commerce Commission in the Enporcbmbnt op the Act .... 340 1. Constitutionality 340 2. Powers and Duties . . . 344 IV. Function op Courts in the Enforcement op the Act . . . 635 1. Primary Jurisdiction of the Commission . . ... 635 2. Judicial Review . 660 3. Proceedings for Enforcement . 723 Appendix . 761 LIST OF CASES Arlington Heights Fruit Ex- page change ». Southern Pacific •V Co. (22 1. C. C. 149, 1911) . . 430 Armour Packing Co. v. United States (209 U. S. 56, 1908) . . 101 Atchison, Topeka & Santa Fe Ry. Co. V. United States (232 U. S. 199, 1914) 181 Atchison, Topeka & Santa Fe Railway Co. v. Harold (241 U. S. 371, 1916) 34 Bluefield Shippers Association V. N. & W. Ry. Co. (22 I. C. C. 619, 1912) 441 Brotherhood of Locomotive Engineers et al. v. Eastern Railroad & Power Co. et al. (Decision No. 33, 1 Dec. U. S. R. R. Labor Board, 53, 1920) 6 Burnham, Hanna, Munger Drygoods Co. v. Chicago, Rock Island & Pacific Co. (14 I. C. C. 299, 1908) 372 Chicago Junction Ry. Co. v. United States (226 U. S. 286, 1912) 113 Chicago, Milwaukee & St. Paul R. R. Co. V. McCaU-Dins- more Co. (253 U. S. 97, 1920) 661 Class and Commodity Rates to Salt Lake City (32 1. C. C. ~ 551, 1915) 388 Consolidated Classification Cases (54 I. C. C. 1, 1919) . . 344 Crane Iron Works v. United States (Interstate Commerce Commission et al. Inter- veners) (209 Fed. Rep. 238, 1912) 134 Cudahy Packing Co. v. Grand Trunk Western Ry. Co. (215 Fed. Rep. 93, 1914) 315 Cudahy Packing Co. v. United States (209 U. S. 56, 1908) . . 101 Director General of Railroads page et al. V. The Viscose Co. (254 U. S. 498, 1921) 656 Ellis V. Interstate Commerce Commission (237 U. S. 434, 1915) 738 Erie Ry. Co. v. Shuart et al. (250 U. S. 465, 1919) 167 Florida East Coast Ry. Co. v. United States (234 U. S. 267, 1914) 681 Galveston, Harrisburg & San Antonio Ry. Co. v. Wood- bury et al. (254 U. S. 357, 1920) 104 Georgia, Florida & Alabama Ry. Co. V. Blish MilUng Co. (241 U. S. 190, 1916) 225 Great Northern Ry. Co. v. Mer- chants Elevator Co. (259 U. S., 1922) 783 Houston, East and West Texas Railway Co. v. United States (234 U. S. 342, 1914) 69 Illinois Central Ry. Co. v. Rail- road Commission of Louisi- ana (236 U. S. 157, 1915) ... 160 Illinois Central Ry. Co. v. State Public Utilities Commission of lUinois et al. (245 U. S. 493, 1918) 81 Increased Rates (58 I. C. C. 220, 1920) 515 In re Investigation of Advances in Rates, etc. (20 I. C. C. 307, 1911) 470 Intermountain Rate Cases (234 U. S. 476, 1914) 576 Interstate Commerce Commis- sion V. Baird (194 U. S. 25, 1904) 723 X LIST OF CASES Interstate Commerce Commis- page sion V. Louisville & Nashville Ry. Co. (227 U. S. 88, 1913) . 663 Interstate Commerce Commis- sion V. Illinois Central Ry. Co. (215 U. S. 452, 1910) . . 660 Interstate Commerce Commis- sion V. Brimson (154 U. S. 447, 1894) 340 Interstate Commerce Commis- sion V. Baltimore & Ohio Ry. Co. (145 U. S. 263, 1892) ... 297 Interstate Commerce Commis- sion V. Chesapeake & Ohio Ry. Co. (200 U. S. 361, 1906) 280 Interstate Commerce Commis- sion V. Alabama Midland Ry. Co. (168 U. S. 144, 1897) 264 Interstate Commerce Commis- sion V. Illinois Central Ry. Co. (215 U. S. 452, 1910) ... 189 Interstate Commerce Commis- sion V. Diffenbaugh (222 U. S. 42, 1911) 173 Interstate Commerce Commis- sion V. U. S. of America ex rel. Humboldt Steamship Co. (224 U. S. 474, 1912) 106 Interstate Commerce Commis- sion V. Goodrich Transit Co. (224 U. S. 194, 1912) 90 Knapp V. Lake Shore & Michi- gan Southern Ry. Co. (197 U. S. 536, 1905) 729 Lehigh Coal & Navigation Co. V. United States (250 U. S. 566, 1919) 753 Lehigh Valley Ry. Co. v. United States (213 U. S. 444, 1917) . 179 Louisville & Nashville Ry. Co. V. Ohio Vallev Tie Co. (242 U. S. 288, 1915) 741 Louisiana and Pine Bluff Ry. Co. V. United States (257 U. S., 1921) 707 Louisville & Nashville Ry. Co. et al. V. United States et al. (242 U. S. 60, 1916) 212 Morris & Co. v. United States (209 U. S. 56, 1908) 101 Murfree,sboro Board of Trade v. Louisville & Nashville Ry. Co. (55 1. C. C. 648, 1919) . . 461 New York Central & Hudson page River Ry. Co. v. Board of Chosen Freeholders of the County of Hudson (227 U. S. 248, 1913) 204 New York, New Haven and Hartford Ry. Co. ». Inter- state Commerce Commission (200 U. S. 361, 1906) 280 North Iowa Traffic Association V. Director General (58 1.C.C. 491, 1920) 363 Norfolk and Western Ry. Co. V. Dixie Tobacco Co. (228 U. S. 593, 1913) 223 Northern Pacific Ry. Co. v. Solum (247 U. S. 477, 1918) . 248 Omaha & Council Bhiffs Street Railway v. Interstate Com- merce Commission (230 U. S. 324, 1913) 1 Pennsylvania Railroad Co. v. Clark Brothers Coal Mining Co. (238 U. S. 456, 1915) ... 23 Pennsylvania Ry. Co. v. Stein- man Coal Mining Co. (242 U. S. 298, 1916) 653 Pennsylvania Ry. Co. v. Son- man Shaft Coal Co. (242 U. S. 120, 1916) 648 Proctor & Gamble Co. v. U. S. of America, Interstate Com- merce Commission, Cincin- nati, Hamilton & Dayton Ry. Co. et al. (255 U. S. 282, 1912 709 Pere Marquette Ry. Co. v. J. F. French & Co. (254 U. S. 538, 1921) 252 Pittsburgh, Cincinnati, Chicago & St. Louis Ry. Co. v. Fink (250 U. S. 577, 1919) 306 Railroad Commission of Ne- vada 0. Southern Pacific Co. (19 I. C. C. 238, 1910) 409 Railroad Commission of Wis- consin et al. V. Chicago Bur- lington & Quincy Ry. Co. (257 U. S., 1922) 761 Seaboard Air Line Ry. Co. et al. V. United States et al. (254 U. S. 57, 1920) 703 LIST OF CASES XI Seaboard Air Line Ry. Co. page et al. V. United States et al. (254 U. S., 57, 1920) 271 Shanks v. Delaware, Lacka- wanna and Western Railroad Co. (239 U. S. 556, 1916) . . 31 South Bend Chamber of Com- merce V. Director General (57 I. C. G. 215, 1920) 356 Southern Pacific Terminal Co. V. Interstate Commerce Com- mission and Young (219 U. S. 498, 1911) 141 Southern Pacific Co. v. Inter- state Commerce Commission (200 U. S. 536, 1906) 242 Southern Pacific Co. v. Inter- state Commerce Commission (200 U. S. 536, 1906) 322 Southern Pacific Co. et al. v. Darnell-Taenzer Lumber Co. et al. (245 U. S. 531, 1918) . . 744 Spiller V. Atchison, Topeka & Santa Fe Rv. Co. et al. (253 U. S. 117, 1920) 671 State of New York and Charles D. Newton, personally and as Attorney General of the State of New York, Appellants v. The U. S. and Edgar E. Clark, et al. (25 U. S., 1922) . 773 Swift & Co. V. Hocking Valley Rv. Co. (243 U. S. 281, 1917) 198 Swift & Co. V. United States (209 U. S. 56, 1908) 101 Tap Line Cases (234 U. S., 1914) 122 Texas & Pacific Rv. Co. v. Abilene Cotton Oil Co. (204 U. S. 426, 1907) 635 Texas and Pacific Ry. Co. v. United States (234 U. S. 343, 1914) 69 Texas Common Point Case (26 I. C. C. 528, 1913) 397 The Los Angeles Switching Case (234 U. S. 294, 1914) 693 The Central Rd. Co. of New Jersey et al. v. The United States et al. (257 U. S., 1921) 275 The Fifteen per cent Case (45 1. C, C. 303, 1917) 485 The Minnesota Rate Cases (230 U. S. 352, 1913) 39 The Pipe Line Cases (234 U. S. page 548, 1914) 18 The State of Texas, Appellant, V. Eastern Texas Ry. Co., et al. The State of Texas et al., Appellants v. The United States (258 U. S., 1922) 777 The Vicksburg, Shreveport & Pacific Ry. Co. et al. v. Ander- son-Tully Co. (256 U. S. 408, 1921) 746 United States v. Adams Express Co. (229 U. S. 381, 1913) ... 139 United States of America, upon the Application of the At- torney General v. Union Stockvard Co. of Chicago (226 is. S. 286, 1912) 295 United States v. Brookljm Eastern District Terminal (249 U. S. 296, 1919) 153 United States v. Delaware, Lackawanna & Western Ry. Co. (238 U. S. 516, 1915) ... 326 United States v. Erie Ry. Co. (236 U. S. 259, 1915) 318 United States v. Northern Pacific Ry. Co. (242 U. S. 190, 1916) 750 United States at the Relation of Kansas City Southern Ry. Co. V. Interstate Commerce Commission (252 U. S. 178, 1920) 732 U. S. of America v. Union Stock Yard & Transit Co. of Chicago (226 U. S. 286, 1912) 113 United States v. White Star Line (224 U. S. 194, 1912). . 90 Vandalia Ry. Co. v. United States (226 Fed. 713, 1915) . 309 Wells Fargo & Co. v. Taylor (254 U. S. 175, 1920) 13 Western Transit Co. v. A. C. Leslie & Co., Limited (242 U. S. 448, 1917) 230 Western Transit Co. v. Leslie Co, (242 U. S. 448, 1917) ... 163 Western Union Tel. Co., Peti- tioner, V. Esteve Brothers & Co. (256 U. S., 1921) 234 Xll LIST OF CASES Whitaker-Glessner Co. v. Balti- page more & Ohio R. R. Co. (63 1. C. C. 47, 1921) 562 White V. United States (167 U. S. 512, 1897) 259 William Wylie Beall v. Wheel- ing Traction Co. (63 1. C. C. page 220, 1921) 557 Young V. Interstate Commerce Commission et al. (219 U. S. 498, 1911) 141 A SELECTIOI^ OF CASES UNDER THE INTERSTATE COMMEECE ACT The Congress shall have Power .... [3] To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes; .... — And [18] To make all Laws which shall be necessary and proper for carrying into execution the foregoing Powers ARTICLE I, Section 8, of the Constitution of the United States. CHAPTER I SCOPE OF THE COMMERCE REGULATED BY THE ACT 1. Kinds op "Cakribrs" OMAHA & COUNCIL BLUFFS STREET RAILWAY v. INTERSTATE COMMERCE COMMISSION 230 U. S. 324 (1913) Mr. Justice Lamar delivered the opinion of the court. The Omaha & Council Bluffs Railway & Bridge Company was chartered as a Street Railroad Company under the laws of Iowa. It owned street car lines in Council Bluffs and, in 1887, was authorized by Congress to construct a bridge across the Missouri River and to operate thereon "steam, cable and street cars." (March 3, 1887, 24 Stat. 501, c. 356.) The Omaha & Council Bluffs Railway, chartered as a Street Railroad under the laws of Nebraska, owned the street car lines in Omaha and its suburbs, South Omaha, Benson, Dundee and Florence. This street railroad had . no right of eminent domain and was not authorized to haul freight, being limited by its charter to carry- ing passengers only. By lease it acquired the bridge and car lines in Council Bluffs which thereafter it operated as part of its system. Complaint having been made that certain interstate fares were unreasonable, a hearing was had before the Commerce 1 2 SCOPE OF THE COMMERCE REGULATED BY THE ACT Commission, which, on November 27, 1909 (17 I. C. C. 239), ordered a reduction in the rate between Council Bluffs, Iowa, and points beyond the Loop, in Omaha, Nebraska. The two com- panies, lessor and lessee, thereupon filed a bill in the United States Circuit Court for the District of Nebraska to enjoin the order. The case was heard before three Circuit Judges, who (179 Fed. Rep. 243) granted a temporary injunction. The case was transferred to the Commerce Court, which, on October 5, 1911, dismissed the bill, 191 Fed. Rep. 40. On the argument of the appeal in this court, the sole question discussed was whether the provisions of the Commerce Act as to railroads applied to street railroads, the appellant relying, among other things, on the fact that during the discussion in the Senate the author of the biU and Chairman of the Senate Committee to which it had been referred, said (17 Cong. Rec. Pt. IV, p. 3472) "that the Bill is not intended to affect the stage coach, the street railway, the telegraph Hnes, the canal boat, or the vessel em- ployed in the inland or coasting trade, even though they may be engaged in interstate commerce, because it is not deemed necessary or practicable to cover such a multitude of subjects." After quoting § 1 ^ and this statement and construing it in the light of the broad scope of the act, the Commerce Court held that the meaning of the statute could not be determined from state- ments used in debate. We concur in that view. The act must be interpreted by its own terms, and we must look to it as a whole, in order to determine whether it applies to Street Railroads, carrymg passengers between cities divided by a state line. The statute in terms applies to carriers engaged in the trans- portation of passengers or property by railroad. But, in 1887, that word had no fixed and accurate meaning, for there was then, as now, a conflict in the decisions of the state courts as to whether street railroads were embraced within the provisions of a statute giving rights or imposing burdens on railroads. The appellants cite decisions from twelve States holding that in a statute the word "railroad" does not mean "street railroad." The defense cite decisions to the contrary from an equal number of States. The present record discloses a similar disagreement in Federal tribunals. Fot not only did the Commerce Court and the Circuit Court differ, but it appears that the members of the Commission were divided on the subject ' The text of Section 1 of the Interstate Commerce Act set forth in the oflBcial report is here omitted. — Ed. OMAHA ST. RY. V. INTERSTATE COMMERCE COM. 3 when this case was decided and also when the question was first raised in Willson v. Rock Creek By. Co., 7 I. C. C. 83. This conflict is not so great as at first blush would appear. For all. recognize that while there is similarity between railroads and street railroads, there is also a difference. Some courts, emphasizing the similarity, hold that in statutes the word "Rail- road" includes Street Railroad, unless the contrary is required by the context. Others, emphasizing the dissimilarity, hold that "Railroad" does not include Street Railroad unless required by the context, since, as tersely put by the Court of Appeals of Kentucky, "a street railroad, in a technical and popular sense, is as different from an ordinary railroad as a street is from a road." Louisville & Portland R. R. Co. v. Louisville City Ry. Co., 2 Duvall, 175. But all the decisions hold that the meaning of the word is to be determined by construing the statute as a whole. If the scope of the act is such as to show that both classes of companies were within the legislative contemplation, then the word "Rail- road" will include Street Railroad. On the other hand, if the act was aimed at Railroads proper, then Street Railroads are excluded from the provisions of the statute. Applying this universally accepted rule of construing this word, it is to be noted, that ordinary railroads are constructed on the companies' own property. The tracks extend from town to town and are usually connected with other railroads, which themselves are further connected with others, so that freight may be shipped, without breaking bulk, across the continent. Such railroads are channels of interstate commerce. Street Railroads, on the other hand, are local, are laid in streets as aids to street traffic, and for the use of a single community, even though that community be divided by state lines, or under different municipal control. When these street railroads carry passengers across a state line they are, of course, engaged in interstate commerce, but not the commerce which Congress had in mind when legislating in 1887. Street railroads transport passengers from street to street, from ward to ward, from city to suburbs, but the commerce to which Con- gress referred was that carried on by railroads engaged in hauling passengers or freight "between States," "between States and Territories," "between the United States and foreign countries." The act referred to Railroads which were required to post their schedules — not at street corners where passengers board street cars, but in "every depot, station or office where passengers or freight 4 SCOPE OF THE COMMERCE REGULATED BY THE ACT' are received for transportation." The railroads referred to in the act were not those having separate, distinct and local street lines, but those of whom it was required that they should make joint rates and reasonable facilities for interchange of traffic with connecting lines, so that freight might be easily and ex- peditiously moved in interstate commerce. Every provision of the statute is apphcable to railroads. Only a few of its requirements are applicable to street railroads which did not do the business Congress had in contemplation and had not engaged in the pooling, rebating and discrimination which the statute was intended to prohibit. This was recognized in Willson V. Rock Creek Ry. Co., 7 I. C. C. 83, where, although it was held that the statute apphed to a street railroad between Washington, D. C, and a point in Maryland, the Commission nevertheless said (7 I. C. C. 88): "It may be conceded that this class of railroads was not specifically within the contemplation of the framers of that law, for the evils which it was intended to remedy would, in the nature of the case, but rarely arise in the management of such roads in their dealing with the public." Street railroads not being guilty of the mischief sought to be corrected, the remedial provisions of the statute not being appKca- ■ ble to them, commands upon every railroad "subject to the act" being such that they could not be obeyed by street railroads be- cause of the nature of their business and character and location of their tracks, it is evident that the case is within that large line of authorities which hold that under such a statute the word "railroad" cannot be construed to include street railroad. But it is said that since 1887, when the act was passed, a new type of interurban railroad has been developed which, with electricity as a motive power, uses larger cars and runs through the country from town to town, enabling the carrier to haul passengers, freight, express and the mail for long distances at high speed. We are not dealing with such a case, but with a company chartered as a street railroad, doing a street railroad business and hauling no freight. The case was heard on de- murrer, with the opinion of the Commission treated as a part of the record. It indicates that at some points the line is on private property, but where this is and to how great an extent does not appear. Indeed, the record does not show that electricity was used as a motive power, though, in the light of modern methods, that may possibly be assumed. But it affirmatively appears that the company was chartered as a street railroad, and hauls no OMAHA ST. RY. V. INTERSTATE COMMERCE COM. 5 freight and is doing only a business appropriate to a street rail- road. So that whatever the motive power or the size or speed of the cars is immaterial. In any event, there were "street cars" referred to in the act of Congress authorizing the construction of the Bridge from Council Bluffs to Omaha (24 Stat. 501). The company used such cars and did a street passenger business only. It laid its tracks in crowded thoroughfares of those cities and their suburbs and it is manifest that Congress did not intend that these tracks should be connected with Railroads for hauhng freight cars and long trains through and along the streets of Omaha and Council Bluffs. It is contended, however, that the amendment of June 18, 1910, 36 Stat. 539, 553, c. 309, shows that Congress considered that street raihoads were under the jurisdiction of the Com- mission inasmuch as it then provided that "the Commission shall not estabUsh any through route, classification or rate be- tween street electric" passenger railways not engaged in . . . transporting freight . and railroads of a different char- acter." It is contended on the other hand that in that statute Congress distinctly recognized that a street electric road was "a different character of railroad," and apprehending that the broad language of the amendment of 1910 might be construed to take in street railroads, this provision was inserted out of abundant caution to prevent that result, as in the case of establish- ing routes wholly by water, which certainly were not within the terms of the original Act. This section of the act of 1910, however, having been passed after the order was made by the Commission, Nov. 27, 1909, is not before us for construction and, manifestly, cannot be given a retrospective operation, though the Government insists that it should be given a prospective operation and in its brief con- tends that "even if the Commission's order was without lawful authority at the time it was made (Nov. 27, 1909) the amend- ment of 1910 either ratified it altogether, or, at least, validated it for the future," and, therefore, it was contended "that the judg- ment should be affirmed, or if not affirmed as rendered, should be modified to set aside the order only in its operation prior to June 18, 1910," on which day the amendment as to electric street passenger cars became effective. Mattingly v. District of Columbia, 97 U. S. 687; Lmurey v. Hawaii, 206 U. S. 206; B. & 0. R. R. v. 7. C. C, 221 U. S. 612, are cited to show that Congress might ratify what had not been originally commanded. The first two 6 SCOPE OF THE COMMERCE REGULATED BY THE ACT decisions relate to transactions of a nature entirely different from that here involved; and, in the Baltimore & Ohio Case, which was more like this on its facts, the parties pending the suit stipulated that the order should apply only to the future, dnd it was said that the "question of the authority of the Com- mission at the time the order was made has become a moot one" (621). There was no such stipulation here, and there being noth- ing to show that Congress attempted an express ratification, and it being open whether the amendment was intended to confer a jurisdiction not previously given, the motion of the Govern- ment to make the order of November 27, 1909, effective from June 18, 1910, cannot prevail. The decree of the Commerce Court is reversed and that of the three Circuit Judges made permanent. Reversed. Mr. Justice Pitney did not hear the argument and took no part in the decision of this case. BROTHERHOOD OF LOCOMOTIVE ENGINEERS et al. v. SPOKANE & EASTERN RAILROAD & POWER CO., et al. Decision No. 33, 1 Dec. U. S. R. R. Labor Board, 53 (1920) Representatives of employees on the electric railways named herein have brought before the Labor Board for consideration and determination disputes between these railways and certain of their employees. All the organizations which are petitioners do not have a dispute with every respondent railway, but each petitioner has a dispute with one or more of the respondents, and each respondent has a dispute with one or more of the petitioners. The railway representatives having questioned the Labor Board's jurisdiction, this decision is upon that question solely. The ground upon which jurisdiction is questioned is that these railways are interurban electric railways not operating as a part of a general steam railroad system of transportation, and that they are therefore excepted from section 300 of the Transporta- tion Act, 1920, subsection 1 of which is as follows: (1) The term "carrier" includes any express company, sleeping-car com- pany, and any carrier by railroad, subject to the Interstate Commerce Act, except a street, interurban, or suburban electric railway not operating as a part of a general steam railroad system of transportation. LOCOMOTIVE ENGINEERS V. SPOKANE & EASTERN R. R. 7 It is clear that Congress intended to exclude certain kinds of transportation facilities from the jurisdiction of the Labor Board. So far as the railways here in question are concerned, if they either are not interurbans or are operated as a part of a general steam railroad system of transportation, then they are not excluded and remain within the Labor Board's jurisdiction. The 11 railways divide themselves, roughly speaking, into two groups. In one are the Hudson & Manhattan Railroad, the New York, Westchester & Boston Railway, and the Denver and Inter- urban Railroad, which do almost exclusively a passenger business. In the other group are the eight remaining railways, which, in addition to a passenger service, do a more or less extensive freight interchange business with steam trunk Hues, carry mail and ex- press, and, in general, perform the same public service as steam lines. In each group are roads which operate equipment jointly with steam trunk lines. They range in size of road operation from the Lackawanna & Wyoming Valley Railroad, with 20 miles of road, to the Pacific Electric Railway Co., with 600 miles. Several are interstate in their operation. While no two railroads are exactly alike, they are generally similar as to method of operation and character of employment, except for the Hudson & Manhattan Railroad, whose equipment and operation are similar to that of the Interborough and the Brooklyn Rapid Transit Cos. of New York. There are also cer- tain other features characterizing one or more of the railways jvhich, being emphasized by the petitioners to prove that partic- ular railways are within the jurisdiction of the Labor Board, deserve careful consideration. Such consideration will obviate the necessity of presenting in detail the facts about each railway. The points to consider are as follows: (1) That this or that railway is physically an interstate prop- erty. (2) That it performs the principal functions of a steam railroad. (3) That its charter permits it to operate either by steam or by electricity. (4) That it has at some time in the past operated by steam. (5) That to a certain extent it operates jointly with a steam trunk line certain equipment and makes certain joint use of track. (6) That its stock is entirely or partially owned by a steam trunk line. (7) That it does a considerable interstate business. 8 SCOPE OF THE COMMERCE REGULATED BY THE ACT (8) That it has received a freight increase from the Interstate Commerce Commission imder Ex Parte 74. Noting the further fact that none of the respondents is under the same operating management as any general steam railroad system as hereinafter defined, what bearing do the above-de- scribed characteristics have on the question whether any of these railways is an interurban and whether it is operating as a part of a general steam railroad system of transportation? (1) The interurban status of an electric railway is not affected by the fact that it operates between states. See Spokane & Inland Empire Railroad Co. v. United States (241 U. S., 244), in which the court says: The railroad company operated a street railway system in Spokane and sev- eral interurban electric lines, one of which existed from Spokane to Coeur d'Alene, Idaho, a distance of about 40 miles. ... In addition to its passen- ger trains, the interurban hne also operated freight trains. (2) The fact that an electric railway performs the functions of a steam railroad is characteristic of a large number of so-caUed interurban railways and is not regarded by the courts as bearing upon the roads' interurban status. See Sandqutst v. Fort Dodge, Des Moines & Southern Railroad (159 Iowa, 194), in which the court says: The defendant is an interurban railroad operating a line of ro^d for the car- riage of passengers and freight between the cities of Des Moines and Fort Dodge, run by means of electricity. (The distance between Des Moines and Fort Dodge is 85 miles, and the service rendered, except for minor details, is primarily that which a steam road would perform.) (3) That the road is chartered so that either steam or electricity may be used as a motive power has no practical bearing on the status of the road. The important thing is the actual nature of its operation. (4) Similarly, the past history of the railway can not be consid- ered as important as its present actual operation. To hold other- wise would raise a number of awkward questions. For instance, the Washington & Old Dominion Railway and the Piedmont & Northern Railway are doing the same kind of business as the Spokane & Inland Empire Railroad Co. and the Fort Dodge, Des Moines & Southern Railroad, both of which are recognized interurbans. How can it be fairly said that the LOCOMOTIVE ENGINEERS V. SPOKANE & EASTERN R. R. 9 Washington & Old Dominion Railway and the Piedmont & Northern Railway are not interurbans merely because one once ran by steam and the other may now run by steam if it so elects? How long must a road have operated by steam to prevent it subsequently becoming an interurban when the motive power changes to electricity; or, having once been operated by steam, how long must it operate by electricity before it may become an interurban? Does the fact that a road once operated by steam prevent it from ever becoming an interurban? (5) The joint use of equipment and trackage is not regarded in the case of the Pacific Electric Railway Co. as disqualifying it from being an interurban. See decision 1961 of the California Railroad Commission, which, speaking of the Pacific Electric Railway Co., says: Applicant operates a large suburban and interurban railway system in south- em California, and its financial condition has heretofore been investigated on several occasions when apphcations were made for the issuance of securities. (6) Neither does the above decision consider important the fact that the Southern Pacific Co. owns the stock of the Pacific Electric Railway Co. and that certain of the officers of these two companies are the same persons, or that certain equipment is operated jointly with the Southern Pacific Co. (7) The amount of interstate freight business is immaterial on the question whether or not an electric railway is an interurban. (See Sandquist v. Fort Dodge, Des Moines & Southern Railroad cited above.) The interstate freight business of the Fort Dodge, Des Moines & Southern Railroad amounts to approximately 80 per cent of its total business. This feature of interchange of freight, however, raises a further question: It is argued that such interchange, which is sometimes accompanied by interstate passenger traffic, brings the railroad within the definition "part of a general steam railroad system of transportation," thus raising the questions: (1) What is a general steam railroad system of transportation? (2) What constitutes operating as a part of a system? The word "system" as used throughout the Transportation Act, 1920, means a system similar to the Pennsylvania System, Baltimore & Ohio Railroad System, Southern Pacific Co. (Pa- cific System), etc. The word "System" is used, in other words, in customary railroad parlance. (See also the opinion of the court in Hines v. Dahn, 267 Fed., 105, where the lUinois Central 10 SCOPE OF THE COMMERCE REGULATED BY THE ACT Railroad is referred to as a system within the Federal Control Act.) • Such roads and others doing a general railroad business with country-wide connections are general steam railroad systems within the meaning of the act. It is to be noted, also, that the act specifically says "a" system of transportation, which can not be interpreted to mean "the" systems of transportation in the United States or a group of systems. Operating as a part of a system means, as a practical matter, operating as an integral part of that system and under a uni- fied control. If there is a physical connection and a common control and the lines are used together as one general system, the definition of the act would cover and include such a road. But when there is separate control and management, mere con- tiguity at points of connection, or even some common officials, would not be a decisive test. If a road is under such separate control that its officials can manage its own business, make its own contracts, and regulate its own affairs, then it is not a part of another. The idea that engaging in a large interstate freight business, in the course of which it interchanges cars with several steam trunk lines, brings a railway within the term "operating as a part of a general steam railroad system of transportation" is negatived by the phraseology of various sections of the Trans- portation Act, 1920. Interurban electric railways are excluded from the provisions of the act under three heads: (a) In all matters pertaining to Federal control, namely, section 204-A, "reimbursement for deficits," and section 209-A, "guarantee to carriers," the exclusion covers an "interurban electric railway which has as its principal source of operating revenue urban, suburban, or interurban passenger traffic, or sale of power, heat and light, or both." (6) In section 1, subsection 22, forbidding extension and further construction without authority from the Interstate Commerce Commission; in section 20- A, requiring the assent of the Inter- state Commerce Commission to the issuance of securities; and in section 300, giving the Labor Board jurisdiction, the exception is "a street, interurban, or suburban electric railway not operating as a part of a general steam railroad system of transportation." (c) In section 15-A, deafing with rates, are excluded "inter- urban electric railways, unless operated as a part of a general LOCOMOTIVE ENGINEERS V. SPOKANE & EASTERN R. R. 11 steam railroad system of transportation or engaged in the general transportation of freight." The contention that interchange of freight makes an electric line part of those trunk lines with which it interchanges assumes that section 300 includes by inference exactly what section 15-A specifically states, namely, "or engaged in the general transpor- tation of freight." If that is what section 300 means, then the use of the words "or engaged in the general transportation of freight" as used in section 15-A is surplusage. As matter of fun- damental legal construction such an assumption is unsound. On the other hand. Congress must be assumed to have spoken with discrimination. The purpose here of differentiating in the phraseology of the two sections was to differentiate in the meaning. Had Congress meant to describe the same kind of railways in these two sections, it would have described them in similar terms. The Labor Board is not bound by interpretations of the Inter- state CommeEce Commission. Nevertheless, it should give care- ful thought to such interpretations where the Labor Board itself is interpreting identical language. For example, section 20-A, above quoted, includes interurban railways in exactly the same language as section 300. Under section 20-A the Interstate Commerce Commission has not thought itself warranted in assuming jurisdiction over the issuance of securities by interurban roads, some of those here in question. In other words, the Interstate Commerce Commission does not regard engaging "in the general transportation of freight" as equivalent to "operating as a part of a general steam railroad system of transportation." And again, directly interpreting section 300 with regard to the nominations of members of the Labor Board, the Interstate Commerce Commission excluded from participation in such nominations both interurban electric railways and the most important organization of employees engaged in operating these railways. (8) The railways have received a freight increase from the Interstate Commerce Commission. They have not received a passenger increase. The reason they have received the former and not the latter is that the freight business done by interurban roads is sufficiently general to give Congress jurisdiction over the matter. Passenger traffic, on the other hand, is so local that Congress can not properly regulate it. Therefore, such rates are left to the State commissions. 12 SCOPE OF THE COMMERCE REGULATED BY THE ACT Apart from the significant exclusion of the Labor Board from jurisdiction over railways engaged in the freight business, it is obvious as a practical matter that the granting by the Labor Board of a wage increase, without corresponding authority to the Interstate Commerce Commission to raise rates, would result in serious complications. The Labor Board and the Interstate Commerce Commission were clearly intended to be interdepend- ent in this matter. Such intention would be nullified if the Labor Board assumed jurisdiction where the Interstate Commerce Commission was without it. And so it does not seem to the Labor Board that any or all of the eight factors above discussed materially affect the question of jurisdiction. It remains to say a word regarding the matter of statutory construction and the purpose of Congress. In construing section 300 of the Transportation Act, 1920, in reference to the railways before the Labor Board, it is well to bear in mind the settled rules of construction and interpretation. Whether an act be remedial or not, it is to be strictly construed as to the classes of people, citizens, parties, and subjects included, and none are to be included by any intendment not expressed in the terms used. The intention of Congress becomes material only in case of an ambiguity in the language of the act. While such an ambiguity does not exist here it nevertheless is not inappropriate to consider what the intention of Congress was. It is plain that Congress has dealt in discriminating language with interurban electric railways throughout the Interstate Com- merce Act and the Transportation Act, 1920, and has consistently treated them differently from steam lines. Congress has done this because there is a material difference, generally speaking, between steam and electric roads in the matter of equipment, nature of service, and standards of emplojonent. With a few exceptions, one service is general, the other is local. The difficulty is that a few electric railways have developed far beyond the origi- nal idea of an interurban. They have now come to rival many steam lines in service and size. And still the definition of what is an interurban has likewise broadened, not only by popular conception, but by legal, statutory, and executive decree, so that the Pacific Electric Railway Co., operating upward of 600 miles of road; the Fort Dodge, Des Moines and Southern Rail- road, owning 2,400 box and coal cars; and the Spokane & Inland Empire Railroad Co., crossing State lines and operating passenger WELLS FARGO & CO. V. TAYLOR 13 and freight trains, are all judicially labeled "interurban." It is difficult, if not impossible, to get away from this definition. All the respondents are electrically operated. Some have been judicially determined to be interurban; the remainder either are so similar in character that they can not be successfully differ- entiated or are otherwise clearly excluded by the words of the act. Neither are the respondents operating as a part of any general steam railroad systems of transportation. Therefore the Labor Board must decide that it has no jurisdiction over any of these respondents, and it herewith dismisses the applica- tions of the petitioners for further hearing. WELLS FARGO & COMPANY v. TAYLOR 254 U. S. 175 (1920) Mr. Justice Van Devanter delivered the opinion of the court. Oscar G. Taylor, an express messenger of Wells Fargo & Com- pany, a common carrier by express, received substantial personal injuries through the derailment of an express car in which he was working, and which was part of a passenger train moving over the railroad of the St. Louis and San Francisco Railroad Company in the State of Mississippi, — the derailment resulting from negli- gence on the part of the railroad company and its employees. To recover for these injuries Taylor brought an action against the railroad company in the Circuit Court of Monroe County, Missis- sippi, and obtained a judgment for $4,000, which was affirmed by the Supreme Court of the State without an opinion. See 58 So. 485. In his declaration in that case Taylor explained and justified his presence on the train and in the express car by alleging that he was then in the employ of the express company as its messenger and in the course of that employment was in charge of express matter which the railroad company was transporting for the ex- press company, that this transportation was in pursuance of a contract between the two companies, and that under the contract the express car was furnished by the railroad company and he, as the express company's messenger, was permitted to accompany the express matter carried therein. While the declaration said nothing more about the nature or terms of that contract, it is important here to have them in mind. The contract shows that it was intended to, and did, cover all 14 SCOPE OF THE COMMERCE REGULATED BY THE ACT express business on and over the railroad company's road, both within and without the State of Mississippi, for a specified period, including the day when Taylor was injured. It gave to the ex- press company the exclusive privilege of conducting an express business on and over the railroad and ol^Ugated the railroad com- pany to refrain from conducting an express business. There were provisions whereby the railroad company agreed, (a) to transport by suitable cars, to be provided by it and attached to its passenger trains, all express matter of the express company and the messen- gers accompanying the same, (6) to light and warm the cars and equip them with necessary conveniences, and (c) to permit portions of its station houses to be used by the express company for the re- ception, safekeeping and dehvery of express matter. And there were other provisions whereby the express company agreed, (a) to make stated payments — usually a percentage of the gross earnings — ^for the facihties furnished and service rendered by the railroad company, (6) to assume all risks, losses, and damages to its own property, express matter and valuable packages trans- ported under the contract, (c) to assume all risk and damage to its agents and employees while engaged in its business on the trains or property of the railroad company, and (d) to indemnify and hold harmless the railroad company in respect of all claims for damages suffered by such agents and employees while so engaged. There was also a contract between Taylor and the express company, spoken of as a messenger's agreement, wherein, — fol- lowing a recital that he had full knowledge of the service re- quired and the conditions on which the railroad company would permit messengers to accompany express matter on its trains, and that with such knowledge he was desirous of becoming a messenger of the express company, — it was stipulated, as a term or condition of his employment, that neither the express com- pany nor the railroad company should under any circumstances or in any case be liable for any injury which he might receive while on the railroad company's trains as such messenger, whether caused by negligence of the railroad company or otherwise, and that he would assume all and every risk incident to such employ- ment, from whatever cause arising. Promptly after Taylor sued the railroad company in the Cir- cuit Court of Monroe County, and before the case was brought to trial, the express company presented to that court in that cause a petition wherein it set out the contracts just described and asked to be made a party defendant. To this the railroad WELLS FARGO & CO. V. TAYLOR 15 company assented, but Taylor evidently objected and the petition was denied. The railroad company by its answer and evidence sought to avail itself of the stipulation in the messenger's agree- ment, in connection with those in the other contract, but the court ruled against it and Taylor obtained the judgment before men- tioned. What has been recited will conduce to a right understanding of another suit the decree in which we are now to review. The suit is in equity and was brought by the express company against Taylor in the District Court of the United States for the Northern District of Mississippi. The federal jurisdiction rests on diversity of citizenship, — the express company being a corpora- tion and citizen of Colorado, and Taylor a citizen of Mississippi residing in the Northern District. The bill, with a supplement and amendment, proceeds on the theory that, in suing the rail- road company and obtaining a judgment against it, which as between that company and the express company must be paid by the latter as stipulated in their contract, Taylor not only vio- lated the messenger's agreement, but perpetrated a legal fraud on the express company; that the judgment is therefore one which in equity and good conscience he has no right to enforce; that if he be permitted to enforce it the. express company will be without any effective remedy in that he has no property which can be reached by legal process (a fact which is both alleged and proved) ; and that the express company, which was not a party to that case, and has not been in any wise negligent or at fault, is in equity and good conscience entitled to have the messenger's agreement respected and to demand that the claims embraced in the inequit- able judgment be relinquished and the enforcement of the judg- ment enjoined. The prayer conforms to that theory and is in substance that Taylor be required specifically to perform and carry out the messenger's jigreement, to execute a sufficient re- lease of all claims on account of the injuries received, and to ab- stain from enforcing the judgment. General relief also is prayed. Taylor challenged the bill by a demurrer, which was overruled, and after a hearing in due course the express company prevailed. On appeal to the Circuit Court of Appeals that decree was re- versed and the suit remanded because in that court's opinion the bill did not show that Taylor was not in the employ of the rail- road company or that he was solely in the employ of the express company. 220 Fed. 796. After the mandate was received, Taylor, conceiving that the decision of. the Circuit Court of Appeals fully 16 SCOPE OF THE COMMERCE REGULATED BY THE ACT disposed of the merits and was final, requested the District Court to enter a decree dismissing the bill, and the express company requested leave to amend the bill by correcting the defect pointed out by the Circuit Court of Appeals. Taylor's request was de- nied and that of the express company was granted. The bill was accordingly amended so as to show that Taylor was not in the employ of the railroad company, but was on the train solely in virtue of his employment by the express company, and that in his declaration in the action against the railroad company he did not claim or allege any employment by that company, but, on the contrary, claimed and alleged that it permitted him to be on the train because he was accompanying the express matter as the express company's employee. Taylor then filed a new answer, and on a further hearing a decree for the express company was entered. By it the District Court found that the allegations of the bill, with its supplement and amendment, were all true; declared that the institution of the action against the railroad com- pany and its prosecution to judgment constituted a violation of the messenger's agreement and a legal fraud on the express com- pany; directed Taylor to carry out and perform the messenger's agreement and to execute, within a fixed time, an appropriate in- strument releasing the express company and the railroad company from all claims for damages on account of his injuries, and enjoined him from collecting or attempting to collect the judgment against the railroad company. On a further appeal to the Circuit Court of Appeals that decree was reversed with directions to dismiss the bill. 249 Fed. 109. A writ of certiorari was then granted by this court. On the second appeal the Circuit Court of Appeals put its decision entirely on the ground that the express company was a "common carrier by railroad" within the meaning of the Em- ployers' Liability Act of April 22, 1908, c. 149, 35 Stat. 65, and therefore under § 5 of the act the messenger's agreement was void. Taylor advanced that and other grounds in asking a re- versal, but the court- did not discuss the other grounds. All are pressed on our attention, and we take them up in what seems the natural order.i 3. Does the Employers' Liabihty Act affect the validity of the messenger's agreement? The act provides that "every common carrier by railroad" shall be Uable in damages for the injury or death of any of its ' The first two grounds, dealing with jurisdictional issues, are omitted. — Ed. WELLS FARGO & CO. V. TAYLOR 17 employees occurring while it is engaged and he is employed in in- terstate commerce and resulting in whole or in part from the negligence of any of its officers, agents or employees, or from any defect or insufficiency, due to its negligence, "in its cars, engines, appliances, machinery, track, roadbed," etc.; and in § 5 it de- clares that any contract whereby a common carrier exempts itself from "any habihty created by this act" shall to that ex- tent be void. In his declaration in the state court Taylor did not claim that he was in the employ of the railroad company, and his judgment was not obtained on that theory. Here it is shown with certainty that he was not in that company's employ. True he urges that the contract between the two companies shows a co-proprietor- ship or sort of partnership between them which made him an employee of both; but the contract discloses no basis for the claim or for distinguishing his case from that of the Pullman porter recently before us. Robinson v. Baltimore & Ohio R. R. Co., 237 U. S. 84. Here the businesses of the companies concerned were quite as distinct in point of control and otherwise as they were there! That here the railroad company provided the express car is not material, for it is measurably equalized by other differ- ences. In_ both cases the railroad company provided the motive power and the train operatives. The messenger here, like the porter there, was on the train as an employee, not of the railroad company, but of another by whoin he was employed, directed and paid, and at whose will he was to continue in service or be dis- charged. As respects the express company, it appears not merely that Taylor was in its employ, but also that the injuries were re- ceived while it was engaged and he was employed in interstate commerce; and so the question is presented whether the act embraces a common carrier by express which neither owns nor operates a railroad, but uses and pays for railroad transportation in the manner before shown. The District Court answered the question in the negative and the Circuit Court of Appeals in the affirmative. A negative answer also has been given in a like situation by the Court of Errors and Appeals of New Jersey, Higgins v. Erie R. R. Co., 89 N. J. L. 629; and a recent decision by the Supreme Court of Minnesota makes persuasively for that view. State ex rel. v. District Court, 142 Minn. 410. In our opinion the words "common carrier by railroad," as used in the act, mean one who operates a railroad as a means of 18 SCOPE OF THE COMMERCE REGULATED BY THE ACT carrying for the public, — that is to say, a railroad company acting as a common carrier. This view not only is in accord with the ordinary acceptation of the words, but is enforced by the mention of cars, engines, track, roadbed and other property pertaining to a going railroad (see Southern Pacific Company v. Jensen, 244 U. S. 205, 212-213); by the obvious reference in the latter part of §§ 3 and 4 to statutes requiring engines and cars to be equipped with automatic couplers, standard drawbars and other ap- phances intended to promote the safety of railroad employees (see San Antonio & Aransas Pass Ry. Co. v. Wagner, 241 U. S. 476, 484); by the use of similar words in closely related acts which apply only to carriers operating railroads, c. 196, 27 Stat. 531; c. 225, 35 Stat. 476; c. 208, 36 Stat. 350, and by the fact that similar words in the original Interstate Commerce Act had been construed as including carriers operating railroads but not express companies doing business as here shown. 1 1. C. C. 349; United States v. Horseman, 42 Fed. 448; Southern Indiana Ex- press Co. V. United States Express Co., 88 Fed. 659, 662; s. c. 92 Fed. 1022. And see American Express Co. v. United States, 212 U. S. 522, 531, 534. As Taylor was not an employee of the railroad company and the express company was not within the Employers' Liability Act, it follows that the act has no bearing on the liability of either company or on the validity of the messenger's agreement It follows that the decree of the District Court was right and that the Circuit Court of Appeals erred in reversing it. Decree reversed. THE PIPE LINE CASES i 234 U. S. 548 (1914) Mr. Justice Holmes delivered the opinion of the court. By the act of Congress of June 29, 1906, c. 3591, 34 Stat. 584, the Act to Regulate Commerce was amended so that the first section reads in part as follows: "That the provisions of this 1 Docket title of these cases: No. 481. United States v. Ohio Oil Com- pany. No. 482. United States v. Standard Oil Company. No. 483. United States V. Standard Oil Company of Louisiana. No. 506. United States v. Prairie Oil & Gas Company. No. 507. United States v. Uncle Sam Oil Com- pany. No. 508. United States v. Benson, doing business under the Part- nership Name of Tide Water Pipe Company, Limited. THE PIPE LINE CASES 19 Act shall apply to any corporation or any person or persons en- gaged in the transportation of oil or other commodity, except water and except natural or artificial gas, by means of pipe lines, or partly by pipe lines and partly by railroad, or partly by pipe lines and partly by water, who shall be considered and held to be common carriers within the meaning and purpose of this Act." Thereafter the Interstate Commerce Commission issued an order requiring the appellees among others, being parties in control of pipe lines, to file with the Commission, schedules of their rates and charges for the transportation of oil. 24 I. C. C. 1. The appellees thereupon brought suit in the Commerce Court to set aside and annul the order, and a preliminary injunction was issued by that court, on the broad ground that the statute applies to every pipe line that crosses a state boundary and that thus construed it is unconstitutional. 204 Fed. Rep. 798. The United States, the Interstate Commerce Commission and other inter- vening respondents appealed. The circumstances in which the amendment was passed are known to every one. The Standard Oil Company, a New Jersey corporation, owned the stock of the New York Transit Com- pany, a pipe line made a common carrier by the laws of New York, and of the National Transit Company, a Pennsylvania corporation of Hke character, and by these it connected the Appalachian oil field with its refineries in the east. It owned nearly all the stock of the Ohio Oil Company, which connected the Lima-Indiana field with its system; and the National Transit Company, con- trolled by it, owned nearly all the stock of the Prairie Oil and Gas Company, which ran from the Mid-Continent field in Okla- homa and Kansas and the Caddo field in Louisiana to Indiana and connected with the previously mentioned lines. It also was largely interested in the Tide Water Pipe Company, Limited, which connected with the Appalachian and other fields and pur- sued the methods of the Standard Oil Company about to be de- scribed. By the before mentioned and subordinate lines the Standard Oil Company had made itself master of the only prac- ticable oil transportation between the oil fields east of California and the Atlantic Ocean and carried much the greater part of the oil between those points. Before the recent dissolution the New York and Pennsylvania Companies had extended their lines into New Jersey and Maryland to the refineries and the laws of those States did not require them to be common carriers. To meet the present amendment the Standard Oil Company took a con- 20 SCOPE OF THE COMMERCE REGULATED BY THE ACT veyance of the New Jersey and Maryland lines, and the common carrier lines now end at insignificant places where there are neither market nor appliances except those of the Standard Oil, by which it would seem that the whole transport of the carriers' Knes is received. There is what seems to be merely a formal breach of continuity when the carriers' pipes stop. The change is not material to our view of the case. AvaiUng itself of its monopoly of the means of transportation the Standard Oil Company refused through its subordinates to carry any oil unless the same was sold to it or to them and through them to it on terms more or less dictated by itself. In this way it made itself master of the fields without the necessity of owning them and carried across half the continent a great subject of international commerce coming from many owners but^ by the dm'ess of which the Standard Oil Company was master, carrying it aU as its own. The main question is whether the act does and constitutionally can apply to the several constituents that then had been united into a single line. Taking up first the construction of the statute, we think it plain that it was intended to reach the combination of pipe lines that we have described. The provisions of the act are to apply to any person engaged in the transportation of oil by means of pipe lines. The words 'who shall be considered and held to be common carriers within the meaning and purpose of this act' obviously are not intended to cut down the generality of the pre- vious declaration to the meaning that only those shall be held common carriers within the act who were common carriers in a technical sense, but an injunction that those in control of pipe Hnes and engaged in the transportation of oil shall be dealt with as such. If the Standard Oil Company and its cooperating com- panies were not so engaged no one was. It not only would be a sacrifice of fact to form but would empty the act if the carriage to the seaboard of nearly aU the oil east of Cahfornia, were held not to be transportation within its meaning, because by the exer- cise of their power the carriers imposed as a condition to the carriage a sale to themselves. As appHed to them, while the amendment does not compel them to continue in operation it does require them not to continue except as common carriers. That is the plain meaning as has been held with regard to other statutes similarly framed. Atlantic Coast Line R. R. Co. v. .River- side Mills, 219 U. S. 186, 195, 203. Its evident purpose was to bring within its scope pipe lines that although not technically THE PIPE LINE CASES 21 common carriers yet were carrying all oil offered, if only the offerers would sell at their price. The only matter requiring much consideration is the consti- tutionality of the act. That the transportation is commerce among the States we think clear. That conception cannot be made wholly dependent upon technical questions 'of title, and the fact that the oils transported belonged to the owner of the pipe line is not conclusive against, the transportation being such commerce. Rearick v. Pennsylvania, 203 U. S. 507, 512. See Texas & New Orleans R. R. Co. v. Sabine Tram Co., 227 U. S. 111. The situation that we have described would make it illusory to deny the title of commerce to such transportation, beginning in purchase and ending in sale, for the same reasons that make it transportation within the act. The control of Congress over commerce among the States cannot be made a means of exercising powers not entrusted to it by the Constitution, but it may require those who are common carriers in substance to become so in form. So far as the statute contemplates future pipe Unes and prescribes the conditions upon which they may be established there can be no doubt that it is valid. So the objection is narrowed to the fact that it applies to lines already engaged in transportation. But, as we already have intimated, those lines that we are considering are common car- riers now in everything but form. They carry everybody's oil to a market, although they compel outsiders to sell it before taking it into their pipes. The answer to their objection is not that they may give up the business, but that, as applied to them, the statute practically means no more than they must give up requiring a sale to themselves before carrying the oil that they now receive. The whole case is that the appellees if they carry must do it in a way that they do not like. There is no taking and it does not become necessary to consider how far Congress could subject them to pecuniary loss without compensation in order to accom- plish the end in view. Hoke v. United States, 227 U. S. 308, 323. Lottery Case, 188 U. S. 321, 357. These considerations seem to us sufficient to dispose of the cases of the Standard Oil Company, the Ohio Oil Company, the Prairie Oil and Gas Company and the Tide Water Pipe Company, Lim- ited. The Standard Oil Company of Louisiana was incorporated since the passage of the amendment, and before the beginning of this suit to break up the monopoly of the New Jersey Stand- ard Oil Company. It buys a large part of its oil from the Prairie 22 SCOPE OF THE COMMERCE REGULATED BY THE ACT Oil and Gas Company, which buys it at the wells in the Mid- Continent field and transfers the title to the Louisiana Company in that State. Its case also is covered by what we have said. There remains to be considered only the Uncle Sam Oil Com- pany. This company has a refinery in Kansas and oil wells in Oklahoma, with a pipe line connecting the two which it has used for the sole purpose of conducting oil from its own wells to its own refinery. It would be a perversion of language, considering the sense in which it is used in the statute, to say that a man was en- gaged in the transportation of water whenever he pumped a pail of water from his well to his house. So as to oil. When, as in this case, a company is simply drawing oil from its own wells across a state line to its own refinery for its own use, and that is all, we do not regard it as falling within the description of the act, the transportation being merely an incident to use at the end. In that case the decree will be afl[irmed. In the others the decree will be reversed. No. 507, Decree affirmed. Nos. 481, 482, 483, 506 and 508, Decrees reversed. The Chief Justice concurring. Agreeing in every particular with the conclusions of the court and with its reasoning except as to one special subject, my con- currence as to that matter because of its importance is separately stated. The matter to which I refer is the exclusion of the Uncle Sam Oil Company from the operation of the act. The view which leads the court to exclude it is that the company was not engaged in transportation under the statute, a, conclusion to which I do not assent. The facts are these: That company owns wells in one State from which it has pipe lines to its refinery in another State, and pumps its own oil through such pipe lines to its refinery and the product of course when reduced at the refinery passes into the markets of consumption. It seems to me that the busi- ness thus carried on is transportation in interstate commerce within the statute. But despite this I think the company is not embraced by the statute because it would be impossible to make the statute applicable to it without violating the due process clause of the Fifth Amendment, since to apply it would neces- sarily amount to a taking of the property of the company without compensation. It is shown beyond question that the company buys no oU and by the methods which have been mentioned simply carries its own product to its own refinery; in other words, it is engaged in a purely private business. Under these conditions PENN. B.R. V. CLARK COAL CO. 23 in my opinion there is no power under the Constitution without the exercise of the right of eminent domain to convert without its consent the private business of the company into a pubhc one. Of course this view has no application to the other companies which the court holds are subject to the act because as pointed out the principal ones were chartered as common carriers and they all either directly or as a necessary result of their association were engaged in buying oil and shipping it through their pipes; in other words, were doing in reality a common carrier business, disguised, it may be, in form, but not changed in substance. Under these conditions I do not see how it would be possible to avoid the conclusion which the court has reached without declaring that the shadow and not the substance was the criterion to be resorted to for the purpose of determining the vaUdity of the exercise of legislative power. Mr. Justice McKenna, dissenting.^ 2. Kinds op Commerce PENNSYLVANIA RAILROAD COMPANY v. CLARK BROTHERS COAL MINING COMPANY 238 U. S. 456 (1915) Mb. Justice Hughes delivered the opinion of the court. This suit was brought in January, 1912, by the Clark Brothers Coal Mining Company (defendant in error) in the Court of Com- mon Pleas of Clearfield County, Pennsylvania, to recover dam- ages for inadequate and unjustly discriminatory car service and supply. The complaint related to the action of the defendant company with respect to cars required for the transportation of coal from the plaintiff's mines known as Falcon, Nos. 2, 3, and 4, in Clearfield County, and Falcon, Nos. 5 and 6, in Indiana County, Pennsylvania, between October, 1905, and April 30, 1907. A statute of Pennsylvania [Act of June 4, 1883, P. L. 72, 4 Purd. 3906; see Const. (Pa.) 1873, Art. 17] prohibits undue or un- reasonable discrimination by any common carrier 'in charges for or in faciUties for the transportation of freight within this State or coming from or going to any other State,' and provides that the carrier guilty of unjust discrimination shall be hable 'for damages treble the amount of injury suffered.' 1 The dissenting opinion is omitted. — Ed. 24 SCOPE OF THE COMMEKCE REGULATED BY THE ACT On behalf of the defendant (plaintiff in error) the jurisdic- tion of the court to entertain the action was challenged upon the ground that with respect to car distribution the defendant was subject to the Act to Regulate Commerce, and that the claim of the plaintiff was cognizable only by the Interstate Commerce Commission or by the coin-ts of the United States. It was urged further that in a proceeding before the Interstate Commerce Commission, which had been instituted by the plaintiff against the defendant prior to the beginning of this action, the Com- mission had found that the method of car distribution practiced by the defendant with respect to the plaintiff's mines known as Falcon, Nos. 2, 3, and 4, was unjustly discriminatory, and that the Commission had made an award of damages accordingly; and that by reason of this proceeding and the action of the Com- mission the plaintiff was precluded from maintaining the present action so far as it related to the alleged loss sustained with re- spect to the mines last described. The trial court overruled these contentions of the defendant. The jury, finding discrimination, assessed the damage at $41,481 and trebled the amount, making $124,443. Motions in arrest of judgment and for a new trial and for judgment non obstante veredicto, upon the grounds above stated (and others) were denied. Judgment for the total amount of the verdict was entered and was affirmed by the Supreme Court of the State, 241 Pa. St. 515. And this writ of error has been sued out. It clearly appeared that the proceeding before the Interstate Commerce Commission as to the mines Falcon, Nos. 2, 3, and 4, embraced substantially the same claim as that litigated in this action. As the trial judge said: "It" (the plaintiff) "did get an award of damages for what we understand to be practically the same subject-matter." That proceeding was instituted by the plaintiff in June, 1907. Its petition, among other things, alleged that it had been, and was, ' engaged in mining and shipping coal to points and places of delivery and to the coal markets beyond the State of Pennsylvania,' and that it had during all the period mentioned, to wit, ' from the fifteenth day of October, 1905, to the date of the filing of this complaint,' orders for coal to be mined and shipped 'beyond the fines of said State.' It com- plained of the rating of its mines by the defendant and also of unjust and unreasonable discrimination against it in the daily distribution of cars 'for the transportation of its coal into the interstate markets'; that it had suffered "great loss and damage PENN. K.R. V. CLARK COAL CO. 25 in its business 'as a producer, shipper and seller of bituminous coal' in the intersta,te coal trade, and that such damage amounted in the aggregate to $36,401.12. It prayed for hearing, for an ascertainment of the damages which it had sustained in its inter- state business by reason of unreasonable preferences given to its competitors as alleged, and for a determination of the proper basis of car distribution to be observed. After hearing, the Com- mission made its report on March 7, 1910. 19 I. C. C. 392. On the same day, the Commission rendered its decision in Hillsdale Coal & Coke Co. v. Penna. R. R. (19 I. C. C. 356), involving similar questions as to the method practiced by the defendant in distributing 'its available coal car equipment.' Upon this point, the Commission thpre said: "Under a rule announced by it on February 1, 1903, the de- fendant seems to have charged' all railroad cars, regardless of ownership, and private cars not owned by the operator loading them, against the distributive share of each mine, but it treated its own fuel cars as a special allotment in addition to the distrib- utive share. On March 28, 1905, a notice was- sent to shippers of bituminous coal from mines on the lines of the defendant advising them that thereafter all railroad cars, regardless of ownership, and all private cars not owned by the operator loading them, should be considered as cars available for distribution, except its own company fuel cars and fuel cars sent upon its lines by foreign companies and specially consigned to particular mines. "On January 1, 1906, the defendant divided all cars into two classes which it designated as 'assigned' and 'unassigned' cars. In the former class were its own fuel cars, foreign railway fuel cars, and individual or private cars loaded by their owners or assigned by their owners to particular mines. The rule then made effective and still in force provides that the capacity in tons of any 'assigned' cars shall be deducted from the rated capacity in tons of the particular mine receiving such cars, and that the remainder is to be regarded as the rated capacity of the mine in the' distribution of all 'unassigned' or system cars." Id., p. 362. After illustrating the operation of this system and the advan- tage in distribution thus given to mines having assigned cars {Id., pp. 363, 364), the Commission concluded: ','Upon aU the facts shown of record the Commission there- fore finds that throughout the period of the action the system upon which the defendant distributed its available coal-car equipment, including system fuel cars, foreign railway fuel cars, 26 SCOPE OF THE COMMERCE REGULATED BY THE ACT and individual or private cars, has subjected the complainant to an undue and an unlawful discrimination." In the case of the plaintiff's petition, the Commission held that so far as the rating of its mines was concerned 'there was no substantial basis for any finding of discrimination.' But, in the matter of car distribution, unjust discrimination was found. The Commission said (19 I. C. C. 394-6): "There are a number of mines on the Moshannon branch of the defendant that are owned by other operators, but in this connection it will suffice to mention only the six mines operated by or for the Berwind-White Coal Mining Company, one of which, known as Eureka No. 27, immediately adjoins the com- plainant's Falcon No. 2. The same 'P' coal vein is worked in these two. mines. The quality of the coal is therefore the same and it is claimed that the capacities of the two mines were sub- stantially the same at the period involved in the first of these two complaints "But neither Falcon No. 2 nor the mines of the complainant, the Clark Brothers Coal & Mining Company, was placed on an equal footing with the mines of the Berwind-White Coal Mining Company in the matter of the distribution of the defendant's available coal-car equipment during the period of the actions "It is established with reasonable clearness on the record that the Berwind-White mines during the years 1906 and 1907, as well as to a period immediately preceding those dates, were daily in receipt of coal cars in large numbers and were there- fore kept in operation almost continuously while the complainants received an inadequate supply and were not able, therefore, to run their mines to the best advantage. This difference is largely explained by the fact that the Berwind-White Coal Mining Com- pany owned a large number of private cars and also enjoyed con- tracts for supplying the defendant and its connection with coal. Under the rules of defendant, fully explained in Hillsdale Coal & Coke Co. v. P. R. R. Co., ante, the ownership of such private cars and the enjoyment of these contracts resulted in the special allotment to the mines of that company of these so-called assigned cars. For the reasons explained at some length in that case those rules operated as an undue discrimination against these complainants, and we so find. But for the present and for the reasons there explained we shall limit our order to a finding that in the several respects here mentioned the defendant was guilty of a discrimination against these complainants, leaving for PENN. E.R. V. CLABK COAL CO. 27 determination after further argument the question of the extent to which the complainants may have been damaged thereby." Order was entered accordingly condemning the defendant's rule and practice of distribution (as stated) as a violation of § 3 of the Act to Regulate Commerce, requiring the defendant to desist from that practice, and reserving the question of damages for further consideration. Subsequently, in April, 1911, this question was submitted, and it was determined on March 11,, 1912. 23 I. C. C. 191. The Commission then made its report as foUows: "We now find that the damages sustained by this claim- ant as result thereof" (the discrimination found) "amounted to $31,127.96, and that it is entitled to an award of reparation in that sum, with interest from June 25, 1907." The Commission set forth its primary findings of fact upon which this ultimate finding was based, showing its calculations with respect to shipments, selling prices, cost of production, and profits, during the times in question. It found the number of tons, in case of each of the mines, actually shipped and the amount which wou^i have been shipped and sold, with a proper car supply, for 'interstate destinations,' that is, for points without the State of Pennsylvania. This action was brought after the first report of the Commission, and while the question of damages was under its consideration. The trial judge in charging the jiu-y described the system of car distribution in use, and the practice of the defendant prior to and after January 1, 1906. Referring to the rule promulgated on that date, it was recognized that it in effect gave a distinct advantage to the mine having 'assigned cars' over one that did not have them, but the jury were instructed that 'for the purposes of this case,' it might 'be considered that it was a fair rule of distribution.' The subject comniitted to them was thus stated in the concluding portion of the instructions: "In considering the damages, therefore, in case you find discrimination, you must first ascertain what wotild have been, under all the circumstances testified to, a fair rating of the plaintiff's mines in both regions. Second, if after having such fair rating a comparison with the alleged preferred shippers would entitle it to an increased num- ber of cars and what that increased number of cars would be, and if the evidence at the same time shows that the preferred shipper received day by day and month by month throughout the period of the action, an excess over its proper pro rata share, the plaintiff would be entitled to recover at your hands a verdict 28 SCOPE OF THE COMMERCE REGULATED BY THE ACT for what you may find its fair share of such excess of cars amounted to in tons, estimated just as we have laid down the rule with respect to the method of calculating. Now then, if you allow for discrimination, then you may disregard all question as to inade- quacy or insufficiency of car supply, because you cannot allow for both. For discrimination, after you have made an estimate of the amount of damages and found a definite sum as com- pensation for the injuries which it sustained, that would be single damages, and if you find that there was discrimination, as claimed by the plaintiff's counsel then you can go to the question as to whether there shall be treble damages under the Act of 1883 If you find discrimination, therefore, and you arrive at or esti- mate the amount of single damages which you beUeve the plain- tiff has sustained by reason of such undue and unreasonable dis- criminatory acts practiced against it, it is for you to say whether or not that amount should be trebled, that is, multiphed by three." The jury, as we have said, did find discrimination, and trebled the damages. In considering the right of the plaintiff to maintain ^Jiis action, despite the proceeding before the Commission, an initial question is presented as to the nature of the commerce involved. It ap- peared, as stated by the state court, that practically all the coal mined by the plaintiff was sold f. o. b. cars at the mines. About ninety-five or ninety-eight per cent, was sold in this way. Hence, it is said, it is "not subject to Interstate Commerce regu- lation." We do not understand that it is questioned that a very large part of the damages recovered in this action pertain to coal which with a fair method of car distribution would have been shipped from the mines to purchasers in other States. There is no con- troversy as to the course of business. The plaintiff sold to persons within and without the State of Pennsylvania. The coal was loaded on cars to be transported to various points of destination not only in Pennsylvania but in other States. The transporta- tion to other States absolutely depended upon a proper supply of cars, and it is manifest that unjust discrimination against the plaintiff in car distribution would improperly obstruct the freedom of such transportation, in which the plaintiff had a direct interest. And the question presented is whether unjust discrimination of this character is a subject which falls without the scope of the jurisdiction conferred upon the Interstate Com- merce Commission, that is, whether there is an absence of such PENN. E.R. V. CLABK COAL CO. 29 jurisdiction merely because the plaintiff sold its product, which was to be transported to other States, f. o. b. at its mines. This question must be answered in the negative. In deter- mining whether commerce is interstate or intrastate, regard must be had to its essential character. Mere billing, or the place at which title passes, is not determinative. If the actual movement is interstate, the power of Congress attaches to it and the pro- visions of the Act to Regulate Commerce, enacted for the pur- pose of preventing and redressing unjust discrimination by inter- state carriers, whether in rates or facilities, apply. Rearick v. Pennsylvania, 203 U. S. 507, 512; So. Pac. Terminal Co. v. Inter. Comm. Comm., 219 U. S. 498, 526, 527; Ohio R. R. Comm. v. Worthingion, 225 U. S. 101, 108, 110; Savage v. Jones, 225 U. S. 501, 520; Texas & N. 0. R. R. v. Sabine Tram Co., 227 U. S. Ill, 127; Louisiana R. R. Comm. v. Tex. & Pac. R\j., 229 U. S. 336; III. Cent. R. R. v. Louisiana R. R. Comm., 236 U. S. 157, 163. Thus, in the case of Southern Pacific Terminal Co. v. Interstate Commerce Commission, supra, cotton seed cake which had been purchased by one Young at various places in Texas was shipped to him at the port of Galveston, where it was prepared for export. The court sustained the jurisdiction of the Interstate Commerce , Commission with respect to the transportation to Galveston, although between Texas points, it being an incident to the export movement, and held that the special privileges given by the Ter- minal Company to Young on the wharf were undue preferences. As the commodity was destined for export it made no difference, said the court, 'that the shipments of the products were not made on through bills of lading or whether their initial points were Gal- veston or some other points in Texas. ' In Ohio Railroad Commis- sion V. Worthingion, supra, it appeared that the State Commission had established a rate on what was called 'lake cargo coal' trans- ported from a coal field in eastern Ohio to ports in the same State on Lake Erie for carriage thence by lake vessels to other States. Ordinarily, the shipper had the coal transported 'upon biUs of lading to himself, or to another for himself,' at Huron, Ohio. The rate covered the transportation to Huron and the placing of the coal on the vessels and trimming it for its interstate journey. In view of the proved nature of the movement, the court held that the action of the State Commission was an attempt directly to regulate interstate commerce and the enforcement of the order of the State Commission was enjoined. Again, in Savage v. Jones, 225 U. S. 501, 520, the complainant was a manufacturer in Minne- 30 SCOPE OF THE COMMERCE REGULATED BY THE ACT sota and sold his commodity to purchasers in Indiana, the dehvery being f. o. b. cars at Minneapohs for transportation to Indiana in the original unbroken packages, the freight being paid by the purchasers. Referring to an objection similar to the one here urged, the court said: "In answer, it must again be said that 'commerce among the States is not a technical legal conception, but a prac- tical one, drawn from the course of business.' Swift & Co. v. United States, 196 U. S. 375, 398; Rearick v. Pennsylvania, 203 U. S. 507, 512. It clearly appears from the bill that the com- plainant was engaged in dealing with purchasers in another State. His product manufactured in Minnesota was, in pursuance of his contracts of sale, to be delivered to carriers for transportation to the purchasers in Indiana. This was interstate commerce in the freedom of which from any unconstitutional burden the complainant had a direct interest." In Texas & N. 0. R. R. Co. v. Sabine Tram Co., 227 U. S. Ill, 127, it was found that the Powell • Company bought lumber for export to different ports in Europe through the ports of Sabine and Port Arthur, both in Texas. To fill its export contracts, it purchased of the Sabine Tram Company a large amount of lumber, which according to the seller's option was delivered f. o. b. cars at Sabine, Texas. There were separate bills of lading for delivery at Sabine to the Sabine Tram Company. Upon arrival at Sabine, the lumber was carried a short distance beyond the station to the dock where it was unloaded from cars into water of the slip ready for loading upon ships. The Sabine Tram Company had no connection with the further carriage. The railroad company collected, over protest, the rates fixed by tariffs filed with the Interstate Commerce Commission, and the Sabine Tram Company brought suit to recover the difference be- tween the amount thus paid and the amount which would have been payable at the rate fixed by the State Commission. The court held that the rate fixed by the Interstate Commerce Com- mission was appUcable as the lumber was destined for export and that, as the movement was one actually in the course of trans- portation to a foreign destination, the form of the biUing to Sabine, and the transactions there, were not determinative. Thus, in varying circumstances, the same principle has been apphed in these cases and in the others cited; and that principle is that the jurisdiction of the Commission is determined by the essential character of the commerce in question. In the present case, to repeat, it appears that for the purpose of filUng contracts with purchasers in other States, coal is deUvered f. o. b. at the SHANKS V. DELAWARE, LACKAWANNA & WESTERN R. R. CO. 31 mines for transportation to such purchasers. The movement thus initiated is an interstate movement and the facilities re- quired are facilities of interstate commerce. A very large part of what in fact is the interstate commerce of the country is con- ducted upon this basis and the arrangements that are made be- tween seller and purchaser with respect to the place of taking title to the commodity, or as to the payment of freight, where the actual movement is interstate, does not affect either the power of Congress or the jurisdiction of the Commission which Congress has established SHANKS V. DELAWARE. LACKAWANNA AND WESTERN RAILROAD COMPANY 239 U. S. 556 (1916) Mr. Justice Van Devanter deUvered the opinion of the court. Shanks sued the Railroad Company for damages resulting from personal injuries suffered through its neghgence while he was in its employ, and rested his right to recover upon the Em- ployers' Liability Act of Congress. His injuries were received in New Jersey and his action was brought in the Supreme Court of New York. He prevailed at the trial, but in the Appellate Division the judgment was reversed with a direction that his complaint be dismissed without prejudice to any remedy he might have under the law of New Jersey, and this was affirmed by the ' Court of Appeals, the ground of the appellate rulings being that at the time of the injury he was not employed in interstate com- merce. 163 App. Div. 565; 214 N. Y. 413. To obtain a review of the judgment of the Coiu-t of Appeals he sued out this writ of error, which was directed to the Supreme Court because the record was then in its possession. See Atherton v. Fowler, 91 U. S. 143; Wurts v. Hoagland, 105 U. S. 701; Sioux Remedy Co. v. Cope, 235 U. S. 197. In so far as its words are material here, the Employers ' Liabihty Act declares that "every common carrier by railroad while en- gaging in commerce between any of the several States .... shall be liable in damages to any person suffering injury while he is employed by such carrier in such commerce," if the injury results in whole or in part from the negligence of the carrier or of any of its officers, agents or employes. Thus it is essential to a right of recovery under the act not only that the carrier be engaged in interstate commerce at the time of the injury but also that the 32 SCOPE OP THE COMMERCE REGULATED BY THE ACT person suffering the injury be then employed by the carrier in such commerce. And so it results where the carrier is also engaged in intrastate commerce or in what is not commerce at all, that one who while employed therein by the carrier suffers injury through its negligence, or that of some of its officers, agents or employes, must look for redress to the laws of the State wherein the injury occurs, save where it results from the violation of some Federal statute, such as the Safety Appliance Acts. The facts in the present case are these: The Railroad Company was engaged in both interstate and intrastate transportation and was conducting an extensive machine shop for repairing parts of locomotives used in such transportation. While employed in this shop Shanks was injured through the negligence of the company. Usually his work consisted in repairing certain parts of locomotives, but on the day of the injury he was engaged solely in taking down and putting into a new location an overhead counter-shaft — a heavy shop fixture — through which power was communicated to some of the machinery used in the repair work. The question for decision is, was Shanks at the time of the in- jury employed in interstate commerce within the meaning of the Employers' Liability Act? What his emplojmient was on other occasions is immaterial, for, as before indicated, the act refers to the service being rendered when the injury was suffered. Having in mind the nature and usual course of the business to which the act relates and the evident purpose of Congress in adopting the act, we think it speaks of interstate commerce, not in a technical legal sense, but in a practical one better suited to the occasion (see Svnft & Co. v. United States, 196 U. S. 375, 398), and that the true test of emplo3anent in such commerce in the sense intended is, was the employ^ at the time of the injury en- gaged in interstate transportation or in work so closely related to it as to be practically a part of it. Applying this test, we have held that the requisite employment in interstate commerce exists where a car repairer is replacing a drawbar in a car then- in use in such commerce, Walsh v. New York, New Haven & Hartford R. R., 223 U. S. 1; where a fireman is walking ahead of and piloting through several switches a lo- comotive which is to be attached to an interstate train and to assist in moving the same up a grade, Norfolk & Western Ry. v. Earnest, 229 U. S. 114; where a workman about to repair a bridge regularly used in interstate transportation is carrying from a tool SHANKS V. DELAWARE, LACKAWANNA & WESTERN R. R. CO. 33 car to the bridge a sack of bolts needed in his worli, Pederson v. Del, Lack. & West. R. R., 229 U. S. 146; where a clerk is on his way through a railroad yard to meet an inbound interstate freight train and to mark the cars so the switching crew will know what to do with them when breaking up the train, St. Louis, San Fran- cisco & Texas Ry. v. Seale, 229 U. S. 156; where a fireman, having prepared his engine for a trip in interstate commerce, and being about to start on his run, is walking across adjacent tracks on an er- rand consistent with his duties, North Carolina R. R. v. Zachary, 232 U. S. 248; and where a brakeman on a train carrjdng several cars of interstate and two of intrastate freight is assisting in seciurely placing the latter on a side track at an intermediate station to the end that they may not run back on the main track and that the train may proceed on its journey with the interstate freight, New York Central R. R. v. Carr, 238 U. S. 260. Without departing from this test, we also have held that the requisite employment in interstate commerce does not exist where a member of a switching crew, whose general work extends to both interstate and intrastate traffic, is engaged in hauling a train or drag of cars, all loaded with intrastate freight, from one part of a city to another, III. Cent. R. R. v. Behrens, 233 U. S. 473, and where an employ^ in a colliery operated by a railroad com- pany is mining coal intended to be used in the company's loco- motives moving in interstate commerce, Del., Lack. & West. R. R. v. Yurkonis, 238 U. S. 439. In neither instance could the service indicated be said to be interstate transportation or so closely related to it as to be practically a part of it. Coming to apply the test to the case in hand, it is plain that Shanks was not employed in interstate transportation, or in repairing or keeping in usable condition a roadbed, bridge, engine, car or other instrument then in use in such transportation. What he was doing was altering the location of a fixture in a machine shop. The connection between the fixture and interstate trans- portation was remote at best, for the only function of the fixture was to communicate power to machinery used in repairing parts of engines some of which were used in such transportation. This, we think, demonstrates that the work in which Shanks was en- gaged, hke that of the coal miner in the Yurkonis Case, was too remote from interstate transportation to be practically a part of. it, and therefore that he was not employed in interstate com- merce within the meaning of the Employers' Liabihty Act. Judgment affirmed. 34 SCOPE OF THE COMMERCE REGULATED BY THE ACT ATCHISON, TOPEKA & SANTA FE RAILWAY COMPANY V. HAROLD 241 U. S. 371 (1916) Mr. Chief Justice White deKvered the opinion of the court. We are of the opinion that a motion to dismiss is without merit but the reasons which lead us to that conclusion will be more* clearly appreciated after we have made a statement of the case. Until that is done we hence postpone the subject. J. Bell & Son, having sold a carload of bulk corn to the C. V. Fisher Grain Company residing and doing business at Kansas City, Missouri, on September 21, 1910, shipped the same from Yanka, Nebraska, over the Union Pacific Railroad. The bill of lading identified the car as L. W. No. 33791 containing 100,420 pounds of corn, and the same was consigned to Topeka, Kansas, to the order of the consignors (BeU & Son) with a direction, how- ever, in the bill of lading to "notify C. V. Fisher Grain Com- pany, care of Santa Fe for shipment." A draft for the purchase price of the corn was mailed to Kansas City, Missouri, accompanied with the bill of lading endorsed over to the order of the Fisher Grain Company and on the presentation of this draft to the Grain Company at Kansas City, Missouri, while the car was yet in transit it paid the same and became the possessor and owner of the bill of lading. On September 24 the Grain Company surren- dered to an agent of the Santa Fe at Kansas City, Missouri, the Yanka bill of lading which it had thus acquired and took in ex- change for it another bill consigning the identical car to their own order at Elk Falls, Kansas, a place on the Santa Fe road, with a direction, however, to notify at Elk Falls the NevKng -Elevator Company. This bill of lading was dated the same day as the origi- nal bill for which it was exchanged, that is, September 21, although it was in fact only signed and issued on the twenty-fourth of that month; and although on its face it treated the car as being at Kansas City, in reality the car was in transit from Yanka, not having yet reached Topeka. Harold, the defendant in error, a grain dealer at Wichita, Kansas, who had sold on September 15 a carload of corn to Shoe & Jackson at Elk Falls to be shipped or delivered in a stated number of days, bought the carload of corn described by the bill of lading issued at Kansas City, and, paying a- draft for the pur- chase price drawn by Fisher Grain Company with the bill an- nexed, he became the owner of the bill and directed that delivery ATCHISON, TOPEKA & SANTA FE V. HAROLD 35 of the corn be made to Shoe & Jackson. The car from Yanka had then not yet been dehvered to the Santa Fe at Topeka, having reached that point only on September 28, on which day it was offered to the Santa Fe for carriage and dehvery at Elk Falls. Finding that the car was in bad order the dehvery was declined and the car turned back to the Union Pacific. That road dis- covering that the damage was such that the car could not be repaired while it was loaded, sent it to an elevator, transferred the grain to another car, S. P. No. 85721, and turned that car over to the Santa Fe. The new car, however, did not contain the exact quantity of grain originally shipped from Yanka as one of the defects in the old car was a leaky door and several hundred pounds of the corn had been lost in transit. The car was promptly carried by the Santa Fe to Elk Falls and offered for delivery, but as the period for the fulfillment by Harold of his contract with Shoe & Jackson had elapsed and there had been a decline in the market price of corn, the latter refused to take the car. There- upon this suit against the Santa Fe was commenced by Harold to recover the loss which he had suffered by the alleged unreason- able delay in dehvery at Elk Falls consisting of three items: First, the difference between the price at which the corn had been con- tracted to be sold to Shoe & Jackson and the market price at the date the car was offered for delivery; Second, the amount of the freight paid on the corn which had been lost; and Third, a reasonable attorney's fee which it was alleged a statute of the State of Kansas authorized to be recovered in case of delay of a carrier in the dehvery of grain. In its defense the company alleged the shipment over the Union Pacific from Yanka, averred that the corn was received by it at Topeka in order to complete the transportation to Elk Falls, and charged that by a condition of the bill of lading issued at Kansas City as the delay had been wholly caused by the Union Pacific, there was no liabUity on the part of the Santa Fe, and that besides that company was not hable because of a failure to give a notice of claim in compliance with a condition which was also contained in the Kansas City bill of lading. There was judgment in the trial court for the plaintiff and the judgment of the court below affirming such action is the one now under review. The court after referring to the bill of lading sued on (the one issued at Kansas City), and after stating that "the shipment in- tended to be described in the bill of lading originated at Yanka, Nebraska, on the Union Pacific Railway," proceeded to state 36 SCOPE OF THE COMMERCE REGULATED BY THE ACT the facts which we have recapitulated and which had been ad- mitted in evidence without objection. In substance conceding that if the facts stated were made the test of the rights of the parties the judgment under review was wrong because there had been as a matter of fact no unreasonable delay in delivering the corn by the Santa Fe, it was held that the judgment rendered was right since the plaintiff below as the purchaser of a bill of lading for value had a right to rely upon the face of the bill, to treat the corn as having been received by the carrier at Kansas City on the date the bill of lading was issued, and therefore to recover for the unreasonable delay in delivery which necessarily would result from excluding from view the facts concerning the movement of the corn from Yanka, Nebraska, and the date of its delivery at Topeka to the Santa Fe. The essence of the opinion, 93 Kansas, 456, was aptly summed up in the syllabus which pre- ceded it drawn by the court which is as follows: "1. The rule which invests the innocent holder of a bill of lading with rights not available to the shipper, declared in Savings Bank v. A., T. & Santa Fe R. R., 20 Kansas, 519; Railway Co. V. Hutchings, 78 Kansas, 758, 99 Pac. Rep. 230; and Hutchings V. Railway Co., 84 Kansas, 479, 114 Pac. Rep. 1079, is followed in a case where the plaintiff piu-chased corn described in a bill of lading, and paid the shipper's draft attached to the bill in the usual course of business." In addition the allowance of the attorney's fees under the Kan- sas statute was upheld on the ground that the statute was within the legitimate police power of the State to enact and not repugnant to the state or Federal Constitution. The motion to dismiss referred to at the outset is based on the ground that the action of the court involved no question of inter- state but purely one of intrastate commerce. But this disregards the fact that the bill of lading which was sued upon was an interstate commerce bill covering a shipment from Kansas City, Missouri, to Elk Falls, Kansas. True it is urged that that bill of lading is not the test of whether there is juris- diction because it was shown that in reality the shipment was an intrastate one from- Topeka, Kansas, to Elk Falls in that State. But this assumes that although the judgment rests upon the conception that the previous movement of the corn from Yanka could not be considered as against the plaintiff because he was an innocent third holder of the bill of lad- ing issued at Kansas City, nevertheless for the purpose of deter- ATCHISON, TOPEKA & SANTA FE V. HAROLD 37 mining whether jurisdiction exists the facts as to the ship- ment from Yanka must be treated as relevant. Leaving aside however, this contradiction and considering the facts as to the movement of the grain from its inception,, we are of opinion that from that point of view it was clearly estabUshed that the grain moved in a continuous interstate commerce shipment from the date of its departure from Yanka to the termination of the transit at Elk Falls and that the delivery of the car to the Santa Fe at Topeka for further movement was therefore not a new and dis- tinct shipment in intrastate commerce. We reach this conclusion in view of the place of business of the Fisher Grain Company (Kan- sas 'City, Missouri), of the fact that there was no person at Topeka to whom the grain was consigned, of the endorsement of the bill of lading to the Fisher Grain Company and the annexing to it of a draft drawn on that company at Kansas City for the purchase price, and because the order on the face of the bill of lading to "notify C. V. Fisher Grain Company, care of Santa Fe for ship- ment" made it apparent that it was not contemplated that the interstate shipment should terminate at Topeka, but that the car should move on as the result of such direction as might be given while it was in transit by the Fisher Grain Company at Kansas City, Missouri That the local rule apphed by the court below was in direct conflict with the general commercial law on the subject as re- peatedly settled by this court, is plain. Shaw v. Railroad Co., 101 U. S. 557; Pollard v. Vinton, 105 U. S. 7; Iron Mountain By. V. Knight, 122 U. S. 79; Friedlander v. Tex. '& Pac. Ry., 130 U. S. 416; Mo. Pac. Ry. v. McFadden, 154 U. S. 155; The Carlos F. Roses, 177 U. S. 655, 665. Nothing could better point out the irreconcilable conflict be- tween the local doctrine apphed by the court below and the general law as illustrated in the cases cited than does the following statement in the opinion in the Roses Case last cited (p. 665): "A pledgee to whom a biU of lading is given as security gets the legal title to the goods and the right of possession only if such is the intention of the parties, and that intention is open to explanation. Inquiry into the transaction in which the bill origi- nated is not precluded because it came into the hands of persons who may have innocently paid value for it." Whether in the absence of legislation by Congress the attrib- uting to an interstate bill of lading of the exceptional and local characteristic applied by the com't below in conflict with the 38 SCOPE OF THE COMMERCE REGULATED BY THE ACT general commercial rule constituted a direct burden on inter- state commerce and was therefore void need not now be considered. This is so because irrespective of that question and indeed without stopping to consider the general provisions of the Act to Regulate Commerce it is not disputable that what is known as the Carmack Amendment to the Act to Regulate Commerce (act of June 29, 1906, c. 3591, § 7, 34 Stat. 593) was an assertion of the power of Congress over the subject of interstate shipments, the duty to issue bills of lading and the responsibilities thereunder, which in the nature of things excluded state action. Adams Express Co. v. Croninger, 226 U. S. 491, 505-506; Mo., Kan. & Tex. Ry. V. Harriman Bros., 227 U. S. 657, 671-672; Boston & Mhine R. R. V. Hooker, 233 U. S. 97, 110; Atchison, Topeka & Santa Fe Ry. V. Robinson, 233 U. S. 173, 180; Cleveland & St. Louis Ry. V. Dettlebach, 239 U. S. 588; Georgia, Florida & Alabama Ry. V. Blish Milling Co., ante [240 U. S.], p. 190. Indeed in the argument it is frankly conceded that as the subject of a carrier's liabihty for loss or damage to goods moving in interstate commerce under a bill of lading is embraced by the Carmack Amendment, state legislation on that subject has been excluded. It is insisted, however, that this does not exclude liability for error in the bill of lading purporting to cover an in- terstate shipment because "Congress has legislated relative to the one, but not relative to the other." But this ignores the view expressly pointed out in the previous decision dealing with the Carmack Amendment that its prime object was to bring about a uniform rule of responsibility as to interstate commerce and interstate commerce bills of lading, — a purpose which would be wholly frustrated if the proposition relied upon were upheld. The principal subject of responsibility embraced by the act of Congress carried with it necessarily the incidents thereto. See the subject aptly and clearly illustrated by St. Louis & San Fran- cisco R. R. V. Woodruff Mills, 105 Mississippi, 214, where a statute of the State of Mississippi accomplishing the very result applied by the court below was decided to be no longer applicable to interstate commerce because of the taking possession by Congress of the field by virtue of the amendment referred to. As it follows from what we have said that the court below erred in applying the local law to the interstate commerce shipment under consideration, its judgment must be reversed and the case remanded for further proceedings not inconsistent with this opinion. And it was so ordered. THE MINNESOTA RATE CASES 39 THE MINNESOTA RATE CASES 230 U. S. 352 (1913) ' These suits were brought in the Circuit Court of the United States for the district of Minnesota by stockholders of the North- ern Pacific Railway Company, the Great Northern Railway Com- pany, and the Minneapolis and St. Louis Railroad Company to restrain the enforcement of two orders of the Railroad and Warehouse Commission of the State of Minnesota and two acts of the legislature of that State prescribing maximum charges for transportation of freight in that State and a maximum rate of two cents a mile for passengers. The rates related to traffic ex- clusively between points in the State. It was contended, however, that as applied to cities on the State's boundaries or to places within competitive districts crossed by the state line, the rail- ways disturbed the relation previously existing between interstate and intrastate rates, thus imposing a direct burden on interstate commerce and creating discriminations as against localities in other states. The rates were also assailed as confiscatory. The jiu-isdiction of the Circuit Court was sustained in Ex parte Young, 209 U. S. 123, where it was also held that the penal provisions of the acts, operating to preclude a fair opportunity to test their vaUdity, were unconstitutional on their face. The Circuit Court then referred the suits to a special master, who took the evidence and made an elaborate report sustaining the complainant's con- tentions. His findings were confirmed by the court and decrees were entered accordingly, adjudging the acts and orders (with the exception, in the case of the Minneapolis and St. Louis Rail- road Company, of the order of May 3, 1907) to be void and permanently enjoining the enforcement of the prescribed rates, freight and passenger, and their adoption or maintenance by the railroad companies. 184 Fed. Rep. 765. From these decrees, the Attorney-General of the State and the members of the Railroad and Warehouse Commission prosecute these appeals. Mk. Justice Hughes delivered the opinion of the court. . . . The situation is not peculiar to Minnesota. The same question ^ A brief statement of the facts has been framed based upon that in the opinion of the court. — Ed. 2 Only so much of the opinion as deals with the effect of the acts and orders on interstate commerce is here reprinted. — Ed. 40 SCOPE OF THE COMMERCE REGULATED BY THE ACT has been presented by the appeals, now before the court, which involve the validity of intrastate tariffs fixed by Missouri, Arkan- sas, Kentucky and Oregon. Differences in particular facts appear, but they cannot be regarded as controlling. A scheme of state rates framed to avoid discrimination between localities within the State, and to provide an harmonious system for intrastate transportation throughout the State, naturally would embrace those places within the State which are on or near the State's boundaries; and, when these are included in a general reduction of intrastate rates, there is, of course, a change in the relation of rates as theretofore existing to points adjacent to, but across, the state Une. Kansas City, Kansas, and Kansas City, Missouri; East St. Louis, Illinois, and St. Louis, Missouri; Omaha, Nebraska, and Council Bluffs, Iowa; Cincinnati, Ohio, and Covington and Newport, Kentucky; and many other places throughout the country which might be mentioned, present substantially the same conditions as those here appearing with respect to localities on the boundaries of Minnesota. It is also a matter of common knowledge that competition takes but little account of state lines and in every part of the land competitive districts embrace points in different States. With appreciation of the gravity of the controversy, the Rail- road Commissioners of eight States ' have filed their brief as amid curiae, in support of the appeals, stating that, if the doctrine of the court below were accepted, the regulation by the States of rates for intrastate transportation would be practically de- stroyed. They say that "there is practically no movement of traffic between two towns within a State that does not come into competition with some interstate haul," and that "if the dis- turbance of the existing relation between competitive state and interstate rates is the correct criterion, no reduction can be made in state rates without interfering with interstate commerce." The Governors of three States, pursuant to a resolution of a conference of the Governors of all the States, have also presented, by leave of the court, their argument in defense of the position taken by Minnesota. They do not seek "to belittle the effect, of the action of Minnesota on the business between the places" named in the findings, but they are convinced that if the principle announced by the Circuit Court is upheld, it can be made to apply by a showing of similar facts in virtually every State. Insist- ' Nebraska, Iowa, Kansas, South Dakota, North Dakota, Oklahoma, Missouri and Texas. THE MINNESOTA RATE CASES 41 ing that, under their reserved power, "the right of the States to regulate their own commerce is as clear and broad as that of Congress to regulate interstate commerce," they assail the deci- sion below, not upon the ground that it incorrectly sets forth conditions in Minnesota and adjoining States, but for what they consider to be "its plain disregard of the provisions of the Federal Constitution, which establish the relations between the Nation and the States." "The operation of these provisions," they maintain, "was not made to depend on geography or convenience or competition. They cannot apply in one State and not in an- other, according to circumstances as they may be found by the courts, because they are vital principles which constitute the very structure of our dual form of government." The controversy thus arises from opposing conceptions of the fundamental law, and of the scope and effect of Federal legislation, rather than from differences with respect to the salient facts. For the purpose of the present inquiry, the rates fixed by the State must be assumed to be reasonable rates so far as intrastate traffic is concerned; that is, they must be taken to be rates which the State, in the exercise of its legislative judgment, could con- stitutionally fix for intrastate transportation separately considered. If the state rates are not of this character — a question to be dealt with later — they cannot be sustained in any event; but, assum- ing them to be otherwise valid, the decree below, with respect to the present branch of the case, rests upon two grounds: (1) That the action of the State imposes a direct burden upon inter- state commerce; and (2) .that it is in conflict with the provisions of the Act to Regulate Commerce. These grounds are distinct. If a state enactment imposes a direct burden upon interstate comimerce, it must fall regardless of Federal legislation. The point of such an objection is not that Congress has acted, but that the State has directly restrained that which in the absence of Federal regulation should be free. If the acts of Minnesota constitute a direct burden upon inter- state commerce, they would be invalid without regard to the exercise of Federal authority touching the interstate rates said to be affected. On the other hand, if the State, in the absence of Federal legislation, would have had the power to prescribe the rates here assailed, the question remains whether its action is void as being repugnant to the statute which Congress has enacted. Prior to the passage of the Act to Regulate Commerce, carriers 42 SCOPE OF THE COMMERCE REGULATED BY THE ACT fixed their interstate rates free from the actual exertion of Federal control; and under that act, as it stood until the amendment of June 29, 1906, 34 Stat. 584, c. 3591, the Interstate Commerce Commission had no power to prescribe interstate rates. Inter- state Commerce Commission v. C, N. 0. & T. P. Ry. Co., 167 U. S. 479, 511. The States, however, had long exercised the power to establish maximum rates for intrastate transportation. Was this power, apart from Federal action, subject to the limitation that the State could not fix intrastate rates, reasonable as such, generally throughout the State, but only as to such places and in such circumstances that the interstate business of the carriers would not be thereby affected? That is, was the State debarred from fixing reasonable rates on trafl&c, wholly internal, as to all state points so situated that as a practical consequence the carriers would have to reduce the rates they had made to competing points without the State, in order to maintain the volume of their interstate business or to continue the parity of rates or the re- lation between rates as it had previouslj'- existed? Was the State, in prescribing a general tariff of reasonable intrastate rates other- wise within its authority bound not to go below a minimum stand- ard estabUshed by the interstate rates made by the carriers within competitive districts? If the state power, independently of Federal legislation, is thus limited, the inquiry need proceed no further. Otherwise it must be determined whether Congress has so acted as to create such a restriction upon the state authority theretofore existing. (1) The general principles governing the exercise of state authority when interstate commerce is affected are well estab- lished. The power of Congress to regulate commerce among the several States is supreme and plenary. It is "complete in itself, may be exercised to its utmost extent, and acknowledges no limitations other than are prescribed in the Constitution." Gib- bons V. Ogden, 9 'WTieat. 1, 196. The conviction of its necessity sprang from the disastrous experiences under the Confederation when the States vied in discriminatory measures against each other. In order to end these evils, the grant in the Constitution conferred upon Congress an authority at all times adequate to secxire the freedom of interstate commercial intercourse from state control and to provide effective regulation of that intercourse as the national interest may demand. The words "among the several States" distinguish between the commerce which con- THE MINNESOTA HATE CASES 43 cerns more States than one and that commerce ,which is confined within one State and does not affect other States. "The genius and character of the whole government," said Chief Justice Marshall, "seem to be, that its action is to be apphed to all the external concerns of the nation, and to those internal concerns which affect the States generally; but not to those which are completely within a particular State, which do not affect other States, and with which it is not necessary to interfere, for the purpose of executing some of the general powers of the govern- ment. The completely internal commerce of a State, then, may be considered as reserved for the State itself." {Id., p. 195.) This reservation to the States manifestly is only of that authority which is consistent with and not opposed to the grant to Congress. There is no room in our scheme of government for the assertion of state power in hostility to the authorized exercise of Federal power. The authority of Congress extends to every part of inter- state commerce, and to every instrumentality or agency by 'which it is carried on; and the full control by Congress of the subjects committed to its regulation is not to be denied or thwarted by the commingling of interstate and intrastate operations. This is not to say that the Nation may deal with the internal concerns of the State, as such, but that the execution by Congress of its constitutional power to regulate interstate commerce is not limited by the fact that intrastate transactions may have become so interwoven therewith that the effective government of the former incidentally controls the latter. This conclusion neces- sarily results from the supremacy of the national power within its appointed sphere. McCulloch v. Maryland, 4 Wheat. 316, 405, 426; The Daniel Ball, 10 Wall. 557, 565; Smith v. Alabama, 124 U. S. 465, 473; Baltimore & Ohio R. R. Co. v. Interstate Com- merce Commission, 221 U. S. 612, 618, 619; Southern Railway Co. v. United States, 222 U. S. 20, 26, 27; Mondou v. N. Y., N. H. & H. R. R. Co., 223 U. S. 1, 47, 54, 55. The grant in the Constitution of its own force, that is, without action by Congress, established the essential immunity of inter- state commercial intercourse from the direct control of the States with respect to those subjects embraced within the grant which are of such a nature as to demand that, if regulated at all, their regulation should be prescribed by a single authority. It has repeatedly been declared by this court that as to those subjects which require a general system or uniformity of regulation the power of Congress is exclusive. In other matters, admitting of 44 SCOPE OF THE COMMERCE REGULATED BY THE ACT diversity of treatment according to the special requirements of local conditions, the States may act within their respective jurisdictions until Congress sees fit to act; and, when Congress does act, the exercise of its authority overrides all conflicting state legislation. Cooley v. Board of Wardens, 12 How. 299, 319; Ex parte McNiel, 13 Wall. 236, 240; Welton v. Missouri, 91 U. S. 275, 280; County of Mobile v. Kimball, 102 U. S. 691, 697; Gloucester Ferry Co. v. Pennsylvania, 114 U. S. 196, 204; Bowman V. Chicago &c. Railway Co., 125 U. S. 465, 481, 485; Gulf, Colorado & Santa Fe Ry. Co. v. Hejley, 158 U. S. 98, 103, 104; Northern • Padjic Ry. Co. v. Washington, 222 U. S. 370, 378; Southern Ry. Co. V. Reid, 222 U. S. 424, 436. The principle, which determines this classification, underhes the doctrine that the States cannot under any guise impose direct bxirdens upon interstate commerce. ' For this is but to hold that the States are not permitted directly to regulate or restrain that which from its nature should be under the control of the one authority and be free from restriction save as it is governed in the manner that the national legislature constitutionally ordains. Thus, the States cannot tax interstate commerce, either by laying the tax upon the business which constitutes such commerce or the privilege of engaging in it, or upon the receipts, as such, derived from it (State Freight Tax Case, 15 Wall. 232; Robbins v. Shelby Taxing District, 120 U. S. 489; Philadelphia & Southern Mail S. S. Co. V. Pennsylvania, 122 U. S. 325; Leloup v. Mobile, 127 U. S. 640; McCall v. California, 136 U. S. 104; Brennan v. Titusville, 153 U. S. 289; Galveston, Harrisburg & San Antonio Railway Co. v. Texas, 210 U. S. 217; Western Union Telegraph Co. V. Kansas, 216 U. S. 1; Pullman Co. v. Kansas, 216 U. S. 1, 56; Meyer v. Wells, Fargo & Co., 223 U. S. 298; Crenshaw v. Arkansas, 227 U. S. 389) ; or upon persons or property in transit in interstate commerce (Passenger Cases, 7 How. 283-; Crandall v. Nevada, 6 Wall. 35; State Freight Tax Case, supra, p. 281; Coe V. Errol, 116 U. S. 517; Kelley v. Rhoads, 188 U. S. 1; Bacon v. Illinois, 227 U. S. 504). They have no power to prohibit interstate trade in legitimate articles of commerce (Bowman v. Chicago &c. Railway Co., supra; Leisy v. Hardin, 135 U. S. 100; Van^e v. Vandercook Co. (No. 1), 170 U. S. 438; Schollenberger v. Pennsylvania, 171 U. S. 1; Okla- homa V. Kansas Natural Gas Co., 221 U. S. 229; L. & N. R. R. Co. V. Cook Brewing Co., 223 U. S. 70); or to discriminate against the products of other States (Ward v. Maryland, 12 Wall. 418; THE MINNESOTA RATE CASES 45 Welton V. Missouri, supra; Hannibal & Si. J. R. R. Co. v. Husen, 95 U. S. 465; Guy v. Baltimore, 100 U. S. 434; Walling v. Michi- gan, 116 U. S. 446; Minnesota v. Barber, 136 U. S. 313; Brimmer V. Rebman, 138 U. S. 78; Darnell v. Memphis, 208 U. S. 113); or to exclude from the limits of the State corporations or others engaged in interstate commerce or to fetter by conditions their right to carry it on {Crutcher v. Kentucky, 141 U. S. 47; Western Union Telegraph Co. v. Kansas, supra; Pullman' Co. v. Kansas, supra; International Text Book Co. v. Pigg, 217 U. S. 91; Bu£k Stove Co. V. Vickers, 226 U. S. 205) ; or to prescribe the rates to be charged for transportation from one State to another, or to subject the operations of carriers in the course of such transporta- tion to requirements that are unreasonable or pass beyond the bounds of suitable local protection {Wabash &c. Railway Co. v. Illinois, 118 U. S. 557, 577; Covington &c. Bridge Co. v. Kentucky, 154 U. S. 204; Louisville & NashmUe R. R. Co. v. Eubank, 184 U. S. 27; Hanley v. Kansas City Southern Ry. Co., 187 U. S. 617; R. R. Commission of Ohio v. Wonhington, 225 U. S. 101; Texas & N. 0. R. R. Co. V. Sabine Tram Co., 227 U. S. Ill; Hall v. DeCuir, 95 U. S. 485, 488; Cleveland, C, C. & St. L. Railway Co. V. Illinois, 177 U. S. 514; Houston & T. C. R. R. Co. v. Mayes, 210 U. S. 321; McNeill v. Southern Railway Co., 202 U. S. 543; Mississippi R. R. Commission v. Illinois Cent. R. R. Co., 203 U. S. 335; Atlantic Coast Line v. Wharton, 207 U. S. 328; St. Louis Southwestern Ry. Co. v. Arkansas, 217 U. S. 136; Herndon v. C, R. I. & Pac. R. R. Co., 218 U. S. 135; Yazoo &c. R. R. Co. v. Greenwood Grocery Co., 227 U. S. l). ■But within these limitations there necessarily remains to the States, until Congress acts, a wide range for the permissible exercise of power appropriate to their territorial jurisdiction although interstate commerce may be affected. It extends, to those matters of a local natiire as to which it is impossible to de- rive from the constitutional grant an intention that they should go uncontrolled pending Federal intervention. Thus, there are certain subjects having the most obvious and direct relation to interstate commerce, which nevertheless, with the acquiescence of Congress, have been controlled by state legislation from the foundation of the Government because of the necessity that they should not remain unregulated and that their regulation should be adapted to varying local exigencies; hence, the absence of regu- lation by Congress in such matters has not imported that there should be no restriction but rather that the States should continue 46 SCOPE OF THE COMMERCE REGULATED BY THE ACT to supply the needed rules until Congress should decide to super- sede them. Further, it is competent for a SJ;ate to govern its internal commerce, to provide local improvements, to create and regulate local faciUties, to adopt protective measures of a reason- able character in the interest of the health, safety, morals and welfare of its people, although interstate commerce may inciden- tally or indirectly be involved. Our system of government is a practical adjustment by which the National authority as con- ferred by the Constitution is maintained in its full scope with- out unnecessary loss of local efficiency. Where the subject is peculiarly one of local concern, and from its nature belongs to the class with which the State appropriately deals in making reasonable provision for local needs, it cannot be regarded as left to the unrestrained will of individuals because Congress has not acted, although it may have such a relation to interstate commerce as to be within the reach of the Federal power. In such case. Congress must be the judge of the necessity of Federal ac- tion. Its paramount authority always enables it to intervene at its discretion for the complete and effective government of that which has been committed to its care, and, for this purpose and to this extent, in response to a conviction of national need, to displace local laws by substituting laws of its own. The successful working of our constitutional system has thus been made possible. The leading illustrations may be noted. Immediately upon the adoption of the Constitution, Congress recognized the propriety of local action with respect to pilotage, in view of the local ne- cessities of navigation. Act of August 7, 1789, c. 9, § 4; 1 Stat. 53, 54; Cooley v. Board of Wardens, supra. It was sixty years be- fore provision for Federal hcense of pilots was made (act of Aug- ust 30, 1852, c. 106; 10 Stat. 61), and even then port pilots were not included. Pacific Mail Steamship Co. v. Joliffe, 2 Wall. 450, 459. And while Congress has full power over the subject and to a certain extent has prescribed rules, it is still in a large measure subject to the regulation of the States. ' Anderson v. Pacific Coast S. S. Co., 225 U. S. 187. A State i? entitled to protect its coasts, to improve its harbors, bays and streams, and to construct dams and bridges across navigable rivers within its limits, unless there is conflict with some act of Congress. Plainly, in the case of dams and bridges, interference with the accustomed right of navigation may result. But this exercise of the important power to provide local im- provements has not been regarded as constituting such a direct THE MINNESOTA RATE CASES 47 burden upon intercourse or interchange of traffic as to be repug- nant to the Federal authority in its dormant state. Willson v. Blackbird Creek Marsh Co., 2 Pet. 245; Oilman v. Philadelphia, 3 WaU. 713; Pound v. Turck, 95 U. S. 459; County of Mobile v. Kimball, supra; Escanaba Co. v. Chicago, 107 U. S. 678; Cardwell V. American Bridge Co., 113 U. S. 205; Huse v. Glover, 119 U. S. 543, 547; Willamette Bridge Co. v. Hatch, 125 U. S. 1; Lake Shore & Michigan C. Ry. Co. v. Ohio, 165 U. S. 365; Cummings v. Chicago, 188 U. S. 410; Manigault v. Springs, 199 U. S. 473. Thus, in Oilman v. Philadelphia, supra, the complainants were the owners of a valuable wharf and dock property in the Schuylkill River and sought to prevent the construction of a bridge which had been authorized by the legislature of Pennsylvania to connect East and West Philadelphia. It appeared that the bridge would prevent the passage of vessels having masts which had formerly navigated the river up to the complainants' wharf, and would largely reduce the income from the property. The court affirmed the dismissal of the bill upon the ground that in the absence of legislation by Congress the State was acting within its authority. "The States have always exercised this power," said the court {id., p. 729), "and from the nature and objects of the two systems of government they must always continue to exercise it, subject, however, in all cases, to the paramount authority of Congress, whenever the power of the States shall be exerted within the sphere of the commercial power which belongs to the Nation." Again, in Escanaba Co. v. Chicago, supra, the question related to the power of the City of Chicago, acting under the authority of the State, to regulate the closing of draws in the bridges over the Chicago River. The court said: "The Chicago River and its branches must .... be deemed navigable waters of the United States, over which Congress under its commercial power may exercise control to the extent necessary to protect, preserve, and improve their free navigation. But the States have full power to regulate within their Umits matters of internal police, includ- ing in that general designation, whatever will promote the peace, comfort, convenience, and prosperity of their people. This power embraces the construction of roads, canals, and bridges, and the estabUshment of ferries, and it can generally be exercised more wisely by the States than by a distant authority When its (the State's) power is exercised, so as to unnecessarily obstruct the navigation of the river or its branches. Congress may interfere and remove the obstruction. . . . But until Con- 48 SCOPE OF THE COMMERCE. REGULATED BY THE ACT gress acts on the subject, the power of the State over bridges across its navigable streams is plenary." {Id., p. 683.) While the State may not impose a duty on tonnage {Steamship Co. V. Portwardens, 6 Wall. 31; State Tonnage Tax Cases, 12 Wall. 204, 212; Cannon v. New Orleans, 12 Wall. 577), it may regulate wharfage charges and exact tolls for the use of artificial facilities provided under its authority. The subject is one under state control, where Congress has not acted, although the pay- ment is required of those engaged in interstate or foreign com- merce. Keokuk Packet Co. v. Keokuk, 95 U. S. 80; Cincinnati &c. Packet Co. v. Catletisburg, 105 U. S. 559; Parkershurg & 0. R. Transportation Co. v. Parkersburg, 107 U. S. 691; Huse v. Glover, supra, Ouachita Packet Co. v. Aiken, 121 U. S. 444; Sands V. Manistee River Improvement Co., 123 U. S. 288, 295. In Trans- portation Co. V. Parkersburg, supra, the court had before it an ordinance of that city prescribing rates of wharfage on vessels discharging or receiving freight at public landings belonging to the city. A transportation company having steamers plying between Pittsburg and Cincinnati complained that the wharfage charge was exorbitant. The court held that the reasonableness of the charge, it being simply one for wharfage, was to be de- termined by the state law. "The regulation of wharves belongs prima fade, and in the first instance, to the States, and would only be assimaed by Congress when its exercise by the States is incompatible with the interests of commerce." {Id., p. 703.) Again, in Ovuchita Packet Co. v. Aiken, supra, where the owners of steamboats engaged in interstate commerce on the Mississippi River complained of wharfage rates at New Orleans ^.s unreason- able and excessive, and in effect "a direct duty, or burden, upon commerce," the court, overruling the contention, held that the case was "clearly within the principles of the former decisions of this court, which affirm the right of a State, in the absence of regulation by Congress, to establish, manage and carry on works and improvements of a local character, though necessarily more or less affecting interstate and foreign commerce." {Id., p. 447.) Quarantine regulations are essential measures of protection which the States are free to adopt when they do not come into conflict with Federal action. In view of the need of conforming such measures to local conditions. Congress from the beginning has been content to leave the matter for the most part, notwith- standing its, vast importance, to the States and has repeatedly acquiesced in the enforcement of state laws. (Acts of February THE MINNESOTA RATE CASES 49 25, 1799, c. XII, 1 Stat. 619, R. S., § 4797; Act of April 29, 1878, c. 66, 20 Stat. 37; Act of February 15, 1893, c. 114, 27 Stat. 449.) Sucb laws undoubtedly operate upon interstate and foreign commerce. They could not be effective otherwise. They can- not, of course, be made the cover for discriminations and arbitrary enactments having no reasonable relation to health {Hannibal & St. J. Railroad Co. v. Husen, 95 U. S. 465, 472, 473); but the power of the State to take steps to prevent the introduction or spread of disease, although interstate and foreign commerce are involved (subject to the paramount authority of Congress if it decides to assume control), is beyond question. Morgan's &c. S. S. Co. v. Louisiana, 118 U. S. 455; Missouri, Kansas & Texas Ry. Co. V. Haber, 169 U. S. 613; Louisiana v. Texas, 176 U. S. 1; Rasmussen v. Idaho, 181 U. S. 198; Compagnie Francaise &c. V. Board of Health, 186 U. S. 380; Reid v. Colorado, 187 U. S. 137, 138; Asbell v. Kansas, 209 U. S. 251. In Compagnie. Fran- caise &c. V. Board of Health, supra, the com-t had before it the quarantine law of Louisiana which, among other things, provided the State Board of Health might "in its discretion, prohibit the introduction into any infected portions of the State, persons acclimated, or unacclimated or said to be immune, when in its judgment the introduction of such persons would add to or in- crease the prevalence of the disease." The Supreme Court of the State, interpreting the statute, held that it empowered the Board to exclude healthy persons from a locality infested with a contagious or infectious disease, whether they came from without or within the State. It was objected that this provision was too broad and that the former decisions of the court were based upon the right of the States to exclude diseased persons and things which were not legitimate subjects of commerce. The court sustained the law, saying, with respect to this argument: "But it must be at once observed that this erroneously states the doctrine as concluded by the decisions of this court previously referred to, since the proposition ignores the fact that those cases expressly and unequivocally hold that the health and quarantine laws of the several States are not repugnant to the Constitution of the United States, although they affect foreign and domestic com- merce, as in many cases they necessarily must do in order to be efficacious, because until Congress has acted under the authority conferred upon it by the Constitution, such state health and quarantine laws producing such effect on legitimate interstate commerce are not in conflict with the Constitution. True is it 50 SCOPE OF THE COMMERCE REGULATED BY THE ACT that, in some of the cases relied on in the argument, it was held that a state law absolutely prohibiting the introduction, under all ckcumstances, of objects actually affected with disease, was vahd because such objects were not legitimate commerce. But this impUes no limitation on the power to regulate by health laws the subjects of legitimate commerce. In other words, the power exists until Congress has acted, to incidentally regulate by health and quarantine laws, even although interstate and foreign com- merce is affected, and the power to absolutely prohibit additionally obtains where the thing prohibited is not commerce, and hence not embraced in either interstate or foreign commerce." {Id., p. 391.) State inspection laws and statutes designed to safeguard the inhabitants of a State from fraud and imposition are valid when reasonable in their requirements and not in conflict with Federal rules, although they may affect interstate commerce in their relation to articles prepared for export or by including incidentally those brought into the State and held for sale in the original imported packages. Gibbons v. Ogden, supra, p. 203; Turner v. Maryland, 107 U. S. 38; Plumley v. Massachusetts, 155 U. S. 461; Patapsco Guana Co. v. North Carolina, 171 U. S. 345, 357, 358; Savage v. Jones, 225 U. S. 501. And for the protection of its game and the preservation of a valuable food supply, the State may penalize the possession of game during the closed season whether obtained within the State or brought from abroad. Silz V. Hesterberg, 211 U. S. 31. Interstate carriers, in the absence of Federal statute providing a different rule, are answerable according to the law of the State for nonfeasance or misfeasance within its limits. Chicago, Mil- waukee &c. Ry. Co. V. Solan, 169 U. S. 133, 137; Pennsylvania R. R. Co. V. Hughes, 191 U. S. 477, 491; Martin v. Pittsburg & Lake Erie R. R. Co., 203 U. S. 284, 294; Southern Pacific Co. v. Schuyler, 227 U. S. 601, 613. Until the enactment by Congress of the act of April 22, 1908, c. 149, 35 Stat. 65, the laws of the States determined the liability of interstate carriers by railroad for injuries received by their employes while engaged in inter- state commerce, and this was because Congress, although em- powered to regulate the subject, had not acted thereon. In some States the so-called fellow-servant rule obtained; in others, it had been abrogated; and it remained for Congress, in this respect and in other matters specified in the statute, to establish a uniform rule. Mondou v. N. Y ., N. H. & H. R. R. Co., supra; THE MINNESOTA RATE CASES 51 Michigan Central R. R. Co. v. Vreeland, 227 U. S. 59, 66, 67. So, where Congress has not intervened, state statutes providing damages for wrongful death may be enforced not only against land carriers but also against the owners of vessels engaged in interstate commerce where the wrong occurs within the jurisdic- tion of the State. Sherlock v. Ailing, 93 U. S. 99, 103. See Amer- ican Steamboai Co. v. Chase, 16 Wall. 622; The Hamilton, 207 U. S. 398. And, until Congress legislated on the matter, liabiUty for loss of property, on interstate as well as intrastate shipments, was subject to state regulation. Some States allowed an ex- emption by contract from all or a part of the common law lia- bility; others allowed no exemption. These differences in the apphcable laws created inequalities with respect to interstate transportation, but each State exercised the power inherent in its territorial jurisdiction, and the remedy for the resulting diver- sity lay with Congress, which was free to substitute its own regulations; and this was done in the recent amendment of § 20 of the Act to Regulate Commerce. Act of June 29, 1906, c. 3591, 34 Stat. 584; Adams Express Co. v. Croninger, 226 U. S. 491, 500. It is within the competency of a State to create and enforce liens upon vessels for suppUes furnished under contracts not maritime in their nature, and it is no valid objection that the state law may obstruct the prosecution of a voyage of an inter- state character. The Winnebago, 205 U. S. 354. It may also create Uens for damages to property on land occasioned by negli- gence of vessels. Johnson v. Chicago &c. Elevator Co., 119 U. S. 388; Martin v. West, 222 U. S. 191. Cars employed in interstate commerce may be seized by attachment under state law, in order to compel the payment of debts. Davis v. C, C, C. & St. L. Ry. Co., 217 U. S. 157. And the legislation of the States, safeguard- ing life and property and promoting comfort and convenience within its jurisdiction, may extend incidentally to the operations of the carrier in the conduct of interstate business, provided it does not subject that business to unreasonable demands and is not opposed to Federal legislation. Smith v. Alabama, 124 U. S. 465; Hennington v. Georgia, 163 U. S. 299; N. Y., N. H. & H. R. R. Co. V. New York, 165 U. S. 628; Lake Shore & M. S. Ry. Co. v. Ohio, 173 U. S. 285; Missouri Pacific Ry. Co. v. Larabee Mills, 211 U. S. 612; Missouri Pacific Ry. Co. v. Kansas, 216 U. S. 262. It has also been held that the State has the power to forbid the consolidation of state railroad corporations with competing lines although both may be interstate carriers and the prohibi- 52 SCOPE OF THE COMMERCE REGULATED BY THE ACT tion may have a far-reaching effect upon interstate commerce. Pearsall v. Great Northern Ry. Co., 161 U. S. 646, 677; Louis- ville Only the part of the opinion relating to this point is printed here. — Ed. so. PAC. TERMINAL COMPANY V. INTERSTATE COM. COM. 149 Terminal Company, in the ordinance of the city of Galveston, and in the act of the legislature of the State of Texas. The condi- tion expressed in all of them was that terminal facilities should be constructed, upon the property for the use of the Southern Pacific Raikoad and Steamship Systems. The act of the legislature declared that the property "should be developed for shipping and transportation purposes, and that the shipping facilities at the port of Galveston should be thereby improved and enlarged in order to better accommodate the commerce of the port and of the State." And wharfage charges, except so far as they should be covered by the freight rates, should be subject to regulation by the railroad commission of the State. It is clear, therefore, that it was the purpose of the ordinance and of the act confirming it to secure shipping facilities for the city, open to public use, and necessarily so, for the property was to be the terminal of a railroad and steamship system. It may be, as it is contended, that there was no necessity for the ordinance, "except for the purpose of a valid relinquishment of the municipal right, often asserted by it, of opening streets through the bay front property and constructing wharves thereon." The relinquish- ment was treated as valuable and Huntington pledged the property to a public use as a consideration for it. And, as we have said, such use was also a condition expressed in the act of the legislature. It was not discharged by the expenditure of 1150,000 and the erec- tion of wharves by Huntington, as seems to be the contention. The case has no likeness whatever to Louisville &c. R. R. Co. V. West Coast Co., 198 U. S. 483. In the latter case there was no discrimination against the West Coast Company by the railroad company or a preference given to any person. The West Coast Company had the same privilege of using the wharves of the railroad company as other shippers were given. It asserted other privileges. It asserted the privilege of using the wharf for the purpose of transferring goods into vessels which it might arrange to take them; in other words, not into the vessels of the railroad company or into those with which it had traffic agreements. And we said, through Mr. Justice Peckham, "In brief, the fact seems to be that the only complaint of the plaintiff (West Coast Company) is that the defendant (the railroad company) will not permit competing vessels to make use of its wharf for the purpose of such competition." It is true that there was a contention that the wharf was a public one, but the contention was based only on the fact that 150 SCOPE OF THE COMMERCE REGULATED BY THE ACT the wharf was built at the foot of a pubhc street by authority from the city of Pensacola and the State of Florida. That fact alone was not considered sufficient to support the contention. And it was said, "The city or State authorities in granting the right to erect such facilities might, of course, have attached such condi- tions as they thought wise, but in their absence neither the pub- hc nor this plaintiff, as the owner of goods, would have the right, on this state of facts, to go to the wharf with vessels for the pur- pose of continuing transportation of goods in competition with defendant." It is true, it was said, that the railroad company never became a common carrier as to the wharf, in the sense that it was bound to accord to the public or to the West Coast Com- pany the right to use it upon payment of compensation. But it was added that the railroad company would be bound to carry the West Coast Company's goods on the rails which led to the wharf, for the same purpose and upon the same terms that it did for others, viz., in order that it might itself, or through others it had contracted with, forward the goods beyond its own line. And it was further said that the West Coast Company demanded more than this; it demanded that the railroad company should carry its goods in order that it might itself forward them by vessels of its own selection, and that the railroad company should sur- render possession of enough of its wharf to enable the other com- pany to do so. Nor is Weems Steamboat Company v. People's Company, 214 U. S. 344, applicable to the pending controversy. The contest there was between two independent hnes of steamboats, the one claiming a right to use the wharves of the other, on the ground that the wharves had been dedicated to the public. The fact was found adversely to the contention, and the claim of right to the use of the wharves denied. A review of the reasoning of the court is imnecessary. There is great difference between compet- ing carriers claiming the right to use the facilities of one another and the patrons of the same carrier contending for equality of treatment. In stating this we assume that the wharves in the pending case are the instruments of a common carrier. This is, however, denied, and it is asserted that the Terminal Company is purely a wharfage company, and "has no power under its charter to act as a common carrier." The contention is based on a partial view of the conditions. The Terminal Company was incorporated to execute the purposes expressed in the act of the legislature of the State of Texas, that is, to construct terminal ■ so. PAC. TERMINAL COMPANY V. INTERSTATE COM. COM. 151 facilities for the Southern Pacific Railroad and Steamship Sys- tems, and to accommodate the export and import traffic at Galves- ton ; and, necessarily, as instrumentalities of such traffic, wharves and piers are as essential as steamships and railroads, and are, in fact, as they were intended to be by the charter of their authori- zation, parts of a system. The only track facihties for movement of cars to or from the ships, from or to the tracks of the Southern Pacific Railways, are on the Terminal Company's lands, and are owned by it. To these tracks the Galveston, Harrisburg and San Antonio Railway switches cars fot other railroads, charging $1.75 per car, and the Terminal Company receives a trackage charge of 50 cents per car. It is true that the Terminal Company does a wharfage business and pubhshes a schedule of its charges, which, while not filed with the Interstate Commerce Commission, shows a charge of 20 cents a ton on cotton seed cake and meal, and this appears as a wharfage charge in the tariffs of ^the Galves- ton, Harrisburg and San Antonio Railway Company and other railways entering the city of Galveston. And, besides, the Ter- minal Company was a party to numerous circulars issued by the Southern Pacific Railway Company, and that effective May 23, 1905, was filed with the Interstate Commerce Commission. These circulars gave terminal charges at the port of Galveston. The charge on cotton seed meal and cake was given at 1 cent per 100 pounds. Shipments on through bills of lading include in the freight rate the wharfage charge. Another and important fact is the control of the properties by the Southern Pacific Company through stock ownership. There is a separation of the companies if we regard only their charters; there is a union of them if we regard their control and operation through the Southern Pacific Company. This control and opera- tion are the important facts to shippers. It is of no consequence that by mere charter declaration the Terminal Company is a wharfage company or the Southern Pacific a holding company. Verbal declarations cannot alter the facts. The control and oper- ation of the Southern Pacific Company of the railroads and the Terminal Company have united them into a system of which all are necessary parts, the Terminal Company as well as the railroad companies. As said by the Interstate Commerce Commission, " the Terminal Company was organized to furnish terminal facil- ities for the system at the port of Galveston," and it is further said that "through shipments on the railroad fines from and to points in different States of the Union pass and repass over the 152 SCOPE OF THE COMMERCE REGULATED BY THE ACT docks of the Terminal Company. It forms a link in this chain of transportation. It is necessary to complete the avenue through which move shipments over these lines owned by a single cor- poration." And this unity of the railroad's lines and the terminal faciUties is recognized in the lease to Young. By it he agrees to route all of his shipments over "the lines of the Terminal Company and its connections, according to the instructions of said Ter- minal Company from time to time." And provision is made against the possibihty of other lines bidding for the traffic by lower rates. In such event he must give notice to the Terminal Company and give it "the option of meeting such proposed rates," and if the company "elects to do so," then he "shall not divert such shipments, but shall abide by the provisions" of his agree- ment. And surely a system so constituted and used as an instru- ment of interstate commerce may not escape regulation as such because one of its constituents is a wharfage company and its dominating power a holding company. As well said by the Interstate Commerce Conamission, "a corporation such as this Terminal Company, which has 'competing Hnes,' should not be permitted to defeat the jurisdiction of this Commission by showing that it is not in fact owned by any railroad company The Terminal Company is part and parcel of the system engaged in the transportation of commerce, and to the extent that such commerce is interstate the Commission has jurisdiction to super- vise and control it within statutory limits. To hold otherwise would in effect permit carriers generally, through the organization of separate corporations, to exempt all of their terminals from our regulating authority." The reasoning of the Commission is justified by the statute. It includes m the term "raikoad" "all bridges and ferries used or operated in connection with any railroad, and also aU the road in use by any corporation operating a railroad, whether owned or operated under a contract, agreement, or lease, and shall also include all switches, spurs, tracks, and terminal faciUties of every kind used or necessary in the transportation of the persons or property designated herein, and also all freight depots, yards, and grounds used or necessary in the transportation or dehvery of any of said property." The property of the Terminal Company is "necessary in the transportation or delivery" of the interstate and foreign freight transported by the fines of the Southern Pacific system. It is the only terminal for freight moving over the fines of such system, UNITED STATES V. BROOKLYN EASTERN DISTRICT TERMINAL 153 the rails of one of those lines, the Galveston, Harrisburg and San Antonio Railway Company, connecting with tracks upon the docks of the Terminal Company. That the latter collects a track- age charge from the former and it a switching charge from the Terminal Company are, to quote the Commission, "but incidents of the separate corporations." In opposition to these views appellants urge the legal individu- ality of the different railroads and the Terminal Company and cite cases which establish, it is contended, that stock ownership simply or through a holding company does' not identify them. We are not concerned to combat the proposition. The record does not present a case of stock ownership merely or of a holding company which was content to hold. It presents a case, as we have already said, of one actively managing and uniting the rail- roads and the Terminal Company into an organized system. And it is with the system that the law must deal, not with its elements. Such elements may, indeed, be regarded from some standpoints as legal entities; may have, in a sense, separate cor- porate operation; but they are directed by the same paramount and combining power and made single by it. In all transactions it is treated as single. In the ordinance of the city of Galveston, in the act of 1899, of the legislature of the State, and in public circulars and in the lease of Young, it is the system which is dealt with and not its separate hnks. And, we have seen, the terminal faciUties which the Terminal Company was authorized to main- tain were for the system, not for the corporate elements considered separately Decree affirmed. UNITED STATES v. BROOKLYN EASTERN DISTRICT TERMINAL 249 U. S. 296 (1919) Mr. Justice Brandeis deHvered the opinion of the court. The Hours of Service Act (March 4, 1907, c. 2939, 34 Stat. 1415) ' prohibits any common carrier by railroad engaged in interstate 1 Act of March 4, 1907, c. 2939, 34 Stat. 1415. "That the provisions of this Act shall apply to any common carrier or carriers, their officers, agents, and employees, engaged in the transportation of passengers or propery by railroad .... from one State .... to any other State The term 'railroad' as used in this Act shall include all 154 SCOPE OF THE COMMERCE REGULATED BY THE ACT commerce from requiring or permitting an employee to remain on duty for a longer period than sixteen consecutive hours. For al- leged violation of this provision, proceedings were brought against the Brooklyn Eastern District Terminal in the District Court of the United States for the Eastern District of New York. The de- fendant contended that it was not a common carrier; that it was not engaged in interstate commerce by raikoad; and- that its employees were not "connected with the movement of any train." Upon facts which were agreed the trial court entered judgment for the Government. The Circuit Court of Appeals reversed the judgment on the ground that, while the Terminal was engaged in interstate commerce and the employment in question was connected with the movement of trains, it was not a common carrier. 239 Fed. Rep. 287. The case comes here on writ of certiorari (243 U. S. 647) ; and the substantial question before us is whether the Terminal is within the scope of the Hours of Serv- ice Act, as being a common carrier. The essential facts are these: 1. The Terminal is a navigation corporation with an author- ized capital stock of one hundred thousand dollars ($100,000), incorporated under § 10 of Article III of the transportation cor- porations law of the State of New York, which reads as follows: "Seven or more persons may become a corporation, for the purpose of building for their own use, eqtiipping, furnishing, fitting, purchasing, chartering, navigating or owning steam, sail or other boats, ships, vessels or other property to be used in any lawful business, trade, commerce or navigation upon the ocean, or any seas, sounds, lakes, rivers, canals or other waterways, and for the carriage, transportation or storing of lading, freight, mails, property or passengers thereon." In its certificate of incorporation, the corporate powers and purposes of the defendant are stated as follows: "The purposes for which it is formed are to build for its own use, equip, furnish, fit, purchase, charter, navigate, and own steam, sail, and other boats, ships, vessels, and other property, bridges and ferries used or operated in connection with any railroad, and also all the road in use by any common carrier operating a railroad, whether owned or operated under a contract, agreement, or lease; and the term 'employees' as used in this Act shall be held to mean persons actually engaged in or con- nected with the movement of any train. "Sec. 2. That it shall be unlawful for any common carrier, its officers or agents, subject to this Act to require or permit any employee subject to this Act to be or remain on duty for a longer period than sixteen consecutive hours . . . ." UNITED STATES V. BROOKLYN EASTERN DISTRICT TERMINAL 155 to be used in the business of carrying, transporting, storing, and lading merchandise in New York Harbor and the waters adjacent thereto and connected therewith and the territory bordering thereon." 2. The Terminal operates a union freight station at Brooklyn under individual contracts with ten interstate railroads and several steamship companies. From the railroads it receives both car- load and less-than-carload freight and transports the same from their termini to its Brooklyn docks. There, the cars containing such freight are hauled from the car floats by its' locomotives and placed for unloading either on its team tracks or at its freight houses. The Terminal receives likewise from shippers both carload and less-than-carload outgoing freight originating at Brooklyn and consigned to points upon the various railroads with which it has contracts. The cars carrying this outgoing freight are then switched and loaded by its locomotives upon its floats and transported by its tugs to the docks of the several railroads. 3. For its services in handling freight as above set forth the Terminal is paid not by the shipper or consignee, but by the railroad or steamship company upon whose account the trans- portation service is performed, at the rate of 3 cents per 100 pounds of freight moving to or from points east of the western termini of said railroads, and 4 1-5 cents per 100 pounds on freight moving to or from points beyond such termini'. Upon prepaid shipments from shippers not on the credit lists of the railroads it collects from the shipper at Brooklyn the money and charges for the transportation of such freight from that point to its final desti- nation; and also collects from the consignee at Brooklyn the charges for the transportation of such freight from its point of origin to that place, when such charges have not been prepaid. The freight moneys and charges so received by the defendant from shippers or consignees are accounted for and paid over by it with- out deduction to the railroads or steamship hues upon whose account they are collected. 4. The Terminal does not hold itself out as a common carrier; nor does it file with the Interstate Commerce Conamission any tariffs or concurrences with tariffs, or copies of the contracts with the common carriers by whom it is paid for the transportation of freight, as heretofore set forth. The terminal at Brooklyn is des- ignated by such railroads and rail and water lines, in the tariffs filed by them with the Interstate Commerce Commission, as one of their receiving and deUvering stations for freight in the Port 156 SCOPE OF THE COMMERCE REGULATED BY THE ACT of New York; and through bills of lading to such terminal as such station are issued by them on freight to be delivered there. For all freight originating at Brooklyn bills of lading of the railroad or steamship Une to which the freight is to be deUvered are there issued to the shipper by one of the defendant's employees, who is duly authorized to issue such bills of lading by the railroad or steamship hne by which the freight is tp be transported to its final destination or destinations after the same is delivered to such railroad or steamship hne by defendant". 5. The tracks of the Terminal which extend from its float bridges to several warehouses, coal pockets, platforms, and team tracks have an aggregate length of 8 1-3 miles. One track connecting its several dock and deUvery tracks which is kept clear for opera- ting its switching engines is about one mile in length. The length of haul effected by its locomotives in moving cars be- tween its float bridges and warehouses, platforms, pockets, and team tracks varies from a few yards to nearly a mile. The number of cars so hauled as -part of a movement varies from a single car to eight cars. As an incident to such movement its locomotives hauling cars cross a public street in Brooklyn. 6. Defendant owns or hires no cars itself, and no cars, except the ones heretofore mentioned, are ever moved over its tracks. For the use of such cars defendant pays no charges; and except by the switching service heretofore described, it transports freight only by water. It handles interstate and intrastate freight indiscrim- inately, the larger part being interstate. It transports no pas- sengers. 7. In connection with the movement of one or more cars be- tween the floats and the loading tracks, warehouses, and team or dehvery tracks, defendant employs four to eight switching crews during the day and two at night, each crew consisting of a conduc- tor, engineer and two or more brakemen. The Hours of Service Act declares (in the first section) that, "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 common carrier operating a rail- road, whether owned or operated under a contract, agreement, or lease." Hence, neither the character of the Terminal's railroad nor its independent ownership excludes it from the scope of the act. But the Terminal contends that it is not subject to the provisions of the statute, since it is not incorporated as a common carrier and does not hold itself out as such; does not file tariffs; UNITED STATES V. BROOKLYN EASTERN DISTRICT TERMINAL 157 and does not undertake to transport property for all who may ap- ply to have their goods transported; but merely transports as agent such freight as is delivered to it by or for those carriers, and those only, with whom it has elected to make special contracts; and that, under these contracts it performs for the railroads, and not for the public, a part of the whole carriage which they, as common carriers, have undertaken with the shipper to perform. We need not undertake a definition of the term "common carrier" for all purposes. Nor are we concerned with questions of corporate power or of duties to shippers, which frequently compel nice distinctions between public and private carriers. We have merely to determine whether Congress, in declaring the Hours of Service Act applicable "to any common carrier or carriers, their of- ficers, agents, and employees, engaged in the transportation of pas- sengers or property by railroad," made its prohibitions applicable to the Terminal and its employees engaged in the operations here involved. The answer to that question does not depend upon whether its charter declares it to be a common carrier, nor upon whether the State of incorporation considers it such; but upon what it does. Terminal Taxicab Co. v. District of Columbia, 241 U. S. 252, 254. The relation of the Terminal to the several railroads is sub- stantially the same as that of the terminal considered in United States V. Baltimore & Ohio B. B. Co., 225 U. S. 306; 231 U. S. 274, 288. The transportation performed by the railroads begins and ends at the Terminal. Its docks and warehouses are public freight stations of the railroads. These with its car floats, even if not under common ownership or management, are used as an integral part of each railroad Une, like the stockyards in United States V. Union Stock Yard Co., 226 U. S. 286, and the wharfage facilities in Southern Pacific Terminal Co. v. Interstate Commerce Commission, 219 U. S. 498. They are clearly unlike private plant facihties. Compare Tap Line Cases, 234 U. S. 1, 25. The services rendered by the Terminal are pubhc in their nature; and of a kind ordinarily performed by a common carrier. If these terminal op- erations were conducted directly by any, or jointly by all, of the ten railroad companies with which the Terminal has contracts, the operations would clearly be within the scope of the Hours of Serv- ice Law. The evils sought to be remedied exist equally, whether the terminal operations are conducted by the railroad companies themselves or by the Terminal as. their agent; and whether the 158 SCOPE OF THE COMMERCE REGULATED BY THE ACT Terminal acts only as such agent for railroads or undertakes in ad- dition to transport on its own account goods for shippers. The precise question presented is, therefore, whether the fact that the Terminal conducts these operations, not as an integral part of a single raih-oad system but wholly as an agent for one or several, exempts the raikoad companies, because they are not the employer and exempts the Terminal, because it is not a common carrier; thus making inapphcable a provision regarding the physical op- eration of the property devised for the protection of employees and the public. One who transports property from place to place over a definite route as agent for a common carrier may, under conceivable circumstances, be a private carrier. But what is there in the facts above recited to endow the Terminal with that character? The service which it performs is distinctly public in character; — that is, convejdng between Brooklyn and points on any of the ten interstate carriers and their connections all property that is offered. The fact that the raikoad of the Terminal is short does not prevent it from being a common carrier. United States v. Sioux City Stock Yards Co., 162 Fed. Rep. 556; nor does the fact that the thing which it undertakes to carry is contained only in cars furnished by the railroad companies with which it has contracts. Railroads, whose only service is hauling cars for other railroads, have been held hable as common carriers under the Safety Ap- pUance Acts, Union Stockyards Co. of Omaha v. United States, 169 Fed. Rep. 404; Belt Railway Co. of Chicago v. United States, 168 Fed. Rep. 542; and under the Twenty-Eight Hour Law, United States v. Sioux City Stock Yards Co., supra. ^ What the Terminal contracts to transport, however, is not primarily cars, but their contents. Its compensation is measured not by the weight, size, or character of the car, but by the weight and the origin or destination of the goods carried therein. These goods the Terminal must, under its contracts with the railroad companies, receive and carry at the rates specified for all who offer them, as fuUy as the railroad companies do at their other stations. The incidental services performed by the Termi- nal in respect to these goods are also the same as those per- formed by the railroad companies at their other stations. For all freight originating at Brooklyn, it issues through bills of lading to destination. Upon prepaid shipments originating there, ' Compare also McNamara v. Washington Terminal Co., 37 App. D. C. 384, 394, et seq.; State v. Union Stock Yards Co., 81 Nebraska, 67. UNITED STATES V. BROOKLYN EASTERN DISTRICT TERMINAL 159 it collects from the sh'ppers the charges for transportation from Brooklyn to final destination; except where shippers are on the credit lists of the railroad companies. Upon goods arriving over its Une at Brooklyn, it collects from the consignees the charges from point of origin, unless these were prepaid. As the Terminal receives both from railroad companies and from ship- pers also less-than-carload freight, it doubtless performs the loading and unloading, as is done at other railroad stations; and for freight delivered at Brooklyn takes appropriate receipts. In no respect, therefore, does the service actually performed by the Terminal for or in respect to shippers differ from that performed by the railroad companies at their other stations. True, the service is performed by the Terminal under contracts with the railroad companies as agent for them and not on its own account. But a common carrier does not cease to be such merely because the serv- ices which it renders to the pubUc are performed as agent for another. The relation of connecting carriers with the initial carrier is frequently that of agent. See Bank of Kentucky v. Adams Express Co., 93 U. S. 174. The relation of agency may preclude contractual obligations to the shippers, but it cannot change the obligations of the carrier concerning the physical operation of the railroad under the Hours of Service Act, which as this court has said, must be liberally construed to secure the safety of em- ployees and the public. Atchison, Topeka & Santa Fe Ry. Co. v. United States, 244 U. S. 336. • It is now admitted that the Terminal is engaged in interstate commerce; and it is clear that at least "switching crews" engaged in moving at one time a locomotive with seven or eight cars be- tween the docks and the warehouses or team tracks, a distance of nearly a mile, are engaged in the movement of a "train." The decisions under the Safety Apphance Acts depend upon the par- ticular context in which the word "train" there occurs, and are not here apphcable. Compare United States v. Erie R. R. Co., 237 U. S. 402, 407-408. The judgment of the Circuit Court of Appeals is reversed and that of the District Court affirmed. Reversed. 160 scope of the commerce regulated by the act 3. "Railroad" and "Transportation" ILLINOIS CENTRAL RAILROAD COMPANY v. RAILROAD COMMISSION OF LOUISIANA 236 U. S. 157 (1915) Mr. Justice McReynolds delivered the opinion of the court. After a full hearing and investigation the Railroad Com- mission of Louisiana, on August 8, 1903, promulgated the fol- lowing, known as Order No. 295: "No railroad company operating in the State of Louisiana shall refuse or decKne to switch cars for any other raihoad with which it connects or any shipper, or consignee, at rates approved or estabhshed by the Commission, whether such cars are to be loaded with freight to be shipped out of the State, or are loaded with freight shipped into the State. All tariffs for the 'service' of switching cars in the State of Louisiana, shall be filed with the Commission, within thirty days from the date of this order, and all the Commission's rules and orders relative to rates and changes in rates, will also apply to switching charges." By a proceeding against the members of the commission, com- menced in the United States Circuit Court, Eastern District of Louisiana, February 10, 1904, the appellant, a common carrier of freight and passengers operating lines in Louisiana, attacked the vahdity of this order upon the ground that it is an unlawful at- tempt to regulate interstate commerce and for other reasons, and prayed that defendants be restrained from enforcing it. Shortly thereafter a temporary injunction was granted to remain effective pending the cause or until otherwise directed; and on October 6, 1904, defendants answered denying all the alleged equities. The record discloses no further action by either party until April, 1913, when a rather meagre and unsatisfactory agreed statement of facts was filed. The trial court dismissed the bill without prej- udice — January, 1914, — saying that the questions involved had been indirectly decided by this court in Grand Trunk Ry. V. Michigan Railroad Commission, 231 U. S. 457. From this decree a direct appeal was taken and a supersedeas was allowed. The extraordinary delay in bringing the cause to final hear- ing is not explained; and in the circumstances we deem it quite sufficient briefly to indicate and decide the controlhng question. With the consent of the proper local authorities appellant constructed and now operates at New Orleans extensive terminals ILLliSrOIS CENTRAL K. R. CO. V. R. R. COM. OF LOUISIANA 161 including switch and side tracks, warehouses and yards. These are essential to the proper conduct of its large interstate and foreign business; and when it brings freight there the cars are placed on its various switch tracks to be unloaded by the con- signees. At New Orleans physical connections exist between appellant's, tracks and the Unes of competitive railroads leading therefrom to many States; if Order No. 295 is enforced its switch tracks will be subjected to use by such railroads; more cars will pass over them; and its power to comply with obhgations to patrons will be hindered. Together with the various railroads ap- pellant has pubHshed and now has in effect terminal tariffs covering switching; these include no rates for transporting freight to or from the city "but simply cover the charges made for switching cars from the depot or yard of one railroad company to points on its terminals." Upon orders of the consignees certain switch movements are made entirely within the switching limits of the city between points one or both of which may be located upon the terminals of the Ilhnois Central, and for these charges are made varying according to distance with an addition of three dol- lars per car for rental. When a car loaded with interstate freight arrives at New Orleans the consignee is first notified that the contents are ready for deUvery at the carrier's depot or warehouse. After calhng and paying the charges he gives to the agent of the railroad transporting the shipment an order directing that the cars be switched and placed on some ter- minal or industrial track for delivery. This order is then submit- ted to the lUinois Central Railroad and in due course is executed by it. From the foregoing summary of the facts stipulated it fairly appears that obedience to Order No. 295 would require appellant, upon demand of a carrier or shipper and on terms fixed by the State Commission, to switch empty cars from any connection with a competing interstate railroad to a designated side track within its own terminals for the purpose of being loaded there with goods intended for interstate commerce, and when so loaded to move the same back to the competitor's hne for continued trans- portation to another State. Likewise appellant would be re- quired to accept from competing interstate Hnes at points within the city loaded cars brought from other States and place them on its own side track, although such track was the real destination contemplated at the time of the original shipment. Switching movements of this kind (we do not now inquire as to others) 162 SCOPE OF THE COMMERCE REGULATED BY THE ACT constitute a part of interstate commerce the regulation of which Congress has undertaken, and consequently the order of the State Commission transcends the limits of its powers. When freight actually starts in the course of transportation frotn one State to another it becomes a part of interstate com- merce. The essential natiu'e of the movement and not the form of the bill of lading determines the character of the commerce involved. And generally when this interstate character has been acquired it continues at least until the load reaches the point where the parties originally intended that the movement should finally end. McNeill v. Southern Railway, 202 U. S. 543, 559; Southern Pacific Terminal v. Interstate Commerce Commission, 219 U. S. 498, 527; Ohio Railroad Commission v. Worthington, 225 U. S. 101, 110; Texas & New Orleans Railroad v. Sabine Tram Co., 227 U. S. Ill, 126; Louisiana Railroad Commission v. Tex. & Pac. Ry., 229 U. S. 336, 341. The contention for appellees that switching cars at junctions and terminals "is only interstate commerce when performed as a part of the interstate movement on a through rate or bill of lading under tariff authority" is contrary to the doctrine established by opinions of this court in the cases cited above. We cannot under- take as suggested to dissect the contested order and point out whether any part of it constitutes "a workable scheme for the regulation of intrastate traffic." Problems relating alone to commerce wholly within the State must be left to the discretion of the State Commission to be exercised upon a view of all existing, relevant facts and circumstances. The present controversy is not controlled by Grand Trunk Ry. v. Michigan Railroad Commission, supra. The issues in the two cases are essentially different. There the attack was upon an order of the State Conunission "suspensory only of the tariff of the appellants, not a final determination against it or of the con- ditions which might or might not justify it," and the question was "whether, under the statutes of the State of Michigan, appellants can be compelled to use the tracks it owns and operates in the city of Detroit for the interchange of intrastate trafiic." The movement actually regulated was held to be intrastate com- merce. It took place within Detroit but between points sufficiently far apart to constitute genuine transportation; and, treating it as a local matter, the Railway Company had applied special tariffs thereto until withdrawn because of disagreement with shippers and commission. WESTERN TRANSIT CO. V. LESLIE COMPANY 163 The original bill shCould have been sustained and a permanent injunction awarded. The decree below is accordingly reversed and the cause remanded for further proceedings in accordance with this opinion. Reversed. WESTERN TRANSIT COMPANY v. LESLIE COMPANY 242 U. S. 448 (1917) Mr. Justice Brandeis dehvered the opinion of the court. The Western Transit Company, operating steamers between Buffalo and other points on the Great Lakes, formed, with the New York Central Raihoad, a "lake and rail" Une between Michi- gan and New York City. Among the privileges and facilities of- fered by this line was the right "in transit of free storage and di- version at Buffalo." That is, the shipper instead of sending his goods from Michigan through to New York City, was entitled, without the payment of any extra charge, to have them stored at Buffalo for a period, to await further orders and be forwarded later to New York. The shipper was also given the privilege of "diversion"; — that is of changing the ultimate destination of the stored goods upon proper adjustment of the rate. On Sep- tember 23, 1908, A. C. Leshe & Co., Limited, the plaintiff below, delivered to the Western Transit Co., the defendant below, at Houghton, Michigan, for shipment over this hne to New York City, 25 tons of copper ingots, with direction to store the same upon arrival at Buffalo to await further shipping directions. The copper arrived there September 30, and was placed in the Transit Company's warehouse. Nearly four months later about one ton of it was stolen from the warehouse. An action was brought by the shipper in the City Court of Buffalo to recover its value. The Transit Company denied all liabihty; but the court found that the loss was due to its negligence and held the company hable for the full value of the copper lost. The judgment of the City Court was affirmed by the Supreme Court of New York at special term and also by the Appellate Division of that court. 165 App. Div. 947. AppUcations for an appeal to the Court of Appeals of New York having been denied, both by the Appellate Division and by the Chief Judge of the Court of Appeals, a writ of error from this court was granted on the ground that the decision below involved a federal question, namely: the construction and effect 164 SCOPE OF THE COMMERCE REGULATED BY THE ACT of the bill of lading and of tarifEs filed undel- the Act to Regulate Commerce as amended. Act 1906, c. 3591, 34 Stat. 584. The question before this court relates solely to the measure of damages. The shipper contends that it is entitled to the full value of the copper lost, which was $271.38. The carrier contends that the damages recoverable are limited to $94.10; that is, the value not to exceed $100 a ton. In support of this Hmitation it relies upon the fact that freight was paid at the rate of 18 cents per ton, under a bill of lading and a tariff which names the following rates from Houghton, Michigan, to New York City: "Copper ingots .... value not to exceed $100 a ton, 18c. per ton Copper ingots .... value not expressed 30c. per ton." The shipper insists that it is enforcing the liability of t-he Transit Company not as carrier, but as warehouseman; and that the terms of its obhgation as warehouseman are fixed, not by the bill of lading and the tariff provision quoted above, but wholly by the letter of November 26, 1908, and the circular therein referred to, which are copied in the margin.^ ' The Western Transit Company, N. Y. C. & H. R. R. Line of Steamers. Buffalo, N. Y., Nov. 26, 1908. Messrs. A. C. Leslie & Company, Montreal, Que. Gentlemen: Replying to your letter of 24tli, instant, would advise you that we have in store here, lot 1036 ingot bars of copper, marked M. M. 102, as well as lot of 979 ingot bars, marked M. M. 97. This copper came forward in our steamer, Buffalo, which unloaded here September 30th, and will be held here subject to our storage circular I. C. C. No. 236, copy of which I enclose. Yours truly, (Signed) EDWIN T. DOUGLASS, General Manager. I. C. C. No. 236, Superseding I. C. C. No. 231. The Western Transit Company, New York Central & Hudson River R. R. Line. General OfiBce. Copper and Copper Matte, Pig Lead and Spelter for Storage and Diversion at Buffalo. The Western Transit Company will accept shipments of Copper and , Copper Matte, Pig Lead and Spelter for storage and diversion at Buffalo, imder the following rules: 1. The Western Transit Company, at request of owners, will furnish free storage on shipments of Copper and Copper Matte, Pig Lead and Spelter in transit, at Buffalo, for a period not exceeding four months. WESTERN TRANSIT CO. V. LESLIE COMPANY 165 The Transit Company filed with the Interstate Commerce Commission, in addition to its general tariffs covering "lake and rail" rates, a separate tariff known as I. C. C. No. 236, covering specifically storage and diversion privileges at Buffalo, as set forth in the circular copied in the margin. The fihng of this tariff was required by the act (see Goldenberg v. Clyde S. S. Co., 20 I. C. C. 527) since the general tariff did not specify the details of the storage and diversion privileges. The Act to Regulate Commerce as amended provides expressly (§1) that the term transportation includes storage. And § 6 provides that a carrier must file with the Interstate Commerce Commission tariff s '" showing all the rates, fares, and charges for transportation" and "shall also state separately all ... . storage charges, .... all privileges or facihties granted or allowed and any rules or regulations' which in any wise change, affect, or determine any part or the aggregate of such aforesaid rates." The bill of lading, in a form similar to that approved and rec- ommended by the Interstate Commerce Commission (14 I. C. C. 346), contains the following, aniong other provisions: "It is mutually agreed in consideration of the rate of freight hereinafter named, as to each carrier of all or any of said property over all or any portion of said route to destination and as to each party at any time interested in all or any of said property, that every service to be performed hereunder shall be subject to all the conditions, whether printed or written, herein contained, and which are hereby agreed to by the shipper, and by him accepted for himself and his assigns as just and reasonable." "To be held at Bflo. for orders. 2. If held longer than four months, it wUl be subject to a charge of one- half (4) cent per 100 pounds for each thirty (30) or part thereof so held. 3. Shipments held under this arrangement will be at owner's risk, and will not be accepted for storage unless arrangements are made with the under- signed previous to forwarding from Western Lake Ports. 4. Shipments ordered out of store will be charged at the through rate in effect at time the shipment originated, to points to which through rates are pubhshed by 'The Western Transit Company. 5. Shipments ordered to points to which no through rates are m effect via The Western Transit Company, will be charged at the local rate to and from Buffalo. Issued May 15th, 1908. Effective June 16th, 1908. Edwin T. Douglass, General Manager, Buffalo, N. Y 166 SCOPE OF THE COMMERCE REGULATED BY THE ACT "Value not to exceed 1100.00 per net ton. Limited by written agreement. "The consignor of this property has the option of shipping same at a higher rate without Umitation as to value in case of loss or damage from causes which would make the carrier hable, but agrees to the specified valuation named in case of loss or damage from causes which would make the carrier liable, because of the lower rate thereby accorded for transportation." Conditions. "The amount of any loss or damage for which any carrier be- comes hable shall be computed at the value of the property at the place and time of shipment under this bill of lading, unless a lower value has been agreed upon or is determined by the classification upon which the rate is based, in either of which events such lower value shall be the maximum price to govern such computation." The release valuation clause in an interstate bill of lading when based upon a difference in freight rates is valid. Adams Express Co. v. Croninger, 226 U. S. 491, 509. The Umitation of liability by means of such valuation contained in the bill of lading continues although the service of carrying has been completed and the goods are held by the carrier strictly as warehouseman. Cleveland, Cincinnati, Chicago & St. Louis Ry. v. Dettlebach, 239 U. S. 588. The provisions of the bill of lading govern even where the goods are allowed to remain in the carrier's warehouse after giving receipt therefor and payment of freight. The carrier and the shipper can make no alteration of the terms upon which goods are held under a tariff, until there has been an actual dehvery of the goods to the consignee. Southern Ry. Co. v. Prescott, 240 U. S. 632. The reasons are even more persuasive for holding that the terms of a bill of lading govern storage in transit, hke that at Buffalo. The contention of the shipper that the letter of November 26 enclosing the circular created a contract of ware- housing wholly independent of the contract of carriage is con- trary to fact. The Transit Company's circular states "that free storage is furnished on shipments in transit" and that shipments "will not be accepted for storage unless arrangements are made with the undersigned previous to forwarding from Western Lake Ports." Obviously free storage in transit was granted only to those who shipped over this "lake and rail" line. The shipper ERIE RAILROAD CO. V. SHUART et al. 167 had enjoyed nearly two months' storage when the circular was received in answer to a letter of inquiry. It stated only what was contained in the tariff filed, which every shipper was bound to take notice of. The contention was also made that the judgment below was correct, even if the bill of lading be held to govern the warehousing at Buffalo; because the agreed valuation clause properly construed fixes an amount far greater than the actual value for which judg- ment was rendered. The "released" or agreed valuation is "$100 per net ton." There were 25 tons in this shipment. It is insisted that, as the 25 tons constituted a single lot, $2,500 is recoverable for loss of or damage to the whole or to any part of the lot. This construction does violence to the language used and is unrea- sonable. The valuation clause fixes not an arbitrary limit of re- covery but a ratio. In Kansas City Southern Ry. Co. v. Carl, 227 U. S. 639, 656, where the released valuation clause was applied to a shipment consisting of two boxes and a barrel, and one box was lost, this court said, the consignor and carrier must have understood the agreed valuation to mean that the package con- tained "household goods of the average value per hundredweight of five dollars." The ratio is more naturally applied where the whole shipment is homogeneous. Under this bill of lading the shipper is entitled to recover not more than $100 a ton for each or any ton damaged or lost. Judgment reversed and cause remanded for further proceedings not inconsistent with this opinion. ERIE RAILROAD COMPANY v. SHUART ET AL. 250 U. S. 465 (1919) Mr. Justice McReynolds delivered the opinion of the court. Respondents delivered to the Toledo, St. Louis & Western Railroad at East St. Louis, Illinois, a carload of horses for trans- . portation, under a Limited Liabihty Livestock Contract or bill of lading via petitioner's road, to themselves at Suffern, New York, their home. Among other things the contract provided: "That the said shipper is at his own sole risk and expense to load and take care of, and to feed and water said stock whilst being transported, whether delayed in transit or otherwise, and to unload the same; and neither said carrier nor any connecting 168 SCOPE OF THE COMMERCE REGULATED BY THE ACT carrier is to be under any liability or duty with reference thereto, except in the actual transportation of the same." .... "That no claim for damages which may accrue to the said shipper under this contract shall be allowed or paid by the said carrier, or sued for in any Court by the said shipper, unless a claim for such loss or damage shall be made in writing, verified by the afiidavit of the said shipper or his agent, and deUvered to the General Auditor of the said carrier at his office in the City of Chicago, III, within five days from the time said stock is removed from said car or cars, and that if any loss or damage occurs upon the Une of a connecting carrier, then such carrier shall not be liable unless a claim shall be made in like manner, and delivered in Hke time, to some proper officer or agent of the carrier, on whose Hne the loss or injury occurs." Immediately after the car arrived at Suffern, petitioner placed it on a switch track opposite a cattle chute and left it in charge of respondents for unloading. By letting down a bridge they at once connected the chute and car and were about to lead out four horses when an engine pushed other cars against it and injured the animals therein. No written claim was made for the loss or damage as provided by the bill of lading; and when sued the carrier defended upon that ground. Respondents maintain that transportation had ended when the accident occurred and con- sequently no written claim was necessary. The courts below accepted this view. Under our former opinions, the clause requiring presentation of a written claim is clearly valid and controlUng as to any liability arising from beginning to end of the transportation contracted for. Chesapeake & Ohio Ry. Co. v. McLaughlin, 242 U. S. 142; St. Louis, Iron Mountain & Southern Ry. Co. v. Starbird, 243 U. S. 592; Baltimore & Ohio R. R. Co. v. Leach, 249 U. S. 217; Cleve- land, Cincinnati, Chicago & St. Louis Ry. Co.' v. Dettlebach, 239 U. S. 588, 593, 594; and Southern Ry. Co. v. Prescott, 240 U. S. 632. In Cleveland, Cincinnati, Chicago & St. Louis Ry. Co. v. Dettle- bach we pointed out that the Hepburn Act enlarged the definition of "transportation" so as to include "cars and other vehicles and aU instrumentalities and facihties of shipment or carriage, irre- spective 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, refrigera- tion, or icing, storage, and hauling of property transported"; and we said from this and other provisions of the act "it is evident ERIE RAILROAD CO. V. SHUART et ol. 169 that Congress recognized that the duty of carriers to the pubUc included the performance of a variety of services that, according to the theory of the common law, were separable from the carrier's service as carrier, and, in order to prevent overcharges and discrim- inations from being made under the pretext of performing such additional services, it enacted that" so far as interstate carriers by rail were concerned the entire body of such services should be included together under the single term 'transportation' and sub- jected to the provisions of the Act respecting reasonable rates and the hke." In the instant case, when injured, the animals were awaiting removal from the car through a cattle chute alleged to be owned, operated and controlled by the railroad. If its employees had then been doing the work of unloading there could be no doubt that transportation was still in progress; and we think that giving active charge of the removal to respondents, as agreed, was not enough to end the interstate movement. The animals were in the car; no adequate time for unloading had transpired. The carrier had not fully performed the services incident to final dehvery imposed by law. These included the furnishing of fair opportunity and proper facilities for safe unloading although the shippers had contracted to do the work of actual removal. See Hutchinson on Carriers, §§ 711, 714, 715. Petitioner's request for an instructed verdict in its behalf should have been granted. The judgment below must be reversed and the cause remanded for further proceedings not inconsistent with this opinion. Reversed. Mr. Justice Clarke dissenting. I greatly regret that I cannot concur in the opinion and judg- ment of the court in this case, but I cannot consent to share in what seems to me a very strained construction of a definition in the Hepburn Act (34 Stat. 584, c. 3591, § 1) which will result in keeping aUve a bill of lading, with the effect of excusing the carrier from Hability for negligently damaging the Uve stock of a con- signee, after it had been deUvered, on the ground that a claim in writing for the damage, duly verified, had not been presented within five days. My reasons for dissenting, stated as briefly as may be, are as follows : It is shown by the opinion of the court that the consignee, a 170 SCOPE OP THE COMMERCE REGULATED BY THE ACT partnership of three members, was bound by the bill of lading to unload the horses at destination. The consignee, being notified by the carrier as to the probable time of the arrival of the car, on the day before it arrived, paid what was supposed to be the full amount of the freight charges, and two members of the partnership were at the station at three o'clock in the morning to receive and unload it. When the train came, the senior member of the consignee stood in the cattle chute with the conductor, while the latter was placing the' car for unloading and approved as satisfactory the position in which it was placed. Thereupon, a brakeman set the brake, the engine was cut off and the conductor went away and left the car in the sole custody of the consignee, after saying to its representative, "You had better get them out as soon as you can, they have been on the road a good while and must be tired and hungry." Two members of the partnership, consignee, went to work at once to unload the horses, but it was necessary to get some boards to make the bridge from the car to the chute safe, and in about half an hour, when the two were in the act of leading two horses from the car, other cars were negligently thrown against it and caused the damage sued for. I dissent from the opinion of the court because I agree with the three New York courts that the undisputed facts thus stated show that the transportation was ended and the delivery of the stock was so completely made as to end all liability of the carrier under the bill of lading, before the negligence of the company occurred which caused the damage complained of. What constitutes delivery of goods or of live stock by a carrier is usually a mixed question of law and fact, but where, as here, the facts are not disputed, it is a question of law. What more was there for the carrier to do, — what more could it have done — to make more complete the delivery necessary to fulfill its obligation as a carrier? The Journey was ended, the freight charges were paid, and the car was placed on a side track in an appropriate place and position for unloading, which was approved by the consignee. It had been accepted by two mem- bers of the partnership, consignee, and had passed into their ex- clusive custody a full half hour before the accident. No assistance was asked for or needed after the conductor delivered the car and went away and thereafter the carrier owed to the consignee only the duty which it owed to any property lawfully upon or near to its tracks, — not to negligently or wilfully injure it, and it was EEIE RAILROAD CO. V. SHUART et al. 171 for violation of that duty, not for failure to discharge duties im- posed by the bill of lading, that this suit was instituted. The case is one of side track deUvery, the equivalent of the familiar dehvery of a car to an "industrial track" or "team unloading track" of a railroad, with possession taken by the consignee before the damage was done. To the weighty authority of the New York courts which de- cided in this case that the deUvery was complete before the dam- age was done, may be added, a few from many, the decisions of the Supreme Courts: of Michigan, in a strikingly similar case but with not so complete a dehvery, in Brown v. Pontiac, Oxford & Northern R. R. Co., 133 Michigan, 371; of IlUnois, in Gratiot Street Warehouse Co. v. St. Louis, Alton & Terre Haute R. R. Co., 221 Illinois, 418; of North Carolina, in Reid v. Southern Ry. Co., 149 N. Car. 423; of Georgia, in Kenny Co. v. Atlanta & West Point R. R. Co., 122 Georgia, 365. And see Hedges v. Hudson River R. R. Co., 49 N. Y. 223. The d&finition of "transportation" in the Hepburn Act (34 Stat. 584), relied upon in the court's opinion, seems to me quite irrelevant. That provision was incorporated into the act to pre- vent unjust discrimination by carriers in terminal delivery diarges, as the context and the history of the act abundantly show. It defined "transportation" but did not define what should consti- tute delivery to a consignee, — that was left untouched and is governed by the prior decisions of courts and by those which have been developed since. Equally beside the question involved seems to me the decision in Cleveland, Cincinnati, Chicago & St. Louis Ry. Co. v. Dettlebach, 239 U. S. 588, 593, 594, cited in the opinion of the court. The question there under consideration was, whether when goods carried to destination were lost, after they had been held more than a month uncalled for, the liability of the carrier was to be deter- mined by the terms of the bill of lading or by the more Umited liabihty of a warehouseman. Obviously there was no question in the case as to what constituted delivery, for there was no pretense of deUvery, actual or constructive, and therefore the decision cannot be of service in determining this case. The opinion of the court in this case concludes: "The animals were in the car; no adequMe time for unloading had transpired. The carrier had not fully performed the services incident to final dehvery imposed by law. These included the furnishing of fair opportunity and proper facilities for safe unload- 172 SCOPE OF THE COMMERCE BEGULATED BY THE ACT ing although the shippers had contracted to do the work of actual removal. See Hutchinson on Carriers, §§711, 714, 715." I cannot find justification, in the sections cited, for such a statement of the law as is here made. Section 711 deals with the obligation to unload carload freight, and, after saying that it is "the uniform rule and custom in this country" for the consignee to unload, the only other relevant statement of the writer is: "All, therefore, that can be required of the railroad company is that it shall place the cars where they may be safely and con- veniently unloaded." This the carrier in the case before us had done to the satisfaction and acceptance of the consignee before the accident complained of. Section 714 deals with the UabiUty of the carrier pendmg re- moval (delivery) of the goods, and says: "During this reasonable time [for delivery] the liability of the carrier remains unchanged; but so soon as it has elapsed he no longer stands in the relation of carrier to the goods, but in that of an ordinary bailee for hire." The "reasonable time" here referred to is palpably that nec- essary for the carrier to wait before its obligation becomes that of a warehouseman when the consignee does not appear to claim the shipment, — it is not applicable to the time for unloading after the property has been accepted by the consignee. Section 715 declares that: "If the consignee is bound to unload the goods himself from the car, it is the duty of the carrier to place the car where it can be unloaded with a reasonable degree of convenience, and to furnish the consignee with safe and proper facilities for the pur-' pose." All of this the carrier in this case did, and the consignee not only approved as satisfactory, safe and proper, the position in which the car was placed and the facihties furnished for unloading it, but the delivery of the car was accepted and was in the actual possession and custody of the consignee for a very considerable time before the accident complained of happened. It was not in any attempt or effort on the part of the carrier to improve the unloading facilities or to assist the consignee that the damage was done, but it was" the result of a tort, pure and simple, — of a negligent switching operation, entirely independent of the de- livery of the shipment, occurring a half hour after it had been accepted. INTERSTATE COMMERCE COMMISSION V. DIFFENBAUGH 173 The delivery having been completed and accepted by the con- signee, the five-day limitation, so unreasonable in itself that it has been prohibited by congressional enactment (38 Stat. 1196, c. 176, § 1) has, in my judgment, no applicability to this case, and to bottom the conclusion announced upon the definition of "trans- portation" in the Hepburn Act is to convert what was intended for the protection of shippers of property in interstate commerce into an instrument of injury and injustice. For the reasons thus stated I dissent from the opinion and judg- ment of the court.. Mr. Justice McKenna and Mr. Justice Brandeis concur in this dissent. Mr. Justice Day also dissents. INTERSTATE COMMERCE COMMISSION v. DIFFENBAUGH 222 U. S. 42 (1911) Mr. Justice Holmes dehvered the opinion of the court. These are appeals from injunctions issued upon bills brought by the appellees against the enforcement of two orders made by the Interstate Commerce Commission. 176 Fed. Rep. 409. The stages by which the Commission came to its present conclusion, against its. earlier view, will be found reported in 10 I. C. C. Rep. 309, 12 id. 85, 14 id. 315. See 14 id. 317, 510, 551. In the Cir- cuit Court these cases were tried upon the same evidence and they raise the same question; but as the Peavey suit presents that question in its initial and simplest form we will state the facts of that case first. The Union Pacific Railroad, after passing through a grain country, has its eastern termini at Omaha and Kansas City, on the Missouri River. Much the greater part, nine-tenths, more or less, of the grain gathered and carried by the road passes beyond the termini, especially to points farther east. Duting the season the Union Pacific needs all its cars to collect the grain, and there- fore wants to get them back as quickly as possible from the end of its line. Furthermore, the shipments eastward are made more profitably in heavier loads than can be collected from the local stations. For these reasons the Union Pacific sought to prevent its own cars being carried beyond the termini, over connecting 174 SCOPE OF THE COMMERCE REGULATED BY THE ACT lines, and to have the grain shifted to other cars. To make the change it is commercially necessary to pass the grain through an elevator, where also it is weighed, another necessary- step in the transportation. See 14 I. C. C. Rep. 317, 318. An additional consideration is that Omaha and Kansas City are great grain mar- kets where there are sales largely in excess of local needs, and this also requires the grain to pass through elevators at these points. If the Union Pacific could not use these instruments of transfer it could not compete with other roads that have through lines from the grain fields across the Missouri River to the East. See 14 I. C. C. Rep. 317, 327. Acting on these motives, the railroad company in 1899 made a contract in good faith with Peavey under which he built an ele- vator at Council Bluffs on the other side of the river from Omaha. He was to receive not exceeding IJ cents per hundred pounds for the first ten years, and one cent for the next ten, for grain trans- ferred through his elevator. Later another elevator was brought into the arrangement, now with Peavey & Co., .a corporation.. Peavey & Co. is a large dealer in grain and receives the same allowance for its own. grain that it receives for that of others. It is important to remark that in no case is any additional charge made to the shipper for the elevator service. In 1904 the Inter- state Commerce Commission investigated the matter and upheld the contract, including the allowance for Peavey & Co.'s own grain. 10 I. C. C. Rep. 309. The Commission also made a report to Congress, and after fur- ther investigation, notwithstanding the fact that the incidental advantages to grain owners from such allowances had been made apparent. Congress passed the act of June 29, 1906, c. 3591, 34 Stat. 584. By this it was provided in § 1, amending the earlier statute, that "the term 'transportation' shall include .... all instrumentahties and facilities of shipment or carriage, irrespective of ownership or of any contract, express or imphed, for the use thereof and all services in connection with the receipt, deUvery, elevation, and transfer in transit, ventilation, refrigeration or icing, storage, and handhng 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 therefor, and to estabhsh through routes," etc. By § 6 the carrier was required to state separately in its schedules all terminal charges and all privileges or facilities granted or allowed, and by § 15 "If the owner of property transported under this INTERSTATE COMMERCE COMMISSION V. DIFFENBAUGH 175 Act 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 aiid 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 instrumentality so furnished." Thus Congress clearly recognized that services such as those rendered by Peavey & Co. were services in transportation and were" to be paid for notwithstanding the possibility that some advantage might be gained as a result. Meantime other elevators had sprung up, and in 1906 the Union Pacific extended the allowance made to Peavey & Co. to all elevators in Omaha, Council Bluffs and Kansas City. But the Interstate Commerce Commission had begun to change its view upon further reflection. In 1907, upon rehearing, it cut down the allowance to Peavey & Co. to three-quarters of a cent, estimating that to be the actual cost, and being of opinion that to allow any profit would be in effect to permit a rebate. 12 I. C. C. Rep. 85. The order made required the railroad company to desist from paying more than three-fourths of a cent per hundred pounds, for service rendered in the transfer or elevation of grain at Council Bluffs or Kansas City, to any one interested in the buying, selling or shipment of grain at those places, especially naming the appellees. This is one of the orders complained of. The chief object of complaint, however, is an order made in the following year, on June 29, 1908. In that the Commission took the last step and ordered the Union Pacific to desist from paying any allowance to Peavey & Co. on grain in which they have any in- terest that is not reshipped from their elevators within 10 days, or that has been mixed, treated, weighed or inspected in any of their elevators at the above named points. 14 I. C. C. Rep. 315. The ground on which the payment to owners of grain finally was held to be a rebate had been considered from the beginning and, as we have said, had been brought to the mind of Congress. It is that when the owners of the elevators own the grain put into them they have the opportunity to perform other services to the grain in the way of treatment, or cleaning, clipping, and mixing the grain, which although not included under the term elevation or paid for by the railroad, it is an advantage to them to be able to perform at the same time. This advantage is thought to create an undue preference and unjust discrimination. Of course the opportunities for fraud are adverted to, but the ground 176 SCOPE OP THE COMMERCE REGULATED BY THE ACT of the decision is that even an honest payment of the bare cost of elevating grain in transit gives an undue advantage if the ele- vator owner also owns the grain. As was pointed out by the court below the final order is confined to grain that has been treated, weighed, inspected, or mixed. We agree with the court below that this decision is erroneous in its conception of the grounds on which under the statute an advantage may be pronounced undue, and in its assumption that Congress has left the matter open by merely permissive words. The principle as to advantages is recognized in Penn Refining Co. V. Western New York & Pennsylvania R. R. Co., 208 U. S. 208, 221. The law does not attempt to equalize fortune, opportunities or abilities. On the contrary the act of Congress in terms contem- plates that if the carrier receives services from an owner of prop- erty transported, or uses instrumentahties furnished by the latter, he shall pay for them. That is taken for granted in § 15; the only restriction being that he shall pay no more than is reasonable, and the only permissive element being that the Commission may determine the maximum in case there is complaint (or now, upon its own motion. Act of June 18, 1910, c. 309, § 12, 36 Stat. 539, 551). As the carrier is required to furnish this part of the trans- portation upon request he could not be required to do it at his own expense, and there is nothing to prevent his hiring the instru- mentality instead of owning it. In this case there is no complaint that the rate out of which the allowance is made is unreasonable, and it is admitted that three-quarters of a cent barely would pay the cost of the service rendered without any reasonable profit to Peavey & Co. for the work. See Interstate Commerce Commission v. Stickney, 215 U. S. 98. In the Diffenbaugh case the order of the Commission bore the same date, June 29, 1908, as that against Peavey & Co. and the Union Pacific. It was directed against the Chicago, Burlington & Quincy Railroad Company and other competitors of the Union Pacific, and forbade their paying any sum as compensation for service rendered in the elevation of grain at Kansas City, Missouri, and other Missouri River points upon their lines. Competition, which was an element in the motives of the Union Pacific, led these other roads to make a similar arrangement. Probably, being through lines, they would not object to the Commission's order if that to the Union Pacific could be sustained. The opinion of Mr. Commissioner Prouty in this case takes somewhat different ground from that on which the orders in the Peavey case are INTERSTATE COMMERCE COMMISSION V. DIFFENBAUGH 177 based. 14 I. C. C. Rep. 317. See 15 id. 90, 93. See also H. Gund & Co. V. Chicago, Burlington & Quincy R. R. Co., 18 I. C. C. Rep. 364. Especially it throws doubt upon the allowance being properly a transfer allowance at this present day. As the contract with Peavey & Co. .purports to be only for grain transferred, it is not necessary to consider whether elevation could be allowed for as practically necessary under modern conditions even if the grain did not go on. For the purposes of this case so much of the order as meets the above-mentioned doubt by confining payments to grain reshipped within ten days seems proper enough and not open to review on the matter of fact. But when the grain has been treated the prohibition of an allowance is universal, and therefore the question that we have answered is raised by the record; the question, that is, of the power of the Commission to prohibit such allowances to grain owners in general terms. In this order it was stated expressly that the purpose of the Com- mission was to prohibit and stop the payment of the elevator allowances everywhere. 14 I. C. C. Rep. 510. Ibid. 551. The Union Pacific made the allowances in question to elevators at its termini ; it had no motive to make them anywhere else. The competitors of the Union Pacific concerned in the Diffenbaugh case were compelled by competition to make the same allowance at Missouri River points, but they also make it nowhere else. The Traffic Bureau, Merchants' Exchange of St. Louis, complained to the Commission that the result was a discrimination against St. Louis of f of a cent per 100 pounds. But the principle of the decision is that the allowance to elevators upon their own grain is to be stopped everywhere unless they are prevented from using the opportunity for treating their grain. Therefore this question of preference between cities does not need to be discussed. But, as remarked below, the Union Pacific could not be complained of on this ground, 176 Fed. Rep. 424, and it would be impossible to deny the same right to competing roads, merely because as the result of the conditions one city would gain and another lose. Louisville & Nashville R. R. Co. v. Behlmer, 175 U. S. 648. Although the order cutting down the allowance to Peavey & Co. to the estimated cost may have been influenced by erroneous views touching the powers of the Commission and the elements proper for consideration (see Southern Railway Co. v. St. Louis Hay & Grain Co., 214 U. S. 297), we are of opinion that no sufii- cient reason appears for disturbing that. The Commission has decided what compensation is reasonable, and we infer that 178 SCOPE OF THE COMMERCE REGULATED BY THE ACT Peavey & Co. would be content under the circumstances to render the service for three-quarters of a cent per hundred pounds rather than give it up. The jurisdiction in the Diffenbaugh case was doubted, although the Commission did not press the point as it wishes a final decision. We are content to leave that matter on the statement of the court below. 176 Fed. Rep. 416, 417. The plaintiffs are affected by the order and it is just that they should have a chance to be heard, although not parties before the Commission. The result is that the decree of the Circuit Court must be affirmed in its main point, but that the Commission's order of 1907, di- minishing the allowance to three-quarters of a cent, and so much of the Peavey order of 1908 as confines allowances to grain re- shipped within ten days, should be allowed to stand. Decree of Circuit Court modified and affirmed. Mr. Justice McKenna, with whom concurred Mr. Justice Hughes, dissenting. I am unable to concur in the opinion of the court. The Commission did not hold that elevation may not properly be furnished by a railroad or be allowed for to a shipper, but held that "such elevation must be charged for at what it is reasonably worth," and without discrimination. And I understand elevation to mean "the transfer of the grain from the car of the inbound carrier, through an elevator to the car of the outbound carrier" within a given period. "In such elevation," Mr. Commissioner Harlan said, and his language I adopt, "there is nothing either preferential or discriminatory, whether done in an elevator oper- ated by the carrier or in an elevator operated for it by the owner," but "any allowance by the carrier to the owner of an elevator on grain belonging to him that has been weighed, inspected, cleaned, mixed or otherwise treated in the process of elevation, is unlawful. As a facihty for the convenience of the carrier free elevation is unobjectionable, but when the owner is permitted to and does use the elevation as a transit privilege for himseff, by means of which to secure commercial advantages on his own grain, the result is an unlawful preference and discrimination." The conclusion is not a misconstruction of the statute. Trans- portation simply is the business of the railroad company. Weigh- ing, inspecting, cleaning and mixing, that is, raising the quality of the grain to suit the demand of the market, is the business of the grain dealer or others, and the two businesses are not to be confounded, and it was not, I think, the purpose of the statute LEHIGH VALLEY B. E. CO. V. UNITED STATES 179 to confound them. The statute makes the term "transportation" include "all instrumentalities and facilities of shipment or car- riage," and it is only when the owner of property renders services "connected with such transportation, or furnishes any instrumen- tahty used therein," that he may be compensated by the railroad. What goes beyond that transcends the statute and becomes, as the Commission held, a discrimination. I am authorized to say that Mr. Justice Hughes concurs in this dissent. LEHIGH VALLEY RAILROAD COMPANY v. UNITED STATES 243 U. S. 444 (1917) Mb. Justice Holmes dehvered the opinion of the court. This is a proceeding instituted by direction of the Attorney General at the request of the Interstate Commerce Commission to prevent the appellant railroad from carrying freight at less than its pubUshed rates on file. The case was heard upon bill and answer and a stipulation, and the question is whether the facts warrant an injunction, as matter of law. George W. Sheldon and Company is an Ilhnois corporation engaged in forwarding, or bringing goods for importers from the place of purchase in Europe to their destination in the United States and charging the importers for the transportation and such other services as it may perform. Of course the expectation is that it will make a profit from the transaction, although from the uncertainty of ocean freight charges it may lose, as the contract is made in advance. By arrangement with the appellant, so far as it is able it sends the goods over the appellant's Hne, and for doing so receives from it a varying percentage upon the pubHshed rates and also a salary of $5,000 a year. These payments by the appellant are the ground of the bill. The District Court issued an injunction as prayed. " 222 Fed. Rep. 685. As toward the railroad, George W. Sheldon and Company is consignor and consignee, and although it may be in no case the owner, that does not concern the appellant. Upon the admitted facts there can be no doubt and it is not denied that it is to all legal intents the shipper of the goods. Interstate Commerce Com- mission V. Delaware, Lackawanna & Western R. R. Co., 220 U. S. 235. Great Northern Ry. Co. v. O'Connor, 232 U. S. 508. If the shipper were the owner an allowance to him of a percentage upon 180 SCOPE OF THE COMMERCE REGULATED BY THE ACT the freight as an inducement to ship by that line, however honest and however justifiable on commercial principles, would be con- trary to the Act to Regulate Commerce as it now stands. Act of June 29, 1906, c. 3591, § 2, 34 Stat. 586, 587, amending § 6 of the original act, &c. See also the original Act of February 4, 1887, c. 104, § 2, 24 Stat. 379. Wight v. United States, 167 U. S. 512. But the above cases show that the carrier cannot inquire whether the shipper is the owner and therefore the statute expresses a necessary poUcy when it forbids in universal terms re- funding in any manner any portion of the rates specified in the pubUshed tariffs or extending to "any shipper" any privilege not so specified. , Of com-se it does not matter whether the allow- ance takes the form of a deduction or a crosspayment. Any pay- ment made by a carrier to a shipper in consideration of his shipping goods over the carrier's Une comes within the prohibiting words. It is true no doubt that George W. Sheldon and Company in the performance of the services for which it is paid maintains offices here and abroad, advertises the Railroad, solicits traffic for it, does various other useful things, and, in short, we assume, benefits the road and earns its money, if it were allowable to earn money in that way. It is true also that in Interstate Commerce Commission V. F. H. Peavey & Co., 222 U. S. 42, an owner of property trans- ported was held entitled under § 15 of the Act to Regulate Com- merce to an allowance for furnishing a part of the transportation that the carrier was bound to furnish. (So Union Pacific R. R. Co. V. Updike Grain Co., 222 U. S. 215, and United States v. Baltimore & Ohio R. R. Co., 231 U. S. 274.) But that case goes to the verge of what is permitted by the act. The services rendered by George W. Sheldon and Company, although in a practical sense " connected with such transportation," were not connected with it as a nec- essary part of the carriage — were not "transportation service," in the language of Union Pacific R. R. Co. v. Updike Grain Co., 222 U. S. 215, 220 — and in our opinion were not such services as were contemplated in the Act of June 29, 1906, c. 3591, § 4, 34 Stat. 589, amending § 15 of the original act. On the other hand the allowance of them falls within the plain meaning of § 2 of the Act of 1906, to which we referred above. There is some criticism of the form of the decree, but it pro- hibits with sufiicient plainness all payments to George W. Sheldon and Company, whether by way of salary, commission, or other- wise, in consideration of the shipment of goods by George W. Sheldon and Company over the appellant's fine. Decree affirmed. ATCHISON, TOPEKA & SANTA FE RY. V. UNITED STATES 181 ATCHISON, TOPEKA & SANTA FE RAILWAY COMPANY V. UNITED STATES 232 U. S. 199 (1914) In 1909, Associations, representing California fruit-growers, filed with the Commerce Commission complaints against numerous railroad companies attacking the freight and refrigeration charges on citrus fruit shipped from California to Eastern points. Much testimony was taken, from which it appeared that the orange crop amounted to aboiit 50,000 cars per annum, of which the 20,000, shipped in warm weather, required some form of re- frigeration in order to keep the fruit in condition for use at the end of the journey. At the close of the first hearing June 11, 1910, the Commission held (19 I. C. C. 148) that $1.15 per cwt. was a reasonable freight-rate on oranges. Other questions in the case were postponed until January 14, 1911, when the Commission made a report (20 I. C. C. 106) as to the reasonableness of the carriers' charges of $62.50 per car for refrigeration and $30 for services in shipments pre-cooled by the consignor. The Commission found that in refrigeration by the carriers they furnished all the ice and performed all of the services, includ- ing re-icing en route. It found that there was a total of about 11 tons of ice furnished, but owing to the melting the average weight of ice hauled was 8,000 lbs., the freight on which to Chicago, was .25 per 100. It cost something to repair the bunkers, and the Com- mission recognized the right to include an additional sum to cover risk and profit. The total revenue of $345.30 from such shipments was made up of the following items: Freight on 27,200 lbs. of oranges @ $1.15 $312.80 Cost of 11 tons of ice $30. Freight on 8,000 lbs. average weight of ice hauled®. 25 20. Damage to bunkers 5. Sum to cover risk and profit 7.50 , 62.50 Gross Receipt $375.30 Less cost of ice 30.00 Freight and refrigeration charges $345.30 The Commission found that the charge of $62.50 for refrigera- tion services was reasonable. 182 SCOPE OF THE COMMERCE REGULATED BY THE ACT It further appeared that the Government had conducted cer- tain experiments with a view of determining whether an advan- tage would not be derived from pre-cooHng the fruit before the bunkers were filled with ice. There was testimony that the carriers had reached the conclusion that if the fruit was pre- cooled before the movement of the car began, there would be a corresponding saving in the amount of ice needed in the bunkers. They accordingly had erected plants at which the fruit could be pre-cooled and included such pre-cooling service in the regu- lar refrigeration charge of $62.50. Certain shippers claimed that better results were obtained where the fruit was pre-cooled immediately after it was taken from the grove and before it was placed in the car. They there- fore adopted a method in which the shipper chills the fruit, cools the car, furnishes the ice and fills the bunkers at a cost to him- seK of $32.50. The carrier for its services in connection with hauUng such pre-cooled shipment charged $30, intending thereby to make the rates on pre-cooled fruits the same, whether the pre-cooling was by the shipper or the carrier. In determining whether this $30 was a reasonable charge for service rendered by the carrier in hauling fruit pre-cooled by the shipper, the Commission said (20 I. C. C. 120) that no re-icing was necessary en route and that "it would be a hberal estimate to put the average weight of the ice during the entire journey at 5,000 lbs. For the hauhng of this ice the carriers are entitled to fair com- pensation, as they are in the case of Standard Refrigeration." There is also an "expense in providing and keeping in repair the ice bunkers The carrier is, therefore, entitled to this additional cost, which is about $5 per car per trip one way." (20 I. C. C. 120.) Where the fruit is pre-cooled by the shipper, the boxes are packed so much closer together that the load is one-sixth greater than in case of shipments pre-cooled and refrigerated by the car- rier. The result is that the revenue from a car of fruit pre-cooled by the shipper would be — Freight on 33,000 lbs. of oranges at $1.15 $379.50 Freight on 5,000 lbs. of ice at 25 cents per hundred . . 12.50 Damage to bunkers (and profit allowed?) 7.50 $399.50 or, $54 more than the revenue of $345.30 from a car pre-cooled and refrigerated by the carrier. ATCHISON, TOPEKA & SANTA FE RY. V. UNITED STATES 183 The Commission further said: "As bearing upon the reason- ableness of the rate, the carriers showed the cost of the movement of these oranges per gross ton — that is, per ton of combined weight of car and of contents as compared with other articles — claiming that this was the true basis upon which to fix rates. So treating these pre-cooled shipments, it will be found that the carrier receives more per gross ton for handling the pre-cooled car than for either the ventilated or the refrigerated shipment. By every canon of rate-making which has been applied by car- riers in the past, or which is relied upon by them now, these pre-cooled shipments at the standard rate without additional compensation are better business than either the ventilated or the refrigerated movement. Clearly these growers who, have devised and perfected this system of shipment, should not be compelled to pay for the privilege of using it more than the fail- cost to the carrier of providing the additional facilities which are not included in the ventilated rate with a fair profit." 20 I. C. C. 121. The report concluded as follows: "We are of the opinion that the present pre-cooHng charges of the defendants of $30 per car are unjust and unreasonable, and that these charges should not exceed for the future $7.50 per car, but the defendants may, as a condition of making this charge, require that pre-cooled cars be loaded seven tiers wide and two tiers high, and may provide by their tariffs a proper minimum to accomplish this result, the amount of which would depend upon the length of the car." 20 I. C. C. 123. The carriers, in obedience to this order, put in a tariff of $7.50 for pre-coohng services, but at once filed another tariff, effective July 1, 1911, reciting that "the privilege heretofore per- mitted to shippers of citrus fruit to pre-ice carload shipments is withdrawn, the carriers retaining and exercising the exclusive right and control of furnishing and doing all icing and refriger- ation of citrus fruit in all cases where shipper does not specifically request or direct shipments to move solely under ventilation." Immediately thereafter the orange-growers' associations filed proceedings to cancel this withdrawal tariff and to compel the carriers to continue to extend to shippers the old privilege of pre- ^ cooling at the new rate of $7.50. At the hearing the evidence and reports of the Commission in the former case were stipu- lated into the record and, on April 8, 1912 (23 I. C. C. 267, 271), the Commission held that the shippers had the right to the pre- 184 SCOPE OF THE COMMERCE REGULATED BY THE ACT cooling privilege and again ruled that $7.50 was a reasonable charge for the services rendered by the carriers. The Railroad Companies then filed a petition in the Com- merce Court attacking the original order of January 14, 1911 (fixing $7.50 as a reasonable charge on pre-cooled shipments) and the last order of April 8, 1912 (requiring the roads to per- mit pre-cooled shipments at that sum), contending that shippers had no right to ice the bunkers. They also insisted that the $7 .SO rate was confiscatory and did not equal the $17.50, which the Commission itself had found to be the actual cost of serv- ices rendered in connection with pre-cooled shipments. The carriers, thereupon prayed that both orders should be annulled and .set aside. The Commerce Court (204 Fed. Rep. 647, 651) adopted the finding of the Commission that in pre-cooled shipments the reve- nue was $54 greater than in the Railroads' method of refrigera- tion, and concluded by saying that, in view of that fact, "we do not think that the petitioners have any valid complaint to make of the charge of $7.50 per car estabhshed by the Commis- sion." It further held that under the facts appearing in the record, the shipper had the right to furnish the ice in pre-cooled shipments and thereupon it dismissed the petition. The case was then brought here by appeal. Mr. Justice Lamar, after making the foregoing statement of facts, delivered the opinion of the court. There are many cases between shipper and carrier in which each insists that the other is bound to furnish service or facili- ties connected with the transportation of freight. The present record, however, presents an instance where both parties are contending for the privilege of supplying an article needed in the proper shipment of fruit — the consignor claiming that icing is a necessary part of the loading, which he is authorized to supply; while the carriers insist that icing is a part of refrigeration, by statute made transportation, which they are bound to provide and for which they are entitled to collect reasonable compensa- tion. The determination of these conflicting claims necessitates an examination of the two methods under which, in warm wea- ther, oranges are shipped from CaUfornia to the East. In what is called Standard Refrigeration, the boxes, of the aggregate weight of 27,200 pounds, are so placed as to leave spaces between them wide enough to admit of a free circulation ATCHISON, TOPEKA & SANTA PE RY. V. UNITED STATES 185 of air chilled by ice in the bunkers. Subsequently the carriers put in a system of pre-cooling, under which after the cars had been loaded they were taken from the point of shipment to Refrigerating Plants owned by the carriers, where whole train- loads are pre-cooled at one time by means of blasts of very cold air driven into the car through and around the boxes. At the end of three or four hours the fruit is sufficiently chilled, the bunkers are then filled with about 10 tons of ice, furnished by the carrier, and the train is started on its journey to the East — the bunkers being re-iced from time to time as needed at stations along the route. For this entire service the Com- mission held that the carrier's charge of $62.50 was reasonable. A different method obtains where the icing of the car is done by the shipper at his own expense. In that class of cases the oranges are taken from the grove directly to a cold room having a tem- perature of about 33° F. There the boxes are allowed to remain for periods of from 24 to 48 hours, and until the fruit is chilled to the center. When thus pre-cooled, the boxes are ready for ship- ment. A refrigerator car is then placed on the track opposite the door of the cold room of the warehouse with which it is connected by a collapsible enclosed passageway, so arranged as to exclude the outside air, while at the same time allowing that from the cold room to enter and cool the interior of the car. Through this pas- sageway the oranges are trucked from the warehouse to the car and, as they have been chilled to the center, the boxes are packed close together forming a soUd mass weighing 33,000 lbs., with a temperature of about 35° F. The doors and vents of the car are promptly and tightly closed, the bunkers are immediately filled with unusually large cakes of ice, in order to reduce the rate of melting, and the fruit is then forwarded under a filed tariff which provides that re-icing is unnecessary, and that the shipper will make no claim for damage occasioned by failure to re-ice in transit. For their services in connection with such pre-cooled shipments the carriers were allowed to charge $7.50 but the Commission re- fused to permit them to charge for the ice needed to keep the fruit cool between warehouse and destination. 1. This ruUng is attacked by the appellants, who contend that icing is a part of refrigeration, which the Hepburn Act' makes a ' . . . . The term "transportation" shall include .... all services in connection with the receipt, delivery . . . ventilation, refrigeration or icing, .... of property transported; and it shall be the duty of every carrier .... to provide and furnish such transportation upon reasonable request therefor. (Act of June 29, 1906, c. 3591, § 1, 34 Stat. 584.) 186 SCOPE OF THE COMMERCE REGULATED BY THE ACT part of the transportation they are bound to furnish upon, reason- able request. They insist that in order to meet the duty, thus imposed by statute, they have been compelled at great expense to erect immense plants where trainloads of fruit can be cooled and where an enormous quantity of ice is manufactured for re- frigeration purposes. They argue that, being bound to furnish all necessary icing and re-icing and having at great cost prepared to furnish the supply, it is not only just, but a right given by statute, that they should be allowed to provide all needed icing or refrigeration at a rate to be approved by the Commission. Whatever transportation service or facility the law requires the carrier to supply they have the right to furnish. They can there- fore use their own cars, and cannot be compelled to accept those tendered by the shipper on condition that a lower freight rate be charged. So, too, they can furnish all the ice needed in refrigera- tion, for this is not only a duty and a right, under the Hepburn Act, but an economic necessity due to the fact that the carriers cannot be expected to prepare to meet the demand, and then let the use of their plants depend upon haphazard calls, under which refrigeration can be demanded by all shippers at one time and by only a few at another. This contention was sustained by the Commission, which recog- nized that "the shipper has no right to provide refrigeration him- self today and call upon the railroad company for that service tomorrow. To permit such a course is to demoralize the service of the defendants and prevent them from discharging their duty with economy and efficiency It is the duty of the carrier to furnish refrigeration upon reasonable demand, and in so far as the furnishing of that refrigeration is a part of the service rendered by the carrier, the carrier may insist upon its right to furnish that service exclusively." 20 I. C. C. 116. 2. But of course this does not mean, that because the carriers have ice on hand, they can compel the shipper to have his fruit refrigerated, when, on account of the state of the weather or for other cause, he prefers to have it forwarded under ventilation only. When, however, ice is actually needed and is actually used, the question arises as to whether icing is a part of preparation which can be done by the shipper; or a part of refrigeration (transportation) which, by statute the carrier has the exclusive right to furnish. To this question no answer can be given that will apply in all cases. For in the shipment of fruit, as in that of other articles. ATCHISON, TOPEKA & SANTA FE BY. V. UNITED STATES 187 it is impossible to lay down a rule which definitely fixes what load- ing includes and by whom it must be done. Nor is there any con- sistent practice on this subject, since from reported cases it appears that the claims of the parties are based rather on interest than on some definite principle. Sometimes the shipper, as here, insists on the right to load and provide necessary appliances. At other •times he demands that such service and appliances be furnished by the railroad company. Conversely the carriers sometimes claim, as here, the right to furnish service and facihties, while in other cases insisting that one or both must be supplied by the con- signor. Cf. National Jjumber Dealers Association v. Atlantic Coast Ldne, 14 I. C. C. 154; Schultz v. Southern Pacific, 18 I. C. C. 234; In re Allowance for Lining and Heating Cars, 26 I. C. C. 681; 25 I. C. C. 497. These inconsistent and conflicting demands serve to emphasize the fact that, before the haul actually begins, the right or duty of each party, where not absolutely fixed by statute, must be decided with reference to the special facts of each case. As a general rule, the carrier loads all freight tendered in less than carload lots while the consignor loads in all cases where, for his convenience, the car is placed at his warehouse or on public team tracks. This practice has grown up not only because the work can be more satisfactorily performed by the owner, but also because it is impossible for railroad companies economically to load cars at private warehouses or on those tracks where vehicles of the consignor or consignee come and go at the direction of the owner. 25 I. C. C. 490. 3. But loading may involve more than the mere placing of the freight on the car, since the character of the shipment may be such as to require the furnishing and placing of stakes, racks, blocks and binders needed to make the transportation safe; or, the freight may be such as to require special covering, packing, icing or heating, in order to preserve the merchandise in condition fit for use at the end of the journey. Who is to furnish these needed facihties, may be quite as uncertain as who is to place the freight on the car, and can only be determined by considering the char- acter of the shipment, the place where the loading begins, and who can most economically perform the service required. Neither party has a right to insist upon a wasteful or expensive service for which the consumer must ultimately pay. The interest of the pubhc is to be considered as well as that of shippers and carriers — their rights in turn having been adjusted by a reduction 188 SCOPE OF THE COMMERCE REGULATED BY THE ACT in the rate, if the loading is done in whole or in part by the shipper; and by an increase in the rate where the loading is done in whole or in part by the carrier. But, by whomsoever done, the loading must be such as to fit the freight for shipment, and when — by statutory requirement, by valid order of the Commission, or by the carriers' voluntary act, — the car is placed at the consignor's warehouse to be loaded by the shipper, he may not only put the . freight on the car but may do all other acts required to fit the freight for its proper shipment — at least, until under a tariff regularly filed, the carrier offers to do what is necessary to secure or pre- serve what has thus been placed on its car for transportation. The refrigeration and pre-coohng offered by the carrier to shippers of pre-cooled fruit was found not to be the equivalent of the method adopted by the shipper. 4. In the present case the carriers concede that in pre-coohng shipments the consignor had the right to take all of the steps for preparation except the last. They concede that he had the right to pre-cool the fruit, to pre-cool the car, to place the boxes on board the car, to stop the vents and seal the doors. But they deny that he could ice the bunkers, even though that was necessary to the complete preparation, or loading, needed in that particular class of shipments and without which the fruit would be damaged by the rise in temperature, occurring during the time the car is being hauled from the warehouse of the shipper to the icing sta- tion of the carrier. Such delay in filUng bunkers would nullify most of the advantage of the expensive chilling of fruit and car necessary in the pre-cooUng shipments, — permitted, if not origi- nally encouraged, by the carrier. The privilege was withdrawn — not because the railroad companies were in position to furnish the ice at the proper time and place, but solely because the Com- mission had reduced the carriers' charge on pre-cooled oranges from $30 to $7.50 per car. The icing may have been so related to refrigeration as to author- ize the carriers to render that service. But manifestly they could not be expected to biiild refrigerating plants near each warehouse; and, the carrier not being in a position to do such icing, the con- signor had the same right to provide the necessary supply that he would have had to ice a shipment of fish, to furnish and place standards to secure lumber on an open car, or to fasten to the floor articles which otherwise might be damaged by the jerks and jolts of a moving train. In the absence, therefore, of the carriers' offer, under a filed tariff, to furnish ice at the time and place needed INTERSTATE COM. COM. V. ILLINOIS CENTRAL R. R. CO. 189 in pre-cooled shipments, or to substitute a service of equal value at practically the same cost, they had no right to prevent the con- signor from filling the bunkers so as to fit the freight for proper transportation INTERSTATE COMMERCE COMMISSION v. ILLINOIS CENTRAL RAILROAD COMPANY 215 U. S. 452 (1910) Mr. Justice White deUvered the opinion of the court. Whether a duty rested upon the IlUnois Central Railroad Company to obey an order made by the Interstate Commerce Commission is the question here to be decided. On the ground that preferences were created and discrimina- tions engendered by regulations established by the railroad company concerning the daily distribution of coal cars to mines along its line in periods when the supply of such cars was inade- quate to meet the demand upon it for the movement of coal, the order in question commanded the railroad company to desist from enforcing the regulations found to be preferential, and for a future period of two years to deliver cars to mines along its line in conformity with the rule announced by the commission. A clearer perception of the questions to be considered will be afforded by giving a brief statement of the cause of car shortage referred to, accompanied with a mere outline of the steps generally taken by carriers to deal with the subject and the particular method appUed by the Illinois Central Railroad Company prior to the date when the complaint was made against it, concerning which the order previously referred to was entered. It is conceded in argument that bituminous coal mines, which are the character of mines here involved, must dispose of their product as soon as the coal is delivered at the surface, as it is not practicable for an operator to store such coal, and the amount that a mine will produce is therefore directly dependent upon the quantity that can be taken away day by day. As a result of this situation it is also conceded that railroads upon whose lines coal mines are situated pursue a system by which daily deliveries of cars, based upon requisitions of the respective mines, are made to such mines to permit of the removal of their available output for that day. 190 SCOPE OF THE COMMERCE REGULATED BY THE ACT Notwithstanding full performance by railway carriers of the duty to have a legally sufficient supply of coal cars, it is conceded that unforeseen periods arise when a shortage of such cars to meet the demand for the transportation of coal takes place, because among other things, a, of the wide fluctuation between the de- mands for the transportation of bituminous coal at different and uncertain periods; 6, the large number of loaded coal cars deUvered by a carrier beyond its own Une for transportation over other roads consequent upon the fact that the coal produced at a par- ticular point is normally distributed for consumption over an extensive area; and, c, because the cars thus parted with are subject to longer detentions than usually obtain in the case of shipments of other articles, owing to the fact that bituminous coal is often shipped by mining operators to distant points to be sold after arrival, and is hence held at the terminal points awaiting sale, or because, owing to the cost of handhng coal, and the diffi- culty of storing such coal, the car in which it is shipped is often used by the shipper or purchaser at the terminal points as a convenient means of storage or as an instrument for dehvery, without the expense of breaking bulk, to other and distant points. It is disclosed that the railroads of the United States generally, at various times, put in force regulations for the distribution of coal cars. Generally speaking, these regulations provide for fixing the capacity of coal mines in order to determine the num- ber of cars to which each might normally be entitled to daily move its output of coal. And these regulations also provide for a method of determining the yro rata share of the cars daily allotted for distribution in times of car shortage. Neither the method by which capacity was to be ascertained nor the regulation for daily distribution upon the basis of such capacity in case of shortage was identical among the various railroad systems of the United States. The divergence, and even conflict, between those sys- tems is illustrated by the cases of Logan Coal Co. v. Pennsylvania R. R. Co., 154 Fed. Rep. 497; United States ex rel. Pitcairn Coal Co. V. B. & 0. R. R. Co., 165 Fed. Rep. 113; cases cited at pages 503 and 504 of the report of the Logan Coal Co. case, and the case of Majestic Coal & Coke Co. v. Illinois Central R. R. Co., 162 Fed. Rep. 810. In a general sense, however, all the regulations of the various railroads, either for ascertaining the capacity of coal mines or in order to determine the -pro rata share for daily distribution of cars to the respective mines in case of shortage dealt with four INTERSTATE COM. COM. V. ILLINOIS CENTRAL R. R. CO. 191 classes of cars: 1, system cars, that is, cars owned by the carrier and in use for the transportation of coal; 2, company fuel cars, that is, cars belonging to the company and used by it when neces- sary for the movement of coal from the mines on its own line, and which coal had been bought by the carrier and was used solely for its own fuel purposes; 3, private cars, that is, cars either owned by coal mining companies or shippers or consumers, and used for the benefit of their owners in conveying coal from the mines tp designated points of delivery; 4, foreign railway fuel cars, that is, cars owned by other railroad companies and which were by them delivered to the carriers on whose lines mines were situated, for the purpose of enabling the cars to be loaded with coal and returned to the company by whom the cars had been furnished, the coal being intended for use as fuel by such foreign railroad companies. The various regulations, irrespective of minor differences be- tween them, fell upon one or the other side of this broad line of division. One system took into account class 2, the fuel cars of the carrier, class 3, the private cars, and class 4, the cars of foreign railroads, and deducted from the rated capacity of the mine the sum of coal delivered by that mine in such cars, and upon the basis thus resulting apportioned ratably in case of shortage the system cars, that is, those embraced in class 1. On the other hand the other class of regulation not only took no account of the cars in classes 2, 3 and 4, as a means of rating the capacity of the mine, but moreover did not charge against any mine, for the purpose of ascertaining the daily pro rata of the cars to which such mine was entitled, any car whatever furnished such mine on such day embraced within classes 2, 3 and 4, that is, any company fuel car, foreign railway fuel car or private car. By this system, therefore, where a mine was entitled daily to a given pro rata of the cars subject to general distribution it received its fuU share of such cars, and in addition on that day also received such of the company fuel cars, foreign railway fuel cars and private cars as might have been sent to it for loading on that day. This absolute disregard in the allotment of the company fuel cars, foreign railway fuel cars and private cars was not in all respects common to all the systems which took no account of such cars in fixing capacity, since in some of the regulations one or the other of the classes was taken into account in fixing the pro rata for distribution. Previous to 1907 the Railroad Commission of the State of 192 SCOPE OF THE COMMERCE REGULATED BY THE ACT Ohio filed with the Interstate Commerce Commission two com- plaints against the Hocking Valley and another railroad company. These complaints were based upon the ground that the failure of the railroads in times of car shortage to include in the pro rata of cars for distribution foreign railway fuel cars and private cars, and to charge the mines which had received such cars with the same as part of their distributive share, created an undue prefer- ence and worked unjust discrimination in violation of the act to regulate commerce. On July 11, 1907, the report and opinion of the commission was announced in the cases referred to. R. R. Comm. of Ohio v. Hocking Val. Ry. Co., 12 I. C. C. Rep. 398. It was declared that the complaints were well founded, and the relief prayed was awarded. Nine days afterwards — presump- tively in ignorance of the finding of the commission just referred to — the Illinois Central Railroad Company promulgated rules governing the distribution of cars to coal mines. Although by these rules foreign fuel cars, private cars and company fuel cars were not taken into account in ascertaining the capacity of a mine or mines, such cars were expressly directed not to be counted for the purpose of the daily distribution of cars among the respective mines. On August 15 following, however, pre- sumably to cause the regulations to conform to the interpretation of the Interstate Commerce Act adopted by the commission in the Hocking Valley case, a circular was issued by the Ilhnois Central Railroad Company, to go into effect September 1, 1907, cancelling the circular of July 20, 1907, and directing that account should be taken in the distribution of cars to a particular mine or mines of both foreign railway fuel and private cars. Before the date fixed for the going into effect of this last-named circular the Majestic Coal and Coke Company, a West Virginia corpora- tion, filed a suit against the Ilhnois Central Railroad Company in the United States Circuit Court for the Northern District of Ilhnois, complaining that to charge against its distributive share of coal cars, in the event of a car shortage, the fuel cars and pri- vate cars furnished it would violate its legal rights. After hearing, a temporary injunction, preventing the going into effect of the regulations in the particulars mentioned, was issued. The distri- bution of coal cars thereafter continued to be made as provided in the prior circular. With this prelude we come more immediately to the origin of the controversy before us. On October 31, 1907, the Illinois Collieries Company filed with INTERSTATE COM. COM. V. ILLINOIS CENTRAL R. R. CO. 193 the Interstate Commerce Commission a complaint against the Illinois Central Railroad Company. The regulations of the railroad company as to the distribution of coal cars were assailed as unjustly discriminatory in violation of the act to regulate commerce, particularly as respected the practice ,of not taking into consideration foreign railway fuel cars and private cars in determining the distribution of coal cars among the various coal operators along the lines of the railroad on interstate shipments of coal. It appears that the complaint just referred to was heard before the commission, with two other complaints against other railroads involving the same general subject. In its report, which was filed in all three of the cases on April 13, 1908, Traer v. Chicago & Alton R. R. Co., 13 I. C. C. Rep. 451, the commission held that not to count in times of car shortage when the daily distributions were made against the mine receiving the same company fuel cars, foreign railway fuel cars and private cars was a violation of the act to regulate commerce. In announcing this conclusion reference was made to the previous opinion of the commission in the Hocking Valley case, supra, and it was de- clared that the Illinois Central Railroad Company on the hearing before the commission had conceded the controlHng effect of the previous ruling of the commission. Considering the temporary injunction issued by the Circuit Court of the United States for the Northern District of Illinois, the commission declared that in view of the decision of this court in the case of the Texas & Pacific Ry. Company v. Abilene Cotton Oil Co., 204 U. S. 426, it was the duty of the commission to order the carrier to desist from the unlawful discrimination. Although the complaint in the case of the Illinois Central Rail- road Company differed from the complaints in the two other cases which were considered and passed upon by the commission at the same time, in that it did not assail the failure to take into account the company fuel cars in making distribution in times of car shortage, nevertheless the commission declared that the Illinois Central Railroad Company, both in its brief and argument, had conceded the importance of the subject to that company and had invoked the action of the commission thereon. The order of the commission, as heretofore stated, therefore not only directed the desisting from the practice of failing to take into account the foreign railway fuel cars, private cars and the company fuel cars, but also required the carriers to establish regulations for a period of two years from July 1, 1908, providing 194 SCOPE OF THE COMMERCE REGULATED BY THE ACT for the counting of all such cars. The general scope of the order was, however, qualified by expressly authorizing a railroad com- pany to deliver to a particular mine all the foreign railway fuel cars, the private cars and the company fuel cars consigned or assigned to said mine, even although the number thereof might exceed the pro rata share of the cars attributable to said mine when ascertained by taking into account all the cars which the order required to be considered. Where, however, tlie number of such cars was less than the ipro rata share of the mine the order only permitted the carrier to add a sufficient number of system cars to make up the rightful pro rata number. Being unwilling to comply with the order of the commission, the Ilhnois Central Railroad Company commenced the suit which is now before us to enjoin in all respects the enforcement of the order of the commission. It was averred that although the company was adequately equipped with coal cars and with suffi- cient motive power and operative forces, yet at times an inade- quate supply of coal cars to meet the demand arose from the circumstances which we have previously stated. It was alleged that the regulations adopted by the company for ascertaining the capacity of the mines and for the distribution of cars were in all respects just and reasonable, and it was charged that the order of the commission, directing the taking into account of private cars in the distribution of cars, was unjust, unreasonable, oppressive and unlawful, because it deprived the owners of such cars of the right to the use of their own property. It was further alleged that, as to the foreign railway fuel cars, the order was also unjust, unreasonable, oppressive and unlawful, because such cars constituted no part of the equipment of the road, and, faiUng to count them, could not constitute an unlawful discrimination or the giving of an unjust preference within- the intendment of the act to regulate commerce. Besides charging that the order to count the company fuel cars was unjust, unreasonable, etc., it was averred that the attempt of the commission to deal with such cars was beyond its power, and was but an effort to deprive the company of its lawful right to freely contract for the purchase of the fuel necessary for the operation of its road. In addition, the proceedings in the suit brought by the Majestic Coal Company were set out, the granting of a temporary injunction therein as to counting foreign railway fuel cars and private cars was alleged, and it was charged that in any event, as to those two classes of cars, the order of the commission was not lawful, since it com- INTERSTATE COM. COM. V. ILLINOIS CENTRAL R. K. CO. 195 pelled the company to violate the injunction which was yet in force. The commission answered by asserting the vaUdity in all respects of the order by it made, substantially upon the grounds which had been set out in its report and opinion announced when the order was made. All the averments in the complaint as to want of power were traversed and it was expressly charged that the subject of the distribution of coal cars as dealt with by the order was within the administrative power delegated to the com- mission by the terms of the act to regulate commerce. The nature and character of the preferences and discriminations which had led the commission to conclude that unlawful discrimi- nation and unjust preference arose from the failiu-e to count the classes of cars referred to was alleged in subdivision XIV of the answer, a portion whereof is reproduced in the margin.' A cer- tificate as to the pubHc importance of the cause was filed by the Attorney General in compHance with § 16 as amended by the act of June 29, 1906, 34 Stat. 584, c. 3591, and the cause was thereafter submitted at the same time with one brought by the Alton Raih-oad, involving a similar question, to a Circuit Court held by Judges Grosscup, Baker and Kohlsaat. A single opinion was announced in both cases. 173 Fed. Rep. 930. While decid- ing that the complainants were not entitled to relief in so far as the order of the commission concerned the counting of foreign railway fuel cars and private cars, it was yet held that the railway companies were entitled to an injunction restraining the enforce- ment of the orders of the commission in so far as they directed • XIV. Defendant avers that the allotment by complainant of said foreign railway fuel cars, private cars, and complainant's fuel cars to the mines re- ceiving them in addition to the full distributive shares of such mines in the general distribution of cars by complainant and the failure by complainant to count and charge said foreign railway fuel cars, private cars, and company cars against the mines receiving them, in said general distribution, results in undue and unreasonable preference or advantage to the mines and operators receiving such cars and subjects the owners and operators of mines which do not receive such cars to undue and unreasonable prejudice and disadvantage in the following respects, to wit: (a) That the operator receiving the foreign railway fuel cars, private cars, or company fuel cars thereby receives a higher percentage of cars than mines of equal capacity which do not receive such cars. (6) That the operator receiving the foreign railway fuel cars, private cars, or company fuel cars may operate his mine to a fuller capacity and thereby reduce the cost of coal per ton, resulting in an increased profit on his com- mercial coal. , (c) That the operator receiving foreign railway fuel cars, private cars, or company fuel cars is enabled to increase the number of working places in 196 SCOPE OF THE COMMERCE REGULATED BY THE ACT the taking into account of the cars employed by the company in hauling its own fuel. The conclusion on this latter subject was based upon the theory that, as the railroad companies took the coal which they bought for their own use from the tipple of a coal mine, and thereafter moved it for their own account and not for commercial purposes, the cars used for that purpose could not be treated as being engaged in commerce, as "commerce under these circumstances ends at the tipple." The court, however, observed: "But this does not mean that these cars do not affect the problem of an equitable distribution of commercial equipment. The mine operators are objects of interest under the interstate commerce law, not as diggers of coal, but as shippers who tender a commercial product for transportation by interstate common carriers. The basis, therefore, on which the mines in a district should be rated is not their average output as a physical question, but the average' output which they respectively tender for trans- portation in commerce." And in accord with this reasoning it was in conclusion remarked that the complainants as to the cars used for hauling their fuel were entitled to an injunction "against their being compelled to take fuel cars into consideration except as a means in determining the true capacities of the mines to tender coal to them for trans- portation in commerce." From the final decree enjoining the commission from enforcing its order, in so far as it directed the taking into account the com- the mine, is enabled to develop his mine more rapidly, is enabled to increase his capacity rating, and in future reratings of such mine by complainant for the purposes of car distribution the mine would receive a higher rating and consequently a larger number of cars in complainants' general distribution of cars. (d) That the operator receiving the foreign railway fuel cars, private cars, or company fuel cars is enabled thereby to secure and hold a larger, more efficient, and regular working force of miners and laborers. (e) That the development of the mines which do not receive the foreign railway fuel cars, private cars, or company fuel cars is retarded in inverse ratio as the development of the mines receiving said cars is accelerated. (f) That by the arbitrary allotment of the foreign railway fuel cars, private cars, or company fuel cars the complainant and the so-called foreign railways are enabled to secure low prices on railway fuel because the operator receiv- ing such cars is enabled to produce his commercial coal at much lower prices than do the mines which do not receive such arbitrary cars. (g) That the operator of the mine receiving the foreign railway fuel cars, private cars, or company fuel cars is thereby enabled to make contracts for the delivery of coal distributed over a long period, to an extent that the operator of the mines which do not receive such cars cannot do. INTERSTATE COM. COM. V. ILLINOIS CENTRAL R. R. CO. 197 pany fuel cars in the distribution of coal cars in times of car shortage and in so far as it directed the future taking such cars into account, the Interstate Commerce Commission appeals When coal is received from the tipple of a coal mine into coal cars by a railway company, and the coal is intended for its own use and is transported by it, it is said there is no consignor, no consignee and no freight to be paid, and therefore, although there may be transportation, there is no shipment, and hence no com- merce. In changed form these propositions but embody the reasoning which led the court below to its conclusion that, under the circumstances, commerce ended at the tipple of the mine. The deduction from the proposition is, as the movement of coal under the conditions stated is not commerce, it is therefore not within the authority delegated to the commission by the act of Congress, as all such acts have relation to the regulation of com- merce, and do not, therefore, embrace that which is not commerce. It is to be observed, in passing, that if the proposition be well founded, it not only challenges the authority of the commission, but extends much further, and in effect denies the power of Con- gress to confer authority upon the commission over the subject. In all its aspects the proposition calls in question the construction given to the law by the commission in every case where the sub- ject has been before it, and also assails the correctness of nmnerous decisions in the lower Federal courts, to which we have previously referred, where the subject, in various forms, was considered. It goes further than this, since it, in effect, seeks to avoid the fair inferences arising from the regulations adopted by the railroad company. Those regulations, in providing for the obligation of the railroad company to supply cars, and recognizing the duty of equaUty of treatment, found it necessary, by express provision, to provide that private cars, foreign railway cars and company fuel cars should not be counted against the mine on the day when furnished, thus implying that, under the general rule of equality, if not restricted, it was considered the duty would exist to con- sider such cars. The contention, moreover, conflicts with the rule which, as we have seen, obtains in other and great systems of railroad, by which, for the purpose of avoiding inequality and preference, foreign railway fuel cars, private cars and com- pany fuel cars are made one of the factors upon which a mine is rated in order to fix the basis upon which its distributive share of cars is to be allotted in case of car shortage. And, from this, it must follow, if the proposition contended for be maintained, 198 SCOPE OF THE COMMERCE REGULATED BY THE ACT that it would not only relieve the railroad company, whose rights are here involved, from the obligation of taking into account its fuel cars in the making of the distribution, but from the duty even to consider them for the purpose of capacity rating. As a result, it would lead to the overthrow of the system of rating, prevaihng on other railroads, by which, as we have said, such cars are taken into account, a consequence which is well illus- trated by the case of Logan Coal Co. v. Pennsylvania R. R. Co., 154 Fed. Rep. 497. Under these conditions, it is clear that doubt, if it exist, must be resolved against the soundness of the contentions rehed on. But that rule of construction need not be invoked, as we think, when the erroneous assumption upon which the proposition must rest is considered, its unsoundness is readily demonstrable. That assumption is this, that commerce in the constitutional sense only embraces shipment in a technical sense, and does not, therefore, extend to carriers engaged in interstate commerce, certainly in so far as so engaged, and the instrumentalities by which such commerce is carried on, a doctrine the unsoundness of which has been apparent ever since the decision in Gibbons v. Ogden, 9 Wheat. 1, and which has not since been open to question. It may not be doubted that the equipment of a railroad company engaged in interstate commerce, included in which are its coal cars, are instruments of such commerce. From this it necessarily follows that such cars are embraced within the governmental power of regulation which extends, in time of car shortage, to compelling a just and equal distribution and the prevention of an unjust and discriminatory one. SWIFT & COMPANY v. HOCKING VALLEY RAILWAY COMPANY 243 U. S. 281 (1917) Mr. Justice Brandeis deUvered the opinion of the court. The National Convention of Railway Commissioners, an asso- ciation comprising the commissioners of the several States, adopted in November, 1909, a Uniform Demurrage Code. Its action was based upon extensive investigations and thorough discussion, participated in by the railroad commissioners, commercial organ- izations, representatives of railroads and individual shippers from all parts of the country. On December 18, 1909, the Interstate SWIFT & COMPANY V. HOCKING VALLEY RY. CO. 199 Commerce Commission endorsed the rules so adopted and recom- mended "that they be made effective on interstate transportation throughout the country." In re Demurrage Investigation, 19 I. C. C. 496. These rules provide that after two days' free time "cars held for or by consignors or consignees for loading" or unloading shall, (with certain exceptions not here material) pay a demurrage charge of $1 per car per day. Private cars are specifically included by the following note: Note. — Private cars while in railroad service, whether on carrier's or private tracks, are subject to these demurrage rules to the same extent as cars of railroad ownership. (Empty private cars are in railroad service from the time they are placed by the carrier for loading or tendered for loading on the orders of a shipper. Private cars under lading are in railroad service until the lading is removed and cars are regularly released. Cars which belong to an industry performing its own switching service, are in railroad service from the time they are placed by the industry upon designated interchange tracks, and thereby tendered to the carrier for movement. If such cars are subse- quently returned empty, they are out of service when withdrawn by the industry from the interchange; if returned under load, railroad service is not at an end until the lading is duly removed.) In 1910 the' Hocking Valley Railway Company, an inter- state carrier, inserted in its freight tariff duly filed and pubhshed as required by the Act to Regulate Commerce, the demurrage rules and charges, including that relating to private" cars quoted above. Thereafter, Swift & Company, Chicago meat packers, estabUshed on the line of that railroad at Athens, Ohio, a warehouse to which it made, from time to time, shipments in private cars. These cars, which were placed on the switch used in connection with the warehouse, were not unloaded within the forty-eight hours' free time allowed by the tariff; and demurrage charges were assessed by the Railway Company. Payment being refused, this action was brought in the Court of Common Pleas of Cuyahoga County, Ohio, to recover the amount. The amended petition alleged, among other things, that the demurrage rules and charges had been "approved by the Interstate Commerce Commission, by a decision rendered by said Commission on the 14th day of No- vember, 1910, in the case of Procter and Gamble Company against Cincinnati, Hamilton & Dayton Railway Company et al., which decision is reported in the 19th volume of the Interstate Commerce 200 SCOPE OF THE COMMERCE REGULATED BY THE ACT Commission Reports, pages 556 to 560, inclusive thereof, and which decision, approving said car demurrage rules and charges, is hereby- referred to and made a part hereof, as though the same were fully written out at length herein." Swift & Company demurred; and defended on the single ground that the cars in question were its private cars standing on its "private track"; contended that the demurrage rule which re- quired payment of charges under such circumstances was an ar- bitrary imposition; that it was unlawful and void; and that it was subject to collateral attack, even though included in a tariff duly filed and pubhshed under the Act to Regulate Commerce. Two days after the case had been heard on demurrer in the Court of Common Pleas, counsel filed a stipulation as follows: "For the purpose only of reviewing the judgment of the Common Pleas Court on defendant's demurrer to the amended petition, it is stipulated by the parties hereto that the track on which the cars in question were placed was the private track of Swift and Company." The next day judgment was rendered for the Railway Company. It was affirmed both by the Court of Appeals of Cuyahoga County and by the Supreme Court of Ohio. 93 Ohio St. 143. The Supreme Court of Ohio assumed the track in question to be a "private track" as stipulated by the parties, and declared that "demurrage rules relating to private cars employed in inter- state commerce and the charges assessable thereimder are matters properly included in the tariff or schedule required to be filed and published. This tariff containing the demurrage rule having been filed and pubhshed according to law, was binding ahke on carrier and shipper, and so long as it was in force was to be treated as though it were a statute This rule having been approved by a federal tribunal, acting within the scope of its authority, its decision must be followed by the courts of this state and be given full force and effect." The case was then brought to this court on writ of error. The errors assigned were, in substance, that the demurrage rule was repugnant to the Act to Regulate Commerce and that the de- cisions below deprived Swift & Company of its property without the due process of law guaranteed by the Fourteenth Amendment. Prior to the bringing of this action the Interstate Commerce Conunission had held in Procter & Gamble Co. v. Cincinnati, Hamilton & Dayton Ry. Co., 19 I. C. C. 556, that carriers were "within their lawful rights in estabUshing and maintaining" SWIFT & COMPANY V. HOCKING VALLEY RY. CO. 201 the above rule for demurrage charges on private cars. The Com- merce Court approved the finding. Procter & Gamble Co. v. United States, 188 Fed. Rep. 221, 227. An effort to secure a re- view of these decisions by tliis court failed. Procter & Gamble Co. V. United States, 225 U. S. 282. We do not find it necessary to decide whether the ruling of the Supreme Court of Ohio was correct; or whether the rule con- cerning demurrage charges on private cars is in all respects vahd; or whether a shipper who has delivered private cars to a carrier knowing such rule to be in force is in a position to question its vaHdity in an action for charges accruing thereunder. For the record discloses, contrary to the statement in the stipulation, that the track in question was not a "private track." The facts which determine the character of the switch and the relation to it of carrier and shipper were carefully set forth in the amended petition and the "License" annexed, copied in the mar- gin. 1 Under it Swift & Company occupied a part of the Rail- way Company's premises for its warehouse and office and en- ' Exhibit "B." — License. — Memorandum of agreement, made this twenty-second day of March, A. D. 1911, by and between the Hocking Valley Railway Company, a corporation existing under the laws of the State of Ohio, hereinafter known as the "Railway Company," party of the first part, and Swift & Company, a corporation whose principal place of business is in Chi- cago, County of Cook, State of Illinois, hereinafter known as the "Licensee," party of the second part, Witnesseth: Whereas, the Licensee, at its own request, desires to occupy a tract of ground belonging to the Railway Company at Athens, Ohio, for the purpose of maintaining thereon a warehouse and office in connection with its business at that point, together with all the improvements and appurtenances thereto, in such a manner as not in any way to interfere with the premises, buildings, structiires, tracks or business of said Railway Company, upon the following described premises, to wit: The Northeast part of outlot No. 112 and the Northwest part of outlot No. 113, in the VUlage of Athens, Ohio, fronting 175 feet on the South side of State Street, immediately West of the premises occupied by the Standard Oil Company, said tract extending Southward from said street to the North side of the Railway Company's siding, known as the "Bank Track" as will more clearly appear shaded in yellow on blue print hereto attached and made a part hereof, for a period of five (5) years, beginning on the 1st day of No- vember, 1910, at a rental of Thirty ($30.00) Dollars per annum, payable an- nually in advance on the following terms and conditions, tg-wit: First. This agreement shall not be assigned by the Licensee without the written consent of the Railway Company being first obtained, and in case the said Licensee shall permit its interests to be seized or sold under legal process, this agreement shall thereupon become null and void. Second. The switch of the Railway Company hereby let and connected 202 SCOPE OF THE COMMERCE REGULATED BY THE ACT joyed the rights in the switch from its main hnes. The "License" recites, among other things, the Licensee's desire "to occupy a tract of ground belonging to the Railway Company .... for the purpose of maintaining thereon a warehouse and office .... with its main line, shall at all times be under control of the Railway Company. Third. The Railway Company shall have the right at aU times to enter upon the premises hereby let, for the purpose of repairing or maintaining the track thereon, or switching or removing cars thereover. Fourth. Either party hereto may terminate this agreement at any time, after giving to the other party thirty (30) days' notice in writing, and at or before the termination of said thirty (30) days said Licensee shall at its own expense remove all said improvements from said premises, without causing damage of any kind to the property of the Railway Company. Upon its failure to do so within said time the Railway Company may make such removal at the sole cost of the Licensee. Fifth. The Licensee shall pay all taxes assessed upon improvements upon said premises or said premises by reason thereof and will at all times hereafter indemnify and save harmless the Railway Company, its successors and assigns, from and against all loss, costs, charges and accidents whatsoever, which it may suifer, sustain or in any wise be subjected to, on account of injuries accruing to its property, or loss or damage to the property of any other person or cor- poration, arising out of, resulting from or in any manner caused by the construc- tion, erection, maintenance, presence or use of said improvements installed or existing under this agreement, and said Railway Company shall not be liable in any way for any loss or damage to said improvements or to any property belonging to or in the possession or control of said Licensee on or about said premises, resulting from the operation of and use of its railway, engines, cars or machinery, or by reason of fire or sparks therefrom, or any other casualty arising from the use and operation of its railway, and shall be held forever free and harmless by said Licensee from any such liability. Sixth. The Licensee shall consign all products shipped to it, intended to be placed on the siding hereby let, where the rates and services are equal, via the line or lines of the Railway Company, and shall give said Railway Company the long hauls thereof. Seventh. The Licensee hereby accepts the License herein made with the above specified terms and conditions, and agrees that any failure or default on its part as to either of the same, may be held and considered a forfeiture and surrender of this License by it. In Witness Whereof, the parties hereto have caused this instrument to be executed in duphcate, on the day and year first above written. THE HOCKING VALLEY RAILROAD COMPANY, (Signed) By W. L. MATTOON, Real Estate Agent. SWIFT & COMPANY, (Signed) bt l. b. swift. Witness: (Signed) E. OSLER HUGHES, Witness: (Signed) D. E. HARTWELL. SWIFT & COMPANY V. HOCKING VALLEY RY. CO. 203 in such a manner as not in any way to interfere with the ... . tracks .... of said Railway Company ...."; that the premises Ue on "the North side of the Railway Company's sid- ing, known as the 'Bank Track' . . . ."; that "the switch of the Railway Company hereby let and connected with its main line, shall at all times be under control of the Railway Com- pany"; and that "the Railway Company shall have the right at all times to enter upon the premises hereby let, for the purpose of repairing or maiiVuaining the track thereon, or switching or removing cars thereover." A rental of $30 per annum is provided for; but the Ucense is terminable on 30 days' notice. These facts were admitted by the demurrer. Upon them the case was heard by the Court of Common Pleas; and upon them the case must be decided in this court, unaffected by stipulation of coimsel made "for the purpose only of reviewing the judgment of the Common Pleas Court." The construction and effect of a written instrument is a question of law. Dillon v. Barnard, 21 Wall. 430, 437. Clearly the track in question was not a private track of the shipper but a track of the carrier — hke the spur passed upon in National Refining Co. v. St. Louis, I. M. & S. Ry. Co., 237 Fed. Rep. 347, affirming 226 Fed. Rep. 357. If the stipulation is to be treated as an agreement concern- ing the legal effect of admitted facts, it is obviously inoperative; since the court cannot be controlled by agreement of counsel on a subsidiary question of law.^ If the stipulation is to be treated as an attempt to agree "for the purpose only of reviewing the judgment" below that what are the facts shall be assumed not to be facts, a moot or fictitious case is presented. "The duty of this court, as 6f every judicial tribunal, is limited to determining rights of persons or of property, which are actually controverted in the particular case before it No stipulation of parties or counsel, whether in the case before the court or in any other case, can enlarge the power, or affect the duty, of the court in this regard." California v. San Pablo & Tulare R. R. Co., 149 U. S. 308, 314. See MilU v. Green, 159 U. S. 651, 654. The fact that effect was given to the stipulation by the appellate courts of Ohio does not conclude this court. See Tyler v. Judges of Court ' San Francisco Lumber Co. v. Bibb, 139 Cal. 325; Owen v. Herzihoff, 2 Cal. App. 622; Aubuchon v. Bender, 44 Mo. 560; Prescott v. Brooks, 94 N. W. Rep. 88, 94 (N. D.) ; Holms v. Johnson, 59 Tenn. 155. See also Breeze V. Haley, 11 Colo. 361, 362; Lyon v. The Robert Oarrett Lumber Co., 77 Kans. 823, 827; Wells v. Covenant Mutual Benefit Assn., 126 Mo., 630, 639. 204 SCOPE OF THE COMMERCE REGXJLATEO BY THE ACT of Registration, 179 U. S. 405, 410. We treat the stipulation, therefore, as a nullity. Consignors or consignees of freight shipped in private cars pay the same rates for transportation as if the commodities had been shipped in the cars owned by the carriers; but the owners or lessees of private cars are paid or allowed by the carriers (east of the Mississippi River) a sum equal to three-fourths of a cent per mile for refrigerator or tank cars and three-fifths of a cent per mile for other cars. The cars are returned by the railroads to the owners without extra charge. The mileage allowance is paid for the return trip as well as on the journey to destination with load. And if the private car owner does not furnish a load for the return journey the carriers have the right to load the cars. Re Demurrage Charges on Tank Cars, 13 I. C. C. 378, 379. Swift & Company's cars were, therefore, though privately owned, still in railroad service while under lading. The cars while on the switch were on track owned by the Railway Company. The "transportation" within the meaning of the Act to Regulate Com- merce had not ended. It cannot be said that a charge for deten- tion of a private car and use of a railroad track under such circumstance is unreasonable. Even before the adoption of the Uniform Demurrage Code such a charge had been upheld by the Interstate Commerce Commission. Cudahy Packing Co. v. Chi- cago & Northwestern Ry. Co., 12 I. C. C. 446. Defendant's ar- gument was based wholly upon the assumption that the switch was a "private track"; and the propriety of such a charge for cars detained on a pubhc track seems not to have been ques- tioned. Affirmed. Me. Justice McKenna, Mr. Justice Van Devanter and Mr. Justice McReynolds dissent. NEW YORK CENTRAL & HUDSON RIVER RAILROAD COMPANY V. BOARD OF CHOSEN FREEHOLDERS OF THE COUNTY OF HUDSON 227 U. S. 248 (1913) Mr. Chief Justice White dehvered the opinion of the court. The rails of the main hne of the West Shore Railroad Company extend from Buffalo to Albany, New York, and beyond through N. Y. CENTRAL H. R. V. HUDSON COUNTY 205 the State of New York into New Jersey to the terminus of the road at Weehawken on the west bank of the Hudson river. From Weehawken steam ferries known as the West Shore Railroad ferries are operated over the river to several terminal points in New York City for the purpose of carrying railroad passengers and traffic from Weehawken to New York and from New York to Weehawken. Although these ferries are known as West Shore Railroad ferries and are operated as railroad ferries, their business is not limited to incoming persons or traffic carried over the lines of the railroad or to persons or traffic conveyed from New York to Weehawken to be transported from there over the railroad. Indeed, from both directions a very large number of persons besides considerable traffic "constantly move to and fro between the two States, not having used or intending to use the lines of the West Shore Railroad." In 1905 the Board of Chosen Freeholders of Hudson County, New Jersey, adopted two ordinances, one fixing the rate for foot passengers ferried from New Jersey to New York and the other for a round trip commencing on the New Jersey shore, which rates were applicable to the ferries in question. The New York Cen- tral & Hudson River Railroad, engaged as a lessee in operating the lines of the West Shore Railroad and its railroad ferries, com- menced this proceeding to prevent the enforcement of the rates fixed by the ordinances. The contention was that the ordinances were an unwarranted interference with the interstate business of the company and that the enforcement of the ordinances would constitute a direct burden on interstate commerce, which could not be done consistently with the Constitution. The Supreme Court of New Jersey maintained the contentions of the railroad company. The Court of Errors and Appeals reversed the judg- ment of the Supreme Court. 76 N. J. Law, 664. The case is now here, the writ of error having been directed to the Supreme Court, to which the record was remitted from the Court of Errors and Appeals. At the outset it is to be observed that the contentions pressed in argument by both parties take a wider range than the necessi- ties of the case require. We make a very brief reference to cer- tain decisions of this court referred to in argument by both parties in order that they may aid us to mark plainly the boundaries of the real issues required to be decided, thus enabling us to put out of view irrelevant considerations and confine our attention to things essential. 206 SCOPE OF THE COMMERCE REGULATED BY THE ACT Fanning v. Gregoire, 16 How. 524, required a consideration of the right of the legislature of Iowa to authorize a ferry across the Mississippi river at Dubuque. Without going into details it suf- fices to say that the subject was elaborately considered and the power of the State to grant the ferry right was sustained. In Conway v. Taylor's Executors, 1 Black, 603, the right of the State of Kentucky to grant franchises for ferrjdng across the Ohio river, was considered and the power was upheld, the general reasoning stated in Fanning v. Gregoire being reiterated and approved. It is undoubtedly true that in the course of the reasoning of both the cases just referred to expressions were made use of which give some support to the view that the power to regulate ferriage, even as to a stream bounding two States, was purely local, not transferred by the States to Congress, and therefore not within the grant of power to Congress to regulate commerce. Gloucester Ferry Co. v. Pennsylvania, 114 U. S. 196, concerned the validity of a tax imposed by the State of Pennsylvania on a ferry company operating between Gloucester, New Jersey, and the city of Philadelphia. The tax was resisted on the ground that it was a direct burden on interstate commerce and therefore void as an interference with the power of Congress to regulate com- merce. The contention was sustained. The whole subject of ferriage was elaborately considered, and in the course of the opinion it was expressly declared, after considering the decisions in Fanning v. Gregoire and Conway v. Taylor's Executors, that ferriage over a stream constituting a boundary between two States was within the grant to Congress to regulate commerce, and there- fore not subject to be directly burdened by a State. It was also, however, held that in view of the character of such ferries and the diversity of regulation which might be required, the right to regu- late them came within that class of subjects which although within the power of Congress the States had the right to deal with until Congress had manifested its paramount and exclusive authority. In Covington Bridge Co. v. Kentucky, 154 U. S. 204, the right of the State of Kentucky to impose tolls for use of a bridge across the Ohio river, was challenged on the ground that the State had no authority to fix the tolls, because to do so was the assertion of a power to regulate commerce and therefore was an interference with the exclusive power of Congress on that subject. The tolls were held to be invaUd. The opinion beyond question reasserted the principle enforced in the Gloucester Ferry Case that the move- N. Y. CENTRAL R. R. V. HUDSON COUNTY 207 ment across a stream, the boundary between two States, was within the grant of power to Congress to regulate commerce and there- fore, generically speaking, not subject to the exertion of state authority. Indeed, in view of the fact that there was no act of Congress dealing with the subject of the tolls which were under review in the Covington Case, it is true to say that there are expres- sions in the opinion in that case which have been considered, whether rightly or wrongly we do not feel called upon to say, as quaUfying or overruhng the conclusion expressed in the Gloucester Case as to the power of a State to regulate ferries upon a stream bordering two States until Congress had manifested its purpose to exert its authority over the subject. In St. Clair County v. Interstate Transfer Co., 192 U. S. 454, the question considered was the UabiUty of the Transfer Company to penalties imposed by the County of St. Clair, a municipal cor- poration of the State of IlHnois, for having failed to obtain a license "for carrying on a ferry for transferring railroad cars, loaded or unloaded, over the county of St. Clair in IlUnois to the Missouri shore and from the Missouri shore to the county of St. Clair." It was decided that there was no UabiUty for the penalty (a) because the business of transferring freight cars in the sense disclosed was not ferriage in the proper meaning of that word, and was the transaction of interstate commerce not in any view subject to state control; and (b) because the parj,icular ordinance reUed upon as the basis for imposing the penalty was void be- cause of provisions discriminating against interstate commerce which it contained. The cases of Fanning v. Gregoire, Conway v. Taylor's Executors, Gloucester Ferry Co. v. Pennsylvania and Covington Bridge Co. v. Kentucky were referred to. It was ex- pressly declared in view of the special grounds upon which the case was decided that it was unnecessary to consider whether the decision in the Covington Bridge Case had estabUshed the doc- trine that the interstate business of ferrying over navigable rivers bordering two States was exclusively within the authority of Con- gress to regulate, and therefore was not, as declared in the Glou- cester Ferry Case, subject to state regulation until Congress had exerted its authority over the matter. In the light of this statement we come to state the contentions of the parties. The plaintiff in error insists, not following the exact order of its argument, a, that the assailed ordinances are repugnant to the commerce clause because Congress has legislated concern- ing railroad ferries and thereby manifested its purpose that there 208 SCOPE OF THE COMMERCE REGULATED BY THE ACT should be no longer room for the exertion of state power on the subject; and, b, that if this is not so it is now necessary to pass on the question reserved in the St. Clair Case, and to decide that the ruling in the Covington Bridge Case affirmatively estabUshed that interstate ferriage Uke that here in question is so absolutely within the power of Congress as to exclude even in case of the in- action of Congress the presumption of a Hcense for the exercise of state power. On the other hand, the argument for the defendant in error is this: That the carrying on of the business of ferriage on navigable rivers constituting a boundary between States is not interstate commerce, that the power to regulate it was not sur- rendered by the States and consequently no authority was given over the subject to Congress. This is sought to be shown by a copious review of adjudged cases, and by an analysis of what it is urged was the clear intendment of the opiaion in Gibbons v. Ogden, especially as elucidated by the opinions in Fanning v. Gre- gcnre and Conway v. Taylor's Executors. It is not denied that these theories are directly contrary to the ruling in the Gloucester Ferry Case, but it is urged that that case for the first time an- nounced the doctrine of a national power over interstate ferriage and therefore practically amounted to making a new constitutional provision on the subject. Obviously, however, the views just stated are advanced in a mere academic sense, since the argument admits that the r/uling in the Gloucester Ferry Case is now conclu- sive and has settled the significance of the Constitution contrary to the views mentioned. Thus, at the very outset of the argument, after stating and elaborating the theory of exclusive state power over interstate ferriage, it is said: "The decision of the Gloucester Ferry Case, 114 U. S. 196, decided in 1885, estabUshed Federal jurisdiction to legislate concerning ferriage over boundary streams, but did not turn what had been an exclusive state jurisdiction into an exclusive Federal jurisdiction. State laws on this subject are still valid until superseded by a Federal statute." Again, after copiously reiterating the conceptions as to the novelty of the ruling in the Gloucester Ferry Case and its assumed conflict with what had gone before, it is said: "The result of the Gloucester Ferry Case, therefore, with the other cases which have followed, has probably been to so extend the Federal authority over interstate ferriage as to bring the subject within the concurrent jurisdiction of Congress and of the States. It is a concurrent jurisdiction only, however, which has been established. In the absence of Federal legislation the States have all the power that they have been accus- N. Y. CENTRAL B. R. V. HUDSON COUNTY 209 tomed to exercise." Thus conceding the controUing force of the Gloucester Ferry Case and therefore not questioning the power of Congress which that case upheld, it is urged that the Comngton Bridge Case should not be now held to have overruled or qualified the Gloucester Ferry Case so as to exclude the States from any right to regulate interstate ferriage before and until Congress has mani- fested its intention to exert its authority by deahng with the subject. Upon the assumption thus stated it is insisted that the court below rightly upheld the assailed ordinances because there has been no action by Congress exerting its authority over the sub- ject with which the ordinances deal and therefore no room for the contention that it was not within the power of the State to enact them. It is therefore apparent that the contentions of the plaintiff in error primarily invoke only the controlUng effect of the ruling in the Gloucester Ferry Case, and insist that there has been action by Congress which destroys the presumption of authority in the State to act. It follows that the proposition that the Covington Bridge Case overruled the Gloucester Ferry Case is merely subor- dinate, and need not be considered unless it becomes necessary in consequence of an adverse ruling on the primary contention con- cerning the appUcation of the Gloucester Ferry Case. It is equally clear that the contention of the defendant in error as to the absence of all power in Congress over interstate ferries is merely academic. From this it necessarily arises that the only ground rehed upon to sustain the judgment below is the ruling in the Gloucester Ferry Case, and the further proposition that there has been no action of Congress over the subject of the ferriage here involved which authorizes the holding that state power no longer obtains. As, therefore, the claim on the one side of an all- embracing and exclusive Federal power may be, temporarily at least, put out of view and the assertion on the other of an absolutely exclusive state power may also be ehminated from consideration because not. relied upon or because it is both demonstrated and admitted to be without foundation, it follows that to dispose of the case we are called upon only, following the ruling in the Gloucester Ferry Case, to determine the single and simple question whether there has been such action by Congress as to destroy the presumption as to the existence in the State of vicarious and rev- ocable authority over the subject. We say simple question be- cause its decision is, we think, free from difficulty, in view of the express provision of the first section of the Act to Regulate Com- 210 SCOPE OF THE COMMERCE REGULATED BY THE ACT merce (act of February 4, 1887, c. 104, 24 Stat. 379), subjecting railroads as therein defined to the authority of Congress, and expressly declaring that "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 operated under a contract, agreement or lease " The inclusion of railroad ferries within the text is so certain and so direct as to require nothing but a con- sideration of the text itseK. Indeed, this inevitable conclusion is not disputed in the argument for the defendant in error, but it is insisted that as the text only embraces railroad ferries and the ordinances were expressly decided by the court below only to apply to persons other than railroad passengers, therefore the action by Congress does not extend to the subject embraced by the ordinances. But as all the business of the ferries between the two States was interstate commerce within the power of Congress to control and subject in any event to regulation by the State as long only as no action was taken by Congress, the result of the action by Congress leaves the subject, that is, the interstate commerce carried on by means of the ferries, free from control by the State. We think the argument by which it is sought to limit the opera- tion of the act of Congress to certain elements only of the inter- state commerce embraced in the business of ferriage from State to State is wanting in merit. In. the absence of an express exclusion of some of the elements of interstate commerce entering into the ferriage, the assertion of power on the part of Congress must be treated as being coterminous with the authority over the subject as to which the purpose of Congress to take control was mani- fested. Indeed, this conclusion is inevitable since the assumption of a purpose on the part of Congress to divide its authority over the elements of interstate commerce intermingled in the movement of the regulated interstate ferriage would be to render the national authority inefficacious by the confusion and conflict which would result. The conception of the operation at one and the same time of both the power of Congress and the power of the States over a matter of interstate commerce is inconceivable, since the exertion of the greater power necessarily takes possession of the field, and leaves nothing upon which the lesser, power may operate. To concede that the right of a State to regulate interstate fer- riage exists "only in the absence of Federal legislation" and at the same time to assert that the state and Federal power over such subject is concurrent is a contradiction in terms. But this N. Y. CENTRAL R. R. V. HUDSON COUNTY 211 view has been so often applied as to cause the subject to be no longer open to controversy. Chicago, Rock Island & Pacific Ry. Co. V. Hardwick Farmers' Elevator Company, 226 U. S. 426. Be- cause in the St. Clair Case, supra, it was decided that a particular character of transportation of interstate commerce was not fer- riage and not within state power, even where there had been no action by Congress, affords no reason for in this case extending state authority to a subject to which, consistently with the action of Congress, it cannot be held to apply. The judgment of the Supreme Court of the State of New Jersey will ,be reversed and the case remanded for further proceedings not inconsistent with this opinion. Reversed. CHAPTER II DUTIES OF CARRIER UNDER THE ACT I. Sebvices to be Rendered LOUISVILLE & NASHVILLE RAILROAD COMPANY ET AL. V. UNITED STATES ET AL. 242 U. S. 60 (1916) Mr. Justice Holmes delivered the opinion of the court. This is an appeal from a decree, made by three judges sitting in the District Court, which denied a preliminary injimction against the enforcement of an order of the Interstate Commerce Commission and dismissed the appellants' petition. 227 Fed. Rep. 258, id. 273. See 33 I. C. C. 76, for the report of the Inter- state Commerce Commission. The order complained of required the appellants, the Louisville & Nashville Railroad Company, the Nashville, Chattanooga & St. Louis Railway and the Louis- ville & Nashville Terminal Company to desist and abstain "from maintaining a practice whereby they refuse to switch interstate competitive traffic to and from the tracks of the Tennessee Central Railroad Company at Nashville, Tenn., on the same terms as interstate non-competitive traffic, while interchanging both kinds of said traffic on the same terms with each other, as said practice is found by the Commission in its said .report to be unjustly discriminatory." It was further ordered, that "The Louisville & Nashville Railroad Company, Nashville, Chattanooga & St. Louis Railway, and Louisville & Nashville Terminal Company be, and they are hereby notified and required to establish, on or before May 1, 1915, upon notice to the Interstate Commerce Conamission and to the general pubhc by not less than 30 days' fihng and posting in the manner prescribed in section 6 of the act to regulate commerce, and thereafter to maintain and apply to the switching of interstate traffic to and from the tracks of the Tennessee Central Railroad Company at said Nashville, rates and charges which shall not be different than they contempora- neously maintain with respect to similar shipments to and from their respective tracks in said city, as said relation is found by the Commission in its said report to be nondiscriminatory." 212 LOUISVILLE & NASHVILLE R. B. V. UNITED STATES 213 The appellants contend as matter of law that the relations be- tween them exclude any charge of discrimination that is based only upon a refusal to extend to the Tennessee Central road the advantages that they enjoy. The order is based upon discrimination and is limited by the duration of the interchange between the appellants found to be discriminatory, and the question argued by the appellants is the only question in the case. Therefore it is necessary to con- sider relations between the appeaUng railroads that were left on one side in Louisville & Nashville R. B. Co. v. United States, 238 U. S. 1, 18. The Louisville & Nashville traverses Nashville from north to south, the Nashville & Chattanooga from, west to southeast, the Tennessee Central from northwest to east. They all are com- petitors for Nashville traffic. In 1872, contemplating a possible Union Station, the Louisville & Nashville acquired trackage rights from the Nashville & Chattanooga that connected its northern and southern terminals in the city (previously separate), and the terminal of the Nashville & Chattanooga. It now owns seventy-one per cent, of the stock of the latter. In 1893 these two roads caused the appellant Terminal Company to be organ- ized under the general laws of Tennessee, with the right to let its property. The Louisville & Nashville owns all the stock of this company. In 1896 the two roads respectively let to the Terminal Company their several properties in the neighborhood of the original depot grounds of the Nashville & Chattanooga for 999 years, and shortly afterwards the Terminal made what is termed a lease of the same and subsequently acquired property to the two roads jointly for a like term. It covenanted to construct all necessary passenger and freight buildings, tracks and terminal facilities, the roads to pay annually as rental four per cent, of the actual cost, and to keep the properties in repair. The terminal Company then made a contract with the city for the construction of a Union Station, the two roads guaranteeing the performance, and the construction was completed in 1900; the tracks, connect- ing with those of the two roads but not with those of the Ten- nessee Central. The Terminal Company as part of the improve- ments purchased large additional properties, the two roads ad- vancing the funds, and the company executing a mortgage for three million dollars guaranteed by the roads. $2,535,000 of the bonds were issued and the proceeds used to repay the roads. On August 15, 1900, the two roads, at that time being the only 214 DUTIES OF CARRIER UNDER THE ACT two roads entering Nashville, made the arrangement under which they since have operated. They made an imincorporated or- ganization called the Nashville Terminals which was to maintain and operate the property let to the two roads jointly by the Nash- ville Terminal Company and also 8.10 miles of main track and 23.80 miles of side track contributed by the Louisville & Nash- ville and 12.15 miles of main and 26.37 miles of side track contributed by the Nashville & Chattanooga. The agreement between the roads provided a board of control consisting of a superintendent and the general managers of the two roads, the superintendent having the immediate control and appointing under officers, &c. The total expense of maintenance and opera- tion is apportioned monthly between the two roads on the basis of the total number of cars and locomotives handled for each. There is no switching charge to or from locations on tracks of the Nashville terminals within the switching limits on freight from or to Nashville over either road. The Tennessee Central tracks now connect with those of the Nashville & Chattanooga at Shops Junction in the western section of the city, within the switching limits, and with those of the Louisville & Nashville at Vine Hill, outside the switching limits and just outside the city on the south. It should be added that in December, 1902, a further agree- ment was made purporting to modify the lease to the railroads jointly by excluding from it the property that came from them respectively, and remitting the roads to their several titles as they stood before the lease, subject only to the mortgage, with some other changes that need not be mentioned. This partial change from joint tenancy back to several titles does not affect the substantial equality of the contribution of the two roads, and the joint tenure of the considerable property purchased by the Terminal Company was left unchanged. Another matter that seems immaterial to the case before us is that since the connection between the Tennessee Central and the appellant roads the latter have interchanged noncompetitive traffic with the former, but the Louisville & Nashville has refused to switch competitive traffic and coal except at its local rates and the Nashville & Chattanooga has refused to switch it at all. The switching of coal was dealt with by this court in Louisville & Nashville B. R. Co. v. United States, 238 U. S. 1. But the case now before us is not concerned with the effect of the carriers having thrown the terminals open to many branches of traffic. 238 LOUISVILLE & NASHVILLE R. K. V. UNITED STATES 215 U. S. 18. It arises only upon the question of the discrimination supposed to arise from the appellants' relations to each other, as we have explained — a question grazed but not hit by the decision in 238 U. S. See p. 19. If the intent of the parties or purpose of the arrangement was material in a case hke this, obviously there was none to dis- criimnate against the Tennessee Central road. That road did not enter Nashville when the plan was formed, and the two appel- lants had a common interest although competitors — an interest that also was pubhc and in which the City of Nashville shared. By § 3 of the Act to Regulate Commerce as it now stands, the Act "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 hke business." Therefore if either carrier owned and used this terminal alone it could not be found to discriminate against the Tennessee Central by merely refusing to switch for it, that is to move a car to or from a final or starting point from or to a point of interchange. We conceive that what is true of one owner would be equally true of two joint owners, and if we are right the question is narrowed to whether that is not for all practical purposes the position in which the appellants stand. They do still hold jointly a considerable portion of the terminals, purchased with their funds. They manage the terminals as a whole and in short deal with them in the same way that they would if their title was joint in every part. Of course they do not own their respective original tracks jointly and it is matter for appre- ciation that perhaps defies more precise argument whether the change back to a several tenure of those tracks changed the rights of the parties. We cannot see in this modification of the paper title any change material to the point in hand. Neither road is paid for the use of its tracks, but the severally owned and the jointly held are brought into a single whole by substantially equal contributions and are used by each as occasion requires. The fact principally relied upon to uphold the order of the Commission is that instead of each road doing its own switching over the terminals used in common they switch jointly, and it is said that therefore each is doing for the other a service that it cannot refuse to a third. We cannot believe that the rights to their own terminals reserved by the law are to be defeated by such a distinction. We take it that a several use by the roads for this purpose would open no door to a third road. If the title were strictly joint throughout in the two roads, we can see no 216 DUTIES OP CAREIER UNDER THE ACT ground for prejudice in the adoption of the more economical method of a single agency for both, each paying substantially as it would if it did its own work alone. But, as we have indicated, a large part of the terminals is joint property in substance and the whole is held and used as one concern. What is done seems to us not reciprocal switching but the use of a joint terminal in the natural and practical way. It is ob- jected that upon this view a way is opened to get beyond the reach of the statute and the Commission. But the very meaning of a line in the law is that right and wrong touch each other and that anyone may get as close to the Une as he can if he keeps on the right side. And further, the distinction seems pretty plain be- tween a bona fide joint ownership or arrangement so nearly ap- proaching joint ownership as this, and the grant of facihties for the interchange of traffic that should be extended to others on equal terms. The joint outlay of the two roads has produced much more than a switching arrangement, it has produced a common and peculiar interest in the station and tracks even when the latter are not jointly owned. In our opinion the order was not warranted by the law; but in overturning it upon the single point discussed we do so without prejudice to the Commission's making orders to prevent the appellants from discriminating between competitive and noncompetitive goods, so long as they open their doors to the latter, the appellants being entitled to reasonable compensation, taking into account the expense of the terminal that they have built and paid for. Decree reversed. Injunction to issue, without prejudice to further orders by the Interstate Commerce Commission as stated in the opinion. Mr. Justice Pitney, with whom concurred Mr. Justice Day, Mr. Justice Brandeis, and Mr. Justice Clarke, dissenting. I am unable to concur in the opinion of the court, and, in view of the far-reaching effect of the decision upon the commercial interests of the coimtry, deem it a duty to set forth the grounds of my dissent. The Interstate Commerce Commission found as matter of fact (33 I. C. C. 76, 84) : "Defendants [the two railroad companies, now appellants] imquestionably interchange traffic with each other and without distinction between competitive and noncom- petitive traffic. The cars of both roads are moved over the in- dividually owned terminal tracks of the other to and from Indus- LOUISVILLE & NASHVILLE R. R. V. UNITED STATES 217 tries on the other, and both lines are rendered equally available to industries located exclusively on one. The movement, it is true, is not performed immediately by the road over whose termi- nal tracks it is performed, but neither is it performed immediately by the road whose cars are moved. It is performed by a joint agent for both roads, and that being so, we are of the opinion that the arrangement is essentially the same as a reciprocal switch- ing arrangement and accordingly constitutes a facility for the interchange of traffic between, and for receiving, forwarding, and delivering property to and from defendants' respective lines within the meaning of the second . paragraph of section 3 of the act. [Interstate Commerce Act.] .... We can not agree with defendants' contention that they have merely exchanged trackage rights. But even if they have, we think the term 'facility,' as used in section 3 of the act, also includes reciprocal trackage rights over terminal tracks, the consequences and advantages to shippers being identical with those accruing from reciprocal switching arrangements." The District Court, three judges sitting (227 Fed. Rep. 258, 269), after careful consideration, reached the following conclu- sions: "The operation jointly carried on by the Louisville & Nashville and the Nashville & Chattanooga under the Terminals agreement is not a mere exchange of trackage rights to and from industries on their respective lines at Nashville, under which each does all of its own switching at Nashville and neither switches for the other. It is, on the contrary, in substance and effect, an arrangement imder which the entire switching service for each raiboad over the joint and separately owned tracks is performed jointly by both, operating as principals through the Terminals as their joint agent, each railroad, as one of such joint principals, hence performing through such agency switching service for both itself and the other railroad And, viewed in its fundamen- tal aspect, and considered with reference to its ultimate effect, we entirely concur in the conclusion of the Commission that such joint switching operation 'is essentially the same as a reciprocal switching arrangement,' constituting a facility for the interchange of traffic between the Unes of the two railroads, within the mean- ing of the second paragraph of section 3 of the Interstate Com- merce Act. That each railroad does not separately switch for the other, but that such switching operations are carried on jointly is not, in our opinion, material. If it were, all reciprocal switching operations carried on by two railroads at any connecting point of 218 DUTIES OF CARRIER UNDER"THB ACT several carriers could be easily put beyond the reach of the act, and its remedial purpose defeated, by the simple device of em- ploying a joint agency to do such reciprocal switching. The controlling test of the statute, however, hes in the nature of the work done, rather than in the particular device employed or the names appHed to those engaged in it." With these views I agree. Elaborate argument is made in behalf of appellants in the effort to show that the method of oper- ating the Nashville Terminals is not "reciprocal switching" within a certain narrow definition of that term. This is an im- material point; the real question being whether it constitutes a facility for the interchange of trafiic between the respective lines of appellants, and for the receiving, forwarding and de- Uvering of property between connecting lines, within the mean- ing of § 3 of the Interstate Commerce Act (c. 104; 24 Stat. 380), so that it must be rendered to the patrons of the Tennessee Cen- tral upon equal terms with those of the Louisville & Nashville and the Nashville & Chattanooga. I cannot doubt that it bears this character. It is clear, I think, that in the second paragraph of this section [3] the word "facihties" is employed in two meanings. Where it first occurs, it means those acts or operations that facihtate or render easy the interchange of traffic; while, in the final clause, "to give the use of its tracks or terminal facihties," the words "terminal facihties" are employed in a figurative sense and as equivalent to "terminal properties." This is obvious from the association together of tracks and terminal facihties as things subject to use. And the same words are used in the same sense in the 1906 amendment to § 1 of the Act (c. 3591; 34 Stat. 584), by which the definition of the term "railroad" was expanded so as to include "all switches, spurs, tracks, and terminal facilities of every kind used or necessary in the transportation of the persons or property designated herein." There is nothing in the order of the Commission now under review that requires appellants or either of them, or their agency, the Nashville Terminals, to give the use of tracks or terminal facihties to the Tennessee Central, either physically or in any other sense, within the meaning of the final clause of § 3. It requires them merely to interchange interstate competitive traffic to and from the tracks of the Tennessee Central on the same terms as interstate non competitive traffic so long as they interchange both kinds of traffic with each other on the same terms; LOUISVILLE & NASHVILLE R. R. V. UNITED STATES 219 and also to establish and apply to the switching of interstate traffic to and from the Tennessee Central rates and charges not different from those that they contemporaneously maintain with respect to similar shipments as between themselves. Undoubt- edly the expenditures made by appellants in the construction of the joint terminal property, so far as that property is used in interchange switching, is an element to be taken into considera- tion in fixing the amount of the switching charges. And the same is true with respect to the value of the separately owned tracks of appellants, so far as necessarily used in mutual interchanges. The practice of the Louisville & Nashville and the Nashville & Chattanooga in refusing to interchange competitive on the same terms as noncompetitive traffic with the Tennessee Central, while interchanging both kinds of traffic as between themselves, was found by the Commission to be unduly discriminatory, there being no substantial difference in the conditions of the interchange, nor any increased cost of interchanging competitive as coinpared with noncompetitive traffic. The tracks included in the joint terminal arrangement of appellants include 8.10 miles of main and 23.80 miles of side tracks separately owned by the Louisville & Nashville, 12.15 miles of main and 26.37 miles of side tracks separately owned by the Nashville & Chattanooga, and some yard tracks owned by the Louisville & Nashville Terminal Company, whose entire stock is owned by the Louisville & Nashville R. R. Co. It may be conceded that by virtue of the lease from the Terminal Company to the appellant railroads, even as modified in December, 1902, there remains in some sense a joint tenure of the property of the Terminal Company. But, in my view, the question of the ownership of the property is entirely aside from the real point. The discrimination charged and found by the Commission is not so much in the use of terminal property as in the performance of interchange services; and for such discrimination a community of interest in the property affords neither justification nor excuse. So far as the nondiscriminatory performance of those services requires that cars from the Tennessee Central shall be admitted to the terminal tracks of the Louisville & Nashville and the Nashville & Chattanooga and to tracks in which these companies have a joint interest, this is so only because appellants have, as between themselves, and also as regards traffic from the Ten- nessee Central, thrown their terminals open to the public use. The argument for appellants rests upon the essential fallacy that 220 DUTIES OF CARKIEH UNDER THE ACT the terminal facilities are, in an absolute sense, and for all pur- poses, private property. But they, Kke all other parts of the rail- road line, are, with respect to their use, devoted to the benefit of the pubhc. And the final clause of § 3, while it protects each carrier to a certain extent in the separate use of its terminal property, does so not otherwise than it protects its particular use of the main line of railroad. "Tracks" are mentioned to- gether with "terminal faciUties," and the same rule is applied to both. The fact that a carrier owns its own terminals is no more an excuse for discriminatory treatment of its patrons with respect to services performed therein than its ownership of the main line is an excuse for discrimination with respect to transportation thereon. It is said that if either of the appellants were the sole owner of the terminal properties in question and used them alone, it could not be deemed to discriminate against the Tennessee Central because of a mere refusal to switch for it in the interchange of traffic. Of course if it refused all connecting carriers ahke it could not be held for discrimination. But whether it would be at liberty to refuse to switch for the Tennessee Central would depend upon circumstances; for instance, upon whether the Interstate Com- merce Commission, pursuant to its authority under § 15 of the Act as amended in 1910 (c. 309; 36 Stat. 552), should estabUsh the two lines as a through route, or (without that) should deter- mine upon adequate evidence that the refusal of switching privi- leges was a failure to afford reasonable and proper facilities for the interchange of traffic between the connecting Unes under § 3. Car interchange between connecting hues was made by the 1910 amendment of § 1 of the Act a positive duty on the part of the ■ carrier, even without action by the Commission. 36 Stat. 545. I deem it a most material fact that the appellants already inter- change noncompetitive traffic with the Tennessee Central, upon terms like those upon which they interchange both competitive and noncompetitive traffic between themselves. So far as their method of doing this amounts to an interchange of trackage rights they have by their voluntary action thrown open the use of their terminals to all branches of traffic, excepting so far as they dis- criminate against competitive traffic over the Tennessee Central. Not only so, but the Commission has expressly found (33 I. C. C. 82) that the Louisville & Nashville will switch competitive coal and other competitive traffic to and from the Tennessee Central, the interchange being usually effected at Shops Junction and over the rails of the Nashville & Chattanooga. But the Louisville LOUISVILLE & NASHVILLE R. R. V. UNITED STATES 221 & Nashville insists upon charging local rates as if for transport- ation between Nashville and Overton, Tennessee, which amount to from $12 to $36 per car, and are therefore in effect prohibitory. For a time the Nashville & Chattanooga in hke manner offered to perform the same switching service to and from the Tennessee Central at its local rates, and published a terminal tariff De- cember 14, 1913, expressly providing that such local rates would apply to competitive traffic from and destined to the Tennessee Central. This, however, was revoked shortly after the complaint in the present case was filed. There is here a very plain discrimi- nation, foimd by the Commission to be an undue discrimination, not merely against the Tennessee Central but against a "parti- cular description of traffic," which is distinctly prohibited by § 3. The conduct of appellants is quite analagous to the making of a discrimation in the charge for carriage not because of any dif- ference inhering in the goods or in the cost of the service rendered in transporting them, but upon the mere basis of the ownership of the goods; a discrimination condemned by this court in Int. Com. Comm. v. Del., Lack. & Western R. R., 220 U. S. 2Z5, 252. The present system of interchanging traffic between appellants was estabUshed in August, 1900, a year or two before the line of the Tennessee Central was constructed into Nashville. Emphasis was laid upon this, in argument, as refuting the suggestion that the arrangement could be deemed a "device" to avoid the dis- crimination clause of § 3 of the Interstate Commerce Act. The findings of the Commission show, however (33 I. C. C. 81), that when the Tennessee Central entered Nashville it was only after strong opposition from the Louisville & Nashville; and (p. 79) that prior to the year 1898 the people of Nashville had become desirous of better terminal faciUties, particularly of a union pas- senger depot, and an ordinance authorizing a contract to that end between the City and the Terminal Company was proposed, containing a proviso that the terminal facihties should also be available on an equitable basis to railroads which might be built in the future. The present appellants opposed this proviso and an ordinance omitting it was passed, but was vetoed by the mayor on account of the omission. It clearly enough appears, therefore, that the agreement of August, 1900, was made by appellants in view of the probabihty of some other road entering Nashville thereafter. But were it otherwise, the result should be the same. The obligation to avoid discrimination and to afford "all reasonable, 222 DUTIES OF CARRIER UNDER THE ACT proper, and equal facilities for the interchange of traffic" is not quaUfied by any rights of priority. The new road is a servant of the pubUc, equally with the others; subject to the same duty and entitled for its patrons, to demand reasonable and impartial performance of the reciprocal duty from carriers that preceded it in the field. In my opinion the present case is controlled by our decisions in the former case between the same parties (Louis. & Nash. R. B. V. Unitejl States, 238 U. S. 1, 18, 19), and the earher case of Penn- sylvania Co. V. United States, 236 U. S. 351, 366 et seq. In these cases many of the same arguments that are here advanced were considered and overruled by the court. The latter case concerned the switching of interstate carload traffic between industrial tracks and junction points within the switching Hmits at New Castle, Pennsylvania. The Pennsylvania Company undertook to sustain a practice of doing such switching at $2 per car for three railroads while refusing to do it for the Buffalo, Rochester & Pittsburgh, upon the ground of its sole ownership of the terminals and the fact that the three other carriers were in a position, either at New Castle or elsewhere, to offer it reciprocal advantages fully compensatory for the switching done for them in New Castle, whereas the Buffalo, Rochester & Pittsburgh was not in a po- sition to offer similar advantages. The Interstate Commerce Commission (29 I. C. C. 114) overruled this contention, and in this was sustained by the District Court (214 Fed. Rep. 445), and by this court. We there held (236 U. S. 361) that the question what was an undue or unreasonable preference or advantage under § 3 of the Interstate Commerce Act was a question not of law but of fact, and that if the order of the Commission did not exceed its constitutional and statutory authority and was not unsup- ported by testimony, it could not be set aside by the courts; held (p. 363), that the provisions of § 3, although that section remains unchanged, must be read in connection with the amend- ments of 1906 and 1910 to other parts of the act, and that by these amendments the facihties for dehvering freight at terminals were brought within the definition of transportation to be regu- lated; and also (pp. 368, 369) that the order did not amount to a compulsory taking of the use of the Pennsylvania tracks by another road within the inhibition of the final clause of § 3; no right being given to the Buffalo road to run its cars over the ter- minals of the Pennsylvania Company or to use or occupy its stations or depots for purposes of its own. NOBFOLK & WESTERN RY. CO. V. DIXIE TOBACCO CO. 223 In the former case between the present parties {Louis. & Nash. R. R. V. United Staies, 238 U. S. 1), we sustained the District Court (216 Fed. Rep. 672) in refusing an injunction to restrain the putting into effect of an order of the Commission (28 I. C. C. 533, 540) requiring appellants to interswitch interstate coal with the Tennessee Central as they did with each other. The findings of the Commission (p. 542) recognized that the terminals were in part jointly owned and in part the separate property of the two appellants. The District Court (216 Fed. Rep. 682, 684) alluded to this fact. And this court (238 U. S. 17, 18, 1 9, 20) did not ignore that fact but laid it aside as immaterial, declaring: "If the carrier, however, does not rest .behind that statutory shield [the final clause of § 3] but chooses voluntarily to throw the Terminals open to many branches of traffic, it to that extent makes the Yard pubUc. Having made the Yard a facihty for many purposes and to many patrons, such railroad facihty is with the provisions of § 3 of the statute which prohibits the facihty from being used in such manner as to discriminate against patrons and commodities." If the decision reached in the present case is adhered to, and remains uncorrected by remedial legislation, it will open a wide door to discriminatory practices repugnant alike to the letter and the spirit of the Act to Regulate Commerce. Mr. Justice Day, Mr. Justice Brandeis, and Mr. Justice Clarke concur in this dissent. NORFOLK & WESTERN RAILWAY COMPANY v. DIXIE TOBACCO COMPANY 228 U. S. 593 (1913) Mr. Justice Holmes dehvered the opinion of the court. This is an action brought by the defendant in error to recover for damage! to tobacco shipped by it on the raihoad at Bedford City, Virginia, to Marshall, Texas. The plaintiff got -a. verdict and judgment, which was affirmed by the Supreme Court of Ap- peals (111 Virginia, 813), the case having been taken there on the ground that the act of June 29, 1906, c. 3591, § 7, 34 Stat. 584, 595, amending § 20 of the Act to Regulate Commerce, of February 4, 1887, c. 104, 24 Stat. 379, 386, is unconstitutional. This section requires any common carrier receiving property for 224 DUTIES OF CARRIER UNDER THE ACT transportation from a point in one State to a point in another to issue a receipt or bill of lading for the same; makes the receiving carrier liable for loss caused by any common carrier in transitu; and provides that no contract shall exempt it from the Uability thus imposed. The bill of lading stipulated that no carrier should be Hable for damages not occurring on its portion of the through route. There was evidence that the tobacco was damaged after it left the railroad company's hands; and the defendant asked an in- struction that if the jury beheve that it deUvered the tobacco in good order to the next carrier the verdict should be in its favor. This instruction was refused and the defendant excepted. There was evidence also that the plaintiff chose the route for the tobacco, being partly by sea and a different one from that which the rail- road would have adopted, which would have been all rail. The railroad had no through route or rate established with the line of steamers by which the tobacco went. Instructions were asked and refused, subject to exception, that the bill of lading controlled, and that the above statute, so far as it attempts to invalidate limitations or UabiUties like that quoted above, is void. The Supreme Court of Appeals followed the ruling in Atlantic Coast Line R. R. Co. v. Riverside Mills, 219 U. S. 186 (to which may be added Galveston, Harrisburg & San Antonio Ry. Co. v. Wallace, 223 U. S. 481), as conclusive. The plaintiff in error contends that these cases may be distinguished on the ground that in both of them it was to- be presumed that the carrier was a voluntary party to a through route and rate, whereas here the stipulation against liability beyond its line and the fact that it had no through route with the steamship company exclude that presumption. It argues that as it was bound to accept goods destined beyond its line for deUvery to the next carrier and was required by the statute to give a through bill of lading, if on such compulsory acceptance it is made answerable for damages done by others its property is taken without due process of law. But in the former case there was the same stipulation in the bill of lading, and the- supposed through routes were only presumed. In the second case the carrier is spoken of as voluntarily accepting goods for a point beyond its hue, but there too there was the same attempt to Hmit hability, and in the present case the acceptance was voluntary in the same degree as in that. There is no sub- stantial distinction between the earlier decisions and this. Judgment affirmed. GEORGIA, iPLA. & ALA. RY. CO. V. BLISH MILLING CO. 225 GEORGIA, FLORIDA & ALABAMA RAILWAY COMPANY V. BLISH MILLING COMPANY 241 U. S. 190 (1916) Mr. Justice Hughes delivered the opinion of the court. The BUsh MilHng Company brought this action in trover against the Georgia, Florida & Alabama Railway Company and recovered judgment which was affirmed by the Court of Appeals of Georgia. 15 Ga. App. 142. The facts are these: On May 13, 1910, the BHsh Milling Company shipped from Seymour, Indiana, to Bainbridge, Georgia, a carload of flour consigned to its own order with direction to notify Draper-Garrett Grocery Company at Bainbridge. The bill of lading was issued by the Baltimore & Ohio Southwestern RaUroad Company. The shipper's sight draft upon the Draper-Garrett Grocery Com- pany, for $1,109,89 covering the price of the flour with a carrying charge, was attached to the bill of lading and forwarded to a bank in Bainbridge for collection. The flour was transferred to another car by the Central of Georgia Railway Company, a connecting carrier, and reached Bainbridge on June 2, 1910, over the line of the Georgia, Florida & Alabama Railway Company, the plaintiff in error, in accordance with routing. The plaintiff in error, without requiring payment of the draft and surrender of the bill of lading (which were ultimately returned to the Blish Milling Company), delivered the car to the Draper-Garrett Gro- cery Company immediately on its arrival by placing it on the side track of that company. In the course of unloading the grocery company discovered that some of the floiu: was wet and thereupon reloaded the part removed and returned the flour to the plaintiff in error. The subsequent course of events is thus stated by the Court of Appeals {Id., pp. 144, 145): "The railway company" (that is, the plaintiff in error) "re- took possession of the car and unloaded it, and in a few days sold, as perishable property, a part of the flour alleged to be damaged, and on December 23, 1910, sold the remainder. On June 3, 1910, after the grocery company had turned the flour back to the rail- way company, B. C. Prince, traffic manager of the Georgia, Florida & Alabama Railway Company, telegraphed to the Bhsh Milling Company as follows: 'Flour order notify Draper-Garrett Grocery Company refused account damage. Hold at your risk and expense. Advise disposition.' On the next day the milHng 226 DUTIES OF CARRIER UNDER THE ACT company replied by telegraphing to Prince, 'Sending our represen- tative there. What is nature of damage? ' To this Prince replied: 'Flour transferred in route. Slight damage by water, apparently rough handling. When will your representative reach Bainbridge? ' The Blish Milling Company replied that their man would be there that night or the next day. On June 7 (after the milUng company's representative had reached Bainbridge and conferred with the agents of the^ railway company and with the grocery company) the milling company sent a final telegram, saying, 'We will make claim against railroad for entire contents of car at invoice price. Must refuse shipment as we can not handle. ' It appears, from the evidence of Mr. Draper, that the price of flour declined after his order was given and before the flour reached Bainbridge. There is conflict in the evidence as to a tender of the flour by the rail- way company to the milling company's representative. Ac- cording to some of the testimony, about 18 barrels of the flour had been sold by the railway company before the alleged tender was made, and therefore it was not within the power of the carrier to tender the shipment in its entirety." The verdict in favor of the Milling Company was for $1,084.50 from which the Court of Appeals required a deduction of the amount of the unpaid freight which was held to have been erroneously included. With other defenses, the Railway Company pleaded that the shipper had failed to comply with the following provision of the bill of lading, issued by the initial carrier: "Claims for loss, damage, or delay must be made in writing to the carrier at the point of delivery or at the point of origin within four months after the delivery of the property, or, in case of failure to make delivery, then within four months after a reasonable time for delivery has elapsed. Unless claims are so made, the carrier shall not be liable." This defense was overruled. The Court of Appeals stated that "so far as appears from the record, no claim was -filed by the shipper," but deemed the provision to be inappHcable. Id., p.. 149. There are only two questions presented here, and these are thus set forth in the brief of the plaintiff in error: "1st. That the plaintiff's exclusive remedy was against the initial carrier, the Baltimore & Ohio Southwestern Eailroad Company under the Carmack Amendment of Section Twenty of the Hepburn Bill. "2nd. That under the stipulation in the bill of lading providing for the filing of claims for loss or damage the action was barred." The first contention is met by repeated decisions of this court. GEORGIA, FLA. & ALA. RY. CO. V. BLISH MILLING CO. 227 The connecting carrier is not relieved from liability by the Car- mack Amendment, but the bill of lading required to be issued by the initial carrier upon an interstate shipment governs the entire transportation and thus fixes the obligations of all par- ticipating carriers to the extent that the terms of the bill of lading are appUcable and vahd. "The Uabihty of any carrier in the route over which the articles were routed, for loss or damage, is that imposed by the act as measured by the original contract of shipment so far as it is vaUd under the act." Kansas Southern Ry. V. Carl, 227 U. S. 639, 648. See Adams Express Co. v. Cron- inger, 226 U. S. 491, 507, 508; C. C. & St. L. Ry. v. Dettlebach, 239 U. S. 588, .591; Southern Railway v. Prescott, 240 U. S. 632, 637; Northern Pacific Ry. v. Wall, ante, p. 87. These decisions also estabHsh that the question as to the proper construction of the bill of lading is a Federal question. The clause with respect to the notice of claims — upon which the plaintiff in error relies in its second contention — specifically covers "fail- ure to make delivery." It is said that this is not to be deemed to include a case where there was not only failure to deliver to the consignee but actual delivery to another or delivery in violation of instructions. But 'delivery' must mean dehvery as required by the contract, and the terms of the stipulation are comprehensive, ■ — fully adequate in their literal and natural meaning to cover all cases where the delivery has not been made as required. When the goods have been misdelivered there is clearly a 'failure to make delivery' as when the goods have been lost or destroyed; and it is quite as competent in the one case as in the other for the parties to agree upon reasonable notice of the claim as a condition of Kabihty. It may be urged that the carrier is bound to know whether it has delivered to the right person or according to instruc- tions. This argument, however, even with respect to the particular carrier which makes a misdelivery, loses sight of the practical object in view. In fact, the transactions of a railroad company are multitudinous and are carried on through numerous employees of various grades. Ordinarily the managing officers, and those responsible for the settlement and contest of claims, would be without actual knowledge of the facts of a particular transaction. The purpose of the stipulation is not to escape liability but to facil- itate prompt investigation. And, to this end, it is a precaution of obvious wisdom, and in no respect repugnant to pubhc policy, that the carrier by its contracts should require reasonable notice of all claims against it even with respect to its own operations. 228 DUTIES OF CARRIER UNDER THE ACT There is, however, a further and controlling consideration. We are dealing with a clause in a bill of lading issued by the initial carrier. The statute casts upon the initial carrier responsibihty with respect to the entire transportation. The aim was to establish unity of responsibihty {Atlantic Coast Line v. Riverside Mills, 219 U. S. 186, 199-213; N. Y., P. & N. R. R. v. Peninsula Pro- duce Exchange, 240 U. S. 34, 38), and the words of the'statute are comprehensive enough to embrace responsibihty for all losses resulting from any failure to discharge a carrier's duty as to any part of the agreed transportation which, as defined in the Federal Act, includes dehvery. It is not to be doubted that if, in thi; case of an interstate shipment under a through bill of lading, the terminal carrier makes a misdehvery, the initial carrier is hable; and when it inserts in its bill of lading a provision requiring reason- able notice of claims "in case of failure to make dehvery" the fair meaning of the stipulation is that it includes all cases of such failure, as well those due to misdehvery as those due to the loss of the goods. But the provision in question is not to be con- strued in one way with respect to the initial carrier and in another with respect to the connecting or terminal carrier. As we have said, the latter takes the goods under the biU of lading issued by the initial carrier, and its obKgations are measured by its terms {Kansas Southern Ry. v. Carl, supra; Southern Railway v. Pres- cott, supra); and if the clause must be deemed to cover a case of ■ misdehvery when the action is brought against the initial carrier, it must equally have that effect in the case of the terminal carrier which in the contemplation of the parties was to make the de- hvery. The clause gave abundant opportunity for presenting claims and we regard it as both apphcable and vahd. In this view, it necessarily follows that the effect of the stipu- lation could not be escaped by the mere form of the action. The action is in trover, but as the state court said, "if we look beyond its technical denomination, the scope and effect of the action is nothing more than that of an action for damages against the dehvering carrier." 15 Ga. App., p. 147. It is urged, however, that the carrier in making the misdehvery converted the flour and thus abandoned the contract. But the parties could not waive the terms of the contract under which the shipment was made pursuant to the Federal Act; nor could the carrier by its conduct give the shipper the right to ignore these terms which were applicable to that conduct and hold the carrier to a differ- ent responsibihty from that fixed by the agreement made under the GBOHGIA, FLA. & ALA. EY. CO. V. BLISH MILLING CO. 229 published tariffs and regulations. A different view would antag- onize the plain pohcy of the Act and open the door to the very- abuses at which the Act was aimed. Chi. & Alt. R. R. v. Kirhy, 225 U. S. 153, 166; Kansas Southern Ry. v. Carl, supra; A., T. & S. F. Ry. V. Robinson, 233 U. S. 173, 181; Southern Ry. V. Prescott, supra. We are not concerned in the present case with any question save as to the apphcabihty of the provision and its validity, and as we find it to be both applicable and vaUd, effect must be given to it. But, while this is so, we think that the plaintiff in error is not entitled to succeed in its ultimate ■ contention under the stipu- lation for the reason that it appears that notice of the claim was in fact given. It is true that in the statement made by the Court of Appeals it is said that so far as appears from the record "no claim was filed by the shipper." We must assume, however, that this was in effect a construction of the provision as requiring a more formal notice than that which was actually sent. For the court had already set forth the uncontroverted facts in detail showing that the shipper (having made an investigation in re- sponse to the communication of the traffic manager of the Rail- way Company) had telegraphed to the latter, on June 7, 1910, only five days after the arrival of the goods at destination, as follows: "We will make claim against railroad for entire contents of car at invoice price. Must refuse shipment as we can not handle." In the preceding telegrams, which passed between the parties and are detailed by the state court in stating the facts, the shipment had been adequately identified, so that this final telegram taken with the others estabhshed beyond question the particular shipment to which the claim referred and was in substance the making of a claim within the meaning of the stipu- lation, — the object of which was to secure reasonable notice. We think that it sufficiently apprised the carrier of the char- acter of the claim, for while it stated that the claim was for the entire contents of the car 'at invoice price' this did not con- stitute such a variance from the claim for the value of the flour as to be misleading; and it is plain that no prejudice resulted. Granting that the stipulation is applicable and vahd, it does not require documents in a particular form. It is addressed to a practical exigency and it is to be construed in a practical way. The stipulation required that the claim should be made in writing, but a telegram which in itself or taken with other telegrams con- tained an adequate statement must be deemed to satisfy this re- 230 DUTIES OF CARRIER UNDER THE ACT quirement. See Ryan v. United States, 136 U. S. 68, 83; Klein- hans V. Jones, 68 Fed. Rep. 742, 745; Godwin v. Francis, L. R. 5 C. P. 295; Queen v. RiUy [1896], 1 Q. B. 309, 314, 321; Howley V. Whipple, 48 N. H. 487, 488; State v. Holmes, 56 Iowa, 588, 590. Judgment affirmed. WESTERN TRANSIT COMPANY v. A. C. LESLIE & COMPANY, LIMITED 242 U._ S. 448 (1917) Mr. Justice Brandeis delivered the opinion of the court. The Western Transit Company, operating steamers between Buffalo and other points on the Great Lakes, formed, with the New York Central Railroad, a "lake and rail" Hne between Michigan and New York City. Among the privileges and facili- ties offered by this hne was the right "in transit of free storage and diversion at Buffalo." That is, the shipper ihstead of sending his goods from Michigan through to New York City, was entitled, without the payment of any extra charge, to have them stored at Buffalo for a period, to await further orders and be forwarded later to New York. The shipper was also given the privilege of "diversion"; — -that is of changing the ultimate destination of the stored goods upon proper adjustment of the rate. On Sep- tember 23, 1908, A. C. Leslie & Co., Limited, the plaintiff below, deUvered to the Western Transit Co., the defendant below, at Houghton, Michigan, for shipment over this hne to New York City, 25 tons of copper ingots, with direction to store the same upon arrival at Buffalo to await further shipping directions. The copper arrived there September 30, and was placed in the Transit Company's warehouse. Nearly four months later about one ton of it was stolen from the warehouse. An action was brought by the shipper in the City Court of Buffalo to recover its value. The Transit' Company denied all hability; but the court found that the loss was due to its negligence and held the company hable for the full value of the copper lost. The judgment of the City Court was affirmed by the Supreme Court of New York at special term and also by the Appellate Division of that court. 165 App. Div. 947. AppHcations for an appeal to the Court of Appeals of New York having been denied, both by the Appellate Division and by the Chief Judge of the Court of Appeals, a writ of error from this court was granted on the ground that the decision below WESTERN TRANSIT CO V. LESLIE & CO. 231 involved a federal question, namely: the construction and effect of the bill of lading and of tariffs filed under the Act to Regulate Commerce as amended. Act 1906, c. 3591, 34 Stat. 584. The question before this court relates solely to the measure of damages. The shipper contends that it is entitled to the full value of the copper lost, whifch was $271.38. The carrier contends that the damages recoverable are Umited to $94.10; that is, the value not to exceed %100 a ton. In support of this limitation it rehes upon the fact that freight was paid at the rate of 18 cents per ton under a bill of lading and a tariff which names the follow- ing rates from Houghton, Michigan, to New York City: "Copper ingots value not to exceed $100 a ton, 18 c. per ton Copper mgots .... value not expressed 30 c. per ton." The shipper insists that it is enforcing the liability of the Transit Company not as carrier, but as warehouseman; and that the terms of its obligation as warehouseman are fixed, not by the bill of lading and the tariff provision quoted above, but wholly by the letter of November 26, 1908, and the circular therein referred to, which are copied in the margin.' 1 The Western Transit Company, N. Y. C. & H. R. R. Line of Steamers. Buffalo, N. Y., Nov. 26, 1908- Messrs. A. C. Leslie & Company, Montreal, Que. Gentlemen: Replying to your letter of 24th, instant, would advise you that we have in store here, lot 1036 ingot bars of copper, marked M. M. 102, as well as lot of 979 ingot bars, marked M. M. 97. This copper came forward in our steamer, Buffalo, which unloaded here September 30th, and will be held here subject to our storage circular I. C. C. No. 236, copy of which I enclose. Yours truly, (Signed) Edwin T. Douglass, General Manager. I. C. C. No. 236, Superseding I. C. C. No. 231. The Western Transit Company, New York Central & Hudson River R. R. Line. General Office. Copper and Copper Matte, Pig Lead and Spelter for Storage and Diversion at Buffalo. The Western Transit Company will accept shipments of Copper and Copper Matte, Pig Lead and Spelter for storage and diversion at Buffalo, under the following rules: 1. The Western Transit Company, at request of owners, will furnish free storage on shipments of Copper and Copper Matte, Pig Lead and Spelter in transit, at Buffalo, for a period not exceeding four months. 232 DUTIES OF CARRIER UNDER THE ACT The Transit Company filed with the Interstate Commerce Commission, in addition to its general tariffs covering "lake and rail" rates, a separate tariff known as I. C. C. No. 236, cover- ing specifically storage and diversion privileges at Buffalo, as set forth in the circular copied in the margin. The fiUng of this tariff was required by the act (see Goldenberg v. Clyde S. S. Co., 20 I.C. C. 527) since the general tariff did not specify the details of the storage and diversion privileges. The Act to Regulate Conamerce as amended provides expressly (§ 1) that the term transportation includes storage. And § 6 provides that a carrier must file with the Interstate Commerce Commission tariffs "showing all the rates, fares, and charges for transportation" and "shall also state separately all ... . storage charges, .... all privileges or facil- ities granted or allowed and any rules or regulations which in any wise change, affect, or deteriiiine any part or the aggregate of such aforesaid rates." The bill of lading, in a form similar to that approved and re- commended by the Interstate Commerce Commission (14 I. C. C. 346), contains the following, among other provisions; "It is mutually agreed in consideration of the rate of freight hereinafter named, as to each carrier of all or any of said property over all or any portion of said route to destination and as to each party at any time interested in all or any of said property, that every service to be performed hereunder shall be subject to all the conditions, whether printed or written, herein contained, and which are hereby agreed to by the shipper, and by him accepted for himself and his assigns as just and reasonable." 2. If held longer than four months, it will be subject to a charge of one- half (1) cent per 100 pounds for each thirty (30) or part thereof so held. 3. Shipments held under this arrangement will be at owner's risk, and will not be accepted for storage unless arrangements ■ are made with the under- signed previous to forwarding from Western Lake Ports. 4. Shipments ordered out of store will be charged at the through rate in effect at time the shipment originated, to points to which through rates are published by The Western Transit Company. 5. Shipments ordered to points to which no through rates are in effect, via The Western Transit Company, will be charged at the local rate to and from Buffalo. Issued May 15th, 1908. Effective June 16th, 1908. Edwin T. Douglass, General Manager, Buffalo, N. Y. WESTERN TRANSIT CO. V. LESLIE & CO. 233 "To be held at Bflo. for orders. "Value not to exceed $100.00 per net ton. Limited by written agreement. "The consignor of this property has the option of shipping same at a higher rate without hmitation as to value in case of loss or damage from causes which would make the carrier liable, but agrees to the specified valuation named in case of loss or damage from causes which would make the carrier liable, because of the lower rate thereby accorded for transportation." , Conditions. "The amount of any loss or damage for which any carrier be- comes hable shall be computed at the value of the property at the place and time of shipment imder this bill of lading, imless a lower value has been agreed upon or is determined by the classi- fication upon which the rate is based, in either of which events such lower value shall be the maximum price to govern such com- putation." The release valuation clause in an interstate bill of lading when based upon a difference in freight rates is valid. Adams Express Co. v. Croninger, 226 U. S. 491, 509. The limitation of liability by means of such valuation contained in the bill of lading con- tinues although the service of carrying has been completed and the goods are held by the carrier strictly as warehouseman. Cleve- land, Cincinnati, Chicago & St. Louis Ry. v. Dettleback, 239 U. S. 588. The provisions of the bill of lading govern even where the goods are allowed to remain in the carrier's warehouse after giving receipt therefor and payment of freight. The carrier and the shipper can make no alteration of the terms upon which goods are held under a tariff, imtil there has been an actual delivery of the goods to the consignee. Southern Ry. Co. v. Prescott, 240 U. S. 632. The reasons are even more persuasive for holding that the terms of a billof lading govern storage in transit, like that at Buffalo. The contention of the shipper that the letter of November 26 enclosing the circular created a contract of warehousing wholly independent of the contract of carriage is contrary to fact. The Transit Company's circular states "that free storage is furnished on shipments in transit" and that shipments "will not be ac- cepted for storage unless arrangements are made with the under- signed previous to forwarding from Western Lake Ports." Ob- viously free storage in transit was granted only to those who 234 DUTIES OF CABEIER UNDER THE ACT shipped over this "lake and rail" line. The shipper had enjoyed nearly two months' storage when the circular was received in answer to a letter of enquiry. It stated only what was contained in the tariff filed, which every shipper was bound to take notice of. Judgment reversed and cause remanded for further proceedings not inconsistent with this opinion. WESTERN UNION TELEGRAPH COMPANY, PETI- TIONER V. ESTEVE BROTHERS AND COMPANY 256 U. S. (1921) Mr. Justice Brandeis delivered the opinion of the court. In September, 1917, the Western Union Telegraph Company deUvered to Esteve Brothers & Company at New Orleans, Louisi- ana, an unrepeated cable message from the latter's main office at Barcelona, Spaia, directing a sale for future delivery of two thousand bales of cotton. The message actually sent had directed the sale of two hundred bales. The error in transmission resulted in a loss to Esteve Brothers & Company of $31,095. To recover compensation for this loss they sued the Western Union in a state court of Louisiana. The case was removed to the Federal Dis- trict Court and there was tried by jury upon these additional stipulated facts: The message was sent over lines of the Spanish Government ■ Telegraph from Barcelona to Paris and thence over lines of the French Government to Havre. There it was delivered to the Western Union, transmitted by its cable to New York City and thence over its land lines to New Orleans. The error in trans- mission occurred on these land lines. The charge of $6.60, paid at Barcelona for transmitting the message, represented the sum of the local rates on the several connecting hnes. The Western Union's share was $4.65; and of this $3.75 was apportioned to the cable system and 90 cents to the land Hnes. This Western Union rate was established by its tariff of telegraph and cable rates, in force since some time prior to June 18, 1910. Under the Act of that date. Chapter 309, 36 Stat. 544, making telegraph and cable companies subject to the Act to Regulate Commerce, this tariff had been filed with the Interstate Commerce Commission in May, 1916, by its permission and pursuant to an appropriate resolution of the company. The tariff so filed embodied the long WESTERN UNION TEL. CO. V. ESTEVE BROTHERS & CO. 235 used classification of messages, rules and regulations, including the provision that the company "shall not be liable for mistakes .... in transmission .... of any unrepeated message, be- yond the amount of that portion of the tolls which shall accrue to it." The plaintiffs did not in fact assent to this limitation of liability. They did not, in sending the message at Barcelona, use a blank containing the provisions so Kmiting Uability. They did not have actual knowledge of the resolution of the company or of the filing of the tariffs with the Interstate Commerce Com- mission. The plaintiffs contended at the trial that in view of the above facts they were entitled to a verdict for the full amount of their loss. The company contended that, since the message had not been repeated, the verdict should be limited to $4.65, the amoimt received by it as tolls. A verdict was directed for $31,095 with interest; judgment thereon was affirmed by the United States Circuit Court of Appeals for the Fifth Circuit. 268 Fed. 22; and a petition for writ of certiorari was «granted. 254 U. S. The sole question presented for our decision is the amount of damages recoverable. For more than fifty years prior to the transaction here in suit the Western Union had maintained these two classes of rates for general cable and telegraph service. The usual or basic rate was for service practically at the sender's risk, Uability being limited to the amount of the toll collected. Another special rate entitled the sender to have the message repeated back to the point of origin and rendered the company Hable in case of mistake or nonde- livery up to fifty times the amount of the extra charge. The extra charge for this additional service was for telegrams one-half and for cables one-quarter of the basic rate. In Primrose v. Western Union Telegraph Co., 154 U. S. 1, decided in 1894, this classifi- cation of rates and the Umitations upon the company's Uability were declared by this court to be reasonable and vaUd, in the absence of willful misconduct or gross negUgence. The Umita- tion upon the company's common law Uability was held to be in the nature of contract; and this Uability unlike that of a common carrier, was not an insurer's. It was merely for the damage flowing from failure to use due care in transmission. Primrose v. Western Union Telegraph Co., supra, 14. Since the Umitations of liability was in the nature of contract the provision had to be brought home to the sender of a message in order to be legally binding upon him. Assent by the sender was ordinarily established if the message 236 DUTIES OF CAHRIER UNDER THE ACT was written upon one of the company's blanks which set forth the limitation of liability. Primrose v. Western Union Telegraph Co., supra, 25; compare Cau v. Texas & Pacific Ry. Co., 194 U. S. 427, 431. Whether, in view of long established practice, the mere sending of a message although not written on such a blank imported assent to the usual terms of the rate involved then an issue of fact. See New Jersey Navigation Co. v. Merchant's Bank, 6 How. 344, 383. The question presented for our decision is whether since the amendment of June 18, 1910, to the Act to Regulate Commerce, the sender is, without assent in fact, bound as matter of law by the provision limiting liability, because it is a part of the lawfully established rate. The Act of June 18, 1910, c. 309, sec. 7, 36 Stat. 539, 544, broadened the scope of the Act to Regulate Commerce to include "telegraph, telephone and cable companies (whether wire or wire- less) engaged in sending messages from [a] State ... to any foreign country." And whatever may have been the legal inci- dents of transmitting the message from Barcelona to Havre under Spanish and French law, the Western Union in sending the message over its own lines from Havre to New Orleans was governed by the provisions of that Act. Galveston, Houston & San Antonio By. Co. V. Woodbury, 254 U. S In the third paragraph of Section 1 of the amended Act Congress provided that messages might be "classified into day, night, repeated, unrepeated, letter, commercial, press, Government and such other classes as are just and reasonable, and different rate [might] be charged for the dif- ferent classes of messages." Acting, in May 1916, under the authority of that provision, the Western Union by appropriate action approved the tariff involved in the present case and by permission of the Interstate Commerce Commission filed with it the tariff, including the provisions here in question. The com- pany wag not required so to do by the terms of the act or by any order of the Commission; compare 25th Annual Report I. C. C. (1911) pp. 5, 6. But the rate, long before established, then for- mally adopted and filed, was thereafter the only lawful rate for an unrepeated message, and the hmitation of hability became the lawful condition upon which it was sent. Postal Tel.-Cahle Co. V. Warren-Godvnn, 251 U. S. 27, 30; Clay County Produce Co. V. Western Union Telegraph Co., 44 I. C. C. 670, 674. The lawful rate having been established, the company was by the provisions of Section 3 of the Act to Regulate Commerce prohibited from granting to anyone an undue preference or ad- WESTERN UNION TEL. CO. V. ESTEVE BROTHERS & CO. 237 vantage over the public generally. For, as stated in Postal Tel- Cable Co. V. Warren-Godwin Co., supra, 30, the "Act of 1910 was designed to and did subject such companies as to their inter- state business to the rule of equaUty and uniformity of rates." If the general pubUc upon paying the rate for an unrepeated message accepted substantially the risk of error involved in trans- mitting the message, the company could not, without granting an undue preference or' advantage extend different treatment to the plaintiff here. The limitation of Uabihty was an inherent part of the rate. The company could no more depart from it than it could depart from the amount charged for the service rendered. The Act of 1910 introduced a new principle into the legal rela- tions of the telegraph companies with their patrons which domi- nated and modified the principles previously governing them. Before the Act the companies had a common law hability from which they might or might not extricate themselves according to views of pohcy prevaihng in the several States. Thereafter, for all messages sent in interstate or foreign commerce, the out- standing consideration became that of uniformity and equality of rates. Uniformity demanded that the rate represent the whole duty and the whole hability of the company. It could not be varied by agreement; still less could it be varied by lack of agreement. The rate became, not as before a matter of contract by which a legal liability could be modified, but a matter of law by which a uniform liabihty was imposed. Assent to the terms of the rate was ren- dered immaterial, because when the rate is used, dissent is without effect. This principle was established in cases involving the hmi- tation upon a carrier's liabihty for baggage by Boston & Maine Railroad v. Hooker, 233 U. S. 97, and Galveston & San Antonio Ry. Co. V. Woodbury, decided by this court December 13, 1920. In the former case it was said, "If the charges filed were unrea- sonable, the only attack which could be made upon such regulation [hmiting habiUtyJ would be by proceedings contesting their reasonableness before the Interstate Commerce Commission. While they were in force they were equally binding upon the rail- road company and all passengers whose baggage was transported by carriers in interstate commerce." So here the limitation of liabihty attached to the unrepeated cable rate is binding upon all who send messages to or from foreign countries until it is set aside as unreasonable by the Commission. It is strongly argued that the rule is not appHcable to the situa- tion before us, because of the difference in the provisions of law 238 DUTIES OF CARRIER UNDER THE ACT which govern the establishment of railroad and of telegraph rates. The railroad rate is estabUshed, and can only be established by- filing the tariff with the Connnission. Telegraph companies may initiate rates without fihng tariffs with the Commission, {Clay County Produce Co. v. Western Union Telegraph Co., supra). Plaintiffs insist that it is the filing and subsequent pubhcation of the railroad rate which gives it the force pi law and requires the shipper to take notice of it. But the contention, by dweUing un- duly upon the procedural features of the Act, would defeat the end which Congress had in view. Both raihoad and telegraph- cable rates are inititated by the carrier. It is true that a railroad rate does not have the force of law unless it is filed with the Com- mission. But it is not true that out of the fihng of the rate grows the rule of law by which the terms of this lawful rate conclude the passenger. The rule does not rest upon the fiction of construc- tive notice. It flows from the requirement of equahty and uni- formity of rates laid down in Section 3 of the Act to Regulate Commerce. Since any deviation from the lawful rate would in- volve either an undue preference or an unjust discrimination, a rate lawfully established must apply equally to all, whether there is knowledge of it or not. Congress apparently concluded, in the light of discrimination theretofore practiced by railroads among shippers and localities, that in transportation by rail equal- ity . could be secured only by provisions involving the utmost definiteness and constant official supervision. Accordingly by ection 6 it forbade a carrier of goods from engaging in transpor- tation unless its rates had been filed with the Commission; and it prohibited, xmder heavy penalties, departure in any way from the terms of those rates when filed. In the case of telegraph and cable companies Congress appears to have considered that such stringent provisions were not required to secure the end in view. It did not make fihng with the Commission a condition precedent to the existence of a lawful telegraph and cable rate. When, there- fore, the Western Union initiated and estabhshed this reasonable rate, the principle of equahty and uniformity laid down in Section 3 required that it should have exactly the same force and effect as the rate initiated by a rail carrier and filed according to the provisions of Section 6. It was suggested that the attempted hmitation of habihty must fail under the rule recently applied in Union Pacific Railroad Co. V. Burke, decided February 28, 1921; because both the alterna- tive rates offered in the Western Union tariff for cable messages WESTERN UNION TEL. CO. V. ESTEVE BROTHERS & CO. 239 were for limited liability, and because, therefore, no offer was made to the sender of a rate under which the company would assume full liability for all losses suffered through its negUgence. It is by no means clear that the rule of the Burke case — estabUshed for common carriers of goods — should be applied to telegraph and cable companies. See the Primrose case, supra, p. 14. In any event, it is not applicable here. The Western Union did not, as in the case of telegrams, offer to send cable messages upon a special valuation to be made by the sender and paid for by an extra charge "based upon such value equal to one-tenth of one per cent, thereof." But it offered alternative rates for repeated and for unrepeated cable messages. This long established classifica- tion was expressly recognised as just and reasonable for cable as well as for telegraph messages in the amendment made by the Act of June 18, 1910, to Section 1 of the Act to Regulate Commerce. The provision in the terms offered by the company is: "To guard against mistakes or delays the sender of a cable message should order it repeated, that is, telegraphed back to the originating office for comparison. For this one quarter of the unrepeated message rate is charged in addition. Unless indicated on its face this is an imrepeated message and paid for as such. " ... this Company shall not be liable for mistakes or delays in transmission or delivery .... of any unrepeated message, beyond the amount of that portion of the tolls which shall accrue to this company, .... [nor] of- an repeated message, beyond fifty times the extra sum received by this Company from the sender for repeating such message over its own lines. . . ." The repeated rate, offering greater accuracy and greater lia- bility in case of error, was open to anyone who wished to pay the extra amount for extra security. Whether the limitation of lia- bility prescribed for the repeated message would be vaUd as against a sender who had endeavored, by having the message repeated, to secure the greatest care on the part of the company, we have no occasion to decide, because it is not raised by the facts before us. It is enough to sustain the limitation of liability attached to the unrepeated rate that another special rate was offered for messages of value and importance, and not availed of. The fact that the alternative rate had tied to it a provision which, if tested, might be found to be void, is not material in a case where no effort was made to take advantage of it. Reversed. Mr. Justice Pitney and Mr. Justice Clarke dissent. 240 DUTIES OF CARRIER UNDER THE ACT CHICAGO, MILWAUKEE & ST. PAUL RAILWAY COMPANY V. McCAULL-DINSMORE COMPANY 253 U. S. 97 (1920) Mr. Justice Holmes delivered the opinion of the court. This is an action for the loss of grain belonging to the plaintiff and delivered on November 17, 1915, to the defendant, the peti- tioner, in Montana, for transportation to Omaha, Nebraska. The grain was shipped under the uniform bill of lading, part of the tariffs filed with the Interstate Commerce Commission, by which it was provided that "the amoimt of any loss or damage for which any carrier is Uable shall be computed on the basis of the value of the property at the place and time of shipment under this bill of lading, including freight charges, if paid." The peti- tioner has paid $1,200.48, being the amount of the loss so com- puted, but the value of the grain at the place of destination at the time when it should have been delivered, with interest, less freight charges, was $1,422.11. The plaintiff claimed the difference be- tween the two sums on the ground that the Cummins Amendment to the Interstate Comjnerce Act made the above stipulation void. The District Court gave judgment for the plaintiff, 252 Fed. Rep. 664, and the judgment' was affirmed by the Circuit Court of Appeals. 260 Fed. Rep. 835. The Cummins Amendment, Act of March 4, 1915, c. 176, 38 Stat. 1196, provides that the carriers affected by the act shall issue a bill of lading and shall be Hable to the lawful holder of it "for any loss, damage, or injury to such property .... and no contract, receipt, rule, regulation, or other hmitation of any character whatsoever, shall exempt such conmion carrier .... from the Uabihty hereby imposed" and further that the carrier "shall be liable .... for the fuU actual loss, damage, or injury .... notwithstanding any Hmitation of hability or hmitation of the amount of recovery or representation or agreement as to value in any such receipt or bill of lading, or in any contract, rule, regulation, or in any tariff filed with the Interstate Commerce Commission; and any such hmitation, without respect to the manner or form in which it is sought to be made is hereby de- clared to be unlawful and void." Before the passage of this amendment the Interstate Commerce Commission had upheld the clause in the bill of lading as in no way hmiting the carriers' hability to less than the value of the goods but merely offering the most convenient way of finding the value. Shaffer & Co. WESTERy UNION TEL. CO. V. ESTEVE BROTHERS & CO. 241 V. Chicago, Rock Island & Pacific Ry. Co., 21 I. C. C. 8, 12. In a subsequent report upon the amendment it considered that the clause was still valid and not forbidden by the law. 33 I. C. C. 682, 693. The argimient for the petitioner suggests that courts are bound by the Commission's determination that the rule is a reasonable one. But the question is of the meaning of a statute and upon that, of course, the courts must decide for themselves. We appreciate the convenience of the stipulation in the bill of lading and the arguments urged in its favor. We understand that it does not necessarily prevent a recovery of the full actual loss, and that if the price of wheat had gone down the carrier might have had to pay more under this contract than by the common law rule. But the question is how the contract operates upon this case. In this case it does prevent a recovery of the full actual loss, if it is enforced. The rule of the common law is not an ar- bitrary fiat but an embodiment of the plain fact that the actual loss caused by breach of a contract is the loss of what the con- tractee would have had if the contract had been performed, less the proper deductions, which have been made and are not in ques- tion here. It seems to us, therefore, that the decision below was right, and as, in our opinion, the conclusion is required by the statute, neither the convenience of the. clause, nor any argument based upon the history of the statute or upon the poKcy of the later Act of August 9, 1916, c. 301, 39 Stat. 441, can prevail against whfct we understand to be the meaning of the words. Those words seem not only to indicate a broad general purpose but to apply specifically to this very case. Judgment affirmed. The Chief Justice dissents for the reasons stated by the Interstate Commerce Commission. 242 DUTIES OF CARRIEB UNDER THE ACT SOUTHERN PACIFIC COMPANY v. INTERSTATE COMMERCE COMMISSION SOUTHERN CALIFORNIA RAILWAY COMPANY V. SAME ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY V. SAME SANTA FE PACIFIC RAILROAD COMPANY v. SAME SOUTHERN PACIFIC COMPANY v. SAME 200 U. S. 536 (1906) i Prior to January 1900 there were in force over the Southern Pacific and the Santa Fe systems (hereafter called the initial carriers) through rates on citrus fruit from CaUfornia to the East. Rivalry among connecting carriers to obtain this Cahfornia fruit freight business led to systematic rebates to shippers to induce routing over the rebating roads. To end this practice, the initial carriers and several connecting carriers agreed upon a new through tariff, reserving the right to the initial carriers to route the goods beyond their own terminals. This new tariff was published to take effect January 1, 1900. On February 26, 1900 proceedings were commenced before the Interstate Commerce Commission, imder sections 13, 14, 15 of the Interstate Commerce Act, on the part of corporations engaged in the business of shipping oranges and other citrus fruit from southern Cahfornia to the Eastern markets to restrain the enforcement of the rule reserving to initial carriers the right to route. After hearing, the Conomission (the chairman, Mr. Commissioner Knapp, dissenting) ordered the defendant carriers to cease from exacting from shippers the right themselves to make the route which the freight should take. The initial carriers, believing the Commission had erred in its decision, refused to obey the order which it made, and thereupon the Commission, pursuant to the sixteenth section of the act, filed its bill in the Circuit Court for the purpose of enforcing its order. The bill thus filed by the Commission was demurred to by the defendants, and the demurrer was overruled. 123 Fed. Rep. 598. 1 The facts have been briefly restated. — Ed. SOUTHERN PACIFIC CO. V. INTERSTATE COM. COMMISSION 243 The railroad companies then answered, and the case, after the taking of further evidence, came up for final hearing, when the order of the Commission was affirmed and directed to be enforced (132 Fed. Rep. 829), although the Circuit Court put the afiirm- ance on the ground that the agreement as to routing showed that there was a violation of § 5 of the Commerce Act, in that such agreement amounted to a contract or combination for the pooling of freights. The court passed upon no other question raised in the case. A very full statement of facts is contained in the report in 132 Fed. Rep. supra. A motion was made for a supersedeas pending the hearing of this appeal, which, for the reasons stated in the opinion of the Circuit Court, was denied. 137 Fed. Rep. 606. Mr. Justice Peckham delivered the opinion of the Court. Although there are separate proceedings in these various cases, the question arising in aU is identical and the cases will hereafter be spoken of as if there were but one proceeding before the court. The single question presented is, has the carrier that takes the fruit from the shipper in California the right, under the facts here- in, to insist upon the rule permitting such carrier to route the freight at the time it is received from the shipper? The Commission has decided that the carrier has not the right, and that the rule denies to shippers the use of their transportation facilities, which such shippers are entitled to, and that in its ap- plication, by the initial carriers to the fruit traffic, the shippers are subjected to undue, unjust and unreasonable prejudice and disadvantage, and the carriers are given an undue and unreason- able preference and advantage. If this be the necessary effect of the rule, it may be assumed to be a violation of section 3 of the Interstate Commerce Act, and the Commission, therefore, rightly ordered the carriers to desist from observing it. By section 16 of the act, the Circuit Court is given authority to enforce "any lawful order or requirement of the Commission." If the order be not a lawful one, the court is without power to enforce it. Whether or not such order was lawful is the matter to be determined. The Commission does not find that any contract existed be- tween the initial carrier and its eastern connections to bill the fruit according to certain proportions among the connecting railroads. The Commission said: "The situation warrants the inference, however, that these 244 DUTIES OF CARRIER UNDER THE ACT two initial carriers or systems, connecting with other carriers at various points, and they in turn connecting with numerous other carriers, as shown by the tariff, are able by acting in concert, and routing as they see fit, to only send traffic over the roads of such carriers as fulfilled an agreement to refrain from making any rate concession to the shippers, and some influence of Uke character could doubtless be exerted by them upon the car lines which are also hereinafter referred to." Such statement simply shows that if any eastern railroad, with which an agreement for joint through rates existed, should give rebates on the joint through rate tariff, thus carrying freight below the rates agreed upon as the through rate tariff, that road would not get the freight. We see nothing in the initial carrier endeavoring to maintain the rates agreed upon as a through rate tariff, and thereby pre- venting the payment of rebates, which in itself is a violation of the act. The act especially prohibits, in the sixth section, any al- teration of the rates agreed upon, in favor of any person or persons. There is no finding that there has in fact, as a result of the rule, been any discrimination or unjust action as between the initial carriers and the shippers themselves, and there is no evidence that any was ever practiced. In the examination of the rule it is well to bear in mind the situation of the companies and the business at the time of its adoption. It is fully set forth in the foregoing statement of facts. The payment of the rebates was a shame and was in truth un- satisfactory to all the railroads, besides being plainly a violation of the Commerce Act. We think there is nothing in the act which clearly prohibits the roads from adopting the rule in question. The decision turns upon the construction of a statute which at least does not in terms prohibit. In cases such as this a court is bound to consider the bearing of the result of either construction upon the general purposes of the act. In enacting the Commerce Act this court has stated that the object of Congress was to facilitate and promote commerce by the adoption of regulations to make charges for transportation just and reasonable, and to forbid undue and unreasonable prefer- ences or discriminations. Texas & Pacific Ry. Co. v. Interstate Commerce Commission, 162 U. S. 197. The importance of the rule in this case, so far as the shipper is concerned, is not so great as is its importance to the railroads SOUTHEBN PACIFIC CO. V. INTERSTATE COM. COMMISSION 245 in preventing rebates. If the right of routing be looked at alone, without any connection with the claimed right of diverting the freight, the rule itself would be generally of Uttle importance to the shipper. In all probabiUty the freight gets to its destination when routed by the carrier as early as if routed by the shipper, and in that event the particular route taken is not very important to the latter. The evidence before the Circuit Court shows that the routing, when done by the carrier, was fairly apportioned among the eastern connections, having an eye to good service and expedition, and the roads that the routing was done over were the best roads in the country; the roads that have been eliminated were the roundabout roads; there were no roads that were in- solvent, so far as known by the witnesses. Now, as the fact appears that the actual routing is generally conceded the shipper, and also his request for a diversion allowed, there is nothing in the mere right of routing by the companies, separate from other facts, of which the shipper can properly complain. The Commission ' says it does not distinctly appear in testimony that a delivery by a particular terminal road has been denied in any particular case, yet the manifest evil results of an arbitrary application of the rule must be considered in determining its legality. If there is no such arbitrary application, we do not agree that the rule itself is to be held illegal, because a violation of the act may be com- mitted, while the evidence is that none in fact was committed. It does appear that the mere existence of the right to route on the part of the company has ended the practice of rebating. But the opportunity to obtain rebates on the part of the shipper is surely not a ground for action by the Commission or by the court. Of course, if in attempting to cut off rebates there is a violation of the act, the act must be followed, and that means of prohibiting them must be abandoned. Courts may well look with some de- gree of care before so construing a statute, which confessedly does not in terms so provide, as to prohibit such a rule on the ground that it would be a violation of the statute. We are of opinion that the rule is not a violation thereof. It is conceded that the different railroads forming a continuous line of road are free to adopt or refuse to adopt joint through tariff rates. The Commerce Act recognizes such right and pro- vides for the filing, with the Commission, of the through tariff rates, as agreed upon between the companies. The whole question of joint through tariff rates, under the provisions of the act, is one of agreement between the companies, and they may. or 246 DUTIES OF CARRIER UNDER THE ACT may not, enter into it, as they may think their interests demand. And it is equally plain that an initial carrier may agree upon joint through rates with one or several connecting carriers, who between each other might be regarded as competing roads. It is also undoubted that the common carrier need not contract to carry beyond its own line, but may there deliver to the next succeeding carrier and thus end its responsibiUty, and charge its local rate for the transportation. If it agree to transport beyond its own hne, it may do so by such Unes as it chooses. Atchison &c. R. R. Co. v. Denver &c. R. R. Co., 110 U. S. 667; Louisville & Nashville R. R. Co. v. West Coast Naval Stores &c. Co., 198 U. S. 483. This right has not been held to depend upon whether the original carrier agreed to be liable for the default of the connecting carrier after the goods are dehvered to such connect- ing carrier. As the carrier is not bound to make a through con- tract, it can do so upon such terms as it may agree upon, at least so long as they are reasonable and do not otherwise violate the law. In this case the initial carrier guarantees the through rate but only on condition that it has the routing. It was stated by the late Mr. Justice Jackson of this court, when Circuit Judge in the case of Texas &c. R. R. Co. v. Interstate Commerce Com- mission, 43 Fed. Rep. 37, as follows: "Subject to the two leading prohibitions that their charges shall not be unjust or unreasonable, and that they shall not unjustly discriminate, so as to give undue preference or disadvantage to persons or traffic similarly circumstanced, the act to regulate commerce leaves common carriers as they were at the common law, free to make special contracts looking to the increase of their business, to classify their traffic, to adjust and apportion their rates so as to meet the necessities of commerce, and gen- erally to manage their important interests upon the same prin- ciples which are regarded as soimd, and adopted in other trades and pursuits." This statement was approved by this court in Cincinnati &c.- R. R. Co. V. Interstate Commerce Commission, 162 U. S. 184, 197. Having this right to agree on a joint through tariff on terms mutually satisfactory, we cannot find anything in the Commerce Act which forbids the agreement with such a condition therein as to routing. It is said that the sixth section, properly construed, prohibits such condition. We confess our inability to find any- thing in that section which does so. The fact that the rate, when agreed upon, must be filed with SOUTHERN PACIFIC CO. V. INTERSTATE COM. COMMISSION 247 the Commission and made public by the common carriers when directed by the Commission, does not prevent the adoption of an agreement for a through rate tariff with the condition as stated. Nor does the provision granting power to the Commission to prescribe forms of schedules of rates, as provided for in the sixth section, have any such effect. Where there is an agreed through rate tariff, and as part of such agreement, which is joined in by several railroads, the right to route cars is reserved to the initial carrier, we do not think that the shipper, by virtue of the sixth section, has the right to ignore the condition which is part of. the agreement under which the through rate is made and is guaranteed. We cannot see that the rule violates the third section of the act. All the facts referred to by the Commission are nothing but statements as to how, under such a rule, there might occur a vio- lation of that section, but we find nothing in the facts stated by the Commission, showing that such violation had occurred. In truth, the companies did not always even enforce the rule, still less did they discriminate against shippers or in favor of carriers. On the contrary, the Commission stated that "while the initial carriers do not always route as requested by the shippers, they generally comply with their request." The mere failure to do so does not, however, prove a violation of the section. The right to route is also complained of because the rule con- fined it to the fruit business, and therefore it was, as contended, a discrimination against those engaged in it or against the traffic itself. The transportation of this fruit is a special business, large interests are involved in it, and particular pains are taken to transport it as speedily as possible. With regard to all other freight it has substantially nothing in common. The cases are wholly unHke, and there has been no proof or complaint as to rebates being given in connection with other freight, and the witnesses for the railroad sta,te if there were any evidence or complaint of such rebates, the same rule as to routing would be immediately adopted. As has been said, there is no pretense of discrimination under this rule between the shippers of freight themselves. There seems to be unanimous agreement that all shippers are treated alike and are granted the same privileges, and the routing is gen- erally accorded them. It is the power to route, which rests with the initial carrier, that really takes away the motive for a rebate in the manner indicated, and, therefore, the granting of the re- quest of the shipper as to a particular route may be, and is. 248; DUTIES OF CABRIEB UNDER THE ACT generally conceded without danger that the rebate business may- be again practiced. The important facts that control the situation are that the carrier need not agree to carry beypnd its own road, and may agree upon joint through tariff rates or not, as seems best for its own interests. Having these rights of contract the carrier may make such terms as it pleases, at least so long as they are reasonable and do not otherwise violate the law. We think the routing rule is not unreasonable under the facts herein and that it does not violate the third section of the act. Because opportunities for the violation of the act may occur, by reason of the rule, is no ground for holding as a matter of law that violations must occur, and that the rule itself is therefore illegal. We are, consequently, unable to concur in the view taken by the Commission that the rule violates the third section of the act. NORTHERN PACIFIC RAILWAY COMPANY v. SOLUM NORTHERN PACIFIC RAILWAY COMPANY v. MONARCH ELEVATOR COMPANY NORTHERN PACIFIC RAILWAY COMPANY v. DULUTH ELEVATOR COMPANY 247 U. S. 477 (1918) Mr. Justice Brandeis delivered the opinion of the court. These three cases were heard together. In each of them the plaintiff below sought to recover from the Northern Pacific Rail- way Company, in a state district court of Minnesota, an amount equal to that by which the freight collected for coal carried on an interstate route from Duluth to some other city in the State, ex- ceeded the rate prescribed by the Minnesota law for carriage between those points on another route, wholly within the State. In each case judgment was entered in the trial court for the plaintiff for such amount; and the judgments were affirmed by the Su- preme Court of Minnesota. Each case comes here on writ of error. Carlton is situated on the Northern Pacific Railway, west of Duluth. Between these Minnesota cities that company oper- ates two lines of railroad, each mainly single track. The northerly NOBTHERN PACIFIC RY. CO. V. SOLUM 249 line, about 20.9 miles in length, lies wholly within Minnesota; the southerly line, 27.5 miles in length, extends for 11.7 miles through Wisconsin. The southerly is the original Northern Pa- cific Une which was built in 1885. It has relatively light grades. The northerly line was built by the St. Paul and Duluth Rail- road Company and came under the management of the Northern Pacific in 1900. It has a heavy upgrade from Duluth to Carlton. Since 1900 both fines have been operated continuously by the Northern Pacific. Because of these grades, the northerly route has been used almost exclusively for such Duluth shipments as are inbound and the southerly route has been used for such as are outbound. Until June, 1907, the rates were the same over the two routes. They were duly filed with the Minnesota Rail- road and Warehouse Commission and with the Interstate Com- merce Commission. In 1907 the legislature of Minnesota fixed for intrastate car- riage of coal, maximum rates which were lower than the pub- lished rates theretofore charged. The rates so fixed were to take effeci; June 1, 1907; but before that date their enforcement was enjoined by the proceedings which were reviewed in The Min- nesota Rate Cases, 230 U. S. 352. This injunction remained in effect until July, 1913, when it was dissolved pursuant to that decision. Until then the Northern Pacific continued to charge the pubHshed rates (and therefore the same rates) on all shipments of coal from Duluth to Minnesota points, whether moving via the interstate route or the intrastate route. After dissolution of the injunction, the company refimded on the few shipments which had moved over the intrastate route, the amount by which the charges actually collected exceeded the charges which would have been collected had the rates fixed by the legislature been ob- served. It refused, however, to make refunds on shipments made over the interstate route, on the ground that the state statute did not affect them. Among such shipments were those involved in these cases, from Duluth by the interstate route to three Minnesota points, Hitterdal, Battle Lake, and Hawley, cities on the Northern Pacific lying west of Carlton. The shipment in each case was de- livered to the Railway without any instruction as to how it should be routed; but the plaintiffs contended that, in the absence of in- structions, it was the duty of the carrier to select that route which was for the interest of the shipper, namely the intrastate route; because it would prove to be the cheaper, if the rates prescribed 250 DUTIES OP CARRIEB UNDER THE ACT by the State were upheld. The several shippers claimed that they were entitled to the same refunds which would have been made if the coal had been carried on the intrastate route; and the suits were brought to recover these amounts. The Railway answered in the first two cases, that, at the time of the shipments, the rates pubhshed were (because of the injunc- tion in effect) identical on the two routes ; that "in the ordinary and proper and economical operation of its property, it was necessary to move, and this defendant in general did and does now, move all out-bound shipments from Duluth via the interstate hne and all in-bound shipments into Duluth via the intrastate Hne, and that to have carried the shipments referred to in the complaint to their destination .... via said intrastate Hne instead of via the inter- state Hne, over which they were actually carried, would have en- tailed great additional expense upon this defendant"; and that these rates were just and reasonable for the service performed and were coUected pursuant to the tariffs published and filed with the Interstate Commerce Commission. In the third case the answer alleged in addition, that, on December 24, 1915, and ^rior to the commencement of that action, the Interstate Commerce Commission had, in Holmes & Hallowell Co. v. Great Northern By. Co., 37 I. C. C. 627, decided that the practice of defendant in routing its westboimd shipments from Duluth over its interstate Hne was a proper and reasonable practice -and had denied the appHcation for reparation on shipments of coal made over that route. The judgments entered were upon demurrers to the answers. That in number 205 was entered May 28, 1916; that in number 206 on May 23, 1916; that in number 526 on May 2, 1917. (133 Minnesota, 93; M461; 136 7^.468.) In each case it is assigned as error that the state court held that the cause of action therein is not affected by the federal statute regulating interstate com- merce; and also that the state court assumed jurisdiction in advance of a determination by the Interstate Commerce Com- mission as to whether the practice of the Northern Pacific Railway, in sending via its interstate route all shipments of the char- acter involved in these cases, was reasonable. In the third case the additional error is assigned that the court held that the intra- state rate should be appUed, although the Interstate Commerce Commission had found that the practice of routing out-bound shipments from Duluth via the interstate route was proper and reasonable. The objection that the court lacked jurisdiction to NORTHERN PACIFIC RY. CO. V. SOLUM 251 entertain the proceeding was not made in the answers in the trial court; but it was insisted upon before the Supreme Court of Minnesota; was considered and overruled by that court (133 Minnesota, 93, 97); and is available here. In numbers 205 and 206 judgment was. entered before the Act of September 6, 1916. A federal question is involved; and the cases are properly here under § 237 of the. Judicial Code. In number 526 the judgment was entered after the Act of September 6, 1916, c. 448, 39 Stat. 726, took effect. In that case there was not drawn in question the vaUdity of a statute or treaty nor the vaHdity of any authority exercised under the State. Philadelphia & Reading Coal & Iron Co. V. Gilbert, 245 U. S. 162; Ireland v. Woods, 246 U. S. 323; Stadelman v. Miner, 246 U. S. 544. The writ of error in number 526 must therefore be dismissed; although the defendant in error has not objected to the jurisdiction of this court. We proceed to consider numbers 205 and 206. In those cases the Supreme Court of Minnesota declared that the carrier's duty was governed by the common law and it stated the appUcable principle as follows (p. 96): "Where a railroad company operates two lines of railroad between the same points, and the freight rate over one line is less than such rate over the other hne, if other conditions are reasonably equal, it is the duty of the company to transport shipments between those points over the line which will give the shipper the benefit of the cheaper rate. To justify transporting such shipments over the other hne and thereby compel the shipper to pay the higher rate, the company must show that such Une was chosen by the shipper or that the circumstances or exigencies were such that a proper regard for the interests of the shipper precluded the use of the cheaper hne." In the absence of shipping instructions it is ordinarily the duty of the carrier to ship by the cheaper route. But the duty is not an absolute one. The obhgation of the carrier is to deal justly with the shipper, not to consider only his interests and to disre- gard wholly its own and those of the general pubhc. If, all things considered, it would be unreasonable to ship by the cheaper route, the carrier is not compelled to do so. The duty is upon the carrier to select the cheaper route only "if other conditions are reasonably equal." Resort to the more expensive route may be justified. And the justification may rest either upon the peculiar circum- stances of a particular case or upon a general practice. In the cases before us the justification is rested upon a general practice. 252 DUTIES OF CARRIER UNDER THE ACT The answers allege that, because of the grades of the two lines, aU outbound shipments were and are in general moved over the southerly route on account of the very great expense which another arrangement would entail. It may well be, under such circum- stances, that carriage over the interstate route would be justified, even if it appeared that it was feasible to haul freight out of Du- luth over the intrastate line. Whether the practice of the carrier of shipping over the interstate route was reasonable, when a lower intrastate route was open to it, presents an administrative question, one of perhaps considerable complexity. PERE MARQUETTE RAILWAY COMPANY v. J. F, FRENCH & COMPANY 254 U. S. 538 (1921) Mr. Justice Brandeis dehvered the opinion of the court. The Federal Uniform Bills of Lading Act of August 29, 1916, c. 415, 39 Stat. 538, provides by § 9 that a carrier is, subject to the provisions of §§ 10, 11 and 12, "justified .... in deUvering goods to one who is" (c) "A person in possession of an order bill for the goods by the terms of which the goods are dehverable to his order; or which has been endorsed to him, or in blank by the consignee, or by the mediate or immediate indorsee of the consignee." The main questions presented for our decision in this case are, whether, upon the facts hereinafter stated, there was a delivery to one in possession of the bill, and, if so, whether the delivery exonerated the carrier, it having been made without requiring surrender of the bill of lading. In 1917 J. F. French & Company shipped a carload of potatoes from Bailey, Michigan, to Louisville, Kentucky, by the Pere Marquette Railroad as initial carrier and the Big Four Railroad as connecting and terminal carrier. The shipment was made on a "consignor's order" bill of lading in the standard form by which the car was consigned to the shipper's order at Louisville; and there was a notation: "Notify Marshall & Kelsey, c/o Capt. Bernard, Commissary, Camp Zachary Taylor." The shipper at- tached the bill of lading to a draft on Marshall & Kelsey for the purchase price of the potatoes and sold and delivered both, duly endorsed in blank, to a bank at Grand Rapids. This bank trans- PERB MARQUETTE RY. CO. V. FRENCH & CO. 253 mitted for collection the draft, with bill of lading attached, to an Indianapolis bank. The latter, without obtaining payment of the draft, detached the bill of lading from it and wrongfully delivered the bill of lading to Marshall & Kelsey. The car having reached Louisville, its destination named in the bill of lading, it was phy- sically delivered by the Big Four, upon request of one Bindner, to the Southern Railroad to be forwarded to Dumesnil, under the circumstances hereinafter set forth, without requiring surrender of the bill of ladipg. Later upon the refusal of Marshall & Kelsey to accept the potatoes and honor the draft, possession of the car and bill of lading was returned to the shippers who accepted them under protest and, without waiving any rights which they might have, proceeded to dispose of the potatoes elsewhere in order to make the damage as light as possible for all concerned. The ship- pers then brought this suit in a state court of Michigan against the Pere Marquette to recover compensation, contending that the carrier had by delivering the car upon request without re- quiring surrender of the bill of lading become liable for conver- sion of the potatoes. The court directed a verdict for plaintiff; and the judgment entered thereon was affirmed by the Supreme Court of Michigan. 204 Michigan, 578. The case comes here on writ of certiorari. 250 U. S. 637. The following additional facts are material: Camp Zachary Taylor was located about six miles from Louisville on the Southern Railroad, near Dumesnil station. Marshall & Kelsey had con- tracted with the Government to supply a large quantity of pota- toes at this camp; and had made a contract of pin-chase with J. F. French & Company. The car in question was shipped to Louisville to be applied on these contracts. The endorsed biU of lading for this, as for other cars shipped under like circumstances, had been left by Marshall & Kelsey at Dimiesnil with one Bindner, an employee of the Southern Railroad, for safe-keeping. He, having the bill of lading in his possession at Dumesnil, telephoned from there, at Marshall & Kelsey's request, to the Big Four Rail- road to ascertain whether the car had arrived at Louisville. Find- ing that it had, Bindner, knowing the Government's need of potatoes, told the Big Four trackage clerk that "he had the bill of lading and to let the car go out to the camp." Bindner had no specific instructions from Marshall & Kelsey to do this; but his action was later ratified by them. Upon receiving Bindner's further assurance that a small demurrage charge which had accrued would be paid, the trackage clerk, without requiring surrender 254 DUTIES OF CARRIER UNDER THE ACT of the bill of lading, released the car, changed the waybill so as to provide for deUvery of the car at Dumesnil, and turned it over to the Southern. A charge of 6 cents per hundred pounds thereby became payable to the Southern Railroad for the local carriage from Louisville to Dumesnil; and it was left by the waybill payable by the consignee with the other freight charges upon re- ceipt of the car at Dumesnil. The- Big Four had no information that the draft covering the car had not been paid or of the cir- cumstances under which Bindner obtained possession of the bill of lading. The car arrived at Dumesnil, but the Government did not accept it. Thereupon Bindner returned the bill of lading to Marshall & Kelsey upon their request; they returned it to the IndianapoUs bank; this bank returned it and the draft to the Grand Rapids bank; which in turn surrendered both to J. F. French & Company, upon being repaid the sum originally credited to their account. The shippers then took possession of the car; disposed of the potatoes elsewhere, but at a lower price; and brought this suit to recover the amount of their loss. The evidence is in conflict concerning the reason for the failure of the Govern- ment to accept the potatoes, their condition, and the cause of deterioration in them, if any; and no finding of fact was made by the Supreme Court of Michigan on this issue. But, in an action for conversion the matter could affect only the question of dam- ages and not that of Kabihty; and it is not material in the view which we take of the case. There is no controversy over the amount of the loss. Nor is it denied that suit was properly brought against the Pere Marquette as initial carrier. The shipment was interstate. The shippers sue the initial carrier under § 20 of the Act to Regulate Commerce as amended contending that there was a conversion of the goods by a misdelivery of them at Dumesnil instead of a delivery at Louisville ; or, if it be held that there was a deUvery at Louisville, that it was an unjustifiable delivery in violation of the contract of carriage, since a clause in the bill of lading declared: "The surrender of this original bill of lading properly endorsed shall be required before dehvery of the property." The carrier defends on the ground that there was a delivery at Louisville which exon- erated it under § 9 of the Federal Uniform Bills of Lading Act. Is the carrier liable for misdelivery, because the car was sent from Louisville to Dumesnil upon Bindner's request without requiring surrender of the bill of lading? First. The Supreme Court of Michigan held that the Big PEKE MARQUETTE EY. CO. V. FRENCH & CO. 255 Four in sending the car over the Southern to Dumesnil at the request of Bindner made not a deUvery but an irregular recon- signment. Whatever name be used in "referring to the act of for- warding the car, the Big Four, when it surrendered possession of the car to the Southern at Bindner's request, terminated its relation as carrier; just as it would have done if, at his request, it had shunted the car onto a private industrial track or had given the control of it to a truckman on the team tracks. Having brought the goods to the destination named in the bill of lading the carrier's only duty under its contract was to make a dehvery at that place; and it could make that deUvery by turning the goods over to another carrier for further carriage. Compare Bracht v. San Antonio & Aransas Pass By. Co., ante, 489; Seaboard Air-Line Railway v. Dixon, 140 Georgia, 804; Melbourne & Troy v. Louis- ville & Nashville R. R. Co., 88 Alabama, 443. The fact that in forwarding the car the Big Four used the original waybill, striking out the word "Louisville" under the "destination" and sub- stituting "Dumesnil, Ky. So. R. R." is of no significance. The shipment from Louisville to Dumesnil was a wholly new transac- tion. In turning over the car for this new shipment the railway made a disposal of it in assumed termination and discharge of its obUgations, which was, in legal contemplation, a deUvery. Whether it was a justifiable delivery and did indeed discharge its obhgations we must next consider. Second. Was the delivery at Bindner's order one which the carrier was justified in making imder the provisions of § 9 of the Federal Uniform Bills of Lading Act? Prior to the enactment of the Federal Uniform Bills of Lading Act, or of other apphcable legislation, a carrier was not ordinarily reUeved from liabihty to the consignor or owner for dehvery of goods to a person not legally entitled to receive them, although such person was in possession of an order bill of lading duly endorsed in blank, and surrendered it to the carrier at the time of dehvery. Dehvery was held not to be a justification because the bill of lading, despite insertion therein of words of negotiabiUty, did not become a negotiable instrument. Independently of statute (and, indeed, also under earlier state statutes) the insertion of words of negotiabihty had merely the effect of enabling title to the goods to be transferred by transfer of the document. See Berkely v. Watlihg, 7 A. & E. 29. But one who did not have a valid title to the goods could not by transfer of the bill of lading give a good title to a bona fide holder. Shaw V. Railroad Co., 101 U. S. 557. When in the interests of 256 DUTIES OF CARRIER UNDER THE ACT commerce the Federal Uniform Bills of Lading Act extended to bills of lading certain characteristics of Aegotiable paper in order to protect a bona fide purchaser of such bills, it was deemed proper to afford also certain protection to the carrier. This was done, in part, by providing in § 9 that the carrier would be justified in making delivery to any person in possession of an order bill of lading duly endorsed, with certain exceptions to be noted below. The shippers contend that Bindner was not "a person in pos- session" of the bill, because he held it as agent for Marshall & Kelsey and not on his own account. So far as the carrier is con- cerned that fact is entirely immaterial. Under § 9 it is physical possession of the bill which is made a justification for delivery of the goods by the carrier. Under that section it is immaterial in what capacity the person holds possession of the bill, and also whether he holds it lawfully or imlawfully, so long as the carrier has no notice of any infirmity of title. But the shippers' conten- tion would not be advanced if it were held that the legal, not the physical, possession is determinative. For Bindner's request of the trackage clerk to have the car forwarded to Dumesnil was later ratified by Marshall & Kelsey. If his physical possession of the bill were deemed legally their possession of it, the physi- cal delivery to him of the car would likewise be deemed legally a delivery of it to them and, hence, satisfy in this respect the requirements of § 9. The only exception to the rule justifying the carrier in making delivery to one in possession of an order bill of lading endorsed in blank, which is urged as applicable here, is where the carrier has information that the person in possession of the bill is not lawfully entitled to the goods. The shippers contend that the Big Four when it made deUvery of the car had such information regarding Bindner. For this contention there is not the slightest basis in the evidence. The Big Four had no such information. Nor was there in the circumstances anything which should even have led it to doubt that Bindner was lawfully entitled to request that the car be shipped to Dumesnil. Concluding, therefore, that there was a delivery, that it was made to a person in possession of the bill of lading properly en- dorsed and that it was made in good faith, the important question remains: Does such a delivery exonerate the carrier upon suit by the shipper when it failed to require surrender of the bill of lading as provided in that instrument? In our opinion there is no exon- eration where loss to shipper or subsequent purchaser of the bill PERE MARQUETTE RY. CO. V. FRENCH & CO. 257 results from such a failure; but where the loss suffered is not the result of the failure to take up the bill, mere failure to take it up does not defeat the exoneration. . The plaintiffs seek to estabUsh the carrier's HabiUty for its failure to take up the bill on two theories, — first, that they are bona fide purchasers of the bill left outstanding; and second, that as shippers and owners their goods were converted by a de- hvery in violation fo the terms of the bill of lading. But the shippers cannot claim the protection of § 11 of the act as bona fide purchasers of the bill, as those words are understood in the law, even if in taking back the draft and the biU of lading from the bank they can be deemed purchasers within the meaning of the act. They took back the bill of lading after the events here in question, with full knowledge of them, and because of them. The purchaser whom the act protects is he who is entitled to assume that the carrier has not deUvered the goods and will not thereafter dehver them except to a person who holds the bill of lading. The purpose of §§ 10, 11 and 12 is to give bills of lading attributes of commercial paper. Here the plaintiffs were not buying commercial paper but a law suit. There is nothing in the act which imposes upon the carrier a specific duty to the shipper to take up the bill of lading. Under § 8 the carrier is not obHged to make delivery except upon pro- duction and surrender of the bill of lading; but it is not prohibited from doing so. If instead of insisting upon the production and surrender of the bill it chooses to deliver in reUance upon the assurance that the deUveree has it, so far as the duty to the shipper is concerned, the only risk it runs is that the person who says that he has the bill may not have it. If such proves to be the case the carrier is Hable for conversion and must, of course, indenmify the shipper for any loss which results. Such UabiUty arises not from the statute but from the obligation which the carrier assumes under the bill of lading. Does a delivery without compliance with the surrender clause of the bill of lading render the carrier liable for conversion under the facts shown here? Although there is a conflict of language in the cases in which a shipper sues a carrier for deUvery of goods without requiring a surrender of the bill of lading, there appears to be no conflict of principle or in decision. Where the failure to require the presentation and surrender of the bill is the cause of the shipper losing his goods, a deUvery without requiring it constitutes a conversion. Babbitt v. Grand Trunk Western Ry. 258 DUTIES OP CARRIER UNDER THE ACT Co., 285 Illinois, ,267; Turnbull v. Michigan Central R. R. Co., 183 Michigan, 213; Judson v. Minneapolis & St. Louis R. R. Co., 131 Minnesota, 5; see First National Bank v. Oregon-Washington Railroad & Navigation Co., 25 Idaho, 58; compare Georgia, Florida & Alabama Ry. Co. v. Blish Milling Co., 241 U. S. 190. But where delivery is made to a person who has the bill or who has authority from the holder of it, and the cause of the shipper's loss is not the failure to require surrender of the bill but the im- proper acquisition of it by the deliveree or his improper subse- quent conduct, the mere technical failure to require presentation and surrender of the biU will not make the delivery a conversion. Chicago Packing & Provision Co. v. Savannah, Florida & West- ern Ry. Co., 103 Georgia, 140; Famous Mfg. Co. v. Chicago & Northwestern Ry. Co., 166 Iowa, 361; Nelson Grain Co. v. Ann Arbor R. R. Co., 174 Michigan, 80; St. Louis Southwestern Ry. of Texas v. Gilbreath, 144 S. W. Rep. (Tex. Civ. App.) 1051. In the Chicago Packing Co. Case, supra, the court said, "The loss in the present case was not occasioned by the failure of the railway company to require the production and surrender of the bills of lading, but by the faithlessness of Hobbs & Tucker to their principal." Similarly, in the case before us, the failure of the carrier to require production and surrender of the bill of lading did not cause the loss. The same loss would have resulted if the bill had been presented and surrendered. The real cause of the loss was the wrongful surrender of the bill of lading by the IndianapoHs bank to Marshall & Kelsey by means of which the car was taken to Camp Zachary Taylor and the shipper deprived of the Louisville market. Nor did the failure to take up the bill enable the buyer to throw back the loss upon the shippers. The shippers deUberately assumed the loss by their voluntary act in talcing back the draft and the bill of lading which they had sold to the Grand Rapids Bank. Doubtless J. W. French & Com- pany's relations with Marshall & Kelsey and with the Grand Rapids Bank and the relations of the latter with the Indianapolis Bank made this course advisable. But it is clear that they were under no duty to do so, since the tortious act of the Bank's agent for collection had occasioned the damage. Having assumed the loss of their own volition they should not be permitted to pass it on to the carrier merely because of its technical failure to take up the bill of lading. The delivery was made to one in possession of the bill of lading who could, and doubtless would, have surren- dered it, had he not been prevented by distance from doing so. WIGHT V. UNITED STATES 259 To hold a carrier liable under such circumstances would seriously interfere with the convenience and the practice of business. Reversed. Mr. Justice Holmes did not take part in the consideration and decision of this case. 2. Equality op Service WIGHT V. UNITED STATES 167 U. S, 512 (1897) Section 2 of the interstate commerce act reads: "That if any common carrier subject to the provisions of this act shaU, 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 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 Uke and contemporaneous service in the transportation of a Hke kind of traffic under substantially similar circumstances and conditions, such common carrier shall be deemed guilty of imjust discrimination, which is hereby pro- hibited and declared to be tinlawful." Act of February 4, 1887, c. 104, 24 Stat. 379. Section 10 of the act as amended by the act of March 2, 1889, c. 382, 25 Stat. 855, makes the violation of any of the provisions of the act a misdemeanor and subject to punishment. On October 8, 1894, an indictment was found in the District Court of the United States for the Western District of Pennsylvania, charging the defendant with a violation of said section 2. The trial resulted in a verdict and judgment against him, to reverse which this writ of error was sued out. In their brief his counsel make this statement of facts: "The tmdisputed facts proved in evidence are as follows: F. H. Bruening was engaged, during the year 1892, in the business of a wholesale dealer in beer in the city of Pittsburgh; he purchased his beer in Cincinnati in carload lots, from the Moerlein Brewing Company of that city; Bruening's place of business was situated on the track of the Pittsburgh, Cincinnati and St. Louis Railroad Company, known as the 'Pan-handle,' and had a siding connec- 260 DUTIES OF CARRIER UNDER THE ACT tion with that road, so that Mr. Bruening could ship his beer from Cincinnati over the Pan-handle Railroad, and have it delivered and unloaded directly into his warehouse. The rate by the Pan- handle Railroad for this service from Cincinnati to the ware- house was fifteen cents per hundred pounds. The station of the Baltimore and Ohio Railroad Company in Pittsburgh was at some distance from Bruening's warehouse, and there was no track connection between the Baltimore and Ohio Railroad and the ware- house, so that if Bruening shipped his beer from Cincinnati by the Baltimore and Ohio route it was necessary to haul it in wagons from the Baltimore and Ohio station to the warehouse. The rate charged by the Baltimore and Ohio route between Cincinnati and Pittsburgh, on beer in carloads, was hkewise fifteen cents per hundred poimds. "In the month of Jime, 1892, agents of the Baltimore and Ohio Railroad Company, subordinate to the plaintiff in error, made an arrangement with Mr. Bruening, by which it was agreed that, if Bruening would ship his beer via the Baltiinore and Ohio route from Cincinnati to Pittsburgh, the railroad company would make the same delivery at the door of his warehouse that was made by the Pan-handle Railroad; that is to say, the railroad company would haul the beer from its station to Bruening's warehouse without extra charge. When, afterward, it was found that the cost to the railroad company for this hauling would be three and one half cents per hundred poimds, Bruening offered to do the hauUng himself for that price, and his offer was accepted. This arrangement was reported to the plaintiff in error by his sub- ordinates, approved by him, and continued in effect during the months of June, July, August and September, 1892. During these months Bruening made large shipments of beer ifi carloads via the Baltimore and Ohio route, paid the charge of fifteen cents per himdred pounds on dehvery, hauled the beer from the station to his warehouse, and at the end of each month presented and collected a bill for three and one half cents per hundred poimds for the hauling. At the trial there was no question made of the good faith of the arrangement with Bruening; it was not ques- tioned that the three and one half cents was the fair cost of the hauling; that the sole object of the arrangement was to make the same delivery which was made by the Pan-handle Railroad, and at the same char_ge of fifteen cents per hundred pounds. "During the continuance of this arrangement with Bruening, as shown in the evidence, the Kaufman Brewing Company of WIGHT V. UNITED STATES 261 Cincinnati made several shipments of beer in carloads by the Baltimore and Ohio route, on bills of lading in the form shown at pages 73, 74 and 75 of the record. Each of these shipments was consigned to the 'Kaufman Brewing Company, care of or notify Henry Wolf, Pittsburgh, Pa., to order of shipper,' and was taken at the fifth class rate of fifteen cents per hundred pounds, as shown on the face of the bill. Henry Wolf was a wholesale dealer in beer in Pittsburgh, whose warehouse was near the station of the Baltimore and Ohio Bailroad Company, but was not con- nected by track with any railroad. The bills of lading for the Kaufman Brewing Company's shipments were transmitted through bank with draft attached, and Mr. WoK testified that, after he received notice from the railroad company of the arrival of each shipment, he went to the bank and paid the draft, received the bill of lading, and, on presenting it and paying fifteen cents per hundred pounds, received the beer, which he hauled to his warehouse at his own expense." Mr. Justice Brewer, after stating the case, delivered the opinion of the court. Accepting the statement of facts made by the defendant as correct (and there is nothing in the statement which makes to his prejudice, or omitted from that statement which would be to his advantage), we are of opinion that the verdict and judgment were right, and must be sustained. It is imnecessary to consider aU the instructions given and those refused, or determine whether in those given there may or may not be some language open to criticism. In its general charge the court narrowed the case to the facts which, as stated by counsel, are undisputed, and correctly stated the law appHcable to those facts. Indeed, while the ques- tion of guilt or innocence was submitted to the jury and passed upon by them it is one rather of law than of fact, and if the court properly stated the law applicable to the facts, then the verdict was right and ought to be sustained. With reference to all other matters it is enough to say that our attention is called to no errors in the admission of testimony, and we see nothing in the instruc- tions asked and given or asked and refused which could injuriously affect the rights of the defendant or limit the specific interpreta- ,tion by the court of the rules of law applicable to those facts. It will be observed that, in order to induce Mr. Bruening to transfer his transportation from a competing road to its own line, the Baltimore and Ohio Railroad Company, through the de- fendant, in the first place, made an arrangement by which for 262 DUTIES OF CAHEIER UNDER THE ACT fifteen cents per hundredweight it would bring the beer from Cincinnati and deliver it at his warehouse; that afterwards this arrangementwas changed, and it delivered the beer to Mr. Bruen- ing at its depot, and allowed him three and one half cents per hundred for carting it to his warehouse. As Mr. BrUening had the benefit of a siding connection with the competing road, and could get the beer deHvered over that road at his warehouse for fifteen cents, it apparently could not induce him to transfer his business from the other road to its own without extending to him this rebate. During all this time it was carrying beer for Mr. Wolf from the same place of shipment (Cincinnati) to the same depot in Pittsburgh, and charging him fifteen cents therefor. Mr. Wolf had no siding connection with the rival road, and, therefore, had to pay for his cartage by whichever road it was carried. His warehouse was in a direct line 140 yards from the depot, while Mr. Bruening's was 172 yards, though the latter generally carted the beer by a longer route, on account of the steepness of the ascent. Now, it is contended by the defendant that it was necessary for the Baltimore and 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 whichever road he transported; that, therefore, the traflfic was not "under sub- stantially similar circumstances and conditions" within the terms of section 2. We are unable to concur in this view. Whatever the Baltimore and" Ohio Company might lawfully do to draw business from a competing line, whatever inducements it might offer to the customers of that competing line to induce 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 forbid 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 arrangement was simply the rendering to Mr. Bruening of a little greater service for the , fifteen 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 carrier it cannot WIGHT V, UNITED STATES 263 run the cars containing such shipper's freight on to 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 Cincinnati to the depot at Pitts- burgh was precisely alike for each. The one shipper paid fifteen cents a himdred; the other, in fact, but eleven and a half cents. It is true he formallly paid fifteen cents, but he received a rebate of three and a haK cents, and regard must always be had to the substance and not to the form. Indeed, the section itself forbids the carrier "directly or indirectly by any special rate, rebate, "drawback or other device" to charge, demand, collect or receive from any person or persons a greater or less compensation, etc. And section 6 of the act, as amended in 1889, throws light upon the intent of the statute, for it requires the common carrier in pubUshing schedules to "state separately , the terminal charges, and any rules or regulations which in any wise change, affect or determine any part or the aggregate of such aforesaid rates and fares and charges." It was the purpose of the section to enforce equality between shippers, and it prohibits any rebate or other device by which two shippers, shipping over the same Une, the same distance, under the' same circumstances of carriage, are compelled to pay different prices therefor. It may be that the phrase "imder substantially similar circum- stances and conditions," found in section 4 of the act, and where the matter of the long and short haul is considered, may have a broader meaning or a wider reach than the same phrase found in section 2. It will be time enough to determine that question when it is presented. For this case it is enough to hold that that phrase, as found in section 2, refers to the matter of carriage, and does not include competition. We see no error in the record, and the judgment of the District Court is Affirmed. Mb. Justice White concurs in the judgment. 264 DUTIES OF CARRIER UNDER THE ACT INTERSTATE COMMERCE COMMISSION v. ALA- BAMA MIDLAND RAILWAY COMPANY 168 U. S. 144 (1897) On the 27th day of June, 1892, the Board of Trade of Troy, Alabama, filed a complaint before the Interstate Commerce Commission at Washington, D. C, against the Alabama Midland Railway Cofnpany and the Georgia Central Railroad Company and their connections, claiming that in the rates charged for transportation of property by the railroad companies mentioned and their connecting lines there was a discrimination against the town of Troy, in violation of the terms and provisions of the 'Interstate Commerce Act of Congress of 1887. The general ground of complaint was, that Troy being in active competition for business with Montgomery, the defendant lines of railway imjustly discriminated in their rates against the former, and gave the latter an undue preference or advantage in respect to certain commodities and classes of traffic. The specific charges insisted on at the hearing, and to which the testimony related, were: 1. That the Alabama Midland Railway and the defendant roads forming lines with it from Baltimore, New York and the East to Troy and Montgomery charged and collected a higher rate of shipments of class goods from those cities to Troy than on such shipments through Troy to Montgomery: the latter being the longer distance point by fifty-two miles. 2. That the Alabama Midland Railway and Georgia Central Railroad and their connections imjustly discriminated against Troy and in favor of Montgomery in charging and collecting 13.22 per ton to Troy on phosphate rock shipped from the South Carolina and Florida fields and only S3 .00 per ton on such ship- ments to Montgomery, the longer distance point by both of said roads; and that all phosphate rock carried from said fields to Montgomery over the road of the Alabama Midland had to be hauled through Troy. 3. That the rates on cotton, as estabhshed by said two roads and their connections, on shipments to the Atlantic seaports, Brunswick, Savannah and Charleston, unjustly discriminated against Troy and in favor of Montgomery, in that the rate per hundred poimds from Troy is forty-seven cents, and that from Montgomery, the longer distance point, is only forty cents, and INTERSTATE COM. COMMISSION V. ALABAMA MIDLAND RY. 265 that such shipments from Montgomery over the road of the Alabama Midland had to pass through Troy. 4. That on shipments for export from Montgomery and other points, within the so called "jurisdiction" of the Southern Rail- way and Steamship Association to the Atlantic seaports, Bruns- wick, Savannah, Charleston, West Point and Norfolk, a lower rate was charged than the regular published tariff rate to such seaports, and that Montgomery and such other points were allowed by the rules of said association to ship through to Liver- pool via any of these seaports at the lowest through rates on the day of shipment, which might be less than the sum of the regular pubUshed rail rate and the ocean rate Ada the port of shipment; that this reduction was taken from the pubhshed tariff rail rate to the port of shipment; that, this privilege being denied to Troy, was an unjust discrimination against that town in favor of Mont- gomery and such other favored cities, and that it was also a discrimination against shipments which terminate at such seaports in favor of shipments for export. 5. That Troy waS unjustly discriminated against in being charged on shipments of cotton via Montgomery to New Orleans the full local rate to Montgomery by both the Alabama Midland and Georgia Central. 6. That the rates on "class" goods from Western and North- western points, established by the defendants forming lines from those points to Troy, were relatively unjust and discriminatory as against Troy when compared with the rates over such lines to Montgomery and* Columbus. The Commission, having heard this complaint on the evidence theretofore taken, ordered, on the 15th day of August, 1893, the roads participating in the traffic involved in this case "to cease and desist" from charging, demanding, collecting or receiving any greater compensation in the aggregate for services rendered in such transportation than is specified, as follows, to wit: 1. On class goods shipped from Louisville, Kentucky; Saint Louis, Missouri, or Cincinnati, Ohio, to Troy aforesaid, no higher rate of charge than is now charged and collected on such ship- ments to Columbus, Georgia, and Eufaula, Alabama. 2. On shipments of cotton from Troy aforesaid through Mont- gomery, Alabama, to New Orleans, Louisiana, no higher rate of charge than fifty cents per hundred pounds. 3. On shipments of cotton from Troy aforesaid for export through the Atlantic seaports, to wit, Brunswick, Savannah, 266 DUTIES OF CARRIER UNDER THE ACT Charleston, West Point or Norfolk, no higher rate of charge to these ports than is charged and collected on such shipments from Montgomery aforesaid. 4. On shipments of cotton from Troy aforesaid to the ports of Brmiswick, Savannah or Charleston, no higher rate of charge than is charged and collected on such shipments from Mont- gomery aforesaid through Troy to said ports. 5. On shipments of class goods from New York, Baltimore or other Northeastern points to Troy aforesaid, no higher rate of charge than is charged and collected on such shipments through Troy to Montgomery aforesaid. 6. On shipments of phosphate rock from South Carolina and Florida fields to Troy aforesaid, no higher rate of charge than is charged and collected on such shipments through Troy to Mont- gomery aforesaid. The defendants having failed to heed these orders, the Com- mission thereupon filed this bill of complaint in the Circuit Court of the United States for the Middle District of Alabama, in equity, to compel obedience to the same. On the hearing in said court the bill of complaint was dismissed, and complainant, the Inter- state Commerce Commission, appealed the cause to the United States Circuit Court of Appeals for the Fifth Judicial Circuit, at New Orleans, Louisiana. And, thereupon, in said last-named court, on the 2d day of June, 1896, the decree of the said Circuit Court of the United States for the Middle District of Alabama was in all things duly afiirmed; and from this judgment and de- cree the appellant appealed to this court. Mr. Justice Shiras, after stating the case, delivered the opinion of the court. Whether competition between Unes of transportation to Mont- gomery, Eufaula and Columbus justifies the giving to those cities a preference or advantage in rates over Troy, and, if so, whether such a state of facts justifies a departure from equality of rates without authority from the Interstate Commerce Commission imder the proviso to the fourth section of the act, are questions of construction of the statute, and are to be determined before we reach the question of fact in this case. It is contended, in the briefs filed on behalf of the Interstate Commission, that the existence of rival Hues of transportation and, consequently, of competition for the traffic, are not facts to be considered by the Commission, or by the courts, when de INTERSTATE COM. COMMISSION V. ALABAMA MIDLAND RY. 267 termining whether property transported oVer the same line is carried under "substantially similar circumstances and conditions," as that phrase is found in the fourth section' of the act. Such, evidently, was not the construction put upon this pro- vision of the statute by the Commission itself in the present case; for the record discloses that the Commission made some allow- ances for the alleged dissimilarity of circumstances and conditions, arising out of competition and situation, as affecting transporta- tion to Montgomery and Troy respectively, and that, among the errors assigned, is one complaining that the court erred in not holding that the rates prescribed by the Commission in its order made due allowance for such dissimilarity. So, too, in In re Louisville & Nashville Railroad, 1 Int. C. C. Rep. 31, 78, in discussing the long and short haul clause, it was said by the Commission, per Judge Cooley, that "it is impossible to resist the conclusion that in finally rejecting the 'long and short haul clause' of the House bill, which prescribed an inflexi- ble rule, not to be departed from in any case, and retaining in sub- stance the fourth section as it had passed the Senate, both houses understood that they were not adopting a measure of strict pro- hibition in respect to charging more for the shorter than for the longer distance, but that they were, instead, leaving the door open for exceptions in certain cases, and, among others, in cases where the circumstances and conditions of the traffic were affected by the element of competition, and where exceptions might be a necessity if the competition was to continue. And water compe- tition was beyond doubt especially in view." It is, no doubt, true that in a later case. Railroad Commission of Georgia v. Clyde Steamship Co., 5 Int. C. C. Rep. 326, the Com- mission somewhat modified their holding in the Louisville and Nashville Railroad Company case, just cited, by attempting to restrict the competition, that it is allowable to consider, to the cases of competition with water carriers, competition with foreign railroads, competition with railroad lines wholly in a single State; but the principle that competition in such cases is to be con- sidered is affirmed. That competition is one of the most obvious and effective circumstances that make the conditions, under which a long and short haul is performed, substantially dissimilar, and as such must have been in the contemplation of Congress in the passage of the act to regulate commerce, has been held by many of the Circuit Courts. It is sufficient to cite a few of the number: Ex 268 DUTIES OF CARRIER UNDER THE ACT parte Koehler, 31 Fed. Rep. 315; Missouri Pacific Railway v. Texas & Pacific Railway, 31 Fed. Rep. 862; Interstate Com. Com. V. Atchison, Topeka &c. Railroad, 50 Fed. Rep. 295; Same v. New Orleans & Texas Pacifi^i Railroad, 56 Fed. Rep. 925, 943; Behlmer v. Louisville & Nashville Railroad, 71 Fed. Rep. 835; Int. Com. Com. v. Louisville & Nashville Railroad, 73 Fed. Rep. 409. In construing statutory provisions, forbidding railway com- panies from giving any undue or unreasonable preference or ad- vantage to or in favor of any particular person or company, or any particular description of traffic, in any respect whatever, the English courts have held, after full consideration, that com- petition between rival hnes is a fact to be considered, and that a preference or advantage thence arising is not necessarily undue or unreasonable. Denaby Main Colliery Co. v. Manchester, Shefifleld & Lincolnshire Railway, 11 App. Cas. 97; Phipps v. London & North Western Railway, 2 Q. B. D. 1892, 229. But the question whether competition as affecting rates is an element for the Commission and the courts to consider in applying the provisions of the act to regulate commerce, is not an open question in this coiui. In Interstate Com. Commission v. Baltimore & Ohio Railroad, 145 U. S. 263, it was said, approving observations made by Jack- son, Circuit Judge, (43 Fed. Rep. 37,) that the act to regulate commerce was "not designed to prevent competition between different roads, or to interfere with the customary arrangements made by railway companies for reduced fares in consideration of increased mileage, where such reduction did not operate as an unjust discrimination against other persons travelling over the road. In other words it was not intended to ignore the principle that one can sell at wholesale cheaper than at retail; that it is not all discriminations or preferences that fall within the inhibi- tion of the statute, only such as are unjust or unreasonable;" and, accordingly, it was held that the issue by a railway company, engaged in interstate commerce, of a "party-rate ticket" for the transportation of ten or more persons from a place situated in one State or Territory to a place situated in another State or Territory, at a rate less than that charged to a single individual for a like transportation on the same trip, does not thereby make "an unjust or unreasonable charge" against such individual within the meaning of the first section of the act to regulate commerce; nor make "an unjust discrimination" against him within the INTEBSTATE COM. COMMISSION V. ALABAMA MIDLAND BY. 269 meaning of the second section ; nor give " an undue or unreasonable preference or advantage" to the purchasers of the party-rate ticket within the meaning of the third section. Ii\ Texas & Pacific Railway v. Irderstate Com. Com., 162 U. S. 197, it was held that "in passing upon questions arising imder the act, the tribunal appointed to enforce its provisions, whether the Commission or the courts, is empowered to fully consider all the circumstances and conditions that reasonably apply to the situa- tion, and that, in the exercise of its jurisdiction, the tribunal may and should consider the legitimate interests as well of the carry- ing companies as of the traders and shippers, and in considering whether any particular locality is subjected to an undue prefer- ence or disadvantage, the welfare of the communities occupying the localities where the goods are delivered is to be considered as well as that of the communities which are in the locality of the place of shipment; that among the circumstances and conditions to be considered, as well in the case of traffic originating in foreign ports as in the case of traffic originating within the limits of the United States, competition that affects rates should be considered, and in deciding whether rates and charges, made at a low rate to secure foreign freights which wpuld otherwise go by other com- petitive routes, are or are not undue and unjust, the fair interests of the carrier companies and the welfare of the commimity which is to receive and consume the commodities are to be considered." To prevent misapprehension, it should be stated that the con- clusion to which we are led by these cases, that, in applying the provisions of the third and fourth sections of the act, which make it imlawful for common carriers to make or give any undue or unreasonable preference or advantage to any particualar person or locality, or to charge or receive any greater compensation in the aggregate for the transportation of passengers or of like kind of property, imder substantially similar circumstances and conditions, for a shorter than for a longer distance over the same line, in the same direction, competition which affects rates is one of the matters to be considered, is not applicable to the second section of the act. As we have shown in the recent case of Wight v. United States, 167 U. S. 512, the purpose of the second section is to enforce equality between shippers over the same line, and to prohibit any rebate or other device by which two shippers, shipping over the same line, the same distance, imder the same circumstances of carriage, are compelled to pay different prices therefor; and we 270 DUTIES OF CARRIER UNDER THE ACT there held that the phrase "under substantially similar circum- stances and conditions," as used in the second section, refers to the matter of carriage, and does not include competition between rival routes. This view is not open to the criticism that different meanings are attributed to the same words when found in different sections of the act; for what we hold is that, as the purposes of the several sections are different, the phrase under consideration must be read, in the second section, as restricted to the case of shippers over the same road, thus leaving no room for the operation of com- petition, but that in the other sections, which cover the entire tract of interstate and foreign commerce, a meaning must be given to the phrase wide enough to include all the facts that have a legitimate bearing on the situation — among which we find the fact of competition when it affects rates. 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 char- acter or extent, necessarily reheves 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 consideration in determining the questions of "undue or imreasonable preference or advantage," or what are "substantially similar circumstances and conditions." The competition may in some cases be such as, having due regard to the interests of the public 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 consideration. .... Mr. Justice Harlan dissenting. The acts of Congress are now so construed as to place com- munities on the Hues of interstate commerce at the mercy of competing railroad companies engaged in such commerce. The judgment in this case, if I do not piisapprehend its scope and effect proceeds upon the ground that railroad companies, when com- petitors for interstate business at certain points, may, in order to secure traffic for and at those points, establish rates that will enable them to accompHsh that result, although such rates may discriminate against intermediate points. Under such an inter- pretation of the statutes in question, they may well be regarded as recognizing the authority of competing railroad companies SEABOARD AIR LINE RY. CO. V. UNITED STATES 271 engaged in interstate commerce — when their interests will be subserved thereby — to build up favored centres of population at the expense of the business of the country at large. I cannot, believe that Congress intended any such result, nor do I think that its enactments, properly interpreted, would lead to such a result. SEABOARD AIR LINE RAILWAY COMPANY ET AL. V. UNITED STATES ET AL. 254 U. S. 57 (1920) Mr. Justice Day delivered the opinion of the court. In this case a petition was filed in the District Court of the United States for the Eastern District of Virginia to enjoin an order of. the Interstate Commerce Commission concerning the absorption of switching charges on the Unes of the Seaboard Air Line Railway Company, the Seaboard Air Line Railway, Southern Railway Company, and Atlantic Coast Line Railway Company within the switching Umits of these roads as estabUshed at Rich- mond, Virginia. The Commission's order was made upon a petition of the Richmond Chamber of Commerce averring that the practice of the railroads was discriminatory and unlawful and violative of § 2 of the Act to Regulate Commerce. From the facts found by the Commission it appears that the appellant railroad companies bring freight from the south to Richmond, Virginia, where the same is deUvered to industries in the switching limits of that city. If the freight is received at a point served by any two or more of the carriers, the switching charge is absorbed if the freight be delivered on the line of either. But if the delivery is to an in- dustry served only by a non-competitive carrier the switching charge is not absorbed. The Commission illustrated the point by an example: "Oxford, N. C, is a point reached both by the Southern and the Seaboard, but not by the Chesapeake & Ohio. Norlina, N. C, is a local point on the Seaboard. Assume that industries A, B, and C [referring to a diagram] on the Seaboard, the Southern, and the Chesapeake & Ohio, respectively, are simi- larly located with regard to the interchange tracks of the three carriers at Richmond. On traffic from Oxford to industry B on the Southern, the Seaboard will absorb the Southern's switching .272 DUTIES OF CARRIER UNDER THE ACT charges. But on traffic from Oxford to industry C, on the Chesa- peake & Ohio, the Seaboard refuses to absorb the Chesapeake & Ohio's switching charges. On traffic from and to Noriina, a local point, however, the Seaboard refuses to absorb all switching charges whatsoever to any off-line industry." The order complained of directed the three carriers to cease and desist on or before August 1, 1917, and thereafter to abstain from absorbing switching charges on certain interstate carload freight at Richmond, Virginia, while refusing to absorb such charges on hke carload shipments for a Uke and contemporaneous service imder substantially similar circumstances and conditions, such practices having been found in a supplemental report to be un- justly discriminatory and unlawful within § 2 of the Act to Regu- late Commerce; and "to estabUsh, on or before August 1, 1917, .... and thereafter to maintain and apply imiform regulations and practices for the absorption of charges for the switching of interstate carload freight at Richmond, Va., and to collect no higher rates or charges from shippers and receivers of such car- load freight at Richmond, Va., than they contemporaneously collect from any other shipper or receiver of such carload freight at Richmond, Va., for a hke and contemporaneous service under substantially similar circumstances and conditions." 44 I. C. C. 455. The District Court denied the apphcation for an injunction, and ordered that the petition be dismissed. 249 Fed. Rep. 368. The contention of the appellants is that the carriage is not a Uke and contemporaneous service in the transportation of a like kind of traffic under substantially similar circumstances and con- ditions. Section 2 of the Act to Regulate Commerce provides: "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 persons a greater or less compensation for any service rendered, or to be rendered, in the transportation of pas- sengers 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 hke and contemporaneous service in the transportation of a Hke kind of traffic under sub- stantially similar circumstances and conditions, such common carrier shall be deemed guilty of unjust discrimination, which is hereby prohibited and declared to be unlawful." (24 Stat. 379.) SEABOARD AIR LINE RY. CO. V. UNITED STATES 273 Upon this controversy the Commission in its report said: "Complainant insists that when the Une-haul carrier reaches the common point and competes for the traffic to or from Rich- mond proper, the absorption of the switching charges should not be confined to that traffic for which the switching Une competes for the entire haul. That is, if the Seaboard absorbs the switching charges for the shipper on the terminal tracks of the Southern, it should also absorb the switching charges for the shipper on the terminal tracks of the Chesapeake & Ohio. Unless this is done, complainant contends . that the two shippers are not upon an equahty, since the Seaboard pays for a deUvery service to shippers on the terminal tracks of the Southern and declines to pay for a similar delivery service to shippers on the terminal tracks of the Chesapeake & Ohio "Section 2 is primarily directed against discrimination between shippers located in the same community. It is aimed to put all shippers within a switching district upon a substantial equality. It provides that where a carrier receives from any person a greater compensation for any service rendered in the transportation of passengers or property than it receives from any other person for doing for him a ' like and contemporaneous service in the trans- portation of a like kind of traffic under substantially similar cir- cumstances and conditions, such common carrier shall be deemed guilty of unjust discrimination,' a discrimination which is pro- hibited and declared to be unlawful. Under this section it is set- tled that the competition of rival carriers as such does not constitute substantially dissimilar circumstances to justify a difference in treatment." We are of opinion that the Commission was correct in regarding the service in question as a hke and contemporary service ren- dered under substantially similar circumstances and conditions, and amply sustained as matter of law in Wight v. United States, 167 U. S. 512, and Interstate Commerce Commission v. Alabama Midland Ry. Co., 168 U. S. 144. The principle estabUshed in these cases is that the statute aims to establish equality of rights among shippers for carriage under substantially similar circumstances and conditions, and that the exigencies of competition do not justify discrimination against shippers for substantially hke services. Moreover the determination of questions of fact is by law imposed upon the Commission, a body created by statute for the consideration of this and like matters. The findings of fact 274 DUTIES OF CARRIER UNDER THE ACT by the Commission upon such questions can be disturbed by judicial decree only in cases where their action is arbitrary or transcends the legitimate bounds of their authority. Interstate Commerce Commission v. Louisville & Nashville R. R. Co., 227 U. S. 88; Pre-Cooling Case, 232 U. S. 199; Los Angeles Switching Case, 234 U. S. 294, 311, 312, and cases cited; Pennsylvania Company v. United States, 236 U. S. 351, 361. The Commission did not hold that switching charges must be always the same. But it did hold that they must be aUke where the service was rendered under substantially similar circumstances and conditions. The Commission's report says: "We do not consider that the carriers must absorb the switch- ing charges indiscriminately to all industries within the switch- ing limits of Richmond if they choose to absorb the switching charges to any one industry off their rails. The illegality herein foimd to exist is the receiving of a greater compensation for one service than for a like service under substantially similar cir- cumstances and conditions. To take a concrete example and re- ferring again to the diagram. Suppose industry C were 5 miles distant from the interchange tracks of the Seaboard, while industry B were only 2 miles distant. Suppose the Chesapeake & Ohio's switching charge amoimted to $5, while that of the Southern was $2. If the Seaboard absorbed the Southern's $2 switching charge on traffic to industry B, we do not consider that it must absorb the entire $5 switching charge of the Chesapeake & Ohio on traffic to industry C, but only to the extent to which the service is similar. In other words, it would probably be necessary for the Seaboard to absorb $2 of the $5 charge of the Chesapeake & Ohio." The practice condemned by the Commission, as its report and order show, was that of absorbing switching charges only when the line-haul carrier competes with the switching hne; and re- fusing to absorb such charges when the switching line does not compete with the line-haul carrier; this the Commission held was discrimination within the meaning of § 2 of the Act to Regulate Commerce. We find no occasion to disturb this ruUng as arbitrary in character or beyond the authority of the Commission. We find no merit in the contention that the order of the Com- mission was too vague and uncertain to be enforced. Affirmed. CENTRAL R. R. CO. OF NEW JERSEY V. UNITED STATES 275 THE CENTRAL RAILROAD COMPANY OF NEW JERSEY ET AL. v. THE UNITED STATES EL AL. 257 U. S. (1921) Mr. Justice Brandeis delivered the opinion of the court. This suit was brought in the Federal District Court for New Jersey to enjoin the enforcement of an order of the Interstate Commerce Commission on the ground that it exceeds the powers of the Commission, was arbitrary and is void. The plaintiffs were the Central Raih-oad of New Jersey, the Pennsylvania, and twenty- one other railroads located in Trunk Line territory and New England. The defendants were the United States and the Inter- state Commerce Commission. The former filed a motion to dis- miss; the latter an answer which admitted the material allegiations of the bill of complaint. On these pleadings the case was heard be- fore three judges on an application for a preliminary injunction. This was denied without written opinion; and the case is here on appeal under the Act of October 22, 1913, c. 32, 38 Stat. 208, 220. The order of the Commission was entered upon a petition of the American Creosoting Company to which these twenty-three car- riers — and no others ^ — were made respondents. American Creo- soting Co. V. Director General, 61 I. C. C. 145. It alleged that the petitioner had a creosoting plant at Newark, New Jersey, which was connected by switch tracks with the Central and the Pennsyl- vania; that these carriers had failed to establish there the privi- lege known as creosoting-in-transit; that this failure was unjust and unreasonable in violation of Section 1 of the Act to Regulate Commerce of February 4, 1887 as amended; and that it was also unjustly discriminatory in violation of Section 3. The Commission found that failure to establish this transit privilege was not unjust or unreasonable and denied relief under Section 1. But it found on the facts hereinafter stated that this failure subjected the com- pany to unjust discrimination; and, granting reUef under Section 3, the Commission directed that the discrimination be removed by the respondents, who are the appellants here. By the privilege called creosoting-in-transit forest products re- ceived for shipment may be stopped and unloaded at an inter- mediate point, there subjected to the process of creosoting, and later forwarded on the original bill of "lading to the destination ' Except the New York, Ontario and Western Railway Company, another carrier in the Trunk Line territory, whose interests were presumably not affected by the order. The number of carriers is, therefore, referred to herein as being twenty-three. 276 DUTIES OF CARRIER UNDER THE ACT therein named. Where the privilege is granted and availed of delivery is made of the commodity to the creosoting plant, as if that were the final destination. It is there unloaded and treated; and at some time thereafter it is redelivered to the carrier, as if there were an initial shipment of the creosoted product. Then it is forwarded to the final destination. Although some charge is made for the transit service, the shipper secures thereby a lower freight rate. For through rates are generally much less than the rate on the untreated forest product from point of origin to the transit point plus that on the treated product from there to desti- nation. The plant of the American Creosoting Company is not reached by Hnes of any of the twenty-three appellants except the Central and the Pennsylvania. Neither of these two carriers accords the creosoting-in-transit privilege at any point on its lines; and no competitor of the company has a plant on those of either. Nor is the privilege granted in Trunk Line territory by any carrier, with a single exception not here material. Some competitors of the American Creosoting Company have plants in Mississippi, Indiana, Illinois, Ohio and Pennsylvania; and the several railroads on which these plants are located have, each acting independently, estab- lished the privilege at the places where those plants are situated. Under the rules of the Commission governing the making, filing and publishing of tariffs, privileges like creosoting-in-transit are treated as a matter local to the railroad on which the transit point is situated. Whether the privilege shall be granted or withheld is determined by the local carrier. If granted, the local carrier de- termines the conditions; and these are set forth in the local tariff. Although a joint through route with joint rates is established by concurrent action of several carriers, the transit privilege may thus be granted by a carrier without the consent of, and without consulting, connecting carriers. And the whole revenue received for use of the privilege is retained by the local carrier. The ap- pellants did not participate in any way in establishing the transit privileges enjoyed by competitors of the Newark concern on lines of the southern and midwestern carriers; and none of those car- riers is controlled by any of the appellants. But appellants did join with those southern and midwest railroads in establishing joint rates on forest products over routes which pass through the points at which this privilege prevails and also through Newark. ^ ' The transit privilege so granted includes cutting of paving blocks into shape at creosoting plant. On some of the railroads the joint rates do not CENTRAL- R. R. CO. OF NEW JERSEY V. UNITED STATES 277 The order entered by the Commission declares that the twenty- three carriers "in so far as they participate in tariffs carrying joint rates" on these forest products "through Newark from points in southern classification territory to points in northern New Jersey, eastern New York and New England" subject the Ameri- can Creosoting Company to undue prejudice and disadvantage; and it directs these twenty-three carriers to avoid this undue preju- dice. How the discrimination shall be removed is not prescribed. In effect the order directs that unless the Central and the Penn- sylvania estabhsh the privilege at Newark, the twenty-three car- riers must withdraw from all tariffs establishing the joint rates. As to administrative orders operating in future, the Commission's findings of fact are conclusive, subject to qualifications here not pertinent; and a fimding that the discrimination is unjust is or- dinarily a finding of fact. Manufacturers Ry. Co. v. United States, 246 U. S. 457, 481, 482. But the question presented here is whether the discrimination found can be held in law to be attributable to the appellants, and whether they can be required to cancel existing joint rates, unless it is removed. No finding made by the Commission can prevent the review of such questions. Interstate Commerce Commission v. Diffenbaugh, 222 U. S. 42; Philadelphia & Reading Ry. v. United States, 240 U. S. 334. Creosoting-in-transit, like other transit privileges, rests upon the fiction that the incoming and the outgoing transportation services, which are in fact distinct, constitute a continuous ship- ment of the identical article from point of origin to final destina- tion. The practice has its origin partly in local needs, partly in the competition of carriers for business. The practice is sometimes beneficial in its results; but it is open to grave abuses. ' To police it adequately is difficult and expensive. Unless adequately policed, it is an avenue to illegal rebates and seriously depletes the carriers' revenues. Railroad managers differ widely as to the policy of granting such privileges. The Commission clearly has power under Section 1 of the Act to Regulate Commerce as amended to determine whether in a particular case a transit privilege should be granted or should be withdrawn. For that section requires, among apply through the transit pomt. On them the privilege includes an out-of- line movement and on some Unes also a back haul to reach final destination. This broadened privilege was sought for Newark. ' See In Matter of Alleged Unlawful Hates and Practices, 7 I. C. C. 240; In Matter of Substitution of Tonnage at Transit Points, 18 I. C. C. 280; The Transit Case, 24 I. C. C. 340. 278 DUTIES OF CAERIER UNDER THE ACT- other things, that carriers establish, in connection with through routes and joint rates, reasonable rules and regulations. The Com- mission might, therefore, acting under Section 1, have directed the Central and the Pennsylvania to establish the creosoting-in-transit practice at Newark, if it deemed failure to do so unreasonable or unjust; or it might, in an appropriate proceeding, have directed the southern and midwestern carriers, to discontinue the practice on their Unes, if it deemed the granting of the privilege to be un- reasonable or unjust. But it did neither. Instead it sought to accomplish by indirection either one result or the other and or- dered under Section 3 that the discrimination found to exist be removed. Twenty-one of the appellants are powerless either to cause the Central and the Pennsylvania to instal the privilege at Newark or to cause the southern and midwestern carriers to dis- continue the practice on their Unes. The Central and the Pennsyl- vania are hkewise powerless to cause these connecting carriers to withdraw the privilege. They can, it is true, equalize conditions by estabUshing the privilege at Newark. But to do so would in- volve departure from a pohcy to which they have steadfastly adhered and adhesion to which was held by the Commission not to be unreasonable. If they should establish the privilege at Newark, they would act contrary to their judgment and would adopt a practice which some connecting carriers had introduced without their concurrence or consent, and which may hereafter, upon appropriate' enquiry, be held by the Commission to be unjust and unreasonable. Congress could not have intended that under such circumstances relief should be afforded under Section 3, when a direct remedy is available under Section 1. It is insisted that the order leaves appellants the alternative of withdrawing from the tariffs which estabhsh joint rates with the southern and midwestern carriers through Newark. The order does not so provide in terms; and in fact the alleged alternative is illusory. The undue prejudice found arises not from the exist- ence of joint rates, but from conditions local to other railroads. Cancellation of the joint rates would not change those conditions. Although the joint rates were withdrawn, the estabhshed through routes would remain. The duty to provide such routes is specif- ically enjoined by paragraph 4 of Section 1; and, under the pro- visions of paragraph 1 of Section 6, the separately established rates of the several connecting carriers would, in the absence of joint rates, apply to through transportation. So far as appears the Newark concern would be under the same disadvantage as com- CENTRAL R. R. CO. OF NEW JERSEY V. UNITED STATES 279 pared with its competitors, whether the traffic moved on the com- bination of the rates local to the several hnes or on joint rates. Even the aboUtion ,of the through routes (which is not suggested) would leave the relative positions of the several creosoting con- cerns unchanged. Cancellation of the joint rates would, at most, reheve appellants from the charge that they are violating the pro- visions of Section 3. It is urged, that while the undue prejudice foimd results di- rectly from the individual acts of southern and midwestern car- riers in granting the privilege locally, the appellants, as their part- ners, make the prejudice possible by becoming the instruments through which it is appUed. Discrimination may, of course, be practiced by a combination of connecting carriers as well as by an individual railroad; and the Commission has ample power under Section 3 to remove discrimination so practiced. See St. Louis & Southwestern Ry. Co. v. United States, 245 U. S. 136, 144. But participation merely in joint rates does not make connecting car- riers partners. They can be held jointly and severally responsible for unjust discrimination only if each carrier has participated in some way in that which causes the unjust discrimination; as where a lower joint rate is given to one locaUty than to another similarly situated. Penn Refining Co. v. Western N. Y. & P. R. R. Co., 208 U. S. 208, 221, 222, 225. Compare East Tennessee, Virginia & Georgia Ry. Co. v. Interstate Commerce Commission, 181 U. S. 1, 18. If this were not so, the legaHty or illegahty of a carrier's prac- tice would depend, not on its own act, but on the acts of its connect- ing carriers. If that rule should prevail, only imiformity in local privileges and practices or the cancellation of all joint rates could afford to carriers the assurance that they were not in some way violating the provisions of Section 3. What Congress sought to prevent by that section as originally enacted, was not differences between locaUties in transportation rates, facilities and privileges, but unjust discrimination between them by the same carrier or carriers. Neither the Transportation Act 1920, February 28, 1920, c. 91, 41 Stat. 456, nor any earlier amendatory legislation has changed, in this respect, the purpose or scope of Section 3. Reversed. 280 DUTIES OF CARRIER UNDER THE ACT NEW YORK, NEW HAVEN AND HARTFORD RAIL- ROAD COMPANY V. INTERSTATE COMMERCE COMMISSION INTERSTATE COMMERCE COMMISSION v. CHESAPEAKE AND OHIO RAILWAY COMPANY 200 U. S. 361 (1906) Mr. Justice White delivered the opinion of the court. Following an inquiry begun in consequence of a complaint to it made, the Interstate Commerce Commission, through the Attorney General of the United States, filed under the act to further regulate commerce (32 Stat. 847), in the Circuit Court of the United States for the Western District of Virginia, this proceeding against the Chesapeake and Ohio Railway Company, a Virginia corporation, and the New York, New Haven and Hartford Railroad Company, a corporation of the State of Connect- icut. In this opinion we shall hereafter respectively speak of the parties as the Comimission, the Chesapeake and Ohio, and the New Haven. The petition averred that the Chesapeake and Ohio was engaged in the carriage of coal as interstate traffic be- tween the Kanawha district of West Virginia and Newport News, Virginia, for dehvery thence to the New Haven in Connecticut, and charged that the traffic was being moved at less than the pub- lished rates, and in such a way as to produce a discrimination in favor of the New Haven road and against others, all in violation, of the act to regulate commerce and the amendments thereto. Specifying the grounds of the complaint, it was alleged that in the spring of 1903 the Chesapeake and Ohio made a verbal agree- ment with the New Haven to sell to that road sixty thousand tons of coal, to be carried from the Kanawha district to Newport News, and thence by water to Connecticut, for delivery to the buyer at $2.75 per ton, and that a considerable portion had already been deUvered and the remainder was in process of delivery. It was averred that the price of the coal at the mines where the Chesapeake and Ohio bought it and the cost of transportation from Newport News to Connecticut would aggregate $2.47 per ton, thus leaving to the Chesapeake and Ohio only about twenty- eight cents a ton for carrying the coal from the Kanawha dis- trict to Newport News, whilst the pubHshed tariff for hke carriage from the same district was $1.45 per ton. Referring to the developments before the Commission, and N. Y., N. H., & H. RY. V. INTERSTATE COM. COMMISSION 281 annexing as part thereof the testimony taken on such hearing and the documents connected therewith, the petition further al- leged that the Chesapeake and Ohio asserted that, although the total price which it received for the coal covered by the verbal agreement was less than the total outlay in deHvering the coal, including its published rates, such fact did not amount to a de- parture from the published rates, and was not a discrimination for two reasons: First. Because if such difference existed, it was a loss suffered by the Chesapeake and Ohio, not from taking less than its published rates, but because it had received less as purchaser than the coal had cost. Second. That even if it had not the lawful right thus to impute the payment of the price of the coal, the Chesapeake and Ohio had, in fact, received much more for the coal than the price in money agreed on, because, at the time the verbal agreement to sell was made the New Haven had a claim exceeding one himdred thousand dollars against the Chesapeake and Ohio, arising from a previous written contract to deUver coal, which was to be extinguished by the completion of the deUvery of the coal, and this caused that price largely to exceed the cost of the coal to the Chesapeake and Ohio, including its published rates. Averring that the prior contract was in itself void because it also embodied an agreement to take less than the pubUshed rates and was discriminating, it was charged that the New Haven had entered into both agreements with the Chesapeake and Ohio, knowing that they were in violation of the Interstate Commerce Law. The prayer was that the Chesapeake and Ohio and the New Haven be made parties; that both roads be enjoined, the one from further executing the verbal agreement to deliver coal and the other from seeking to enforce it; that the Chesapeake and Ohio be onjoined from "accepting or receiving any rebate, concession or discrimination in respect of the transportation of any property in interstate or foreign commerce carried by it," and be, moreover, enjoined from "doing anything whatever, whereby coal or any other property shall, by any device whatever, be transported .... at a less rate than named in the tariffs pub- lished and filed by such carrier, as is required by the act to regu- late commerce and acts amendatory thereof or supplementary thereto, or whereby any other advantage may be given or dis- crimination practiced." And that the New Haven road "be enjoined and restrained from accepting or receiving any rebate, concession or discrimination in respect of the transportation of any property in interstate or foreign commerce carried by it." 282 DUTIES OF CARRIER UNDER THE ACT A preliminary restraining order was issued conforming to the prayer of the petition. The Chesapeake and Ohio by its answer admitted that it had made, in the spring of 1903, a verbal agree- ment with the New Haven road for about sixty thousand tons of Kanawha coal for the price alleged in the petition, to be trans- ported by it to Newport News, and thence delivered by ocean transportation to the New Haven in Connecticut. It was ad- mitted that the purchase price agreed to be paid was less than the market price of the coal plus the pubhshed rates, and the cost of transportation and deUvery from Newport News to Connecticut, but it was averred that this was only apparently the case, because the contract to sell included the discharge of a debt of about one himdred thousand dolla.rs, arising from the previous written contract to which the petition referred. The validity of both the previous written contract and the later verbal agreement was averred. The right of the Chesapeake and Ohio to buy and sell coal, and to impute any loss on the sale of the coal to itself as dealer instead of to itself as a carrier, was averred. Both the original contract and the one of 1903 were averred to have been made in good faith, not with any intention to avoid the pubhshed rates, and it was charged that at about the time the original contract was made arrangements had been made by the railroad for a rate of transportation from Newport News to Connecticut which would have caused the contract price to be adequate to pay the market price of the coal and all other charges, including the published rates, but that, subsequently thereto, the persons with whom this contract for transportation was made had violated their agree- ment, and that by strikes the price of coal had advanced, and thereby the loss of one hundred thousand dollars to the Chesa- peake and Ohio was occasioned. The New Haven road in its answer asserted its good faith in making both the original contract and the verbal agreement. It alleged that by the original contract it was a mere purchaser of coal from the Chesapeake and Ohio, and not a shipper over that road; that the coal bought was intended for its own use in the operation of its railroad; that it had no knowledge of the price which the Chesapeake and Ohio would be obUged to pay for the coal or the sum which it would cost that road to dehver it, and therefore had no knowledge that the total cost would not equal the market price of the coal, the cost of dehvery and the pubhshed rate of the Chesapeake and Ohio. It averred the vaUdity of the agreement, the legahty of the debt of one hundred N. Y., N. H., & H. RY. V. INTERSTATE COM. COMMISSION 283 thousand dollars which resulted from it, and charged that, taking that debt into consideration, the sum which is paid the Chesa- peake and Ohio for the coal under the 1903 verbal agreement largely exceeded the market price and the cost of delivery, includ- ing the pubUshed rates of the Chesapeake and Ohio. It denied that there was any departure from the pubhc rates or any dis- crimination, asserted that at the time the original contract was made the price was sufficient to have enabled the Chesapeake and Ohio to perform the contract without losing anything either as a seller or as a carrier, and that if in execution of the contract a condition arose where a loss was suffered by the Chesapeake and Ohio in either capacity, it was caused by subsequent events which could not affect the validity of the contract when made, and especially denied that in any way, directly or indirectly, had it knowingly lent itself to any discrimination, or any taking by the Chesapeake and Ohio of less than its pubUshed rates. The case was heard on the testimony taken in the proceeding before the Commission and the documents forming a part of the same, and upon further documents and testimony stipulated by counsel. For reasons to which we shall hereafter have occasion to advert, the court held that, considering both the original contract and the verbal agreement of 1903, there was no violation of the pro- visions of the second and sixth sections of the act to regulate com- merce, forbidding the taking of less than the pubUshed rates. It, however, held that the contracts amounted to an undue discrimi- nation and a violation of the third section of the act. The court, hence, permanently enjoined the Chesapeake and Ohio from dis- charging any obUgation arising from the original contract of 1896, and from further executing or attempting to execute, in any man- ner whatever, directly or indirectly, the verbal agreement of 1903, and it permanently enjoined the New Haven from asserting or attempting to enforce any claim arising from the contract of 1896, or in any manner, directly or indirectly, attempting to enforce the verbal agreement of 1903. Thereafter the court denied a request made by the Commission, that the injunction be expanded so as in general terms to command the Chesapeake and Ohio perpetually to observe in the future its pubUshed rates. The New Haven appealed. The Commission also prosecuted a cross appeal because of the refusal of the court to grant its prayer to make the injunction against the Chesapeake and Ohio general in its nature, and that company, in an elaborate and 284 DUTIES OP CARHIER UNDER THE ACT separate printed argument in its own behalf, assails the judgment below on the merits and, in effect, asks its reversal on the merits. It is apparent from the case as thus stated that, in order to decide the issues which arise, we may not confine our attention to the verbal agreement of 1903, the execution of which it was the immediate object of the proceeding to enjoin, but must con- sider the prior contract of 1896, since primarily the rights, if any, which arose under the verbal agreement, are inextricably involved in and dependent upon the contract of 1896. In other words, the controversy as considered by the Commission on the inquiry by it conducted and as decided below, and as here presented, involves an analysis of all the dealings under both contracts and the legal rights, if any, which arose from them. We must, there- fore, consider the subject in this aspect, and to do so we state at once the facts which are admitted or which are indisputably estabhshed, reserving such questions of fact as are in dispute for separate consideration when we approach the legal propositions which arise from the undisputed facts. The Chesapeake and Ohio, chartered by the State of Virginia, operates a road which reaches both the New River and the Kana- wha coal fields of West Virginia, and extends to Newport News. The New Haven, chartered by the State of Connecticut, operates a road principally situated in New England. On December 3, 1896, these two roads entered into a written contract, the one to sell and the other to buy between July 1, 1897, and July 1, 1902, not to exceed two million gross tons of bituminous coal to be taken from the line of the Chesapeake and Ohio road; deliveries to be made not exceeding four hundred thousand tons per annum. The price agreed upon was $2.75 per gross ton, New Haven basis, settlement to be made monthly. The coal was to be delivered by the seller on the line of the New Haven. The contract is repro- duced in the margin. ^ ' Contract made between the Chesapeake and Ohio Railway Company and the New York, New Haven and Hartford Railroad Company. Said Chesapeake and Ohio Railway Company, for the consideration herein- after mentioned, hereby agrees to furnish to said raUroad company not to exceed two million gross tons of bituminous coal from its line in such quanti- ties monthly as wanted from July 1, 1897, to July 1, 1902, without charge for demurrage. Deliveries to be made not exceeding four hundred thousand tons per annum. And said Chesapeake and Ohio Railway Company further agrees that all said bituminous coal shall be of the best quality, first-class in every respect, and N. Y., N. H., & H. BY. V. INTERSTATE COM. COMMISSION 285 The Chesapeake and Ohio, not in its own name but through others who really although not ostensibly acted for it, made a contract with- operators in the New River district of West Vir- ginia, for the dehvery to it of the coal to fulfill the contract which had been made with the New Haven. In consequence of failure of some of the operators to perform their part of the contract, changes were made at various times, which it is unnecessary to note. Deliveries of the coal were made to the New Haven as required up to the winter of 1900-1901, when, because of strikes and other difficulties, delivery ceased and the New Haven bought coal in the open market and presented to the Chesapeake and Ohio 'a bill for the increased price which it had paid, and the Chesapeake and Ohio paid one hundred and sixty thousand dol- lars to cover such loss." Subsequently in 1902 further strikes supervened and deliveries again ceased, at a time when about sixty thousand tons remained yet to be delivered. The New Haven again presented a bill for damages amoimting to one hundred and three thousand dollars. Thereupon the verbal agreement of 1903 was made, by which it was provided that the shortage of sixty thousand tons upon the original contract might be discharged by delivery on the part of the Chesapeake and Ohio of that amount of coal from the Kanawha district at the contract satisfactory to said railroad company, and said railway company has the right to terminate this contract at any time if said bituminous coal be of poor quality or if its delivery be unnecessarily delayfed. And said Chesapeake and Ohio Railway Company further agrees to deliver all said bituminous coal to said railroad company in its bins at such ports upon its Unes as required by the monthly requisitions of its purchasing agent. In consideration of the faithful performance by the said Chesapeake and Ohio Railway Company of all its agreements herein contained, said railroad company agrees to pay for said bituminous coal at the rate or two and seventy- five one-hundredths dollars per gross ton, New Haven basis, settlement to be made monthly. Said railway company has the right to cancel any and all portions of said quantity of bituminous coal remaining undelivered on July 1, 1902. Witness the names of the parties hereto this the 3d day of December, 1896 Chesapeake and Ohio Railway Company By M. E. Ingalls, President, rhe New York, New Haven and Habtford Railroad Company, By C. E. Mellbn, Second Vice President. For value received, I hereby guarantee that the Chesapeake and Ohio Railway Company shall not fail to deliver coal on account of strikes. J. Pieepont Morgan 286 DUTIES OF CARRIER UNDER THE ACT price of $2.75, and when this delivery was consummated it was agreed that the Chesapeake and Ohio would be absolutely reUeved from the payment of the damage claim just referred to. At the time this verbal agreement was made the contract price was, leaving out of view the claim for damages, inadequate to pay the market price, as admitted by the pleadings, of the coal plus the published rates of the Chesapeake and Ohio to Newport News, and the charges thence to the point of dehvery. To put itself in a position to carry out the agreement an individual who represented the Chesapeake and Ohio made contracts in his own name with operators in the Kanawha district to furnish the de- sired coal. Without stopping to state the particular methods of accounting by which the result was accompUshed, it is indisputable that the Chesapeake and Ohio bore the loss arising from the differ- ence between the contract price, the price of the coal at the mines, the published rate to Newport News, and the cost of transporting thence to the point of delivery. Undoubtedly long prior to the making of the first contract the Chesapeake and Ohio, besides its business as a carrier, bought and sold coal. This business was carried on by the company from about 1874 up to the time of the making of the contract of 1896, as testified by the president who made that contract, as follows: "The coal was handled by a separate and distinct department of the railway company, the mine operators delivering for an agreed price at the mines to the coal agent of the railway com- pany all coal mined by them, the net result realized from the selling price of the coal representing the freight earned by the railway company." And the same official testified that he made the contract of 1896 as a continuation of this system. In 1895, however, the State of West Virginia passed "An act to prevent railroad companies from buying or selling coal or coke and to prevent discrimination." The first section of this act made it imlawful for any railroad corporation to engage directly or indirectly in the business of buying and selling coal or coke. In consequence of this act, prior to the making of the contract of 1896, the coal department of the railroad was abolished. And it was the existence of the West Virginia statute which caused the Chesa- peake and Ohio, when it contracted with operators in West Vir- ginia to procure as to both contracts the coal for delivery to the New Haven, to do so not in its own name but through another. Before appljdng to these undisputed facts the legal question N. Y., N. H., & H. RY. V. INTERSTATE COM. COMMISSION 287 arising for decision, we must determine a question of fact as to which there is some dispute; that is, was the price at which the Chesapeake and Ohio contracted in 1896 to sell the coal to the New Haven sufficient to pay the cost of the coal at the mines, as well as the expense of delivery, including the published freight rate? Without stopping to go into the evidence we content ourselves with saying that we think the court below correctly held that the price was not adequate to accompUsh these purposes, and that from the inception of deUvery under the contract and during the whole period thereof, except for a brief time, caused by a lowering of the freight rates, the contract price was inadequate to net the railroad its proper legal tariff. We are brought then to determine whether the contract made in 1896 for the two million tons of coal was void because in con- flict with the act to regulate commerce and its amendments. In approaching the consideration of the act to regulate commerce, we for the moment put out of view the provisions of the West Virginia statute and its influence upon the validity of the contract made in West Virginia for the purpose of acquiring the coal which the Chesapeake and Ohio had obligated itself to deUver. We shall also assume for the purpose of the inquiry that the Chesapeake and Ohio, although not expressly authorized, was not prohibited by its Virginia charter from buying and selling and transporting the coal in which it dealt. The case, therefore, will be considered solely in the hght of the operation and effect of the provisions of the act to regulate commerce, and we shall not direct our atten- tion to expressly determining whether the assertion by a carrier of a right to deal in the products which it transports would not be so repugnant to the general duty resting on the carrier as to cause the exertion of the power to deal in the products which it transports to be imlawful, irrespective of statutory restrictions. The question, therefore, to be decided is this: Has a carrier engaged in interstate commerce the power to contract to sell and transport in completion of the contract the commodity sold, when the price stipulated in the contract does not pay the cost of pur- chase, the cost of deUvery and the pubUshed freight rates? The previous decisions of this court concerning the Interstate Commerce Act do not afford much aid in determining this ques- tion. This is the case, because, although that act was adopted in 1887, and questions concerning the import of the act have been often here, such questions have not generally involved the opera- tion and effect of the act concerning the command that pubUshed 288 DUTIES OF CARRIER UNDER THE ACT rates be adhered to, and the prohibitions against discrimination, favoritism or rebates, but have mainly concerned the meaning of the act in other respects, that is, involved deciding whether powers asserted as to other subjects were vested by the act in the Inter- state Commerce Commission. There are several leading cases decided by the Commission, which are relied upon by the two railroads, directly relating to the question we have stated, but, as we shall have occasion here- after to weigh their import, we shall not now pause to analyze and apply them. It cannot be challenged that the great purpose of the act to regulate commerce, whilst seeking to prevent unjust and un- reasonable rates, was to secure equality of rates as to all and to destroy favoritism, these last being accomplished by requiring the publication of tariffs and by prohibiting secret departures from such tariffs, and forbidding rebates, preferences and all other forms of imdue discrimination. To this extent and for these purposes the statute was remedial and is, therefore, entitled to receive that interpretation which reasonably accomplishes the great public purpose which it was enacted to subserve. That a carrier engaged in interstate conmierce becomes subject as to such commerce to the commands of the statute, and may not set its provisions at naught whatever otherwise may be its power when carrying on commerce not interstate in character, cannot in reason be denied. Now, in view of the positive command of the second section of the act, that no departure from the published rate shall be made, "directly or indirectly," how can it in reason be held that a carrier may take itself from out the statute in every case by simply electing to be a dealer and ■ transport a commodity in that char- acter? For, of course, if a carrier has a right to disregard the published rates by resorting to a particular form of dealing, it must follow that there is no obligation on the part of a carrier to adhere to the rates, • because doing so is merely voluntary. The all-embracing prohibition against either directly or indirectly charging less than the pubhshed rates shows that the piu-pose of the statute was to make the prohibition applicable to every method of dealing by a carrier by which the forbidden result could be brought about. If the public purpose which the statute was intended to accomplish be borne in mind, its meaning becomes, if possible, clearer. What was that purpose? It was to compel the carrier as a public agent to give equal treatment to all. Now if by the mere fact of purchasing and selling merchandise to be N. Y., N. H., & H. RY. V. INTERSTATE COM. COMMISSION 289 transported a carrier is endowed with the power of disregarding the published rate, it becomes apparent that the carrier possesses the right to treat the owners of like commodities by entirely dif- ferent rules. That is to say, the existence of such a power in its essence would enable a carrier, if it chose to do so, to select the favored persons from whom he would buy and the favored persons to whom he would sell, thus giving such persons an advantage over every other, and leading to a monopolization in the hands of such persons of all the products as to which the carrier chose to deal. Indeed the inevitable result of the possession of such a right by a carrier would be to enable it, if it chose to exercise the power, to concentrate in its own hands the products which were held for shipment along its Kne, and to make it, therefore, the sole pur- chaser thereof and the sole seller at the place where the products were to be marketed; in other words, to create an absolute monop- oly. To illustrate: If a carrier may by becoming a dealer buy property for transportation to a market and eliminate the cost of transportation to such market, a faculty possessed by no other owner of the commodity, it must result that the carrier would be in a position where no other person could ship the commodity on equal terms with the carrier in its capacity of dealer. No other person owning the commodity being thus able to ship on equal terms, it would result that the owners of such commodity would not be able to ship, but would be compelled to sell to the carrier. And as by the departure from the tariff rates the person to whom the carrier might elect to sell would be able to buy at a price less than any other person could sell for, it would follow that such person so selected by the carrier would have a monopoly in the market to which the goods were transported. And that the result arising from an admission of the asserted power of the carrier as a dealer to disregard the published rates conduces im- mediately and not merely remotely to the production of the in- jurious results stated, is not only demonstrated by the very nature of things, but is established to be the case by the facts indisputably shown on this record. For here it is unquestioned that the Chesa- peake and Ohio, as a result of its being a dealer, had become, long prior to the adoption of the Interstate Commerce Law and con- tinued to be thereafter, up to the passage of the West Virginia statute prohibiting a carrier from dealing in coal, virtually the sole purchaser and seller of all the coal produced along the line of its road. That this result was not merely accidental, but was in effect engendered by the power of the carrier to deal and transport 290 DUTIES OF CARRIER UNDER THE ACT a commodity, is illustrated by the case of The Attorney General V. The Great Northern Railway Company, 29 Law Journal (N. S. Equity), 794. In that case Vice Chancellor Kindersley was called upon to determine whether dealing in coal by the railway company was illegal, because incompatible with its duties as a public carrier and calculated to inflict an injury upon the public. In deciding that the act of Parliament granting the charter to operate the railway LmpUed a prohibition against the company's engaging in any other business, the reason for the rule was thus expressed (p.798) : ". . . . These large companies, joint stock companies generally, for whatever purpose established, and more particularly railway companies, are armed with powers of raising and possessing large sums of money — large amounts of property — and if they were to apply that money, or that property, to purposes other than those for which they were constituted, they might very much injure the interests of the pubHc in various ways." Illustrating the danger to the public, as established by the case before him, the vice-chancellor said (p. 799): " Here we find this company, having the traffic from the north of England, where the great coal fields are (at least some of the principal coal fields), supplying the country with coal, or capable of supplying it; this company buys the coal, which gives to the company an interest in checking; as much as possible, those who will not deal with them; and it is quite clear that it is possible, by the mode in which this company may (I will not say has), — but by the mode in which this company may exercise such powers as either it has or assumes to have — this company may get into their hands the traffic, that is, the dealing in all the coal in the large districts supplying coal to the country. They have to a con- siderable extent done so, and there is no reason why it should not go on progressing. I observe that in the eight (?) years from 1852 to 1857, inclusive, the amount of their coal business has increased from 73,000 tons to 794,000 tons; and there is no reason, as the affidavits show, why they should not — there is great danger that they may — get into their hands the entire business in the coal of aU that district of country. If they can do that with regard to coal, what is to prevent their doing it with every species of agri- cultural produce all along the fine? Why should they not become purchasers of corn, of all kinds of beasts, and of sheep, and every species of agricultural produce, and become great dealers in the supply of edibles to the markets of London; and why not every N. Y., N. H., & H. RY. V. INTEHSTATE COM. COMMISSION 291 other species of commodity that is produced in every part of the country from which or to which their railway runs? I do not know where it is to stop, if the argument on the part of the company is to prevail. There is, therefore, great detriment to the interest of the public, for this reason, taking merely the article of coal." It is apparent that the construction of the statute which is now claimed by the carriers would, if adopted, not only destroy its entire remedial efficacy, but would cause the provisions of the statute to accentuate and multiply the very wrongs which it was enacted to prevent. Without a statutory requirement as to publication of rates and the imposition of a duty to adhere to the rates as published, individual action of the shippers as between themselves and in their dealings with the carrier would have full play, and thereby every shipper would have the opportunity to procure such conces- sions as might result from favoritism or other causes. Interpret- ing the prohibitions of the statute as it is contended they should be, it would follow that every individual would be bound by the published tariff, and the carrier alone would be free to disregard it. Thus the statute, whilst subjecting the public to the prohibi- tions, would exempt the carrier and would thereby enormously increase the opportunities of the latter to do the wrongs which the statute was enacted to prevent. And the considerations previously stated serve also to demon- strate that the prohibitions of the act to regulate commerce con- cerning "undue or imreasonable preference or advantage," "undue or unreasonable prejudice or disadvantage" and "vmjust discrimi- nation" are in conflict with the asserted right of a carrier to become a dealer in commodities which it transports, and as such dealer to sell at a price less than the cost and the pubhshed rates. Certain also is it, when the reasons previously stated are applied to those prohibitions of the statute the possession of the power by a carrier to deal in merchandise and to sell and transport at less than published rates, would not only destroy the remedy intended to be afforded by the provisions in question, but would cause the statute to fructify the growth of the wrongs which it was intended to extirpate. In a general sense the considerations which we have previously stated, moreover, dispose of all the contentions urged at bar to establish the right of the carrier to become a dealer under the circumstances stated. Even although it may give rise to some repetition, we more particularly notice the various con- tentions. 292 DUTIES OF CARRIER UNDER THE ACT (a) It is said that when a carrier sells an article which it has purchased and transports that article for delivery, it is both a dealer and a carrier. When, therefore, the price received for the commodity is adequate to pay the pubHshed freight rate and something over, the command of the statute as to adherence to the pubUshed rates is comphed with, because the price will be imputed to the freight rate, and the loss, if any, attributed to the company in its capacity as dealer and not as a carrier. This simply asserted the proposition which we have disposed of, that a carrier possesses the power, by the form in which he deals, to render the prohibitions of the act ineffective, since it implies the right of a carrier to shut off inquiry as to the real result of a particular transaction on the published rates, and thereby to obtain the power of disregarding the prohibitions of the statute. (6) It is said that, as in the case in hand, it is shown that there was no intention on the part of the carrier in making the sale of the coal to violate the prohibitions of the statute, and, on the contrary, as the proof shows an arrangement made by the carrier for transporting the coal from Newport News to Connecticut, which, if it had been carried out, would have provided for the full published rate, therefore an honest contract made by the carrier should not be stricken down because of things over which the carrier had no control. The proposition involves both an un- founded assumption of fact and an unwarranted implication of law. It is true the court below found that the proof did not jus- tify the inference that the Chesapeake and Ohio had, in 1896, made the contract to sell the coal to the New Haven with the pur- pose of avoiding a compliance with the published rates. But in this conclusion of fact we cannot agree. Whilst it may be that the proof establishes that the contract for the sale of coal was not made as a mere device for avoiding the operation of the statute, we think the proof leaves no doubt that, in making the contract in question, the Chesapeake and Ohio was wholly indifferent to and did not concern itself with the prohibitions of the statute, of which, of course, it must be assumed to have had full knowledge. As we have seen, the president of the Chesapeake and Ohio, by whom the corporation was represented in making the contract, expressly testified that from the beginning that corporation had pursued the policy of acquiring all the coal mined on its line and sold it, relying upon the net result of such sales for its freight compensation, and that the particular contract was made in con- tinuation of that policy. We find it impossible to conclude, from N. Y., N. H., & H. RY. V. INTERSTATE COM. COMMISSION 293 the proof, that the Chesapeake and Ohio could have made a con- tract for so large an amount of coal, to be delivered over so long a period, without taking into view the existing prices and the cost necessarily to be occasioned by the delivery of the coal, if the full pubhshed freight rates were to be realized. Indeed, the proof leaves no doubt upon our minds that, in making the contract, the Chesapeake and Ohio sought to accomplish results which it deemed beneficial by means which it considered effectual, even although resort to such means was prohibited by the Interstate Commerce Act. In other words, we think it is established beyond doubt that, desiring to stimulate the production of coal along its line and thereby, as it conceived, to increase the carriage of that com- modity and to benefit the railroad and those living along its line by the reflex prosperity which it was deemed would arise from giv- ing a stimulus to an industry tributary to the railroad, the Chesa- peake and Ohio bought and sold the coal without reference to whether the net result to it would realize its published rates. And it would seem that this means of stimulating the industry in question was resorted to instead of attempting to bring about the same result by a lowering of the published rates, because to have so done would have engendered disparity between coal rates and the tariff on all the other articles contained in the same classi- fication, and would besides have caused other and competing roads to make a similar reduction on the published rates, and thereby would have frustrated the very advantage to itself and those along its lines which the Chesapeake and Ohio deemed it was bringing about by the method pursued. That is to say, we think it is shown that the mode of dealing adopted was simply the result of a disregard by the Chesapeake and Ohio of the eco- nomic conceptions upon which the Interstate Commerce Law rests, and a substitution in their stead of the conceptions of the Chesa- peake and Ohio, as to what was best for itself and for the public. Further, as the prohibition of the Interstate Commerce Act is ever operative, even if the facts established that at the particu- lar time the contract was made, considering the then cost of coal and other proper times, the net pubhshed tariff of rates would have been reaUzed by the Chesapeake and Ohio from the contract, which is not the case, it is apparent that the deliveries under the contract came under the prohibition of the statute when- ever for any cause, such as the enhanced cost of the coal at the mines, an increase in the cost of the ocean carriage, etc., the gross sum reahzed was not sufficient to net the Chesapeake and 294 DUTIES OF CARRIER UNDER THE ACT Ohio its published tariff of rates. This must be the case in order to give vitality to the prohibitions of the Interstate Commerce Act against the acceptance at any time by a carrier of less than its published rates. We say this because we think it obvious that such prohibitions would be rendered wholly ineffective by decid- ing that a carrier may avoid those prohibitions by making a con- tract for the sale of a commodity stipulating for the payment of a fixed price in the future, and thereby acquiring the power during the life of the contract to continue to execute it, although a viola- tion of the act to regulate conamerce might arise from doing so. Besides, all the contentions just noticed proceed upon the mistaken legal conception that the application of the statutory prohibitions depend not upon whether the effect of the acts done is to violate those prohibitions, but upon whether the carrier intended to violate the statute. (c) It is m-ged that if the requirement of the act to regulate commerce as to the maintenance of published rates and the pro- hibitions of that act against imdue preferences and discriminations be applied to a carrier when engaged in buying and selhng a conunodity which it transports, the substantial effect will be to prohibit the carrier from becoming a dealer when no such prohibi- tion is expressed in the act to regulate commerce, and hence a prohibition will be implied which should only result from express action by Congress. Granting the premise, the deduction is un- founded. Because no express prohibition against a carrier who engages in interstate commerce becoming a dealer in commodi- ties moving in such commerce is found in the act, it does not follow that the provisions which are expressed in that act should not be applied and be given their lawful effect. Even, therefore, if the result of applying the prohibitions as we have interpreted them wiU be practically to render it difficult, if not impossible, for a carrier to deal in commodities, this affords no groimd for relieving us of the plain duty of enforcing the provisions of the statute as they exist. This conclusion follows, since the power of Congress to subject every carrier engaging in interstate conamerce to the regulations which it has adopted is undoubted. We, therefore, conclude that the injunction below should be modified and enlarged by perpetually enjoining the Chesapeake and Ohio from taking less than the rates fixed in its pubKshed tariff of freight rates, by means of deaUng in the purchase and sale of coal. And, as thus modified, the decree below is Affirmed. CHICAGO JUNCTION RAILWAY CO. V. UNITED STATES 295 UNITED STATES OF AMERICA, UPON THE APPLICA- TION OF THE ATTORNEY GENERAL, AT THE REQUEST OF THE INTERSTATE COMMERCE COM- MISSION, V. UNION STOCK YARD & TRANSIT COMPANY OF CHICAGO CHICAGO JUNCTION RAILWAY COMPANY v. UNITED STATES 226 U. S. 286 (1912) Mr. Justice Day delivered the opinion of the court. ' As to the Pfelzer contract, both parties concede the authority of the Commerce Court to pass upon this subject and no objection was made as to the manner and form in which the jurisdiction of that court was invoked. There being no objection taken to the method of proceeding, we think, if this contract is within the prohibitions of the act, that the Commerce Court had the right to entertain the bill and to enjoin the performance of the contract. Sections 2 and 3 of the Elkins Act. It is contended that this con- tract is violative of certain features of the Act to Regulate Com- merce and of the Elkins Act. Section 2 of the former and § 1 of the latter provide: "Sec. 2. 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 compensation for any service rendered, or to be rendered, in the transportation of pas- sengers 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 sub- stantially similar circumstances and conditions, such common carrier shall be deemed guilty of unjust discrimination, which is hereby prohibited and declared to be unlawful." - "Sec. 1 It shaU 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 of the trans- portation of any property in interstate or foreign commerce by * The facts and first part of the opinion will be found on page 113, supra, — Ed. 296 DUTIES OF CARRIEB UNDER THE ACT any common carrier subject to said Act to regulate commerce and the Acts amendatory thereto whereby any such property shall by any deAdce whatever by transported at a less rate than that named in the tariifs published and filed by such carrier, as is required by said Act to regulate commerce and the Acts amend- atoiy thereto, or whereby any other advantage is given or dis- crimination is practiced " This court has had frequent occasion to comment upon the purpose of Congress in the passage of these laws to require equal treatment of all shippers and to prohibit unjust discrimination in favor of any of them. New York, New Haven & Hartford R. R. Co. V. Interstate Commerce Commission, 200 U. S. 361; Armour Packing Co. v. United States, 209 U. S. 56; Louisville & Nashville ' R. R. V. Mottley, 219 U. S. 467; Chicago & Alton R. R. Co. v. Kirby, 225 U. S. 155. By § 2 of the Act to Regulate Commerce the carrier is guilty of imjust discrimination, which is prohibited and declared unlaw- ful, if by any rebate or other device it charges one person less for any service rendered in the transportation of property than it does another for a like service. The Elkins Act makes it an offense for any person or corporation to give or receive any rebate, concession or discrimination in respect to the transportation of property in interstate commerce whereby any such property shall be transported at a rate less than that named in the published tariff or whereby any other advantage is given oi* discrimination is practiced. By the very terms of the contract it is evident that the interest of the Stock Yard Company and also of the Junction Company is in the profit to be made in receiving and delivering, handling and caring for and transporting live stock, shipments of which, to the extent stated, are made in interstate commerce. The contract provides that if the Pfselzers construct a packing plant adjacent to the stock yards of the Stock Yard Company they shall receive $50,000, and it obKgates them to maintain and operate the plant for a period of fifteen years and buy and use in their slaughtering business such live stock only as moves through such stock yards, and if not so bought to pay the regular charges thereon as if the same had moved into the stock yards and had been there purchased by them. In other words, this plant in effect may pay for the services of the Stock Yard Company, up to the sum of $50,000, with the bonus given to the Pfselzers for the location of their plant in juxtaposition to the stock yards. The only interest which the Stock Yard Company has in Pfjelzer INTERSTATE COM. COM. V. BALTIMORE & OHIO RY. CO. 297 & Sons' interstate business is compensation for its services in handling their freight and its share of the profits realized by the Junction Company in rendering its service. Any other company with which it has made no contract would be compelled to pay the full charge for the services rendered without any rebate or concession. Another company might have a contract for a larger or smaller bonus, and thereby receive different treatment. Cer- tainly as to the company which receives no such bonus there has been an imdue advantage given to and an imlawful discrimination practiced in favor of Pfselzer & Sons. If these companies had filed their tariffs, as we now hold they should have filed them, they would have been subject to the restrictions of the Elkins Act as to departures from published rates — and we must consider the case in that light — and this preferential treatment, as we have said, would have been in violation of that act. It is the object of the Interstate Commerce Law and the Elkins Act to prevent favoritism by any means or device whatsoever and to prohibit practices which run counter to the purpose of the act to place all shippers upon equal terms. We think the Commerce Court should have enjoined the carrying out of this contract. It follows that in case No. 621 the judgment of the Commerce Court should he reversed and the case remanded for the entry of a decree in conformity to this opinion. In No. 622 the judg- ment of the Commerce Court should be affirmed. INTERSTATE COMMERCE COMMISSION v. BALTI- MORE AND OHIO RAILROAD COMPANY 145 U. S. 263 (1892) ' The Interstate Commerce Commission found that "party- tickets" issued by the Baltimore & Ohio Raih-oad, i. e., tickets to parties of ten or more at a reduced rate for each than that' charged to single passengers between the same points, constituted an unjust discrimination and ordered the railroad to cease their issuances. Upon the raih-oad's refusal to obey the order the Commission brought a bill in the Circuit Court for the Southern District of Ohio for enforcement of its rule. Upon hearing before the Circuit Court upon pleadings and proofs the bills was dis- 1 The facts have been briefly restated. — Ed. 298 DUTIES OF CARRIER UNDER THE ACT missed. 43 Fed. Rep. 37. From this decree the Interstate Com- merce Commission appealed to this Court. Mb. Justice Brown delivered the opinion of the court. Prior to the enactment of the act of February 4, 1887, to regu- late commerce, commonly known as the Interstate Commerce Act, 24 Stat. 379, c. 104, railway traffic in this country was regu- lated by the principles of the common law appUcable to common carriers, which demanded Uttle more than that they should carry for all persons who applied, in the order in which the goods were delivered at the particular station, and that their charges for transportation should be reasonable. It was even doubted whether they were bound to make the same charge to aU persons for the same service; Fitchburg Railroad Co. v. Gage, 12 Gray, 393 Baxendale v. Eastern Counties Railway Co., 4 C. B. (N. S.) 63 Great Western Railway Co. v. Sutton, L. R. 4 H. L. 226, 237 Ex parte Benson, 18 South Car. 38; Johnson v. Pensacola Railway Co., 16 Florida, 623; though the weight of authority in this coun- try was in favor of an equaUty of charge to all persons for similar services. In several of the States acts had been passed with the design of securing the public against imreasonable and unjust discriminations; but the inefficacy of these laws beyond the lines- of the State, the impossibihty of securing concerted action between the legislatures toward the regulation of traffic between the several States, and the evUs which grew up under a poUcy of tmrestricted competition, suggested the necessity of legislation by Congress under its constitutional power to. regulate commerce among the several States. These evUs ordinarily took the shape of inequality of charges made, or of faciUties furnished, and were usually dic- tated by or tolerated for the promotion of the interests of the officers of the corporation or of the corporation itself, or for the benefit of some favored persons at the expense of others, or of some particular locality or conununity, or of some local trade or commer- cial connection, or for the destruction or crippHng of some rival or hostile fine. The principal objects of the Interstate Commerce Act were to secure just and reasonable charges for transportation; to prohibit unjust discriminations in the rendition of like services tmder similar circumstances and conditions; to prevent undue or unreasonable preferences to persons, corporations or locali- ties; to inhibit greater compensation for a shorter than for a longer distance over the same line; and to aboUsh combinations INTERSTATE COM. COM. V, BALTIMORE & OHIO Ry, CO. 299 for the pooling of freights. It was not designed, however, to prevent competition between different roads, or to interfere with the customary arrangements made by railway companies for reduced fares in consideration of increased mileage, where such reduction did not operate as an unjust discrimination against other persons travelling over the road. In other words, it was not intended to ignore the principle that one can sell at wholesale cheaper than at retail. It is not all discriminations or preferences that fall within the inhibition of the statute; only such as are un- just or unreasonable. For instance, it would be obviously unjust to charge A a greater sum than B for a single trip from Washington to Pittsburg; but if A agrees not only to go but to return by the same route, it is no injustice to B to permit him to do so for a reduced fare, since the services are not aUke, nor the circumstances and conditions substantially similar, as required by section 2 to make an. unjust discrimination. Indeed, the possibiUty of just discriminations and reasonable preferences is recognized by these sections, in declaring what shall be deemed unjust. We agree, however, with the plaintiff in its contention that a charge may be perfectly reasonable imder section 1, and yet may create an unjust discrimination or an unreasonable preference under sec- tions 2 and 3. As was said by Mr. Justice Blackburn in Great Western Railway Co. v. Sutton, L. R. 4 H. L. 226, 239: "When it is sought to show that the charge is extortionate as being con- trary to the statutable obhgation to charge equally, it is imma- terial whether the charge is reasonable or not; it is enough to show that the company carried for some other person or class of persons at a lower charge during the period throughout which the party complaining was charged more under the Hke circumstances." The question involved in this case is, whether the principle above stated as applicable to two individuals applies to the pur- chase of a single ticket covering the transportation of ten or more persons from one place to another. These are technically known as party-rate tickets, and are issued principally to theatri- cal and operatic companies for the transportation of their troupes. Such ticket is clearly neither a "mileage" nor an "excursion" ticket within the exception of section 22; and upon the testimony in this case it may be doubtful whether it falls within the defini- tion of "commutation tickets," as those words are commonly understood among railway officials. The words "commutation ticket" seem to have no definite meaning. They are defined by Webster (edition of 1891) as "a ticket, as for transportation, 300 DUTIES OF CARRIER UNDER THE ACT . which is the evidence of a contract for service at a reduced rate." If this definition be applicable here, then it is clear that it would include a party-rate ticket. In the language of the railway, how- ever, they are principally, if not wholly, used to designate tickets for transportation during a limited time between neighboring towns or cities and suburban towns. The party-rate ticket upon the defendant's road is a single ticket issued to a party of ten or more, at a fixed rate of two cents'per mile, or a discount of one- third from the regular passenger rate. The reduction is not made by way of a secret rebate or drawback, but the rates are scheduled, posted and open to the public at large. ,. But, assuming the weight of evidence in this case to be that the party-rate ticket is not a "commutation ticket," as that word was commonly imderstood at the time of the passage of the act, but is a distract class by itself, it does not necessarily follow that such tickets are unlawful. The unlawfulness defined by sections 2 and 3 consists either in an "unjust discrimination" or an "undue or unreasonable preference or advantage," and the object of section 22 was to settle beyond all doubt that the discrimination in favor of certain persons therein named should not be deemed unjust. It does not follow, however, that there may not be other classes of persons in whose favor a discrimination may be made without such discrimination being unjust. In other words, this section is rather illustrative than exclusive. Indeed, many, if not all, the excepted classes named in section 22 are those which, in the absence of this section, would not necessarily be held the subjects of an unjust discrimination, if more favorable terms were extended to them than to ordinary passengers. Such, for instance, are property of the United States, state or municipal governments; destitute and homeless persons transported free of charge by charitable societies; indigent persons transported at the expense of municipal governments; irunates of soldiers' homes, etc., and ministers of religion, in favor of whom a reduction of rates had been made for many years before the passage of the act. It may even admit of serious doubt whether, if the mileage, excur- sion or commutation tickets had not been mentioned at all in this section, they would have fallen within the prohibition of sections 2 and 3. In other words, whether the allowance of a reduced rate to persons agreeing to travel one thousand miles, or to go and return by the same road, is a "Uke and contemporaneous service under substantially similar conditions and circirmstances " as is rendered to a person who travels upon an ordinary single-trip INTERSTATE COM. COM. V. BALTIMORE & OHIO RY. CO. 301 ticket. If it be so, then, under state laws forbidding unjust dis- criminations, every such ticket issued between points within the same State must be illegal. In view of the fact, however, that every railway company issues such tickets; that there is no re- ported case, state or federal, wherein their illegality has been questioned; that there is no such case in England; and that the practice is universally acquiesced in by the public, it would seem that the issuing of such tickets should not be held an unjust discrimination or an unreasonable preference to the persons travelUng upon them. ' But whether these party-rate tickets are commutation tickets proper, as known to railway officials or hot, they are obviously within the commuting principle. As stated in the opinion of Judge Sage in the court below: "The difference between commuta- tion 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 increase travel without unjust discrimination, and to secure patronage that would not otherwise be secured." The testimony indicates that for many years before the passage of the act it was customary for railroads to issue tickets at re- duced rates to passengers making frequent trips, trips for long distances, and trips in parties of ten or more, lower than the regular single fare charged between the same points; and such lower rates were universally made at the date of the passage of the act. As stated in the answer, to meet the needs of the com- mercial traveller the thousand-mile ticket was issued; to meet the needs of the suburban resident or frequent traveller, several forms of tickets were issued. For example, monthly or quarterly, tickets, good for any number of trips within the specified time; and ten, twenty-five or fifty-trip tickets, good for a specified number of trips by one person, or for one trip by a specified num- ber of persons; to accomodate parties of ten or more, a single ticket, one way or round trip, for the whole party, was made up by the agent on a skeleton form furnished for that purpose; to accomodate excursionists travelling in parties ^oo large to use a single ticket, special individual tickets were issued to each per- son. Tickets good for a specified number of trips were also issued between cities where travel was frequent. In short, it was an established principle of the business, that whenever the amount of travel more than made up to the carrier for the reduction of the 302 DUTIES OF CARRIER UNDER THE ACT charge per capita, then such reduction was reasonable and just in the interests both of the carrier and of the public. Although the fact that railroads had long been in the habit of issuing these tickets would be by no means conclusive evidence that they were legal, since the main purpose of the act was to put an end to cer- tain abuses which had crept into the management of railroads, yet Congress may be presumed to have had those practices in view, and not to have designed to interfere with them, except so far as they were unreasonable in themselves or unjust to others. These tickets then being within the commutation principle of allowing reduced rates in consideration of increased mileage, the real ques- tion is, whether this operates as an undue or unreasonable prefer- ence or advantage to this particular description of traffic, or an unjust discrimination against others. If, for example, a railway makes to the public generally a certain rate of freight, and to a particular individual residing in the same town a reduced rate for the same class of goods, this may operate as an undue preference, since it enables the favored party to sell his goods at a lower price than his competitors, and may even enable him to obtain a com- plete monopoly of that business. Even if the same reduced rate be allowed to every one doing the same amount of business, such discrimination may, if carried too far, operate imjustly upon the smaller dealers engaged in the same business, and enable the larger ones to drive them out of the market. The same result, however, does not follow from the sale of a ticket for a number of passengers at a less rate than for a single passenger; it does not operate to the prejudice of the single pas- senger, who cannot be said to be injured by the fact that another is able in a particular instance to travel at a less rate than he. If it operates injuriously toward any one it is the rival road, which has not adopted corresponding rates; but, as before observed, it was not the design of the act to stifle competition, nor is there any legal injustice in one person procuring a particular service cheaper than another. If it be lawful to issue these tickets, then the Pitts- burg, Chicago and St. Louis Railway Company have the same right to issue them that the defendant has, and may compete with it for the same traffic; but it is unsound to argue that it is unlaw- ful to issue them because it has not seen fit to do so. Certainly its construction of the law is not binding upon this court. The evidence shows that the amount of business done by means of these party-rate tickets is very large; that theatrical and operatic companies base their calculation of profits to a certain extent INTERSTATE COM. COM. V. BALTIMORE & OHIO RY. CO. 303 upon the reduced rates allowed by railroads; and that the attend- ance at conventions, political and religious, social and scientific, is, in a great measure, determined by the abiUty of the delegates to go and come at a reduced charge. If these tickets were with- drawn, the defendant road would lose a large amount of travel, and the single-trip passenger would gain absolutely nothing. If a case were presented where a raihoad refused an application for a party-rate ticket upon the ground that it was not intended for the use of the general pubUc, but solely for theatrical troupes, there would be much greater reason for holding that the latter were favored with an undue preference or advantage. In order to constitute an unjust discrimination vmder section 2, the carrier must charge or receive directly from one person a greater or less compensation than from another, or must accom- plish 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 con- temporaneous servif e in the transportation of a Uke 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 persons on a single ticket is substantially identical with the transportation 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 impossible. In this connection we quote with approval from the opinion of Judge Jackson in the court below: "To come within the inhibi- tion of said sections, the differences must be made under fike conditions; that is, there must be contemporaneous service in the transportation of like kinds of traffic under substantially the same circumstances and conditions. In respect to passenger traf- fic, the positions of the respective persons, or classes, between whom differences in charges are made, must be compared with each other, and there must be found to exist substantial identity of situation and of service, accompanied by irregularity and par- tiality resulting in imdue advantage to one, or undue disadvantage to the other, in order to constitute unjust discrimination." The English Traffic Act of 1854 contains a clause similar to section 3 of the Interstate Commerce Act, that "no such company shall make or give any undue or unreasonable preference or ad- vantage to or in favor of any particular person or company, or any particular description of traffic, in any respect whatsoever, nor shall any such company subject any particular person or com- 304 DUTIES OF CARRIER UNDER THE ACT pany, or any particular description of traffic, to any undue or un- reasonable prejudice or disadvantage in any respect whatsoever." In Hozier v. Caledonian Railway, 17 Sess. Cas. (2d Series) 302, {S. C. 1 Nev. & Macn. Railway Cases, 27,) complaint was made by one who had frequent occasion to travel, that passengers from an intermediate station between Glasgow and Edinburgh were charged much greater rates to those places than were charged to other through passengers between these termini; but the Scotch Court of Session held that the petitioner had not shown any title or interest to maintain the proceeding; his only com- plaint being that he did not choose that parties travelling from Edinburgh to Glasgow should enjoy the benefit of a cheaper rate of travel than he himself could enjoy. "It provides," said the court, "for giving imdue preference to parties pari passu in the matter, but you must bring them into competition in order to give them an interest to complain." This is in substance holding that the allowance of a reduced through rate worked no injustice to passengers Hving on the line of the road, who were obliged to pay at a greater rate. So in Jones v. Eastern Counties Railway, 3 C. B. (N. S.) 718, the court refused an injunction to compel a railway company to issue season tickets between Colchester and London upon the same terms as they issued them between Harwich and London, upon the mere suggestion that the granting the latter, the distance being considerably greater, at a much lower rate than the former, was an undue and unreasonable preference of the inhabitants of Harwich over those of Colchester. Upon the other hand, in Ransome v. Eastern Counties Railway, 1 C. B. (N.S.) 437, where it was manifest that a railway company charged Ipswich merchants, who sent from thence coal which had come thither by sea, a higher rate for the carriage of their coal than they charged Peterboro' merchants, who had made arrangements with them to carry large quantities over their lines, and that the sums charged the Peterboro' merchants were fixed so as to enable them to compete with the Ipswich merchants, the court granted an injunction, upon the ground of an undue preference to the Peter- boro' merchants, the object of the discrimination being to benefit the one dealer at the expense of the other, by depriving the latter of the natural advantages of his position. In Oxlade v. North- eastern Railway, 1 C. B. (N. S.) 454, a railway company was held justified in carr5dng goods for one person for a less rate than that at which they carried the same description of goods for another, if there be circimistances which render the cost of carrying the INTERSTATE COM. COM. V. BALTIMORE & OHIO RY. CO. 305 goods for the fonner less than the cost of carrying them for the latter, but that a desire to introduce northern coke into a certain district was not a legitimate ground for making special agreements with different merchants for the carriage of coal and coke at a rate lower than the ordinary charge, there being nothing to show that the pecuniary interests of the company were affected; and that this was an undue preference. In short, the substance of all these decisions is that railway companies are only bound to give the same terms to all persons alike under the same conditions and circumstances, and that any fact which produces an inequality of condition and a change of circumstances justifies an inequality of charge. These traffic acts do not appear to be as comprehensive as our own, and may justify contracts which with us would be obnoxious to the long and short haul clause of the act, or would be open to the charge of unjust discrimination. But so far as relates to the question of "undue preference," it may be presumed that Congress, in adopt- ing the language of the English act, had in mind the constructions given to these words by the EngUsh courts, and intended to incor- porate them into the statute. McDonald v. Hovey, 110 U. S. 619. There is nothing in the objection that party-rate tickets afford facilities for speculation and that they would be used by ticket brokers or "scalpers" for the purpose of evading the law. The party-rate ticket, as it appears in this case, is a single ticket cover- ing the transportation of ten or more persons, and would be much less available in the hands of a ticket broker than an ordinary- single ticket, since it could only be disposed of to a person who would be willing to pay two-thirds of the regular fare for that number of people. It is possible to conceive that party-rate tickets may, by a reduction of the number for whom they may be issued, be made the pretext for evading the law, and for the purpose of cutting rates, but should such be the case, the courts would have no difficulty in discovering the purpose for which they were issued, and applying the proper remedy. Upon the whole, we are of the opinion that party-rate tickets, as used by the defendant, are not open to the objections foimd by the Interstate Commerce Commission, and are not in violation of the act to regulate commerce, and the decree of the court below is, therefore, Affirmed. 306 DUTIES OF CARRIER UNDER THE ACT PITTSBURGH, CINCINNATI, CHICAGO & ST. LOUIS RAILWAY COMPANY v. FINK 250 U. S. 577 (1919) Mr. Justice Day delivered the opinion of the court. An action was brought by the Railway Company before a Justice of the Peace in Montgomery Coimty, Ohio, to recover fifteen dollars, the freight charges upon a shipment in interstate commerce from Los Angeles, California, to Dayton, Ohio. The defendant. Fink, prevailed in the Magistrate's court, the judg- ment was reversed in the Court of Common Pleas, the case was taken to the Court of Appeals of Montgomery County where the judgment of the Court of Common Pleas was reversed and that of the Magistrate affirmed. 19-Ohio Circuit Court, New Series, 103. The Supreme Court of Ohio denied a motion to require the record to be certified to it by the Court of Appeals, and the case is here upon writ of error to the Court of Appeals of Montgomery County, Ohio. The facts are that the railroad company on September 13, 1910, delivered to Fink, the consignee, two boxes of Indian relics shipped to him at Dayton, Ohio, from Los Angeles, California, the waybill specifying charges in the sum of fifteen dollars, which sum Fink paid upon receipt of the goods. The tariff rates filed with the Interstate Commerce Commission so classified this merchandise that the transportation charges should have been thirty dollars instead of fifteen. It is for the difference that this action is prosecuted. It appears that Fink had dealt with the consignor at Los Angeles in suchwise that some old coins, belonging to Fink, were to be traded for a collection of Indian reUcs. Fink shipped the coins to the postmaster at Los Angeles to be held for his protection. At the time the action was brought, about one year after the shipment, the postmaster had released the coins, and Fink had sold some of the refics. Fink testified that he had no knowledge of the freight classification and rates, and simply paid the freight bill as it was presented to him. No agreement appears to have been made with the consignor that Fink should pay the freight charges. Examination shows some confiict of authority as to the hability at common law of the consignee to pay freight charges under the circumstances here shown. The weight of authority seems to be PITTSBURGH, C, C, & ST. L. RY. CO. V. FINK 307 that the consignee is prima facie liable for the payment of the freight charges when he accepts the goods from the carrier. (See the cases collected and discussed in 4 Elliott on Railroads, § 1559.) However this may be, in our view the question must be decided upon consideration of the apphcable provisions of the statutes of the United States regulating interstate commerce. The purpose of the Act to Regulate Interstate Commerce, fre- quently declared in the decisions of this court, was to provide one rate for all shipments of hke character, and to make the only legal charge for the transportation of goods in interstate com- merce the rate duly filed with the Commission. In this way discrimination is avoided, and all receive hke treatment, which it is the main purpose of the act to secure. Section 6 of the Act to Regulate Commerce, which was in force at the time of this shipment, provides: "Nor shall any carrier charge or demand or collect or receive a greater or less or different compensation for such transportation of passengers or property, or for any service in connection therewith, between the points named in such tariffs than the rates, fares, and charges which are specified in the tariff filed and in effect at the time; nor shall any carrier refund or remit in any manner or by any device any portion of the rates, fares, and charges so specified, nor extend to any shipper or person any privileges or facilities in the transportation of passengers or property, except as are spec- ified in such tariffs." It was, therefore, unlawful for the carrier upon deUvering the merchandise consigned to Fink to depart from the tariff rates filed. The statute made it unlawful for the carrier to receive compensation less than the sum fixed by the tariff rates duly filed. Fink, as weU as the carrier, must be pre- sumed to know the law, and to have understood that the rate charged could lawfully be only the one fixed by the tariff. When the carrier turned over the goods to Fink upon a mistaken under- standing of the rate legally chargeable, both it and the consignee undoubtedly acted upon the behef that the charges collected were those authorized by law. Under such circumstances con- sistently with the provisions of the Interstate Commerce Act the consignee was only entitled to the merchandise when he paid for the transportation thereof the amotmt specified as required by the statute. For the legal charges the carrier had a lien upon the goods, and this lien could be discharged and the consignee be- come entitled to the goods only upon tender or payment of this rate. Texas & Pacific By. Co. v. Mugg, 202 U. S. 242. The trans- 308 DUTIES OF CARRIER UNDER THE ACT action, in the light of the act, amounted to an assumption on the part of Fink to pay the only legal rate the carrier had the right to charge or the consignee the right to pay. This may be in the present as well as some other cases a hardship upon the consignee due to the fact that he paid all that was demanded when the freight was delivered; but instances of individual hardship cannot change the policy which Congress has embodied in the statute in order to secure uniformity in charges for transportation. Louisville & Nashville R. B. Co. v. Maxwell, 237 U. S. 94. In that case the rule herein stated was enforced as against a passenger who had pur- chased a ticket from an agent of the company at less than the published rate. The opinion in that case reviewed the previous decisions of this court, from which we find no occasion to depart. It is alleged that a different rule should be applied in this case because Fink by virtue of his agreement with the consignor did not become the owner of the goods until after the same had been delivered to him. There is no proof that such agreement was known to the carrier, nor could that fact lessen the obligation of the consignee to pay the legal tariff rate when he accepted the goods. Pennsylvania R. B. Co. v. Titus, 216 N. Y. 17. Nor can the defendant in error successfully invoke the principle of estoppel against the right to collect the legal rate. Estoppel could not become the means of successfully avoiding the requirement of the act as to equal rates, in violation of the provisions of the statute. New York, New Haven & Hartford R. R. Co. v. York & Whitney Co., 215 Massachusetts, 36, 40. In our view the Court of Common Pleas correctly held Fink liable for the payment of the remaining part of the legal rate upon the merchandise received by him. The judgment of the Court of Appeals of Montgomery County, Ohio, is reversed, and the cause remanded to that court for further procedings not in- consistent with this opinion. Reversed. VANDALIA RY. CO. V. UNITED STATES 309 VANDALIA RAILROAD COMPANY v. UNITED STATES United States Circuit Court of Appeals, Seventh Circuit 226 Fed. 713 (1915) In 1905, the Lumaghi Coal Company, whose property was lo- cated on the hnes of the Vandalia Railroad Company, was desir- ous of pm'chasing additional property on some of which, at least, it held options. It had not the necessary money, and, as its president testified, it was not in a position to borrow it at 2 per cent, interest as a regular banking proposition or from any ordinary sources, and would not have undertaken the pur- chase of the 9,000-acre tract, at a cost of $260,000, if compelled to pay the ordinary rates for money at that time. And so it applied to the Vandalia Railroad Company for a lo&n. This company, being unable under its charter either to loan money or to buy and sell coal lands and because of other practical diffi- culties, caused the Vandalia Mineral Company to be organized, which had the necessary powers. Being, however, without charter power to own stock of this latter company, it caused the stock to be held for it by the Granite Improvement Company. The controlling interest in both the Granite Improvement Company and the VandaHa Railroad Company was owned by the Penn- sylvania Company. It is conceded by appellant that, for the purposes of this case, all of the acts and doings of the Mineral Company and of the Granite Improvement Company are to be considered the acts of the VandaHa Railroad Company. Thereupon, in 1905, supplemented in 1906, a contract was made between the VandaHa Railroad Company, VandaHa Mineral Company, Lumaghi Coal Company, and Louis F. and Joseph D.- Lumaghi. Treating the Mineral Company as if it were the VandaHa Railroad Company, the contract, in substance, pro- vided for a loan by the VandaHa Company to the Coal Company of $260,000, evidenced by notes of $20,000 each, bearing interest at 2 per cent, and falling due at the rate of one a year The coal lands in question were to be conveyed to the VandaHa prac- tically as security for the loan and were to be proportionately conveyed to the Coal Company on payment of each note. The Railroad was to construct, without cost to the Coal Company, 310 DUTIES OF CARRIER UNDER THE ACT tracks to such coal openings as might be developed; but it re- tained the right to use such tracks for the general business of the road and to remove them on failure of the Coal Company to operate the mines for three years. The Coal Company agreed to furnish the necessary right of way without cost to the railroad. The Raihoad Company agreed to haul the tonnage mined from this property and other property of the Coal Company to East St. Louis at as low a rate as the general rate for Uke tonnage of any railroad entering East St. Louis. The Coal Company agreed that the Railroad Company should be the exclusive carrier of all its coal and minerals from all of its property, and that a violation thereof should cause a forfeiture of its right to the property. A minimum tonnage was fixed for each year. The Coal Company agreed to sell to the Railroad Company such coal as it might desire to buy for company use at $1.20 per ton, based upon the then wage scale and mining scale, and subject to increase or de- crease as such scales should increase or decrease, and to release the Railroad Company from liabihty for damage to any building located near the tracks, whether occasioned by fire from loco- motive sparks or otherwise. It was further agreed that, if the Coal Company should default on any interest note for six months, the Railroad had the option of surrendering the notes and being released from any further obKgation to convey the land. Every conveyance by the Railroad Company to the Coal Company was to contain a condition of forfeiture if the coal were not delivered exclusively to the Railroad Company for carriage. At the time the contract was made, the Railroad was paying, not 11.20, but 11.10, per ton for its coal. It had never had any trouble in getting coal at market rates. Since the contract it had bought its coal from all the mines on its lines in proportion to the production by each during the prior year. While the price paid to the Coal Company was sometimes above and sometimes below the market, it was the same that was paid to the other companies. While, at one time, certain operators along its line had fixed a minimum price to be charged the Railroad, it had had no difiiculty in buying in other markets. The chief clerk in the general manager's office of the Railroad, who testified to these facts, said on cross-examination that, if the contract in question had not been made, it would have been possible for all the coal owners in the vicinity to have combined into one association. for the purpose of raising the price of coal to much in excess of $1.20 per ton. VANDALIA RY. CO. V. UNITED STATES 311 The contract did not specify how the lender was to raise the money. In fact, it procured $240,000 from a bank, giving its notes, payable just as the Coal Company notes were payable, except that the interest was 4 per cent instead of 2 per cent. In each of the years, 1910, 1911, and 1912, shipments were made by the Coal Company pursuant to the contract. The notes falling due in each of these years were paid by the Coal Com- pany to the Railroad Company and by the Railroad Company to the bank, with the result that the Railroad Company paid in each of these years, on account of the money borrowed by it, a considerable sum in excess of the interest that it received on the money loaned by it. The Coal Company paid the tariff rate at the time of and for each transportation transaction referred to in the indictment. The Vandalia Railroad Company, which offered no evidence, was found guilty under an indictment charging it with having given the Coal Company a rebate by means of the device as hereinabove set forth in respect to the transportation of certain specified car loads of coal whereby they were transported at a less rate than that named in the published tariffs, in violation of section 1 of the Elkins Law (Act Feb. 19, 1903, c. 708, as preserved by the amendment in Act. June 29, 1906, c. 3591, § 2, 34 Stat. 587). The several counts were based on shipments made in the years 1910, 1911, and 1912, respectively. Before Baker, Kohlsaat, and Mack, Circuit Judges. Mack, Circuit Judge (after stating the facts as above). While a number of errors are assigned, but two have been argued: (1) The refusal of the court to direct a verdict for defendant; (2) the refusal to charge as requested. 1. No question of discrimination, whether just or unjust, by the Railroad as between competing coal companies is involved. The indictment charges a concession or rebate — a departure from the tariff rate in respect to the transportation of certain car loads. Giving a rebate "whereby any such property shall by any device whatever be transported at a less rate than that named in the tariffs" is one of the offenses enumerated in section 1 of the Elkins Law. The contract, the execution of the 4 per cent notes and the 2 per cent notes, their payment, and the resulting payment of the excess interest for and during the year in which the acts of transportation mentioned in the indictment occurred, are alleged in the indictment to constitute the device by means of which the Railroad knowingly and willfully gave the Coal Company a 312 DUTIES OF CAKEIER UNDER THE ACT rebate in respect to the transportation in interstate commerce of the specified property "whereby said property was transported at a less rate and charge than that named in the tariffs." The statute evidently aims to prohibit, not only discrimination as between shippers, but departure from the tariff rates, irre- spective of its actual discriminatory effect. The history of this legislation demonstrates that both discriminations and rebates have ever been sought to be hidden imder the most subtle disguises. Every device that seeks to cover up either' a rebate or a discrimi- nation in interstate transportation is denounced by the statute, provided only, as to a rebate, that thereby the property is actually transported at less than the tariff rate. That the fuU tariff rate is collected at the time of transportation does not negative the possibiUty of a rebate in respect thereto. The rebate may be in a lump cash sum in advance {United States v. Union Stockyards, 226 U. S. 286, 33 Sup. Ct. .83, 57 L. Ed. 226), or by later or earlier indirect payments {G. R. & I. Ry. Co. v. United States, 212 Fed. 577, 129 C. C. A. 113). While it is conceded that, if the effect of a contract to purchase tonnage would be to give an imdue preference or advantage, such a contract would come within the inhibition of the Elkins Law, it is contended that a similar result would not follow if the effect were to cause only a departure from the tariff rate. In the Union Stockyards Case, however, a cash bonus, paid to a shipper for locating next to the stockyards, and giving the stockyards the ex- clusive transportation of its property, was denounced, not merely as an unjust discrimination, but specifically as a departure from rates which were not, but ought to have been, and, for the purposes of the case, were treated as if, pubKshed; and the Grand Rapids & Indiana Railway Company was convicted under an indictment which charged the giving of a rebate alone, not a discrimination. If, then, a direct cash payment for exclusive tonnage is a rebate in respect to property transported imder such a contract, any de- vice whereby a similar payment is made comes within the pro- hibition of the statute. A loan at less than the market rate of interest, Hke a lease at less than market rental (C, C, C. & St. L. Ry. Co. v. Hirsch, 204 Fed. 849, 853, 123 C. C. A. 145), is, in effect, a gift of the difference between the contract and the market rate, and is, in every respect, equivalent to a direct payment of that amount of money. The evidence detailed above shows clearly that, imder all the circumstances, 2 per cent was far below the market rate, and that the pajmaent of at least the difference VANDALIA RY. CO. V. UNITED STATES 313 between 2 per cent and 4 per cent, if given for the exclusive ton- nage privilege, would be an unlawful rebate. It is contended, however, that there were other considerations given by the Coal Company in addition to the exclusive tonnage; that the burden of proof is on the government to establish that these other considerations were not worth the entire difference between the 2 per cent and the market rate of interest; and that the government has failed to make any such proof. Specifically, the defendant claims that the agreement to furnish coal at $1.20 a ton, subject only to the change in the wage scale and mining scale, was a consideration of great value. The imphcation is that Ihe jury was bound, in the absence of direct proof, to consider that this value exceeded what would otherwise have been a rebate. The jury, however, were not without evidence tending to show the very slight value of this alleged insurance against a combination of dealers to raise the price of coal to the railroad. The fact that the company was actually paying $1.10, and not the stipu- lated price of $1.20, at the time the contract was made; the further fact that the company had never had any actual difficulty in getting coal at the market price, in themselves would have justi- fied the jury in regarding this clause as a mere subterfuge, and of no value whatsoever. The other alleged advantages to the railroad might well have been deemed either offset by the advantages to the other parties, as shown by the contract, or of no substantial value whatsoever. We conclude, therefore, that the evidence fully sustains the charge that the defendant knowingly gave a rebate in respect to the in- terstate transportation whereby such property was transported at a less rate than that named in the tariff. 2. At the conclusion of the charge, defendant's attorney re- quested certain additional charges successively. To each of these in turn the trial judge either gave or refused his assent, or ex- pressed his own modifying views. The last request and the action of the court thereon are thus presented in the bill of exceptions: "Mr. Whitnel: If the court please, one further charge. I ask the jury be charged that devices or rebates are not contrary to law, and prohibited, unless by such devices or rebates property of the shipper, the Lumaghi Coal Company in this case, was trans- ported at a less rate than that named in the tariffs published and filed by the Vandaha Railroad Company. "The Court: Well, 1 refuse that instruction. It is not necessary, and add this to what I have said : It is not necessary for the 314 DUTIES OP CARRIER UNDER THE ACT government to show that the money that was paid, that specific money was rebating or reducing; that's all. It is sufficient, if from the whole evidence, as I have said before, you believe from the whole evidence that the defendant did pay one or more sums of money, for the purpose of reducing the costs of the transpor- tation of this property, and that must be determined from the whole evidence. "To which ruling of the court the defendant by its counsel asked for and was granted an exception." * Whether defendant excepted to the refusal so to instruct, or to the statement of the court, or to both, is not clear. Indeed, it is so vague that, in preparing the assignments of error, counsel' deemed it to extend to the rulings on every request. Waiving this, however, we consider the only error in regard thereto presented in the brief: That "the jury were given to understand that thereby the Van- daUa should be convicted of concocting a device, and not of trans- porting the property at less than the published rate." While the request stated concisely a correct and applicable legal proposition, and might well have been given, the trial judge did not err in regarding it as not absolutely necessary, inasmuch as the court had theretofore pointed out the necessary elements of the offense. After giving the language of the act and discussing the allega- tions as to a device and the purpose and intention of the parties, the comt said: "The indictment concludes with this sort of a charge. That is what you are to determine and try by the evidence in the case: 'And so the grand jurors aforesaid, upon their oaths aforesaid, do say that the said Vandaha Railroad Company, at the time and place and in the manner and form and through the device aforesaid, did conduct and transport property into and through said Eastern district of Illinois, and imlawfuUy did knowingly and willfully offer, grant, and give to said Lumaghi Coal Company a rebate in respect to the transportation of said property in inter- state commerce from said Lumaghi Coal Company's mine in Illinois to the state of Missouri.'" This is a direct statement that it was the duty of the jury to determine, among other things, whether or not the defendant did transport the property and did knowingly give a rebate in respect to such transportation. The jury could not have under- stood therefrom that the mere concoction of the device with- CUDAHY PACKING CO. V. GRAND TRUNK WESTERN RY. CO. 315 out the transportation at a reduced rate resulting therefrom would justify a verdict of guilty. The additional statement made by the judge after refusing the request indicates that he beUeved defendant was endeavoring to have him hold that payment of a lump sum appUcable to any and all subsequent shipments could not be deemed a rebate as to any specific transportation. The assertion that it was not necessary for the government to show that "the money paid, the specific money," was rebating, was intended as a denial of the supposed contention. In adding that "it is sufficient if the jury beHeve from the whole evidence that the defendant did pay one or more sums of money for the purpose of reducing the cost of the transportation of this property" the court neither held nor intended to hold that this was the only element necessary to be estabUshed, but only that, to establish the rebate element, it would be sufficient for the jury to find from the entire evidence, including as well the excess interest payment as the payment of the tariff rate at the time of •shipments, that a reduction from the lawful rate had in fact been made. Judgment affirmed. CUDAHY PACKING CO. v. GRAND TRUNK WESTERN RY. CO. United States Circuit Court of Appeals, Seventh Circuit 215 Fed. Rep. 93 (1914) Baker, Circuit Judge. Defendant in error, plaintiff below, recovered judgment against defendant for $3,637.75 on account of icing charges in transporting dressed meats for defendant. A jury trial was duly waived, and the cause was submitted on an agreed statement of facts that showed: That plaintiff was a railroad corporation engaged in interstate commerce. That defendant was an interstate shipper of dressed meats. ' That plaintiff had duly pubhshed and filed its schedule of carriage charges for dressed meats, exclusive of icing charges. That de- fendant paid plaintiff the carriage charges. That plaintiff had duly pubhshed and filed a tariff sheet in which the following pro- 316 DUTIES OF CARRIER UNDER THE ACT vision was made for icing charges over and above carriage charges: "Shippers desiring refrigerator service for freight in car loads must furnish at their own cost the necessary quantity of ice and salt, or this company, when requested, will obtain and furnish the same, charging therefor the actual cost including labor, but not less than $2.50 per ton of 2000 lbs., fractions of tons to be charged for pro rata." That defendant requested plaintiff to ice defend- ant's car load shipments. That plaintiff did so and charged therefor at the rate of $2.50 per ton of 2,000 pounds. That plain- tiff procured some of the ice from Swift & Co., a competitor of defendant in the dressed meats trade, at a cost of $2.50 per ton of 2,000 pounds, and that defendant failed and refused to pay plaintiff for any of these icing charges. In view of the Commerce Act's definition that transportation shall include all services in connection with refrigeration or icing of property transported, and of plaintiff's action imder that definition in furnishing ice as a service in transportation; it is needless to consider plaintiff's contention that Congress lacked constitutional power to compel carriers to furnish ice, and that plaintiff could therefore recover the value of its icing services for defendant on an express or an impUed contract, without making, publishing, and filing fixed and definite rates therefor. By hold- ing itself out voluntarily as ready to ice car load shipments, plaintiff brought itself within the supervisory and regulatory provisions of the act with respect to reasonableness, certainty, and publicity of rates. Under the Commerce Act (Act Feb. 4, 1887, c. 104, 24 Stat. 379 [U. S. Comp. St. 1901, p. 3154]) compensation for service in transportation cannot be a matter of bargaining between carrier and shipper, and no pasrment can lawfully be demanded or re- ceived except in accordance with a fixed and definite schedule of charges duly published and filed. Is plaintiff's tariff provision, that the charge for icing shall be "the actual cost, but not less than $2.50 per short ton," void for uncertainty? If "cost" were pubUshed as the charge for a serv- ice in transportation, the tariff would in that respect imdoubt- edly be void, for cost is necessarily variant and is undeterminable with exactness until after the event, while the act contemplates that the shipper shall be informed of a fixed and definite rate in advance of his shipment. If the icing charge were stated to be "$2.50 per short ton," we conceive that no complaint would be made on the ground of uncertainty. If plaintiff had published CUDAHY PACKING CO. V. GRAND TRUNK WESTERN RY. CO. 317 that "the minimum rate for icing is $2.50 per short ton," without stating any higher rate or giving any fixed and definite basis on which a higher rate could be calculated in advance with certainty, it seems to us .that the word "minimum" might well be disre- garded as superfluous and $2.50 taken as the fixed rate under all circumstances. Knvdsen-Ferguson Co. v. Mich. Cent. R. Co., 148 Fed. 968, 79 C. C. A. 46. Quite evidently plaintiff has woven the idea of cost into its icing tariff. But does that element inhere throughout the structure? If the cost is less than $2.50 per short ton, the tariff explicitly provides that nevertheless $2.50 per short ton shall be the rate. In that part of the structure, therefore, the idea of cost as a condition to be taken into account has clearly been excluded. It is only in the part of the tariff which contem- plates a charge above $2.50 per short ton that cost is made an ele- ment in the accounting. There is, consequently, we believe, a clean line of demarcation at $2.50 per short ton. Cost, if below or at that line, plays no part; if above, it is the sole basis given. And inasmuch as cost, for reasons heretofore stated, cannot be accepted as a pubUshed rate under the act, part of plaintiff's icing tariff is void for uncertainty. But, while the Commerce Act and all tariffs and doings of carriers should be strictly con- strued and enforced to accomplish the large purposes of fairness and miiformity, we are of opinion that the general principle in relation to statutes, wills, contracts, etc., that the illegal parts will be excised and the legal preserved unless the bad is so inter- woven with the good that extrication is impossible, should be applied to the facts of this case. Plaintiff had duly declared that icing service was not included in the carriage rate, and had pub- lished an icing tariff, part of which was good and part bad. Where to cut seems clear, and what is left is without taint. And what is left is the only part that has been acted on by plaintiff. Whether the carriage and icing charges separately or combined were reasonable, whether plaintiff could lawfully arrange to procure ice from defendant's competitor, and whether that ar- rangement brought about an undue preference, are matters be- yond this case. The judgment is affirmed. 318 DUTIES OF CARRIER UNDER THE ACT UNITED STATES v. ERIE RAILROAD COMPANY 236 U. S. 259 (1915) Mr. Justice McKenna delivered the opinion of the court. These are direct appeals from decrees dismissing two bills filed by the United States to enjoin the railroad company from issuing passes to employes of common carriers not subject to the Act to Regulate Commerce. The action of the railroad company is alleged to be in violation of §§ 2 and 3 of that act, Feb. 4, 1887, c. 104, 24 Stat. 379, and of §§1 and 6 as amended June 29, 1906, c. 3591, 34 Stat. 584, 586, prohibiting rebates and preferences. The bills were filed in pursuance of § 3 of the Act to Further Regulate Commerce, Feb. 19, 1903, c. 708, 32 Stat. 847, 848, which authorizes proceedings in equity to prevent common carriers from departing from their published rates or from com- mitting any discrimination forbidden by law, and the basic con- tention of the United States is that the giving of passes for free transportation constituted a departure from the carrier's pub- lished rates and a discrimination against other passengers. To this the railroad rephes that the passes issued by it and which constitute the ground of suit were authorized by the so-called anti-pass provision of § 1 of the Act to Regulate Commerce. The question, therefore, is very direct and is. What does the act authorize or prohibit? The charge in No. 493 is that the railroad company which is a common carrier subject to the act, in pursuance of a standing practice, issues passes to certain of the officers, agents and em- ployes of various trans-Atlantic steamship fines, such lines not being carriers subject to the act, while other passengers who are transported between the same points are required to pay the published fares, and that the railroad company will continue the practice. The railroad company admits the charges and avers that it soficits transportation over its lines of freight brought to this coimtry by the steamship fines; that the latter in turn solicit from shippers on the fine of the railroad company the transpor- tation of their freight abroad; that large amounts of traffic moving by the steamship fines are transported by the railroad company after arrival in or before departing from the United States, as the case may be, some of it under through bills of lading; that UNITED STATES V. ERIE RAILROAD ' 319 the interchange of passes between the officers and employ6s of the railroad and such steamship Unes to the Umited extent alleged is one which as a matter of common knowledge has existed and been openly followed by the railroad company and other carriers generally for years; that its existence was commonly known long before the passage of the Interstate Commerce Act, by the terms of which its continuance is permitted; that it rests upon the same consideration, including considerations of business policy which have always been recognized as justifying the interchange of passes and is recognized and permitted by the proviso in § 1 of the act as amended and approved June 29, 1906. The provision is as follows: "No common carrier subject to the provisions of this act, shall, after January 1, 1907, directly or indirectly, issue or give any interstate free ticket, free pass, or free transportation for passen- gers, .... provided, that this provision shall not be construed to prohibit the interchange or passes for the officers, agents, and employes of common carriers, and their families; nor to prohibit any common carrier from carrying passengers free with the object of providing relief in cases of general epidemic, pestilence, or other calamitous visitation." The material facts in No. 494 are the same as in No. 493, with the exception that the passes there in controversy were issued by the railroad company to an employ^ of the Great Eastern Railway of England, and a defense of the passes is made not only under the proviso of § 1, above quoted, but under § 22 of the act as originally enacted, which reads as foUows: " Nothing in this Act shall be construed to prevent railroads from giving free carriage to their own officers and employes, or to prevent the principal officers of any railroad company or companies from exchanging passes or tickets with other rail- road companies for their officers and employes." In support of its contention the United States adduces certain rulings of the Interstate Commerce Commission and argues that Congress, having reenacted the statute, adopted the Commission's construction as the proper one. Counsel invoke a line of cases which decide, it is contended, that a contemporaneous construction of a statute by the officers upon whom is imposed the duty of administering it is entitled to weight, and, unless clearly wrong, to determining weight. The cases are familiar, the doctrine they announce a useful one, and we are brought to the inquiry. Does it apply in the case at bar? 320 ■ DUTIES OF CABHIER UNDER THE ACT The first of the ruUngs referred to was made upon petition of Frank Parmelee & Company. That company, which is a transfer company transferring passengers and packages from the railroads to the hotels in Chicago, and the reverse, asked for a ruHng as to whether under the exception contained in the proviso of § 1 it had a right to interchange passes with the railroads. The Com- mission decided that the Parmelee Company was not a carrier subject to the act and that, therefore, an interchange of passes between it and the raihoads was not permissible. In subsequent Conference RuKngs the Commission decided that the right to issue passes coexisted with the obligation to file tariffs, and when the latter did not exist the former could not be exercised. These rulings received emphasis from the fact that "ocean carriers to non-adjacent foreign countries" were said to be among the car- riers not subject to the act and, imder the principle announced, not entitled to receive passes. But these ruUngs were never enforced and the custom of carriers was imiformly the other way. Against a mere verbal construction, therefore, permitted to languish in inactivity, we have the un- opposed practice of the companies. The Commission's action, therefore, cannot have the absolute effect that the Attorney General ascribes to it; but keeping it in mind, let us proceed to a consideration of the statute. It is not denied that the words "carriers," "common carriers," "railroads" and "railroad companies" are used in the act with and without qualification "subject to the provisions of the act," and the mmiber of times they are so used is compared. It will do no good to set forth the instances. The act was passed to regulate the conduct and affairs of the carriers of the country, and necessarily they are brought imder its provisions and subject to them. It controls their relations, but the carriers subject to the act may have relation with other carriers, and special provisions would naturally be made to govern that relation. And certainly the reasoning is not impressive which justifies an interchange of passes between carriers subject to the act and denies it to those not so subject, the same business reasons existing in both cases. Counsel for the United States soimds an alarm at such extension and lets imagination loose in portrayal of its consequences and sees included "tap lines and other industrial railroads, street car lines, local traction companies, omnibus tra'nsfer companies and herdic lines, hackmen, boatmen, ferrymen, truckmen, lumber flumes, bucket lines for ore, parcel deliveries, district messenger UNITED STATES V. ERIE RAILROAD .321 services, carriers of all descriptions, both in this country and abroad" — a formidable enumeration, it must be admitted. And there must be included, too, all their officers, all their em- ployes and their famiUes. There is, however, an opposing picture. It is conceded that carriers subject to the act may interchange passes, the officers and employes of each carrier receiving free transportation, and giving it to every other carrier subject to the act, making an army of the privileged with the same discrimi- nation and the same burden on the passenger service of the rail- roads as in the illustration of the Government. There is no argument, therefore, in a comparison of the possibiUties imder one construction rather than the other. At best it is but a comparison of the excesses which may be but are not likely to be practiced* Counsel seem to think that the railroads have an eager desire to distribute passes and burden their transportation service with a crowd of free passengers. Congress certainly had no such view and gave power to exchange passes, considering that the best safeguard against its abuse was the interest of the carriers. The cases at bar are a typical instance of its exercise. It has its justi- fication in a strictly business poHcy, and instead of being a burden upon the resources of the companies it is an aid to them. With these examples before us, and in view of the other reasons which we have adduced, we see no reason to disregard the Uteral terms of the statute. And this view is strengthened, not weakened, by the proviso inserted on June 18, 1910, which is as follows: "And provided further. That this 'provision shall not be construed to prohibit the privilege of passes or franks, or the exchange thereof with each other, for ... . employfe .... of such tele- graph, telephone and cable lines, and the .... employes .... of other common carriers subject to the provisions of this act." (36 Stat. 539, 546, c. 309.) In such case the statut^ makes a special limitation, as will be observed; in other words, restricts the privilege of exchanging telegraph and telephone franks for employfe, etc., of such lines and of other common carriers subject to the act — that is, there are words of explicit limitation. Decree affirmed. Mr. Justice McReynolds took no part in the consideration and' decision of the case. 322 DUTIES OF CARRIER UNDER THE ACT 3. Maintenance of Competition SOUTHERN PACIFIC COMPANY v. INTERSTATE COMMERCE COMMISSION SOUTHERN CALIFORNIA RAILWAY COMPANY V. SAME ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY v. SAME SANTA FE PACIFIC RAILROAD COMPANY V. SAME SOUTHERN PACIFIC COMPANY v. SAME 200 U. S. 536 (1906) Mr. Justice Peckham delivered the opinion of the court.^ Upon the proceeding before the Circuit Court, that court did not pass upon the question decided by the Commission, but held that the routing rule agreed to between the initial carrier and the various eastern companies, and forming a part of the subsequent joint through tariffs which ^ere filed with the Commission, was in itseK a contract or combination for the pooling of freights. The defendants object that the Circuit Court had no authority to decree the enforcement of the order upon any other ground than that taken by the Commission itself. We think that the court was not confined to those grounds, and if it foimd the rule was, in itself, for any reason illegal as a violation of the act, the order might be valid and be a lawful order,^ although the Commission gave a wrong reason for making it. If it held that the rule 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 rule 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. We therefore look to see the ground taken by the Circuit Court. That court found that the rule was adopted to uphold their The facts and remainder of opinion will be found on page 000 supra, — Ed. SOUTHERN PACIFIC CO. V. INTERSTATE COM. COMMISSION 323 published rates, or in other words to maintain the rates on the joint through tariff. Although, under the previous through rate tariff, these rates had been secretly cut by the eastern connec- tions of the initial carriers, yet when the routing rule was agreed to as part of the through rate tariff these rebates ceased. Hence, as the court said, the purpose of the rule was undoubtedly to main- tain the through rate tariff, and that it was effectual. But the court held, as a result, that this routing provision, being part of the through rate tariff, agreed to by the various eastern roads, made a contract among those roads for the pooling of freights on competing railroads within the meaning of section 5 of the Com- merce Act. It held that it was not necessary in order to form a pool, in violation of that section, that the contract or agreement should fix the percentages of freight the several railroads were to receive, or that the railroads should know in advance what the percentages should be; that it was sufficient to constitute a pool if the contract or agreement provided for special means of agencies for apportioning freights, which would destroy the rivalry which would otherwise exist between the competing railroads; and an agreement by which the apportionment was left to the will of the initial carrier accompUshed that purpose as effectually as though definite percentages were fixed in the contract; that defendants' plan to maintain through rates through the operation of the rout- ing rule necessarily destroyed competition, and the adoption of the routing rule put the shippers in a position where their patron- age could not possibly be competed for by the defendants' eastern connections. Thus the mere fact that the initial carrier was granted by this through tariff agreement the right to route the freight was held to result in the formation of a pool, in violation of the fifth section of the act. There was no other agreement proved in the case. It is stated by the Commission that the shipments are forwarded by the initial carrier so as to give certain percentages of the traffic to connecting lines. At the same time the Commission finds that initial carriers generally comply with the requests of the ship- pers to route the freight as desired. The substance of the report of the Commission is, therefore, that there is a certain percentage of the traffic given the connecting carriers when there is no request for routing given by the shippers. It amounts to the giving of fair treatment to the connecting carriers. It is true the Commis- sion calls this a tonnage pool between the connecting carriers, to which the initial carriers give effect by their routing arrangement '324 DUTIES OF CARRIER UNDER THE ACT and that its object was not so much to prevent rebates, which was but an incident, as to effect the tonnage division. We are of opinion, however, that the evidence is substantially one way, and that is that the arrangement for routing was to break up re- bating, and that it has been accomplished. The evidence before the Circuit Court was to the effect that there was no agreement what- ever with the eastern connections that any of them should have any particular proportion of the freight, but the eastern roads entered into the routing agreement because they were satisfied that it would be better than the then present practice of rebating, and they thought that they would get a fair share of the business, or, in other words, would be fairly treated by the initial carriers, who gave them to understand that they would be so treated. The tonnage pool was, as the witnesses said, a myth, and it was testi- fied to that there was not one of the eastern companies that knew what percentage of the whole business that company secured. They simply knew that the through rates were maintained under the operation of the routing agreement and that rebating ceased, and they were satisfied with the manner of their treatment by the initial carrier. The Circuit Court, in order to arrive at its result, necessarily treated the connecting carriers as rival and competing transporta- tion lines for this freight, and assumed that between these lines there would exist, but for the routing agreement, a competition for the fruit transportation which could not be extinguished by any agreement as to routing, as a condition for making through tariff rates; that as competition was destroyed by this rule, it was idle to say that such result was not intended by the defendant, and so it was held that the carr3dng out of the routing agreement violated tjie act. We think these various roads were really not competing roads within the meaning of the fifth section of the Commerce Act, when the facts are carefully examined. That act recognizes the right of the carriers to agree upon and provides for the publication of joint through tariff rates between continuous roads, on such terms as the roads may choose to make, provided, of course, the rates are reasonable and no discrimination, or other violation of the act is practiced. The initial carrier did not, on its line, reach the eastern markets, but it reached various connecting rail- roads which did reach those markets. The initial carrier had the right to enter into an agreement for joint through rates, with all or any one of these connecting companies, though such comr SOUTHERN PACIFIC CO. V. INTERSTATE COM. COMMISSION 325 panics were competing ones among themselves. And the agree- ments could be made upon such terms as the various companies might think expedient, provided they were not in violation of any other provision of the act. Prior to the adoption of the routing rule these connecting rail- roads were already acting under a through rate tariff which con- tinued up to the time when the agreement for the routing was adopted. When so acting it was no longer possible to compete with each other as to rates (and it is upon the rebates as to rates that this whole controversy is founded), provided the companies fulfilled their joint rate tariff agreements. The only way the rate competition could exist under the through rate tariff was by violating the law. This, unfortunately, was habitually done, and during that time the competition consisted in a rivalry be- tween these roads, as to which would be the greatest violator of the law by giving the greatest rebates. In truth, the only way in which these connecting lines could legally become competing railroads for this California fruit trade would be in the absence of all joint tariff rate agreements. The moment they made such agreements, and carried them out, rate competition would cease. All that would be needed for the total suppression of rate com- petition among the connecting railroads would be the honest fulfillment of their agreement as to joint through rates. And just here is where they failed and where they violated their agree- ment and the law by granting rebates, or, in other words, by com- peting, as to rates, for the freight in violation of the joint rates. In such case we do not see any violation of the pooling section of the act, by putting in the agreement for joint through rates the provision for routing by the initial carrier. It achieved its pur- pose and stopped rebating, although it thereby also stopped rate competition which, in the presence of the through rate tariff, was already illegal. The railroads are no longer rate competing roads after the adoption of a through rate tariff by them, and they have no right to privately reduce their rates. Now, while the most important, if not the only, effect of the routing agreement is to take away this rebating practice, and to hold all parties to that agreement as part of the joint through rate tariff, we think no case is made out of a violation of the pool- ing, provision in the fifth section of the act, even where the initial carrier promises fair treatment to the connecting roads, and carries out such promises. 326 DUTIES OF CARRIER UNDER THE ACT We must remember the general purpose of the act which is, as has been said, to obtain fair treatment for the public from the roads, and reasonable charges for the transportation of freight and the honest performance of duty, with no improper or unjust preference or discrimination. Under such circumstances, the court ought not to adopt such a strict and unnecessary construc- tion of the act as thereby to prevent an honest and otherwise perfectly legal attempt to maintain joint through rates, by destroy- ing one of the worst abuses known in the transportation business. The effort to maintain the pubHshed through joint tariff rates is entirely commendable. We think that the agreement in question, upon its face, does not violate any provision of the Commerce Act, and there is no evidence in the case which shows that in fact there has been any such violation. The decree of the Circuit Court is reversed and the case re- manded with instructions to dismiss the bill. Reversed,. etc. UNITED STATES v. DELAWARE, LACKAWANNA AND WESTERN RAILROAD COMPANY 238 U. S. 516 (1915) The appellee was chartered not only as a Railroad Company, but was authorized to mine and sell coal. The Commodity Clause of the Hepburn Act of 1906 made it unlawful for the carrier to haul its own coal beyond the limits of the State of Pennsylvania, and desiring to continue the business of mining and transporting coal, the Railroad adopted a plan under which it was to make a sale and divest itself of title to the coal, at the mouth of the mines, before transportation began. Accordingly it caused to be incor- porated, under the laws of New Jersey, the Delaware, Lacka- wanna and Western Coal Company with a capital stock of $6,800,000, — divided into shares of $50 each. The Railroad Company then invited its own stockholders to subscribe to the capital stock of the Coal Company at the rate of one share of the latter for each four shares of the former. Ninety-nine per cent, of these stockholders did, as was expected, subscribe for the stock of the Coal Company — their subscriptions being paid for in full out of a cash dividend of $13,600,000 previously declared UNITED STATES V. DEL., LACK. & WESTERN R. R. 327 by the Railroad Company. The new corporation was then or- ganized by electing the Vice-President of the Railroad Company as President of the Coal Company and other officers and directors of the Coal Company were also officers and directors of the Rail- road Company. As soon as the organization was completed, the Railroad Com- pany prepared and submitted to the Coal Company a contract by which the Railroad Company reserving what it needed for its railway locomotives 'agreed to sell and the Coal Company agreed to buy, f. o. b. the mines, aU coal which, during the term of the contract, the Railroad Company should produce from its own mines or purchase from any one else.' The price for prepared sizes — the more important conunercial coal — was fixed at 65 per cent, of the price in New York on the day of delivery at the mines. The Railroad Company also leased to the Coal Company all its trestles, docks and shipping facihties. The contract — thus prepared by the Railroad Company — was then signed by both corporations and, on August 2, 1909, the Coal Company took possession of the leased property; those who had been Agents of the Railroad in its Sales Department became Agents of the Coal Company in its Sales Department and the two corporations, with managing officers in common, also had offices in common in the City of New York. Thereafter the Railroad Company continued its mining business annually producing about 7,000,000 tons and purchasing about 1,500,000 tons from operators whose mines were located on its railway. After retaining what was needed for use on its railway engines, it sold the balance, aggregating about 7,000,000 tons, to the Coal Company at the contract prices f. o. b. the mines. The coal thus sold by the Railroad Company was then transported by the Railroad Company to destination where it was delivered to the Coal Company which paid the regular tariff freight rate and the contract prices on the 20th of each month. This course of dealing continued until February, 1913> when the Govern- ment filed a Petition, against both corporations, alleging that the two were practically one and attacking the validity of the contract. The Petition alleged that the coal business was extremely profit- able and in order to continue it, in all its branches, the Railroad Company (which was controlled by a group of 25 persons, owning a majority of its stock), had determined "to cause the organization of a new corporation to be under their own control — whose 328 DUTIES OF CARRIER UNDER THE ACT stockholders would be substantially the same as those of the Railroad Company — and through it to conduct the business theretofore carried on by the Railroad Sales Department, thus securing, in effect, the continued unity of mining, transporting and selling, in substance, as theretofore and depriving the public of the benefits which the Commodity Clause was intended to produce." The Petition alleged that when the contract was made, in August, 1909, the stockholders of the two corporations were practically identical; that a large majority of the stock in both is still owned by the same persons and that by virtue of the terms and provisions of the contract the Railroad had such an interest in the coal as to make it unlawful for it to transport such com- modity in interstate commerce. It was further charged that the transportation of the coal sold to the Coal Company was not only a violation of the Commodity Clause, but that the contract tended to create a monopoly and unlawfully to hinder and restrain trade in coal in violation of the provisions of the Anti-Trust Act. In this connection it was also charged that the Railroad Company not only mined coal, but purchased the product of other mines located along its railway, and had acquired the output of other collieries on its hne, giving to it the disposition of more than 90 per cent of the market, with power to arbitrarily fix prices. The Petition averred: "By reason of the arrangements described, the support of the Railroad Company, and the peculiar advantages and facilities acquired, the Coal Company at once secured and has ever since maintained an unlawful monopoly of the sale of coal produced along defendant's railroad, and has completely dominated the markets at all points thereon not reached by any other railroad. Its position, power, and support render effective competition with it practically impossible, and the monopoly which it now holds will continue indefinitely unless restrained." Both defendants answered. There was practically no dispute as to the facts, though both corporations contended that the facts alleged and proved did not support the legal conclusions sought to be drawn therefrom by the Government. Each insisted that the two corporations were separate in law and in fact; con- tended that the Railroad Company had no interest in the coal and insisted that the Coal Company acted independently of the Railroad Company and was not subject to its control. At the hearing there was evidence that at the date of the making UNITED STATES V. DEL., LACK. & WESTERN R. R. 329 of the contract all except 2,249 shares in the Coal Company were held by those who held stock in the Railroad Company. By reason of sales of both stocks, it appeared that in October, 1913, 88,116 shares of the Railroad stock were held by those who were not then interested in the Coal Company and 6,907 shares of stock in the Coal Company were held by those who were not owners of the Railroad stock. There was also evidence that many of the officers of the Coal Company were not officers of the Railroad Company; that the management of the two corporations was separate and distinct; that the Coal Company kept its own books, deposited its funds in its name in banks of its own choosing, and that the profits went solely to its own stockholders. The Coal Company paid the same rates of freight and demurrage as other shippers and re- ceived no discriminating favors from the Railroad Company. In 1910 the amount paid to the Railroad for the purchase price of coal imder the contract was about $20,000,000, and for the freight thereon about $14,000,000. Since the contract was made the Coal Company has bought coal from other persons, the quan- tity being 3,847 tons in 1909; 2,267 tons in 1910; 6,600 tons in 1911; 92,004 tons in 1912; 310,645 tons in the first ten months in 1913. There are about 70,000,000 tons of anthracite coal produced annually of which 20,000,000 tons are sold at tidewater. Of the 7,000,000 tons sold by the Delaware, Lackawanna and Western Railroad Company about 2,000,000 tons are transported to tidewater points and 6f this 500,000 tons are prepared sizes. The Coal Company at large expense bought land, built trestles and storage facility at various points in addition to those leased to it by the Railroad Company. The District Court held that the business of the two cor- porations had not been so commingled as to make their affairs indistinguishable; that they are two distinct and separate legal beings actually engaged in separate and distinct operations and that the Railroad does not own the coal, either in whole or in part, during its carriage but has in good faith dissociated itself therefrom before the beginning of the act of transporta- tion. In answer to the claim that 'the Railroad will be the gainer from a high price at tide, since this will necessarily increase the price at the mines and therefore that this interest in the price is such an interest in the coal itself as is condemned by the statute,' 330 DUTIES OF CARRIER UNDER THE ACT the court said: "Undoubtedly it is correct to say that the Rail- road has an interest in the price, but that 'interest' merely means that the Railroad will gain by a higher price at tide and does not mean that the Railroad has power to control the coal or the price for which it sells." The alleged power to increase the price by increasing the freight was held to be ineffective because freight rates were controlled ty the Commerce Commission. " The Rail- road Company does not fix prices. It does not decide how much coal is to go to New York Harbor, and it does not determine the sum for which the coal is to be sold at that point." ' The 65 per cent, basis had its origin many years ago and affords a convenient basis for calculating the price to be paid for future deliveries.' .... The Railroad retains nothing more after the title passes to the Coal Company at the mines than an interest in the price and this is not the same thing as an interest in the coal. The Commodity Clause deals with an "interest direct or indirect" in the commodities themselves and thus must mean some kind or degree of ownership in the thing transported or some power to deal with it or to control it. The Railroad Company neither owns nor con- trols the coal after it has been loaded on the cars at the breakers. Thereafter the Coal Company is the owner and the master, and fixes prices, routes and destination at its own will. The court further said that 'the bill of complaint makes a formal charge against' both defendants under the Anti-Trust Act, but the oral argument left us under the impression that this charge was not much insisted on. For that reason the Anti-Trust Branch of the complaint was regarded as com- paratively unimportant, and for that reason we shall' not under- take what we think would be the needless task of discussing the evidence bearing upon the charge of restraining or monopolizing commerce. If we are mistaken in this supposition the error can easily be corrected.' The Petition was thereupon dismissed without prejudice to the Government's right to begin a second proceeding whenever it may be so advised. 213 Fed. Rep. 240. The Government then brought the case here by appeal. In the Government's brief it is stated that while it did not now ask for a ruling as to the right of the Railroad Company to pur- chase and sell coal produced in mines along its Railroad, it did ask that if the decree was affirmed it should be without prejudice to the right of the United States to institute such pro- ceedings. UNITED STATES V. DEL., LACK. & WESTERN R. R. 331 Mb. Justice Lamae, after making the foregoing statement of facts, delivered the opinion of the court. The Commodity Clause of the Hepburn Act was intended to prevent railroads from occupying the dual and inconsistent po- sitions of public carrier and private shipper; and, in order to separate the business of transportation from the business of selling, that statute made it unlawful for railroads to transport in interstate commerce any coal in which the company had "any interest, direct or indirect." United States v. Delaware & Hudson, 213 U. S. 415; Delaware &c. R. R. v. United States, 231 U. S. U. S. 363, 371. 1. But mere stock ownership by a Railroad, or by its stock- holders, in a producing Company cannot be used as a test by which to determine the legaUty of the transportation of such Company's coal by the interstate carrier. For, when the Commodity Clause was imder discussion, attention was called to the fact that there were a number of the anthracite roads which at that time owned stock in coal companies. An amendment was then 'offered which, if adopted, would have made it unlawful for any such Road to transport coal belonging to such Company. The amendment, however, was voted down; and, in the light of .that indication of Congressional intent, the Commodity Clause was construed to mean that it was not necessarily unlawful for a railroad company to transport coal belonging to a Corporation in which the Road held stock. United States v. Delaware & Hudson Co., 213 U. S. 414. For a stronger reason, it would not necessarily be illegal for the Road to transport coal belonging to a Corpora- tion whose stock was held by those who owned the stock of the Railroad Company. Nevertheless, the Commodity Clause, of the Hepburn Act of 1906, rendered unlawful many transactions which prior to that time had been expressly authorized by the statutes of the States which had chartered the Coal Roads. And, while the Hep- bum Act provided that, in the future, interstate railroads should not occupy the dual position of carrier and shipper, there was, of course no intent on the part of Congress to confiscate property or to destroy the interest of the stockholders. But, still, upon adoption of the Commodity Clause, this appellee Railroad was confronted with a difficult situation.' To shut down the mines, because the coal could not be transported, would have meant not only a vast monetary loss to the Company and its stockholders, but would have been even more harmful to the interests of the pub- 332 DUTIES OF CARRIER UNDER THE ACT lie which required a constant supply of fuel. The character of coal property was such as to make it impossible to divide the same in kind among the railroad stockholders, while the value of the coal land was so great as to make it impracticable to find a pur- chaser in ordinary course of trade. It was, therefore, natural, if not necessary, to organize a corporation with which a con- tract could be made, and out of cash received or stock issued to pay for or preserve the equity which the railroad shareholders had in the coal. In this situation there may have been no impropriety in the Railroad Company taking the preliminary steps of organizing such a corporation. Neither was it illegal for the stockholders of the Railroad Company to take stock in the Coal Company, for there are many instances in which the law recognizes that there may be diversity of corporate interest even when there is an iden- tity of corporate members. A city and the county, in which it is located, may both have the same population but different cor- porate interests. Many private corporations have both stock- holders and officers in common, yet they may nevertheless make contracts which will bind both of the separate entities. But when- ever two such companies, thus owned or managed, make contracts which affect the interest of minority stockholders, or of third persons, or of the public, the fact of their unity of management must be considered in testing the validity and bona fides of the contracts under review. 2. That principle is to be specially borne in mind in the present case. For this is not an instance of a Coal Road and a Coal , Company, both of which existed and had made contracts prior to : the Commodity Clause; — but a case where a Coal Company was created with the express purpose that, with stockholders in common, it should be a party to a contract intended to enable the Railroad Company to meet the requirements of the Commodity Clause and at the same time continue the business of buying, mining, selling and transporting coal. It is also to be noted that the Delaware, Lackawanna and West- em Railroad Company did not part with title to its coal lands, mines and mining machinery as seems to have been done, on terms not fully stated [,United States v. Delaware A Hudson, 213 U. S. 366, 398 (5), 392], in some of the instances discussed in the Com- modity Cases. In them the ownership of the mines had passed completely from the railroads to the producing companies and the coal property was no longer subject to the debts of the railroad UNITED STATES V. DEL., LACK. & WESTERN R. R. 333 companies. After such sale of the coal lands there was both a technical and a practical separation of the legal interest of the two corporations in the coal under the ground, on the surface, when it was transported, and when it was sold. The fact that the Railroad held stock in the producing company, and received dividends thereon, did not give to the Railroad Company, any more than to any other stockholder in any other corporation, a legal interest in the property of the Coal Company. Nor would the fact that the Railroad Company had once owned it, have made any difference, if , — by a normal and bona fide sale at the point of production, — the carrier had lost all power of control and all right, title and interest in the coal before the transportation began. United States v. Delaware & Hudson, 213 U. S. 413, top. 3. But the decisions construing the statute, recognize that one corporation can be an agent for another corporation and that by means of stock ownership one of such companies may be converted into a mere agent or instrumentahty of the other. United States V. Lehigh Valley R. R., 220 U. S. 257, 273. And, this use of one by the other — or this power of one over the other — does not de- pend upon control by virtue of the fact that stock therein is held by the Railroad Company or by its shareholders. For dominance of the Coal Company may be secured by a carrier (New Haven R. R. V. Int. Com. Comm., 200 U. S. 363) not only by an express contract of agency, but by any contract which in its practical operation gives to the Railroad Company a control or. an "interest, direct or indirect" in the coal sold, at the mouth of the mines. Assuming then that the incorporation and organization of the Coal Company under the auspices of the Railroad Company was legal; assuming that, the election of railroad officers as the first managers of the Coal Company was not illegal; assuming that as oSicers of the Railroad they could contract with themselves as officers of the Coal Company; assinning that at the time of organization it was not unlawful for the Railroad Company and the Coal Company, not only to have officers but offices in common, and finally assuming that all these facts together did not, in and of themselves, establish an identity of corporate interest, still these facts taken together are most significant. They at least prove that the relation between the parties was so friendly that they were I not trading at arm's length. And the further fact that one of the ' parties was under a statutory disability as to hauling coal makes it necessary to carefully scrutinize their arrangement in order to determine whether it was a bona fide and lawful contract of sale. 334 DUTIES OF CARRIER UNDER THE ACT or a means by which the Railroad though parting with the legal title retained an interest and control in what had been sold. 4. That contract is pubhshed in full in 213 Fed. Rep. 255-259. The provisions material in the present inquiry may be thus sum- marized: (a) The Railroad Company agreed to seU and the Coal Com- pany agreed to buy all of the coal mined or acquired by the Rail- road Company during the continuance of the contract; (b) the price for the more important commercial grades was to be 65 per cent, of the New York price on the day of delivery; (c) the amount of coal to be sold and delivered was at the absolute option of the Railroad Company as its interests might determine; (d) the Coal Company was not to buy coal from any other person or corporation without the written consent of the Railroad Com- pany; (e) the Coal Company was to conduct the selling of the coal so as best to conserve the interests, good-will and markets of the coal mined by the RaUroad Company; (f) the Coal Company was to continue to fill the orders of present responsible customers of the Railroad Company, even if some of such sales might be unprofitable; (g) the Railroad leased to the Coal Company all of its trestles, docks and shipping facihties at a rental of 5 per cent, of their value; (h) the contract could be terminated by either party on giving six months' notice. The most cursory examination of the contract shows that — while it provides for the sale of coal before transportation begins — it is coupled with onerous and unusual provisions which make it difficult to determine the exact legal character of the agree- ment. If it amounted to a Sales Agency the transportation was illegal because the Railroad Company could not haul coal which it was to sell in its own name or through an agent. If the contract was in restraint of trade it was void because in violation of the Sherman Anti-Trust Law. The validity of the contract cannot be determined by consideration of the single fact that it did pro- vide for a sale. It must be considered as a whole and in the Hght of the fact that the sale at the mine, was but one link in the business of a Railroad engaged in buying, mining, selling and transporting coal. 5. By virtue of the fact that the Railroad Company bought, mined and sold, it — like any other dealer — was interested in maintaining prices, since the contract did not fix a definite sum to be paid for all of the coal sold, but provided that the Railroad Company was to receive 65 per cent, of the New York price on the UNITED STATES V. DEL., LACK. & WESTERN R. R. 335 day the coal was loaded into the cars. The higher the rate in New York the better for the seller. And, by the contract, the Rail- road reserved a power which, when exercised, could not only cur- tail production but shipments. Thus by decreasing the amount transported the supply in New York could be lessened. This would tend to raise New York prices and thus increase the sum the Rail- road was to receive. The Railroad Company was in the business of seUing, and it is not to be presumed that its power to limit deliveries or to prevent the Coal Company from obtaining coal elsewhere would be often exercised. Yet the power did exist and it was reserved for some purpose — not, as argued, to prevent controversy as to failure to deliver in cases of strikes or accidents, for such is not the lan- guage or intent of the contract. Nor is room left for the implica-- tion [necessary to the validity of such an exclusive contract, Chicago &c. R. R. v. Pullman, 139 U. S. 80 (3), 89, 90], that the seller would dehver reasonable amounts at reasonable times. All such defensive arguments are excluded by the express and em- phatic terms of the contract that "the amount of coal to be so delivered and sold to the buyer by the seller shall be at the absolute option of the seller as its interests may determine, and the seller shall be subject to no Hability whatsoever for failure to supply the buyer with such amount of coal as it may desire." It might be said that if such a power was exercised the Coal Company could then go into the market and purchase from other coal dealers. But this contract deprives the buyer even of that ordinary business privilege, declaring that the Coal Company "will purchase all coal to be sold by it from the seller, and will purchase no coal from any other person or corporation, except with the written consent of the seller." 6. Reading these two clauses together, it is evident that the Coal Company was neither an independent buyer nor a free agent. It was to handle nothing except the Railroad's coal and was the instrument through which the Railroad sold all its product. The Coal Company, though incorporated to do a general coal business, was dependent solely upon the Railroad for the amount it could procure and sell and was absolutely excluded from the right to purchase elsewhere without the consent of the Railroad Company, which, however, was under no corresponding obligation to supply any definite amount at any definite date. Restrictive contracts should at least be reciprocal and mutual — for if A is bound to purchase only from B the latter should certainly 336 DUTIES OF CARRIEK UNDER THE ACT be bound to furnish what A wishes to buy [Chicago &c R. R. v. Pullman, 139 U. S. 80 (3), 89, 90] — especially is this true when the subject of the contract is an article in which the public is interested. Even at common law, in passing upon the vaUdity of contracts in restraint of trade, the "public welfare is first considered, and if it be not involved, and the restraint upon one party is not greater than protection to the other party requires the contract may be sustained." Gibbs v. Baltimore Consolidated Gas Co., 130 U. S. 396, 409; Fawle v. Park, 131 U. S. 97. In this case the subject of the contract was anthracite coal — an article of pubhc necessity and of limited supply, one-tenth being controlled by the appellee. The Railroad Company might have justly insisted on contract provisions intended to secure payment for all that it produced. But going beyond what was required for its own protection, it restrained the Coal Company from bujdng from anyone else, and, — what is probably more sigiiificant in this case — thereby prohibited the Coal Company from competing with the Railroad Company for the purchase" of coal mined on the Railroad lines. And, this was not a mere per- functory provision, because the Railroad Company was a buyer of coal and purchased 1,500,000 tons per annum from mines on its system. By this contract it excluded from that market the Coal Company, which, with its capital of $6,000,000, could have been a strong competitor. Such a provision may not have actually effected a monopoly. But considering the financial strength of the carrier; its control of the means of transportation; its powers to fix the time when transportation of the very coal sold was to begin; its power in furnishing cars to favor those from whom it bought or to whom it sold — such a contract would undoubtedly have that tendency. In that respect it was ^opposed to that poKcy of the law, which was the underljang reason for the adoption of the Commodity Clause. New Haven R. R. v. Int. Com. Comm., 200 U. S. 373. 7. There is another provision of the contract which shows that the Railroad had such an interest in the coal as enabled it to dictate to whom it should be sold, even at unprofitable prices. The agreement provides: "Sixth. The buyer agrees that it will conduct the business of selling the coal of the seller in such manner as best to conserve the interests of and preserve the good will and markets of the coal mined by the seller, and to continue to fill the orders of all respon- sible present customers of the seller even though as to some of such UNITED STATES V. DEL., LACK. & WESTERN B. H. 337 customers the sales may be unprofitable, it being understood and agreed that at the prices above quoted the entire business of the buyer will be conducted at a profit." This is not a mere stipulation that the Coal Company would not injure the reputation of the Railroad Company's coal; while the further provision that the Coal Company would 'continue to fill the orders of all responsible present customers, even though some of such sales might be unprofitable, ' was a further indication of the fact that both parties recognized the Railroad had an interest in the coal and used the Coal Company to preserve and secure that interest even after transportation began. The unusual, onerous and restrictive terms imposed by this contract may, as between the parties, have been negligible — certainly so as long as the stockholders remained the same, since a loss to the Coal Company would be presumably represented by a gain to the Railroad Company. But the Commodity Clause and the Anti-Trust Act are not conerned with the interest of the parties but with the interest of the public and it, therefore, makes no difference whether this contract dictated by the Railroad Company was for the permanent advantage of the Coal Company. 8. It is argued, however, that the contract has not operated to the injury of the parties or of the pubHc. And, in answer to those urged by the Government, it is said that some of the obj ections now insisted on were not pressed in the lower court; [that there is no complaint that the Railroad charged the Coal Company exorbitant prices; or, that it ever raised the New York prices; or, that it failed to make prompt deliveries; or, that it has prevented the Coal Company from buying coal from other operators; or, that the Railroad monopolized the coal mined on its railway, or that it deprived such mining companies of an open market. From this it is argued that the present objections to the contract are purely academic. But its validity depends upon its terms. And if , as a matter of law, the contract is in restraint of trade, or, if the Coal Company is practically the agent of the Railroad Company then the transportation of the coal by the latter is imlawful. 9. As already pointed out, the contract has in it elements of a sale and elements of a sales agency. It provides that the Rail- road Company will sell and that the Coal Company will buy all coal that is mined during the continuance of the contract; but it prevents the Coal Company from buying from any one else. 338 DUTIES OF CARRIER UNDER THE ACT It requires it to sell to present railroad customers at the old price, even though those prices may be unprofitable. The seller is not boimd to make deliveries of fixed quantities at fixed dates and by- decreasing what it will seU and determining when it will ship it has a power in connection with its power as a carrier, which, if exerted, would tend to increase prices in New York. Besides all this, the contract prevents the Coal Company from competing with the Railroad Company in the purchase of coal along the railway line. Taking it as a whole and bearing in mind the policy of the Commodity Clause to dissociate the Railroad Company from the transportation of property in which it is interested and that the Sherman Anti-Trust Act prohibits contracts in restraint of trade, there would seem to be no doubt that this agreement violated both statutes. 10. The Railroad Company, if it continues in the business of mining, must absolutely dissociate itself from the coal before the transportation begins. It cannot retain the title nor can it sell through an Agent. It cannot call that Agent a buyer while so hampering and restricting such alleged buyer as to make him a puppet subject to the control of the Railroad Company. If the Railroad sells coal at the mouth of the mines to one buyer or to many it must not only part with all interest direct or indirect in the property but also with aU control over it or over those to whom the coal is sold at the mines. It must leave the buyer as free as any other buyer who pays for what he has bought. It should not sell to a corporation with officers and offices in common, — for the pohcy of the statute requires that instead of being managed by the same officers, they should studiously and in good faith avoid anything, either in contract or conduct, that remotely savors of joint action, joint interest or the dominance of one Company by the other. If the seller wishes — by a lawful and bona fide contract, whose provisions as to dehvery and otherwise are not in restraint of trade — to sell all of its coal to one buying company, then that one buyer can be bound by reasonable terms and re- quired to pay according to the contract. But such buyer should otherwise be absolutely free to extend its business to buy when, where and from whom it pleases, and otherwise to act as an inde- pendent dealer in active competition with the Railroad Company. What has been said is sufficient to show that the contract was invalid. That makes it unnecessary to discuss other questions raised but not disposed of by the District Court, and the decision herein is without prejudice to the right of the United States to UNITED STATES V. DEL., LACK. & WESTERN B. R. 339 institute proceedings in reference thereto or to test the right of the Railroad Company to purchase coal for sale. The decree is reversed with directions to enter a decree enjoining the Railroad from further transporting coal sold under the pro- visions of the contract of August 2, 1909, referred to in the Petition. Reversed. Mb. Justice McReynolds took no part in the decision of this case. CHAPTER III FUNCTIONS OF THE INTERSTATE COMMERCE COMMIS- SION IN THE ENFORCEMENT OF THE ACT 1. Constitutionality INTERSTATE COMMERCE COMMISSION v. BRIMSON. 154 U. S. 447 (1894) i Acting upon an informal complaint, the Interstate Commerce Commission of its own motion investigated into the alleged unreasonable rates and discriminations in favor of the Illinois Steel Company on the part of divers interstate carriers. Upon such hearing witnesses refused to obey the subpoena duces tecum of the Commission and to answer questions. The Com- mission thereupon petitioned the Circuit Court of the Northern District of Illinois for an order compelling to answer and produce the book called for by the subpoena. The Circuit Court held the twelfth section of the Interstate Commerce Act to be un- constitutional, upon which the petition was based, (53 Fed. Rep. 476), and from the judgment dismissing the petition this appeal was taken. Mr. Justice Harlan delivered the opinion of the court. . . . The answers of Brimson, Keefe, and Stirling in the present proceeding, besides insisting that the questions propounded to them, respectively, were immaterial and irrelevant, were based mainly upon the ground that so much of the Interstate Com- merce Act as empowered the Commission to require the attend- ance and testimony of witnesses and the production of books, 1 The facts have been briefly restated — Ed. 340 INTERSTATE COMMERCE COMMISSION V. BRIMSON 341 papers, and documents, and authorized the Circuit Court of the United States to order common carriers or persons to appear before the Commission and produce books and papers and give evidence, and to punish by process for contempt any failure to obey such order of the court, was repugnant to the Consti- tution of the United States. Is the twelfth section of the act unconstitutional and void so far as it authorizes or requires the Circuit Court of the United States to use their process in aid of inquiries before the Com- mission? The court recognizes the importance of this question, and has bestowed upon it the most careful consideration. As the Constitution extends the judicial power of the United States to all cases in law and equity arising under that instru- ment or under the laws of the United States, as well to all con- troversies to which the United States shall be a party, (Art. 3, sec. 2) , and as the Circuit Courts of the United States are capa- ble, under the statutes defining and regulating their jurisdic- tion, of exerting such power in cases or controversies of that character, within the limits prescribed by Congress, 25 Stat. 434, c. 866, the fundamental inquiry on this appeal is whether the present proceeding is a " case " or " controversy " within the meaning of the Constitution. The Circuit Court, as we have seen, regarded the petition of the Interstate Commerce Commis- sion as nothing more than an application by an administrative body to a judicial tribunal for the exercise of its functions in aid of the execution of duties not of a judicial nature, and accordingly adjudged that this proceeding did not constitute a case or controversy to which the judicial power of the United States could be extended. At the same time the learned court said: " Undoubtedly, Congress may confer upon a non- judicial body authority to obtain information necessary for legitimate governmental pur- poses, and make refusal to appear and testify before it touching matters pertinent to any authorized inquiry, an offence punish- able by the courts, subject, however, to the privilege of wit- nesses to make no disclosures which might tend to criminate them or subject them to penalties or forfeitures. A prosecution or an action for violation of such a statute would clearly be an original suit or controversy between parties within the meaning of the Constitution, and not a mere application, like the present one, for the exercise of the judicial power in aid of a non-judicial 342 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT body." In re Interstate Commerce Commission, 53 Fed. Rep. 476, 480. In other words, if the Interstate Commerce Act made the refusal of a witness duly summoned to appear and testify before the Commission in respect to a matter rightly committed by Congress to that body for examination, an offence against the United States, punishable by fine or imprisonment, or both, a criminal prosecution or an information for the violation of such a statute would be a case or controversy to which the judicial power of the United States extended; while a direct civil pro- ceeding, expressly authorized by an act of Congress, in the name of the Commission, and under the direction of the Attorney General of the United States, against the witness so refusing to testify, to compel him to give evidence before the Commission touching the same matter, would not be a case or controversy of which cognizance could be taken -by any court established by Congress to receive the judicial power of the United States. This interpretation of the Constitution would restrict the employment of means to carry into effect powers granted to Congress within much narrower limits than, in our judgment, is warranted by that instrument. [The Court then considered the nature of the power to regu- late commerce, and the conditions under which it may consti- tutionally be exerted.] It was not disputed at the bar, nor indeed can it be success- fully denied, that the prohibition of unjust charges, discrimina- tions, or preferences, by carriers engaged in interstate commerce, in respect to property or persons transported from one State to another, is a proper regulation of interstate commerce, or that the object that Congress has in view by the act in question may be legitimately accomplished by it under the power to regulate commerce among the several States. In every substantial sense such prohibition is a rule by which interstate commerce must be governed, and is plainly adapted to the object intended to be accomplished. The same observation may be made in respect to those provisions empowering the Commission to inquire into the management of the business of carriers subject to the provi- sions of the act, and to investigate the whole subject of interstate commerce as conducted by such carriers, and, in that way to obtain full and accurate information of all matters involved in the enforcement of the act of Congress. It was clearly INTERSTATE COMMERCE COMMISSION V. BRIMSON 343 competent for Congress, to that end, to invest the Commis- sion with authority to require the attendance and testimony of witnesses, and the production of books, papers, tariffs, contracts, agreements, and documents relating to any matter legally committed to that body for investigation. We do not understand that any of these propositions are disputed in this case. Interpreting the Interstate Commerce Act as applicable, and as intended to apply, only to matters involved in the regulation of commerce, and which Congress may rightfully subject to investigation by a commission established for the purpose of en- forcing that act, we are unable to say that its provisions are not appropriate and plainly adapted to the protection of inter- state commerce from burdens that are or may be, directly and indirectly, imposed upon it by means of unjust and unreasonable discriminations, charges, and preferences. Congress is not limited in its employment of means to those that are absolutely essential to the accomplishment of objects within the scope of the powers granted to it. It is a settled principle of constitutional law that " the government which has a right to do an act, and has im- posed on it the duty of performing that act, must, according to the dictates of reason, be allowed to select the means; and those who contend that it may not select any appropriate means, that one particular mode of effecting the object is excepted, take upon themselves the burden of establishing that exception." 4 Wheat. 316, 409. The test of the power of Congress is not the judgment of the courts that particular means are not the best that could have been employed to effect the end contem- plated by the legislative department. The judiciary can only inquire whether the means devised in the execution of a power granted are forbidden by the Constitution. It cannot go be- yond that inquiry without entrenching upon the domain of another department of the government. That it may not do with safety to our institutions. Sinking Fund Cases, 99 U. S. 700, 718. An adjudication that Congress could not establish an ad- ministrative body with authority to investigate the subject of interstate commerce and with power to call witnesses before it, and to require the production of books, documents, and papers relating to that subject, would go far towards defeating the object for which the people of the United States placed com- 344 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT merce among the States under national control. All must recognize the fact that the full information necessary as a basis of intelligent legislation by Congress from time to time upon the subject of interstate commerce cannot be obtained, nor can the rules established for the regulation of such commerce be efficiently enforced, otherwise than through the instrumentality of an administrative body, representing the whole country;, always watchful of the general interests, and charged with the duty not only of obtaining the required information, but of compelling by all lawful methods obedience to such rules. . . . Me. Justice Bbewer dissented; the Chief Justice [Fuller] and Mr. Justice Jackson, concurring in the dissent. ^ 2. Powers and Duties CONSOLIDATED CLASSIFICATION CASES 54 I. C. C. 1 (1919) By the Commision: In our annual reports to Congress we have from time to time mentioned our efforts to stimulate work in the direction of greater uniformity in freight classifications. Early in 1918 it was ap- parent, in view of the progress already made, that a complete unification of the rules and descriptions of articles in the offi- cial, southern, and western classifications was possible at a not distant date, and we accordingly inquired of the carriers why they could not by January 1, 1919, or sooner, effect a consolida- tion of the three general classifications into one volume con- taining one set of uniform commodity descriptions with three rating columns, one for each territory, subtended, and with one set of general rules.^ Shortly thereafter the director of traffic of the Railroad Administration, after conference with us ap- pointed a special committee of experienced classification men to carry out the work we had in mind. This committee prepared 1 Reported in 155 U. S. 3. ^ The term "descriptions" includes packing specifications and minimum and estimated weights. All provisions of the classification, other than ratisgm will hereinafter be referred to as rules and descriptions. CONSOLIDATED CLASSIFICATION CASE 345 and submitted a volume entitled " Proposed Consolidated Freight Classification No. 1," which accomplishes the consolida- tion and uniformity sought, and, in addition thereto, proposes many increases and reductions in ratings, most of which, however, have no necessary connection with the work assigned to the com- mittee. The volume was not filed with us as a tariff schedule. The Director General requested that we make an investiga- tion and give him our recommendations relative to the advisabil- ity of adopting it for application by carriers under federal control. We accordingly instituted this proceeding of inquiry and investigation into the reasonableness and propriety of its provi- sions. ^ We made respondents all of the carriers subject to the act and which were not under federal control, in order that the same classifipation might, if that course were found advisable, be prescribed for their use also. The special committee distributed about 14,000 copies of the volume among carriers, state commis- sions, interested shippers and shippers' organizations through- out the country, each copy accompanied by a notice of this proceeding. Hearings were held at Boston, Mass., New York, N. Y., Chicago, III., Omaha, Nebr., Portland, Oreg., San Fran- cisco, Calif., Denver, Colo., Fort Worth, Tex., New Orleans, La., Atlanta, Ga., and Washington, D. C. Nearly 15,000 pages of testimony were taken and over 800 exhibits were filed. The evidence of objectors or protestants was generally confined to the proposed increases, changes in the nature of increases, and new items. In other words, objections to a particular item were not heard unless the item proposed to put some new or added burden upon shippers. Most of the evidence relates to the in- creased ratings. The consolidation of the classifications and the unification of the rules and descriptions, generally speaking, were received with favor. As we understand it, the consolidated classification was pro- posed as a general standard classification to supersede not only the existing issues of the official, southern, and western classifica- tions, but also all state classifications, and at the request of 1 On the front cover page of the proposed consolidated classification was printed the foUowmg: "Prepared for filling with the Interstate Commerce Commission as an exhibit with an application under the 15th and 20th sections of the act to regulate commerce, as amended, for authority to publish and file a classification embodying these changes in lieu of the official, southern and western classifications specified." It was later decided, however, to handle the matter as above indicated instead of by application. 346 FxmcTiONs op i. c. c. in enforcement of act the director of traffic we have received evidence as to the general effect of canceling the various state classifications. That evi- dence will be referred to later in the report. We were advised by the director of traffic that he had under consideration also the advisability of canceling the exceptions to all classifications, but that commodity rates might be established in lieu thereof in proper cases. That matter, however, has not been referred to us for investigation and recommendation. The consolidated classification is not a uniform classification in the full sense of the term, because all the ratings are not uni- form. In a majority of the items, the ratings are the same as now. The consolidated classification would preserve the identity of the ofiicial, southern, and western classifications, and, as finally amended, is intended to be filed with the Commission, with a separate I. C. C. number for each territory. In other words, from a legal or technical standpoint, it is to be three classifica- tions in one volume. It is not much larger and is no more complicated than any one of the three general classifications now in use. ^ The consolidated classification is the result of effort toward uniformity extending over a long term of years, and since uni- form rules and descriptions are necessary before uniformity in ratings is possible, it marks an important step toward a uniform classification. Definite action in the direction of uniformity was taken about 10 years ago, when the carriers created their com- mittees on uniform classification, to which was assigned the duty of working out a common set of rules and descriptions for the three general classifications. This committee made disap- pointingly slow progress, largely because of technical considera- tions and the disposition of the carriers in each territory to force their views and measures of expediency upon the carriers in the other territories It was abolished shortly after the proposed consolidated classification was prepared. The special committee which prepared the consolidated classi- fication consisted of the chairman of the committee on uniform classification, the chairman of the Ofiicial and Western Classifica- tion Committees, a member of the Southern Classification Conamittee, now its chairman, and our classification agent. ' Included in the publication are the rules and regulations governing the transportation of explosives and other dangerous articles, which have been prescribed by this Commission. These are not involved in this case. CONSOLIDATED CLASSIFICATION CASE 347 In consolidating the classifications and unifying the rules and descriptions the members of the special committee are under- stood to have been guided largely by their own ideas. They were not of one mind in respect to some of the charges they have proposed in the rules and descriptions. Numerous concessions were made and some long standing and deep rooted controversies growing out of territorial or local traffic policies were cast aside. There are instances in which the existing rules as to a given situation and the descriptions, even of like articles, differ widely in the three classifications, and in respect of certain items some radical changes were necessary in order to accomplish the desired uniformity. As stated, the consolidated classification also proposes many changes in ratings. The special committee was not directed, however, to change ratings where that was not necessarily or reasonably incident to changes in descriptions. The task as- signed to the special committee was merely the completion of the work begun years ago by the committee on uniform classifi- cation, which committee had nothing whatever to do with ratings. The changes in ratings were proposed, not by the special com- mittee as a body, but by the representatives of the respective ter- ritorial committees, individually and on their own initiative. The representative of each classification committee undertook a realignment of the ratings in his own classification, in accordance with what he conceived to be proper principles and considerations. Our representative on the special committee had no voice in fixing any of the proposed ratings. There was no concerted effort to make the ratings uniform, but the desirability of uni- formity seems to have been kept in mind, and as to a number of items where there were considerable differences in the exist- ing ratings in the three classifications, changes were proposed which effected a greater dggree of uniformity, particularly in the higher classes. Changes proposed for the purpose of attain- ing a greater degree of uniformity have more of an upward than a downward trend. The classification committees generally have a large number of contemplated changes in ratings in the course of investigation, either before or after they are docketed by them for consideration at their meetings with the public. Some of the changes in ratings proposed in the consolidated classification grew out of such investigations and had been decided upon by the respective com- 348 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT mittees for publication. The great majority of the changes, however, were here laid before the public for the first time. So far as the western classification is concerned most of the increases proposed are of minor importance and comparatively few of them have been protested, but in the two other territories some of the increases would apply on important kinds of traffic and have been the subjects of vigorous protests. The chairmen of the three classification committees, as representatives both of the federal controlled and the nonfederal controlled lines, severally and jointly undertook the defense of their proposals. They have presented detailed written statements in explanation of each increased rating that was not covered by the oral testimony they offered in answer to the protests at the hearings. Changes and new items are indicated in the consolidated clas- sification by appropriate symbols. The special committee under- took to afiBx a proper symbol in every case where the classification provision might on any theory be construed as a change or new item. Based on these symbols the table below, showing the nature and number of changes and new items proposed, was prepared by the special committee and submitted with its re- port to the director of traffic. Number of changes in the classifications Nature of changes Official Southern Western Total Increase in ratings ... . 890 478 136 342 229 39 1,144 2,574 898 1 599 73 49 1,665 393 464 4 194 61 132 425 3,857 1,840 Carload ratings eliminated ^ Increases in minimum weights .... Eeductions in minimum weights. . . Carload minimum weights to which rule 34 is added, subjecting them 141 1,135 363 220 Additions or new items 3,234 Total 3,258 5,859 1,673 10,790 ' The number of carload ratings estabUshed does not appear, but they are included in the reductions. As will be seen, the increases in ratings in the official classifica- tion greatly outnumber the reductions, there being 890 increases and 478 reductions. With respect to the western classification CONSOLIDATED CLASSIFICATION CASE 349 the situation is reversed, the reductions in ratings outnumber- ing the increases, there being 464 reductions and 393 increases. The greater number of increases in ratings in the ofl&cial classification than in the western classification may be attri- butable in some measure to the fact that the ofiicial classification had not received as much upward revision in recent years as the western classification, probably because the official classification committee has only recommendatory powers, and was not free to make changes which it was convinced should be made. In the southern classification the increases in ratings far outnumber the reductions, there being 2,574 increases and 898 reductions. This is due to the fact that at present many articles that are in the higher classes in the official and western classification are rated lower in the southern classification, and it is proposed to bring a large number of ratings in the southern classification up to or nearer to the bases observed in the two other classifica- tions. In the southern classification proposed increases of two classes are quite common; and there are some instances in which the increases are even greater. An increase of one class in rating effects an increase in freight charges ranging generally from 15 to 25 per cent. Many of the protestants referred to the several recent general increases in freight rates and suggested that this was not a desirable time to require shippers to bear further increases, even though they might be reasonable when considered strictly from a technical classification standpoint. Many reductions are proposed, but it happens that upon the whole they do not apply to traffic of the same importance as do the increases, and so far as the in- dividual shipper is concerned the reduction can not, as a rule, be said to neutralize or offset the increases, for the reason that the shipper who would suffer an increase probably would not, in most instances, be the one who would benefit by a reduction. Owing to the fact that more increases than reductions are proposed and to the facti that the increases would apply on more important lines of traffic, or at least on a greater tonnage, than would the reductions, the consolidated classification would bring the carriers some additional revenue. The changes enumerated in the above table, other than the increases and reductions in ratings, are generally of secondary importance and have been the subject of comparatively few 350 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT protests. Additions and new items are numerous. In some cases they are for new articles of commerce, but in most cases they are merely specific provisions for .articles that are at present rated by analogy or covered by indefinite or general provisions. It is impossible to say to what extent they represent increases or reductions. The respective classification committees and territories will be hereinafter, referred to as the oflScial, western, or southern com- mittee or territory. In a number of instances the chairmen of the classification committees, and particularly the chairmen of the official and western committees, in the light of information developed upon •the hearing, withdrew certain of their proposals or presented modified proposals which satisfied some of the protests in whole or in part. These concessions were incorporated in a supplement to the consolidated classification issued after the case was sub- mitted, and given the same distribution as the original publica- tion. In a few instances the revision made by the carriers in order to effect reductions that would satisfy the interested protestants of record resulted in new increases in related items or parts of items, which were not before the public when the hear- ings were in progress. These increases appear to be of minor importance and are generally of such a nature as to be unob- jectionable, especially when considered in connection with the ■ reductions to which they are related. We have stated that the consolidated classification marks an important step toward a uniform classification. Our hitherto most important case in which the matter of classification uni- formity was considered was the Western Classification Case, 25 I. C. C, 442, decided December 9, 1912. In that proceeding the lines parties to the western classification sought to establish a large number of changes, including revised rules and descriptions which had been recommended by the committee on uniform clas- sification. We there discussed classification matters rather fully and stated that in our opinion a uniform classification was practicable, but that there were great difficulties to be overcome, particularly in so far as uniform ratings are concerned. In the instant case several trafiic organizations, one or two state com- missions, and a number of the shippers who would be adversely affected by the changes proposed in the consolidated classification as a result of efforts toward uniformity went on record as being CONSOLIDATED CLASSIFICATION CASE 351 opposed to, or at least not advocating, a uniform classification, contending that there are such wide differences in conditions in the various parts of the country as to make a uniform classi- fication impracticable and undesirable. We are now, as formerly, fully convinced that a uniform classification, with such exceptions or commodity rates as may be necessary in special cases, is practicable and desirable, and practical uniformity should not be unnecessarily delayed. Naturally there must be both in- creases and reductions, which may adversely or advantageously affect individual shippers and carriers, but a broad view of the situation justifies the statement that carriers and shippers alike will be amply repaid in the end by the benefits which will accrue from uniformity. The fact that a uniform classification would be of convenience is a consideration of relatively minor import- ance; we have advocated uniformity because it is an essential part of the general scheme which contemplates greater con- sistency in rate making and elimination of discriminations and inequalities. Placing the ratings in juxtaposition in three parallel columns opposite the descriptions impresses us as never before with the great lack of consistency that exists among the three classifica- tion territories. Many of the inconsistencies are due to consider- ations of minor importance and could be removed without changes in rate scales and, in our view, without serious effect upon any one, particularly in so far as less-than-carload ratings are concerned. In large part different ratings in the three territories are not due to actual or substantial differences in circumstances and conditions, but are the result of mere differ- ences of opinion and the natural inclination of traffic officials to give expression to their respective theories of classification. For instance, on furniture in less than carloads, the chairman of the official committee, following a practice of long standing in his territory, proposes the same rating for the articles wrapped as for the articles boxed or crated. The chairman of the southern and western committees in some instances do the same thing; in others they do not, but propose ratings one or two classes higher for articles wrapped than if boxed or crated. Moreover, the proposals of the three chairmen, even as to one and the same article of furniture, are in some cases directly opposed to each other. An interesting example of this is shown below. The ratings are for less than carloads. 352 FUNCTIONS OF I, C. C. IN ENFORCEMENT OF ACT Item Article Ratings Offi- cial South- ern West- em 180 181 181 185 8-9 11-12 1-2 13 Furniture: Benches, dentists laboratory — Wrapped in burlap In boxes or crates Kitchen cabinets, set up — Wrapped in burlap Wrapped in fibreboard In boxes or crates ChiEforobes (chiEfoniers and wardrobes combined), set up — Wrapped in burlap In boxes or crates Wooden desks, set up — Wrapped in burlap or fibreboard . In boxes or crates Wooden desks, knocked down — Wrapped in burlap or fibreboard . In boxes or crates 14 n n 1 Dl 11 Dl 11 Dl n U n Dl u 'u n 11 n 1 H li 1 li 1 2 1 Conceded first class at hearing Several other examples of lack of uniformity, most of which could probably be dealt with without great difficulty, are shown below. The ratings are for less than carloads Item Article Ratings Page Offi cial South- ern West- em 150 2 10 27 Electric exhaust fans ... 2 'li li 1 2 3 3 1 1 2 2 2 2 3 Dl 322 Dressed poultry: In barrels with cloth tops 1 388 In barrels or boxes Canned vegetables, etc. : In glass or earthenware, packed — In crates 1 3 In barrels or boxes 4 In metal cans — In crates 3 In barrels or boxes 4 1 Conceded li at hearing CONSOLIDATED CLASSIFICATION CASE 353 We show below a few examples of lack of uniformity that probably had their origin in peculiar conditions of the distant past. Item Article Ratings Page Offi- cial South- ern West- ern £115 £165 19 24 12 Banana carriers, old, any quantity Rice flour: 4t 1 4 6 1 5 Dl 6 C 5 D 4 3 Carloads 5 £166 Fodder, in machine-pressed bales: 3 Carloads c 1 ' In supplement The instances cited in these tables are typical of thousands of others that probably would not exist but for the fact that the respective classification committees have for years followed precedents and have acted according to their different opinions or upon different information. Recently they have been working more in unison, and when additional provisions are established to cover new articles of commerce the ratings are generally made uniform, except when to do so would violate some unusually important and well-established policy in one or more of the territories. The continued use of the intermediate or split classes of R-25 and R-26 in the oflBcial classification constitutes one of the princi- pal difficulties in reaching uniform ratings on the higher classes of freight. R-25 is 15 per cent less than second clasq, subject to third class as a minimum. R-26 is 20 per cent less than third class, subject to fourth class as a minimum. These classes were formerly used to a rather limited extent, but additional articles have been assigned to them from time to time, until in the con- solidated classification they are numbered by hundreds.^ 1 R-25 rating is proposed on 387 articles in less than carloads. The ratings proposed on these articles in southern territory are second class or higher in about 44 per cent of the cases and third class or lower in the balance of the cases. The ratings proposed on the same articles in western territory are second class or higher in about 54 per cent of the cases and third class or lower in the balance of the cases — {Continued on page 36^.) 354 FUNCTIONS OP I. C. C. IN ENFORCEMENT OF ACT While it is possible to remove many of the present incon- sistencies without changes in rate scales, it should also be borne in mind that an absolutely uniform classification could be prepared and proposed only in connection with a universal system of rate scales having a uniform number of classes. In our view a desirable arrangement would be to have in each scale at least ten classes related somewhat as shown below; practically all less-than-carload traflBc to be confined to the first four classes, and a redistribution made of the articles in the carload classes: Classes 1 2 3 4 5 6 7 8 9 10 Percentages 100 85 70 60 45 35 30 25 22i 20 Many articles that now move under commodity rates and under exceptions to the classifications could be assigned ratings in such a scale that would result in the application, of rates not substantially higher or lower than now apply. This would be particularly true of the official and southern territories. The percentages in the above scale do not differ greatly from those observed in a large portion of the country. . . . As we have pointed out, most of the increases proposed have no necessary connection with the work of consolidating the rules and descriptions. None of them, except such as were necessarily or reasonably incident thereto, were contemplated by us when we suggested a unification of the rules and descriptions, and, as we understand it, were not in the mind of the director of traffic when he appointed the special committee. When the case was as- signed for hearing we did not realize that there was such a vast number of changes that had no necessary connection with the work required of the special committee, and, as we understand it, the executive authorities of the Railroad Administration them- selves were not fully cognizant of the magnitude of the proposal which had been put forward. R-26 rating is proposed on 401 items in less than carloads. The ratings proposed on these items in southern territory are third class or higher in about 43 per cent of the cases and fourth class or lower in the balance of the cases. The ratings proposed on the same items in western territory are third class or higher in about 66 per cent of the cases and fourth class in the balance of the cases. We have no figures as to the articles that are rated R-25 and R-26 in carloads. CONSOLIDATED CLASSIFICATION CASE 355 The Director General did not intend that the consolidated classification should be a revenue measure, and the chairmen of the classification committees disclaim any purpose on their part to make it such. While in fact it would yield the carriers some additional revenue, the record is convincing that, in the main, the proposed increases reflect conscientious efforts to bring about a proper relationship of ratings and to fairly distribute transportation expenses over the various articles of traffic. A study of the changes in ratings proposed by the classification chairmen disclosed inconsistencies in each territory which ap- parently we could not endorse. We therefore made a compre- hensive analysis of the existing and proposed ratings to ascertain whether or not we could properly recommend, with modifications, the somewhat general revision of ratings proposed, or an ampli- fication of those proposals. We find that we can not properly recommend either, for the reason that many and important changes as to which interested shippers have had no notice or opportunity to be heard would be included. Our analysis of existing and proposed ratings was made with a view of also ascertaining what changes in existing ratings other than those proposed would, in the judgment of our classification and general traffic experts, formed without fully hearing shippers or carriers that would be affected thereby, be proper to propose in any general revision of ratings having for its principal pur- pose attainment of a higher degree of uniformity. The results of this analysis apear in Appendix No. 6, and constitute practically a uniform classification so far as the first four classes are concerned. The results of this laborious work are thus preserved. They will be available and valuable in the future as efforts in the direction of uniformity progress. They must be under- stood to be the tentative views of our expert assistants who heard the case and in no sense as findings or conclusive sug- gestions by us. However, the suggestions in this appendix, so far as they affect descriptions, packing) specifications, and minimum and estimated weights are adopted as recommenda- tions by us without prejudice. We cannot recommend the increased ratings as proposed, nor can we recommend, with modifications, those proposed unac- companied by many others that have not been proposed and as to which no opportunity for hearing affected parties has been afforded. We shall not recommend any changed ratings except 356 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT as the establishment of new items may indirectly effect changes, and such changes, as may be a necessary part of the establish- ment of uniform descriptions of articles, uniform minimum weights, or uniform packing requirements. Our recommendations as to such changes will not prejudice any complaint that may be filed as to individual changes that are believed by complain- ant to result in unreasonable rates or in undue prejudice. . . . SOUTH BEND CHAMBER OF COMMERCE v. DIRECTOR GENERAL 57 I. C. C. 215 (1920) Meyer, Commissioner: This case was made the subject of a proposed report which was served upon the parties. Exceptions were filed by the com- plainants and the Michigan City intervener and oral argument had. The initial complainant herein is a corporation organized to further the commercial, industrial, and municipal interests of South Bend, Ind. Its members and the other complainants herein are corporations, partnerships, and individuals having their principal places of business for the manufacture and sale of various commodities at South Bend, Mishawaka, Elkhart, Goshen, and Napanee, Ind. The complaint of these cities is that for the transportation of class and commodity traffic be- tween those cities and points in trunk line territory and New England territory shippers are subjected to the payment of rates which are unjust and imreasonable, absolutely and relatively, in violation of the act to regulate commerce and the federal control act; and which are unjustly discriminatory and unduly prejudicial and in violation of the long-and-short-haul provi- sion of the fourth section of the act to regulate commerce. The class rates paid by the complainants between South Bend and the associated cities and New York, N. Y., are, in cents per 100 pounds, for the six classes, as follows: Classes 1 2 3 4 5 6 Rates 108 95 72 50.5 43 36 SOUTH BEND CHAMBER OF COMMERCE V. DIRECTOR GENERAL 357 Between trunk line territory and central territory, rates are adjusted in relation to the scale of rates applicable between Chicago and New York, which are regarded as base rates and Chicago as a 100 per cent point. Points in central territory are placed in groups which take percentages of the base rates, theoretically in the proportions that the short-line distances between such points and New York bear to the short-line dis- tance between Chicago and New York. The percentages on east- bound trafiBc are not always the same as on westbound traffic. Rates between points in central territory and points in trunk line territory, other than New York, are made differentially higher or lower than rates to or from that point. Under this adjustment the complaining cities are grouped with other points in northern Indiana taking 96 per cent of the base rates. Complainants contend that their manufacturers and jobbers compete with manufacturers and jobbers of similar character, particularly those located in the central and northern portions of the states of Ohio and Indiana and that portion of the southern peninsula of Michigan lying immediately north of the complaining cities; that the revenue per mile of haul under rates between the competitive territory specified and New York is lower than that under rates paid by the complaining cities; that their favorable location on the great channels of through transportation between Chicago and New York entitle them to rates made 92 per cent of the base rates, which would reduce their rates to and from New York in cents per 100 pounds on the re- spective classes in the following amounts: Classes 1 2 3 4 5 6 Amounts 4.5 4 3 2 1.5 1.5 The Chamber of Commerce of Michigan City, Ind., composed of merchants and manufacturers of that city, filed a similar complaint, which was permitted to be filed as of the nature of an intervention. Michigan City is grouped with Chicago and other points in the 100 per cent group. It, too, is seeking a reduction of its percentage to 92 per cent, which would result in reductions in the rates in the following amounts: Classes 1 2 3 4 5 6 Amounts 9 8 6 4 3.5 3.5 358 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT In the Michigan Percentage Cases, 47 I. C. C, 409, we held that rates to certain points in Michigan were unduly prejudiced to such cities, and that the prejudice could be removed only by reducing the percentages of the Michigan groups. Grand Rapids, Kalamazoo, Marshall, Battle Creek, and other points in Michigan in the 96 per cent group were reduced to 92 per cent. One effect of our order in that case was the division of the former 96 per cent group at the Indiana-Michigan state line. After the filing of the complaint in this case, in a petition to reopen the Michigan Percentage Cases, supra, the Director General averred, among other things, that the discrimination alleged by the complainants herein, if any existed, was due solely to the fact that the de- fendants in that case had obeyed our order and that the only proper method of removing such discrimination was to change the percentage bases in effect in Michigan, and especially in the 92 per cent group. The petition was denied. Some of the com- plainants in that case, interested in the preservation of the adjust- ments there obtained, intervened in the present case. South Bend, Mishawaka, Elkhart, and Goshen are in the central portion of northern Indiana near the Indiana-Michigan state line. South Bend is less than 7 miles south, and Niles, Mich., in the 92 per cent group, is 5 miles north of that line. South Bend is 96 miles east of Chicago. By railroad Mishawaka is 4 miles east of South Bend, but its suburbs adjoin those of South Bend and the two cities are practically one industrial community. Elkhart is 11 miles and Goshen 31 miles east of Mishawaka. The complaining cities are located between Chicago and Toledo, Ohio, on the main line of the New York Central Railroad. South Bend and Mishawaka are also on the line of the Grand Trunk Western Railway between Chicago and Kala- mazoo, Mich. Goshen and Elkhart are served by the Michigan division of the Cleveland, Cincinnati, Chicago & St. Louis Rail- road operating from Benton Harbor, Mich., to Louisville, Ky. A branch of the Michigan Central connects South Bend with the main line of that company. In addition other north-and-south lines such as those of the Lake Erie & Western, New Jersey, Indiana & Illinois railways and the Pennsylvania Company reach South Bend, and in connection with eastern lines of the Baltimore & Ohio Railroad, Wabash Railroad, and the Pennsyl- vania Company form other routes. Napanee is on the main line of the Baltimore & Ohio Railroad between Chicago and Balti- SOUTH BEND CHAMBER OF COMMERCE V. DIRECTOR GENERAL 359 more, Md. It is 9 miles west of Milford Junction, Ind., which is 11 miles south of Goshen. Michigan City is located on the shore of Lake Michigan, 56 miles east of Chicago and about 10 miles southwest of New Buffalo, Mich., a point in the 92 per cent group. It is on the main lines of the Michigan Central and Pere Marquette railroads. It is also served by the north-and-south lines of the Lake Erie & Western and the Chicago, Indianapolis & Louisville railroads and by traction lines. Under the formula used in making these percentage-group rates, the desired percentage is obtained by deducting a fixed terminal charge of 6 cents per 100 pounds from an assumed rate from Chicago to New York of 25 cents per 100 pounds; the re- mainder is divided by the short-line distance from Chicago to New York; the result is multiplied by the short-line distance of the point from which the percentage is sought from New York, the terminal allowance is again added and the percentage which the resulting rate bears to the 25-cent rate is the percentage to be used. Prior to The Five Per Cent Case, 32 I. C. C, 325, the sixth- class rate from Chicago to New York was 25 cents per 100 pounds. Due to the increases allowed in that case, in The Fifteen Per Cent Case, 45 I. C. C, 303, and General Order No. 28 of the Director General of Railroads, the present sixth-class rate from Chicago to New York is 37.5 cents per 100 pounds, or 50 per cent higher than the 25-cent rate. Consequently in their exhibits complain- ants have deducted 9 cents as a terminal allowance from the sixth-class rates, and, following the formula described, compared the resulting revenue per mile of haul at the complaining cities with that at points in Ohio and Michigan, and showed that the revenue under rates to the complaining cities is higher than that from rates to points in Ohio and many of the Michigan points. Defendants contend that this manner of obtaining rates does not correctly disclose the relative situation for the reason that the revenue per ton per mile decreases as the distance increases only because the terminal allowance, a constant factor, is neces- sarily proportionately diminished as the distance increases. They therefore compare the revenue per ton per mile under the fifth- class rates, and the revenue per 100 pounds per mile under the sixth-class rates, showing that with few exceptions the revenue per ton per mile and per 100 pounds per mile from rates to the complaining cities is lower than from rates to points in Ohio. 360 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT The fifth-class rates were used for the reason that over 50 per cent of the carload ratings in the official classification are of that class, whereas but 11 per cent are of sixth class. In many instances the western edges of the rate groups are north-and-south lines of railroad, and many important points formerly recognized as basing points, such as Cleveland and Toledo, are in the western part of the groups. In a grouping system, it necessarily follows that rates at such points are lower, distance considered, and the revenue per ton per mile less than at other points in the group. Michigan City is on the extreme eastern edge of the 100 per cent group. To grant it the relief prayed, a 92 per cent basis, would make the revenue per ton per mile under rates between ' New York and Michigan City lower than that under rates be- tween New York and Chicago. Rates between New York and Michigan City are the same as the rates between New York and Chicago. Rates between Michigan City and the west are higher than those between Chicago and the west. Gary, East Gary, and Porter, Ind., are in the Chicago switching limits, Michigan City is not. Each case must be considered on its merits and whether the adjustment between Michigan City and the west is unreasonable or prejudicial is not in issue here. West of the line of the New York Central running north from White Pigeon to Grand Rapids, lie 10 cities which have rates that yield lower revenue per ton per mile from the fifth-class rates from and to New York than do the rates to and from South Bend and associated cities and Michigan City. It is practically admitted by the defendants that these points have a basis of rates which is lower than that to which their location entitles them. That the rate disparity between Michigan City in the 100 per cent group, and New Buffalo in the 92 per cent group, is indefensible is admitted. Because of deflation in the percentages and consequent lower rates to and from points in Michigan beyond South Bend, Elk- hart, and Goshen, departures from the provisions of the fourth section exist. The Cleveland, Cincinnati, Chicago & St. Louis Railroad runs from Benton Harbor, through Niles, Elkhart, and Goshen, and south through Claypool, Bolivar, and New Paris, Ind., its junctions with the New York, Chicago & St. Louis, Erie, and Wabash railroads. These junctions, also Marion, Milford Junction, and Plymouth, Ind., in connection with eastern carriers, SOUTH BEND CHAMBER OF COMMERCE V. DIRECTOR GENERAL 361 are used in making through rates via which Niles and Benton Harbor are accorded through rates on the basis of 92 per cent of the base rates. The Grand Rapids branch of the New York Central Railroad from Elkhart to Grand Rapids runs through White Pigeon, Three Rivers, Kalamazoo, and Allegan. To and from the territory along this branch, in the 92 per cent group, through traffic is handled via Goshen and Elkhart, because it is more economical to do so than to move it via the shorter route of the same line via Grand Rapids, Lenawee Junction, and Toledo. After the Michigan Percentage Cases, supra, the interested carriers repre- sented to us that departures from the long-and-short-haul pro- vision of the fourth section of the act would be created and departures increased at intermediate points in Ohio and Indiana in complying with the decision. We accordingly authorized temporary relief from the application of the fourth section in this respect. Defendants urge that if the basis sought by complainants is granted, other cities and towns in central territory, the per- centages of which are not exactly upon the formula basis, would seek similar relief, and that a strict application of the per- centage formula through the territory would involve serious reductions of revenue. They also call attention to the fact that many of the railroads serving the complaining cities are among those which failed in 1918 to earn their standard returns. While these are proper elements for consideration in determining the reasonableness of rates, they constitute no bar to the granting of relief if rates are shown to be relatively unreasonable or unduly prejudicial. Defendants also urge that the preponderance of tonnage is eastbound rather than westbound; that overhead tonnage trans- ported from the western edge of central territory, through Illinois, Indiana, and Ohio, increases very materially in the latter state; that the Mahoning and Shenango Valleys in Ohio and Pennsylvania, the great iron and steel producing section of the country, produce enormous volumes of tonnage both for east- bound and westbound movements far in excess of all tonnage produced in Indiana, and that basing points in Ohio may logi- cally be accorded rates which are related more closely to those which an exact application of the percentage formula would afford them than could be claimed by the cities of Indiana with their comparatively lighter tonnage. 362 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT Upon consideration of the whole record, we are of the opinion and find that the rates between Michigan City, South Bend, Mishawaka, Elkhart, Goshen, and Napanee, on the one hand, and points in eastern trunk line and New England territories, on the other, are relatively unreasonable and unduly prejudicial to such cities and unduly preferential of cities in central and northern Ohio, and in Michigan, west of the line of the New York Central Railroad from Elkhart to Grand Rapids and south of the line of the Grand Trunk Western from Grand Rapids to Grand Haven. The undue prejudice with respect to Ohio points should be removed by reducing the percentage of South Bend and asso- ciated cities to 94 per cent, and of Michigan City to 96 per cent, and with respect to the southwestern Michigan points can be removed by increasing the percentage of Niles, Buchanan, Hart- ford, Holland, and points east thereof to the line above described to 94 per cent, and points west thereof to 96 per cent. The short-line routes to Kalamazoo and Grand Rapids and points on and east of the line above described do not pass through the complaining cities, and with rates to both groups properly adjusted, it is not apparent that the complaining cities would be injured by allowing traffic destined to points properly en- titled to lower rates to move over routes through the higher- rated group, and' as to these points we shall allow the temporary relief granted in Fourth Section Order No. 7149 to stand. The routes and distances to points west and south of the lines above described from Elkhart to Grand Haven are not such as to justify lower rates than at the complaining cities, and that portion of the fourth section order permitting the maintenance of lower rates to such points than to intermediate points will be revoked. Appropriate orders will be entered. Hall, Commissioner, dissents. NORTH IOWA TRAFFIC ASSO. V. DIRECTOR GENERAL 363 NORTH IOWA TRAFFIC ASSOCIATION V. DIRECTOR GENERAL 58 I. C. C. 491 (1920) Division 2, Commissioners Clark, Meyer, and Woolley Clark, Chairman: A report in this case was proposed by the examiner. Excep- tions thereto were filed by complainant. This proceeding is in substance a continuation of The Missis- sippi River Case, 28 I. C. C, 47, 29 I. C. C, 530, as supple- mented by B. R. Comm'rs 0|/ Iowa v. A. A. R. R. Co., 46 I. C. C, 20, and of Interior Iowa Cases, 46 I. C. C, 39. In those cases, supplemented by a condition in supplemental order of December 29, 1914, in The Five Per Cent Case, 31 I. C. C, 351, 32 I. C. C, 325, we prescribed, with certain modifications, between points in oflicial classification territory east of the Indiana-Illinois state line, hereinafter termed eastern points, and upper Mississippi River crossings, class rates not in excess of those contemporane- ously maintained between eastern points and lower Mississippi River crossings; also proportional distance class rates between Mississippi River crossings and interior Iowa points applicable on traffic to and from eastern points. In the cases referred to Dubuque, Iowa, was considered the northernmost river crossing. The distance proportionals to points in northern Iowa therefore are generally based on the distance beyond Dubuque and through class rates between the east and northern Iowa are made by adding to the rates between the east and the Mississippi River the Iowa distance proportionals beyond. Complainant is an association composed of the commercial organizations of 27 towns located in the two northern tiers of counties in the state of Iowa. Among these towns are North McGregor, on the west bank of the Mississippi River opposite Prairie du Chien, Wis., 54 miles north of Dubuque, and Mason City, Iowa, 117 miles west of North McGregor via the Chicago, Milwaukee & St. Paul Railway, hereinafter called the Mil- waukee. It is alleged that the class rates between eastern points and points in northern Iowa are unreasonable and unduly pref- erential of cities in Iowa on the Mississippi River and in the 364 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT central and southern portions of the state. Complainant asks primarily the establishment of North McGregor as a Mississippi River crossing and basing point for the contruction of through class rates. It asks that proportional class rates in northern Iowa be based on the distances from North McGregor where such distances are less than those from Dubuque. Originally the same rates were requested between eastern points and North McGregor as between eastern points and Mississippi River crossings, Dubuque and south, the rates between New York, N. Y., for instance, and the Mississippi River being 117 per cent of the New York-Chicago rates. However, complainant would be satisfied if rates were established between North Mc- Gregor and eastern points based on the relation of the Chicago and North McGregor distances. For the purpose of comparison New York may be taken as a representative point in the east and Mason City as a representative point in northern Iowa. As the propriety of the- relationship between the various classes is not in issue, it will be sufficient to show the first-class rates. The rates apply in both directions, and for convenience in state- ment only those applying westbound will be referred to. Rates are stated in amounts per 100 pounds. The evidence relates almost entirely to all-rail rates. We have previously recognized 912 miles as the short-line distance via all-rail routes from New York to Chicago. We have thought it proper in the discussion of this case to adopt the distance via the Milwaukee from Chicago to North McGregor used by com- plainant, which is 239 miles by way of Madison, Wis., aggregat- ing 1,151 miles from New York, or 126 per cent of the distance to Chicago. The Milwaukee is the only road which crosses the Mississippi River at North McGregor, and it serves most of the northern Iowa points. The following statement shows the rates and distances from New York to Chicago, North McGregor, Mason City, and a few of the interior Iowa cities located in the central and southern portions of the state: NORTH IOWA TRAFFIC ASSO. V. DIRECTOR GENERAL 365 STATEMENT OF RATES AND DISTANCES FROM NEW YORK TO CHICAGO AND VARIOUS POINTS IN IOWA. Destination Rate Distance in mUes Ton-mile revenue, in cents Chicago North McGregor Do Mason City Do Cedar Rapids . . . Marshalltown . . . Des Moines Fort Dodge . . . . Waterloo Ottumwa $1,126 912 2.47 1 1.515 "1.42 1 1.765 2 1.72 1,151 1,151 1,268 1,268 2.62 2.47 2.78 2.71 1.515 1.715 1.715 1.815 1.565 1.515 1,127 1,197 1,253 1,274 1,173 1,170 2.69 2.87 2.74 2.85 2.67 2.59 1 Present rate. Rate sought The distances to cities in central and southern Iowa are based on the short-line routes to the Mississippi River shown at page 49 of the first report in The Mississippi River Case, supra. The present rates to North McGregor and Mason City are $1,315 to Dubuque, which takes Mississippi River rates, plus the Iowa proportionals of 20 and 45 cents for distances of 54 miles and 171 miles, respectively, beyond Dubuque. The rate sought to North McGregor is 126 per cent of the New York- Chicago rate, and the rate sought to Mason City is 30 cents higher, which is the Iowa proportional for 117 miles, the distance beyond North McGregor. The Milwaukee crosses the Mississippi at Davenport, Sabula, and North McGregor, Iowa ; La Crosse and Wabasha, Wis. ; and St. Paul, Minn. There are steel bridges at all of these points except Wabasha and North McGregor, where pontoon bridges are used. Through traffic for southeastern Iowa is handled over the Davenport bridge. Substantially all through traffic for the remainder of Iowa, including the northern portion of the state, is handled over the bridge at Sabula, 44 miles south of Dubuque. Through traffic for St. Paul, Minn., and points beyond moves over the La Crosse bridge. Generally speaking, only traffic local to the Prairie du Chien and the Iowa and Dakota divisions 366 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT of the Milwaukee is handled across the river at North McGregor. Those divisions extend to the east and west of North McGregor. There is no through train service from Chicago over the Prairie du Chien division and across the North McGregor bridge. The movement via thkt route would require set-outs at three transfer points. It is testified for defendants that the bridge at North McGregor and the lines in Wisconsin east thereof are no more a factor in the handling of through traffic from eastern points to northern Iowa than if they had never been constructed. The pontoon bridge at North McGregor is single track and is in two sections — one over the east channel, 209 feet long, and one over the west channel, 276 feet long. The tracks con- necting these pontoons with each other and with the banks of the river run over embankments and bridges, most of which are of wooden-piling construction, with a few steel spans. A locomo- tive of 90 tons is the largest that can be used over the bridge. Smaller locomotives are generally used, on account of lack of traffic. The Prairie du Chien division is a single-track line of relatively light construction. The line of the Milwaukee from Chicago to Sabula, however, is part of the main line to the Mississippi River and carries a very large volume of tonnage. It has double track, with 100-pound rails, the entire distance. The density of traffic is also heavy on the line of the Milwaukee from Sabula to North McGregor. The pontoon bridge at Wabasha serves the Chippewa Falls branch of the Milwaukee in Wisconsin. The only other pontoon bridge operated by that road [is] across the Missouri at Cham- berlain, S. Dak., and serves that portion of the line ending at Rapid City, S. Dak. Each of these pontoon bridges is located at a point where the cost of constructing a permanent steel bridge would be great and where the traffic is not handled in such volume or with such regularity as to justify the establishment of per- manent structures. A pontoon bridge has been maintained at North McGregor since 1874 and has been replaced at intervals of approximately 15 years. Occasionally this bridge is closed to traffic, for short periods, due to ice in the river or adverse weather conditions. The record shows that 406 loaded cars were moved west- bound over the McGregor bridge in March, 1918; 555 in Septem- ber, 1918; and 545 in May, 1919. Of these cars 52 originated east of the Indiana-Illinois state line; the remainder moved NORTH IOWA TRAFFIC ASSO. V. DIRECTOR GENERAL 367 almost exclusively from Wisconsin points. For the calendar year 1918 the Milwaukee handled 1,194,961 long tons over the North McGregor bridge; 11,569,099 over the Sabula bridge, and 2,765,476 over the Davenport bridge; the Chicago Great Western handled 2,843,502 tons; and the Illinois Central 2,508,515 tons over the bridge at Dubuque. The rates between eastern points on the one hand and Mis- sissippi River and interior Iowa points on the other have been the subject of several complaints, and the present rates are the result of a gradual process of readjustment. The Mississippi River rates are the result of competition for traffia between the east and the Missouri River. In previous cases we have given in detail the history of these rates. Rates to the Mis- souri River from the east were originally on basis of the com- bination of single-line rates to St. Louis andi local rates be- yond. Several lines from the east terminated at Chicago and certain western lines operated between Chicago and the Missouri River by way of the upper crossings. The combina- tion rates by way of these routes were higher than the combinations through St. Louis, Mo. To induce the movement of traffic via the upper crossings, proportional rates lower than the local rates were established to and from those crossings. In The Mississippi River Case, supra, we originally prescribed class rates between the upper crossings and the east slightly in excess of the rates to and from the lower crossings. In The Five Per Cent Case, supra, we permitted increases in rates to and from the Mississippi River crossings and restricted the. increases to the upper crossings to amounts which would equalize them with the lower crossings. This parity of rates has since been maintained. The Illinois Central Railroad is the most northerly line which has its own rails between Chicago and the Missouri River, and it fixes the northern boundary of the so-called prorating territory. The Illinois Central crosses the Mississippi at Dubuque, and Dubuque has been recognized as the northern-most river crossing. With respect to Mississippi River crossings, Dubuque and south, we said, in Interior Iowa Cities Case, 28 I. C. C, 64: " The proportional rates to the Mississippi River are not made, and never have been made, with special reference to the traffic of interior Iowa points. On the contrary, they are made largely to meet the conditions of through traffic to the Missouri River and to the territory beyond." 368 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT In The Wisconsin Rate Cases, 44 I. C. C, 602, we said with respect to La Crosse, which is 66 miles north of North McGregor: " It is with relation to the rates to the twin cities and not to Dubuque that the La Crosse rates are constructed." In that case we prescribed class rates from the east to La Crosse based on 145 per cent of the New York-Chicago rate, the distance from New York to La Crosse being 1,175 miles, or 129 per cent of the New York-Chicago distance. The present first-class rate from New York to La Crosse is $1,625. To the south of North McGregor, beginning with Dubuque, are the Mississippi River crossings to which rates from the east are based on the rates to St. Louis. To the north, beginning with La Crosse, is another group of Mississippi River points to which rates have been influenced by entirely different circum- stances and conditions, although a certain relationship between the two is recognized by the finding in The Wisconsin Rate Cases, supra. Complainant contends that the rates to North McGregor should be made with relation to the rates to Mississippi River crossings. It asserts that from approximately the northern one- third of central freight association territory and the northern two-thirds of eastern trunk line territory the distances to North McGregor are less than the average distances to St. Louis, Mo., and other lower Mississippi River crossings. Class rates from North McGregor and from the Mississippi River crossings are maintained upon a parity to Pacific coast points and points in the far west. To many points in New Mexico, Texas, Oklahoma, Kansas, and Nebraska the class rates from North McGregor are the same as from certain Mississippi River crossings, and higher than the rates from others in amounts ranging from 6 cents to 25 cents, first class. The situation is substantially the same with respect to class rates to North McGregor and Missis- sippi River crossings from the points referred to. In Iowa State Board Railroad Commissioner si v. A. E. R. R. Co., 28 I. C. C, 563, we approved a grouping under which rates from Utah and Colorado common points to North McGregor were made the same as to the Mississippi River crossings. The com- bination class rates from several eastern cities to North Mc- Gregor and the class rates from North McGregor to the principal cities in Kansas, Nebraska, and a number of other western states are higher in practically every instance than similar combinations of class rates to and beyond Chicago, St. Louis, and Dubuque. NORTH IOWA TRAFFIC ASSO. V. DIRECTOR GENERAL 369 While certain traffic is handled across the river at North McGregor, it is asserted for defendants that a consideration of the nature of the traffic, the character of the crossing, and the operating conditions upon the lines east and west of that point precludes from a physical standpoint the establishment of North McGregor as a river crossing for rate-making purposes. Com- petitive conditions which brought about the extension of the lower basis of rates to Dubuque do not exist at North Mc- Gregor. The rate assailed from New York to North McGregor is 135 per cent of the Chicago rate, whereas the distance to North McGregor is 126 per cent of the distance to Chicago, but in The Wisconsin Rate Cases, supra, and Chamber of Com- merce of Free-port, III, v. Ry. Co., 33 I. C. C, 673, we pre- scribed the following class rates which were higher than rates based on the relative distances from Chicago: From New York to - La Crosse, Wis Madison, Wis . Beloit, Wis. . . . Freeport, 111 . . Rockford, lU. . Per cent of New York- Chicago rate 145 125 118 114 112 Distance miles 1,175 1,042 1,003 1,026 999 Per cent of New York- Chicago distance 129 114 110 112.5 109.5 A reduction in the rates to North McGregor would disrupt the rate ' adjustment to southern Wisconsin and northern Illinois, especially to Madison, which is directly intermediate to North McGregor by way of the Milwaukee, and which is 100 miles nearer Chicago than is North McGregor. Mason City is served by five railroads — the Milwaukee, Chicago & North Western, Chicago Great Western, Chicago, Rock Island & Pacific, and the Minneapolis & St. Louis. It is the largest and commercially the most important of the northern Iowa cities. It produces a large volume of traffic, which is explained by complainants to be due to the fact that its four large industries — namely, brick and tile, cement, meat packing, and beet sugar — use raw materials which are produced in the territory immediately surrounding Mason City, and that 370 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT the carriers provide commodity rates for the outbound movement of the finished products. Manufacturers and shippers at Mason City and various other northern Iowa towns, who are in active competition with sim- ilar enterprises located at Iowa cities in the central and southern parts of the state and on the Mississippi River, assert that the advantage in class rates from the east enjoyed by competing towns restricts the growth of industries in the northern part of the state. The Iowa proportional rates applying from the Mississippi River to northern Iowa points are compared with the proportionals from the river to cities in central and southern Iowa located substantially similar distances west of the Mis- sissippi River. The differences thus shown, which are always in favor of the central and southern cities, grow out of the differences in distances of the respective points from an estab- lished Mississippi River crossing. For example, to Garner, Iowa, 137 miles west of North McGregor, the Iowa first-class proportional is 50 cents, based on the distance from Dubuque of 191 miles, while to Des Moines, Iowa, the proportional is 40 cents, based on the distance of 158 miles from the nearest crossing. Des Moines is almost due south of Garner. Not- withstanding the fact that these proportional rates are de- termined by applying the same distance scale from Mississippi River crossings, ton-mile earnings to northern Iowa points are uniformly higher than those to points in the central and southern part of the state, approximately the same distances from the Mississippi River. This is due to the comparison of the actual distances of the central and southern Iowa points from the nearest river crossings, which are also the rate-making dis- tances, with the distances of the northern Iowa points from North McGregor, which are shorter than the rate-making dis- tances. The combined first-class rates from various eastern cities to Mason City and Dubuque, plus the first-class rates from those points to Iowa destinations for approximately equal dis- tances indicate an adjustment in favor of Dubuque. It is asserted for defendants that the present basis of class rates prescribed by us from the east to interior Iowa, as applied by the carriers to the stations in northern Iowa, results in reasonably low rates. To Mason City the proportional rates from the Mississippi River are based on the distances from Dubuque of 171 miles by way of the Milwaukee. From the Mil- NORTH IOWA TRAFFIC ASSO. V. DIRECTOR GENERAL 371 waukee's crossing at Sabula, over which traffic from the east moves, to Mason City the distance is 215 miles, or 44 miles in excess of the rate-making distance. The distances from the crossings used by the other lines serving Mason City range from 40 miles to 71 miles in excess of the rate-making distance. A finding for the complainant in this case would not change the routing of through traffic, and if the Iowa proportionals to Mason City were based on 117 miles, the distance from North McGregor, the distances of the five roads serving that point from the points at which their traffic from the east crosses the Mississippi River would be from 94 miles to 125 miles in excess of the rate-making distance. The complaint, as modified, seeks rates to North McGregor based on 126 per cent of the New York-Chicago rates, to which are to be added the Iowa proportionals, based on the distances of the interior points from North McGregor. It is contended for defendants that the points in northern Iowa are located off the main routes of traffic ; that the lines serving these points from the east could properly be termed branch lines; and that the northern Iowa stations should be on a somewhat higher basis than stations in the central and southern parts of the state. In Corn Belt Meat Producers' Asso. V. C, B. & Q. R. R. Co., 17 I. C. C, 533, we approved ra*es on live stock from stations in northern Iowa to Chicago upon a relatively higher basis than from the central portion of the state. In that case we stated that the northern section of Iowa is not on what might be considered the main line of traffic. If the basis originally sought by complainant were established and the rates to stations on the Chicago & North Western, just across the line in Minnesota, remained the same, the following spread in rates would result: The first-class rate from New York to Scarville, Iowa, would be $1,525 and to Kiester, Minn., $1.95; to Sibley, Iowa, $1.74; and to Bigelow, Minn., $2,125. Under complainant's modified proposal the first-class rate from New York to North McGregor, and therefore to the Iowa points shown, would be 10.5 cents higher. The proportional rates from the Mississippi River to Mason City are generally lower than those in effect on March 30, 1914. At that time the average of the first-class proportionals from the Mississippi River to Mason City was 83 per cent of the first-class proportional from the Mississippi River to the Missouri River, but the present Mason City proportional is only 65 per cent of the Missouri 372 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT River proportional. The proportional of 45 cents from the river to Mason City is compared with proportional rates from St. Louis to points in Missouri ranging from 48^ cents to 66^ cents for distances of 115 to 188 miles. The through class rates from Pittsburgh, Pa., Cincinnati, Ohio, and New York to points in Minnesota and Missouri for distances substantially equal to those to Mason City are uniformly higher than the present rates to Mason City. Several exhibits were presented to show the extent of the territory which would be affected and the amount of the reductions in rates if the prayer of the complaint were granted, which it will not be necessary to discuss other than to say that they are based on the complaint as originally filed and not as modified with respect to the rates to North McGregor. Upon consideration of all the facts of record, we find that the rates assailed are not shown to be unreasonable or unduly prejudicial. The complaint will be dismissed. BURNHAM, HANNA, HUNGER DRY GOODS CO. V. CHICAGO, ROCK ISLAND & PACIFIC CO. 14 I. C. C. 299 (1908) Clark, Commissioner: Complainants are individuals, partnerships, and corporations engaged in jobbing trade at Kansas City and St. Joseph, Mo., and Omaha, Nebr., to which points they ship via the lines of the defendants large quantities of goods from the Atlantic seaboard, largely under class rates, and from which points they distribute such goods throughout a large teritory to the southwest, west and northwest and also to a comparatively small and limited territory east of the Missouri River. In sale and distribution of their goods, complainants come in competition with jobbers located at Minneapolis and St. Paul, hereinafter referred to as the Twin Cities, and the complaint alleges unjust and unreasonable discrimination in favor of the Twin Cities and undue prejudice against Kansas City, St. Joseph, and Omaha, hereinafter referred to as the Missouri River Cities, due to and measured by the difference in the class rates BtJRNHAM, HANNA, MUNGER CO. V. C, R. I. & P. RY. CO. 373 from the Atlantic seaboard to the Twin Cities, as compared with like rates from same points to the Missouri River Cities. In testimony, briefs, and argument complainants make a strong attack upon the long-established system of rate making under which rates to points west of the Mississippi River are made upon the basis of the rates to the Mississppi River cross- ings. As railroads were constructed into the undeveloped west and, for a time at least, had their western termini at the east bank of the Mississippi River, it seems natural that when the river was crossed, and rates were established to points beyond, they should be constructed by adding certain sums to the rates already established to the river, and as additional lines were built and additional railroad crossings over the Mississippi River were constructed, competition between carriers and localities naturally established common rates to the Mississippi River crossings, especially when applied to traffic going beyond. As the west was further developed, this same condition and like results followed at the several crossings of the Missouri River, so that to-day the rates from the Mississippi River cross- ings to the Missouri River crossings, Kansas City to Omaha, inclusive, are the same, and from points east, to the Missouri River Cities, are the same via any of the Mississippi River crossings. East St. Louis to East Dubuque, inclusive. Complaint alleges unreasonableness of the class rates from the Atlantic seaboard, and the defendants named in the complaint were the Chicago, Rock Island & Pacific Railway Company, the Chicago, Burlington & Quincy Railway Company, the Chicago, Milwaukee & St. Paul Railway Company, the Chicago & Northwestern Railway Company, and the Chicago Great West- ern Railway Company. All of these are carriers whose lines do not extend east of Chicago, and all of them have lines from Chi- cago through the several Mississippi River crossings, to the Mis- souri River Cities. The defendants whose lines are east of Chicago were made defendants upon application of the Chicago & North- western Railway Company. It will, however, be seen that the complaint, the testimony, and the argument are all against the rates charged west of Chicago and the Mississippi River cross- ings. The Sioux City Commercial Club intervened and supported the complainants' request, introducing and emphasizing, however, 374 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT the view that whatever might be done for Omaha should like- wise be done for Sioux City, and arguing that as Sioux City was also a Missouri River crossing it should be placed upon a parity with Omaha. The St. Paul Jobbers and Manufacturers' Association of St. Paul, and the Commercial Club of Minneapolis intervened and in substance joined with and supported the de- fendants. The Chicago Association of Commerce and the Mer- chants' TraflBc Bureau and the Business Men's League of St. Louis appeared at the hearings on behalf of the commercial inter- ests of their respective cities, offered evidence and were heard on brief and in oral argument in defense of the system of rate construction based upon the Mississippi River, and in opposition to a rate adjustment that would give the Missouri River Cities an advantage at the expense of Chicago and St. Louis. Complainants allege that the class rates from the Atlantic seaboard, of which New York will be taken as representative, to the Missouri River Cities, to wit, in cents per 100 pounds, Class 1 2 3 4 5 Eate 147 120 93 68 67 are unjust and unreasonable ; that they are unjustly discrimina- tory against the Missouri River Cities as compared with the class rates from New York to the Twin Cities, to wit, in cents per 100 pounds. Class 1 2 3 4 5 Rate 115 99 76 53 46 and they ask that the Commission establish from New York to the Missouri River Cities the following through class rates in cents per 100 pounds, Class 1 2 3 4 5 Rate 110 95.25 72.5 51.5 44 together with proportionate reductions from eastern producing points as shown in Western Trunk Line Tariff No. 786, I. C. C. No. 678, or such other rates as may be found just and reasonable. Defendants, Chicago, Rock Island & Pacific Railway; Chicago, Burlington & Quincy Railway; Chicago, Milwaukee & St. Paul Railway; Chicago & Northwestern Railway, and Chicago Great Western Railway are parties to the tariff so referred to. It contains rates on classes and commodities from " Atlantic sea- BUENHAM, HANNA, MUNGEE CO. V. C, E. I. & P. EY. CO. 375 board and points west thereof, east of the western termini of the trunk lines " to St. Paul, Minneapolis, etc., and the term " Atlantic seaboard " is used herein in that sense. Defendants admit the correctness of the rates stated in the complaint, and the divisions thereof between the several carriers, and the distances via the various routes, but they deny that such rates are unjust and unreasonable, or unjustly discriminatory in comparison with the rates to the Twin Cities. Of the five original defendants, the Rock Island, the Northwestern, and the Great Western, allege justification for the lower rates to the Twin Cities on the ground of competition by water as well as of competition via the Canadian Pacific and the Minneapolis, St. Paul & Sault Ste. Marie Railway, hereinafter referred to as the Soo line. Of the numerous complainants only representatives of the dry goods interests appeared to give evidence at the hearings, with the exception of one wholesale grocer, introduced by the inter- vener, Sioux City Commercial Club. The jobbers of Sioux City sell goods in northwestern Iowa, southern Minnesota, South Dakota, northern Nebraska, and a part of Wyoming. They come into competition with jobbers at Chicago, Omaha, the Twin Cities, and other intermediate jobbing points, their strongest competition being with Omaha on the south and the Twin Cities on the north. With the exception of North Dakota, western and northwest- ern Minnesota, and Canada it may be said in general that the drys goods concerns in the Missouri River Cities compete in all the territory from the Missouri River to the Pacific Ocean and from the Canadian boundary to the Gulf, and in much of this territory they meet competition more or less keen from jobbers at Chicago, St. Louis, the Twin Cities, Denver, San Francisco, and various smaller jobbing points. In Montana, Washington, and common-points territory the Missouri River Cities jobbers meet strong competition from jobbers in the Twin Cities, New York, Chicago, St. Louis, and San Francisco; New York and the Twin Cities having an advantage in that territory of the difference between the rates from New York to the Missouri River Cities and from New York to the Twin Cities. In the west and southwest the strongest competitors of the Missouri River Cities are New York, Chicago, and St. Louis. In Iowa, south- eastern Dakota, and southwestern Minnesota the rates equalize 376 FUNCTIONS OF I. C. C. IN ENFOHCEMENT OF ACT at greater distances from the Twin Cities than from the Missouri River Cities. While the Missouri River Cities jobbers are at a disadvantage as compared with the Twin Cities jobbers in Minnesota, North Dakota, northeastern South Dakota, and Canadian territory, the Twin Cities jobbers are at a like and apparently equal dis- advantage in the territory immediately west and southwest of the Missouri River Cities and in the Black Hills district of South Dakota. There are points west of the Missouri River which can be reached by the jobber at St. Louis or at New York, under a combination rate based on St. Louis, cheaper than they can be reached by the Missouri River Cities jobbers under a combination rate based on the Missouri River, but the evi- dence seemed to show that in general this was where the applica- tion of a through rate at an intermediate point on the same line had that effect. The record shows that 3 wholesale dry goods houses at Kansas City, 4 at St. Joseph, and 2 at Omaha do an aggregate annual business of about $40,000,000. They estimate that their inbound freight charges amount to about 3:^ per cent of the total sales; that their total expen&es amount to 13 per cent of the total sales and that on an annual business of $5,000,000 the Twin Cities jobbers would have an advantage of approximately $40,000 over the jobbers at the Missouri River Cities by reason of the difference in freight rates. This estimate presumably assumes that the total of the year's sales is made in territory strictly competitive between the Missouri River Cities and the Twin Cities, and that it all moves under the first class rate. Complainants insist that the system of basing rates to the Missouri River Cities and points beyond upon the Mississippi River crossings is improper. Their expert testified that the Mis- sissippi River basis should be abolished, but he did not think the Missouri River basis should be abolished because, in his opinion, the country west of the Missouri River had not devel- oped sufficiently as yet to warrant that change. As has been noted, the Missouri River Cities have a certain territory naturally tributary to them in which the Twin Cities are apparently unable to compete with them, but in certain other territory naturally tributary to the Twin Cities, the Twin Cities jobbers have an advantage over the Missouri River Cities jobbers, and this must necessarily be so as to all distributing BUKNHAM, HANNA, MUNGER CO. V. C, R. I. & P. RY. CO. 377 centers if the cost of the service and the distance which goods are transported are to be given any consideration in determin- ing transportation rates. It is not possible to place all commer- cial centers on an equality in the cost of transportation except by basing transportation charges upon the same principle that underlies the Government's charges for the transmission of mail matter. It is therefore proper for us to here look into the question of not only what the rates are but upon what principles they are constructed, by what conditions they are controlled, and what would be the effect of important changes therein. Chicago is 912 miles and St. Louis is 1,063 miles from New York, Kansas City is 280 miles northwest of St. Louis, St. Joseph is about 65 miles northwest of Kansas City, and Omaha is approximately 200 miles northwest of Kansas City. The short line mileages from New York to the Missouri River Cities are via St. Louis to Kansas City, 1,342 miles; to St. Joseph, 1,390 miles; to Omaha, 1,477 miles, and via Chicago to Kansas City, 1,370 miles; to St. Joseph, 1,382 miles, and to Omaha, 1,405 miles. The short line mileage from Chicago to Kansas City is 458 miles, to St. Joseph 470 miles, and to Omaha, 492 miles. The short line mile- age from Chicago to Minneapolis is 420 miles and to St. Paul 409 miles. The average distances, however, between Chicago and the Missouri River Cities and between Chicago and the Twin Cities are approximately the same. For a long time the rates from New York to points east of Chicago and to points between Chicago and the Mississippi River have been established on a percentage basis, the New York-Chicago rate being taken as 100 per cent. The rates from New York to points east of Chicago are fixed at certain per- centages below the New York-Chicago rates and from New York to points beyond Chicago up to the Mississippi River crossings at certain percentages above the New York-Chicago rates. Rates from New York to the Mississippi River crossings were fixed by the establishment of the New York-East St. Louis rate at 116 per cent of the New York-Chicago rate, and it will be seen that the mileage from New York to East St. Louis is substantially 116 per cent of the mileage from New York to Chicago. On January 1, 1908, the bridge tolls between East St. Louis and St. Louis were taken into the through rates and St. Louis, Mo., and East St. Louis, 111., were placed upon the 378 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT basis of 117 per cent of the New York-Chicago rates, which resulted in increasing the class rates 1 cent in each of the first three classes. The rates and divisions quoted herein, however, are those in effect at the time of the hearing of this case. East St. Louis being a Mississippi River crossing, and the rates having been established at 116 per cent of the New York- Chicago rates, the rates from New York to all of the othef Mississippi River crossings to and including East Dubuque, 111., were fixed the same as to East St. Louis on trafiic moving through them and to points beyond. This resulted in establishing class rates from New York to the several Mississippi River crossings, in cents per 100 pounds, as follows: Class 12 3 4 5 Rate 87 75 58 4 35 The local class rates under Western Classification applying from the several Mississippi River crossings on traffic moving through them from New York and destined to the Missouri River Cities were, in cents per 100 pounds: Class 12 3 4 5 Rate 60 45 35 27 22 It will, therefore, be seen that the through class rates from New York to the Missouri River Cities made by combination of the class rates to the Mississippi River crossings applicable on business beyond and the class rates from the Mississippi River Crossings to the Missouri River Cities resulted in class rates in cents per 100 pounds as follows: Class 12 3 4 5 Rate 147 120 93 68 57 It should be understood that these rates apply on traffic mov- ing via Chicago and that much of the traffic moving through the upper Mississippi River crossing moves via Chicago, and it should be remembered that the rates west of the Mississippi River crossings are not constructed upon percentages of the New York-Chicago rates, or upon any other percentage basis. They are the independently established class rates applying be- tween the Mississippi River crossings and the Missouri River crossings and are made without reference to any methods em- ployed in fixing the rates from the Atlantic seaboard to the Mississippi River crossings. BURNHAM, HANNA, MUNGER CO. V. C, R. I. & P. RY. CO. 379 The local class rates from Chicago to the several Mississippi River crossings are on scales which range from 35.3 to 43.3 cents first class, and it will therefore be seen that the proportional rate from New York to the Mississippi River crossings applicable on business going west of the Mississippi is considerably less than the full combination of class rates on Chicago. The pro- portionals from New York to the Mississippi River crossings through Chicago are divided as follows: Lines east of Chicago: Class 12 3 4 5 Rate 72.3 62.4 48.4 34.3 29.4 Lines west of Chicago : Class 12 3 4 5 Rate 14.7 12.6 9.6 6.7 5.6 In addition to the above divisions of the proportional rate up to the Mississippi River crossings the lines west of Chicago on business destined to the Missouri River Cities get their full class rate local giving them as earnings on this traffic for their service between Chicago and the Missouri River Cities the fol- lowing, in cents per 100 pounds: Class 12 3 4 5 Rate 74.7 57.6 44.6 33.7 27.6 The through class rates from New York to the Twin Cities in cents per 100 pounds are divided as follows: To the lines east of Chicago: Class 12 3 4 5 Rate 75 65 50 35 30 To the lines west of Chicago: Class 12 3 4 5 Rate 40 34 26 18 16 And it is thus seen that in this division the lines east of Chicago get their full New York-Chicago rates. The division going to the lines west of Chicago constitute a line of proportional rates applicable only upon through business, the local class rates be- tween Chicago and the Twin Cities being established on a scale of 60 cents first class. 380 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT Complainants allege that the operating and transportation con- ditions between Chicago and the Missouri River Cities and between Chicago and the Twin Cities are not substantially dif- ferent and in no sense justify the existing differences in rates. As has been seen, the defendants allege the controlling influence of competition by water and via the Soo Line in the fixing of the Chicago-Twin Cities proportionals. Complainant argues that this claim is not possessed of any merit, and in support of that argument cites the fact that these Chicago-Twin Cities rates have been increased during the season of lake navigation and reduced at a time when navigation was closed. There is much conflict in the testimony as to the effect of ■ the competition of the Soo Line and as to when that became a factor in the situation. Complainants went to great trouble to locate the facts, but a careful inquiry into the records of the Commission shows that in some respects complainants' witnesses were mis- taken on this point. The reports of the Commission disclose that in 1886 there were class rates between Chicago and the Twin Cities, in cents per 100 pounds as follows: Class 12 3 4 5 Rate 40 30 20 15 10 These rates were in effect at the time the Chicago, Burlington & Northern Railway (now Chicago, Burlington & Quincy Rail- way) began its operations in that year. From that time to June 4, 1888, these rates were sometimes higher and sometimes lower than above quoted. A short time prior to the date last men- tioned, the Northwestern Association, made up of. all the lines between Chicago and the Twin Cities, excepting the Chicago, Burlington & Northern, increased these rates to the basis of 60 cents first class. The Chicago, Burlington & Northern assented to the 60-cent scale, but claiming an alleged violation of the agreement it said: Finding that many of our patrons would be discriminated against by the 60-cent scale, and owing to the extremely low rates from the seaboard pre- vaihng by Lake Superior lines, we have decided upon the scale, which was: Class 1 2 3 4 6 Rate 40 33 26 18 12* BURNHAM, HANNA, MUNGEK CO. V. C, R. I. & P. RY. CO. 381 At the same time the same carrier established all-rail pro- portional class rates, applicable only upon traffic originating at or east of the western termini of the Trunk Lines, as follows: Class 1 2 3 4 5 Rate 31 22 23 17 11 In re C. St. P. & K. C. Ry., 2 I. C. C. Rep., 231. The Minneapolis, St. Paul and Sault Ste. Marie Railway Company completed its line from Sault Ste. Marie to Minneapolis in January, 1888. In July, 1889, all of the roads between Chicago and the Twin Cities established the 60-cent scale between Chicago and the Twin Cities on traffic from the Atlantic seaboard; on Sep- tember 25 it was again reduced to the 40-cent scale and remained there until November, when the 60-cent scale was again restored. This remained in effect until in February, 1890, when the 40- cent scale was again adopted. It was raised to a 50-cent scale in August and to the 60-cent scale in November of the same year. This continued in force until January, 1897, when the Soo Line, against the vigorous protests of the other lines, issued a tariff which became effective in February, 1897, and which established proportional class rates from Sault Ste. Marie to the Twin Cities on all traffic originating south of Ogdensburg and east of New- port, Vt., when routed via the Soo Line, and on traffic originat- ing at or east of Pittsburg when routed via Mackinaw City destined to Minneapolis and St. Paul in cents per 100 pounds as follows: Class 12 3 4 5 Rate 40 35 26 18 16 This line of, differentials in connection with the Canadian Pacific rates to Sault Ste. Marie materially reduced the through class rates, and all of the lines between Chicago and the Twin Cities followed this reduction in May of 1897. In June, 1899, the Chicago-Twin Cities lines advanced these proportionals to a 50-cent scale and at a time when lake navigation was open. This scale remained in effect until January, 1901, when it was again reduced to the 40-cent scale at a time when navigation was closed. It is thus seen that these carriers have made numerous, persistent, and vigorous efforts to maintain propor- tional rates between Chicago and the Twin Cities higher than the 40-cent scale, and that they have been unable to do so. 382 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT The Canadian Pacific Despatch tariff referred to by defendants as showing maintenance of a 40-cent scale by the Soo Line, at the same time it was party to the tariffs fixing the 50-cent scale, taken in connection with Boston & Maine Railroad's joint west-bound tariff, show that class rates from Boston and points taking same rate to the Twin Cities were established via the Canadian Pacific Railway and the Soo Line in cents per 100 pounds as follows: Class 12 3 4 5 Rate 105 91 70 49 42 The Chicago-Twin Cities lines were named as parties to these tariffs as well as the Soo Line, but it should be understood that these rates applied via a differential line upon which the same rates are now in effect. With further reference to the influence of the water trans- portation upon the Chicago-Twin Cities proportionals, it is found that the class rates from New York to Buffalo in cents per 100 pounds are: Class 12 3 4 5 Rate 39 33 28 19 16 And that the class rates from Duluth to the Twin Cities in cents per 100 pounds are: Class 12 3 4 5 Rate 35 30 23 17 10 The through first class rate New York to the Twin Cities is $1.15. The sima of the rail rates New York to Buffalo and Duluth to the Twin Cities on first class is 74 cents, leaving 41 cents that could be applied to the cost of transportation by water between Buffalo and Duluth. It seems safe to say that if the all-rail through rates were materially increased with any as- surance that the increases would be maintained for a long period, there would be every inducement for the interested jobbers to arrange for independent water transportation from Buffalo to Duluth and avail themselves of the combination that could be so constructed. The lake-and-rail rate on first class New York to Duluth is 68 cents per 100 pounds, which added to the first class rate Duluth to the Twin Cities of 35 cents makes a com- bination rate of $1.03 as compared with the all-rail rate via Chicago of $1.15. There are now in effect lake-and-rail rates BURNHAM, HANNA, MUNGER CO. V. C, R. I. & P. RY. CO. 383 from New York to the Twin Cities on a scale of 83 cents per 100 pounds on first class via Duluth. The controlling influence of the water and Canadian competi- tion over the rates from the Seaboard to the Twin Cities is apparent, and it is also apparent that the defendant carriers west of Chicago must meet the force of that competition or re- frain from participation in that business. Their local class rates from Chicago to the Twin Cities are on the basis of 60 cents first class, as compared with a 55-cent scale via lake and rail from Chicago to the Twin Cities via Gladstone and the Soo Line, and a 50-cent scale from Chicago to the Twin Cities via Duluth. The joint through class rates from New York to the Twin Cities apply up to the Missouri River crossings on traffic from the Atlantic seaboard destined through them to Montana common points and to Spokane, Wash., and common points, as well as upon traffic through the Twin Cities to the same destinations. The locals from the Missouri River crossings and from the Twin Cities are added thereto to make up the combination through rates. The local class rates from the Twin Cities to Montana common points, and to Spokane, Wash., and common points, are the same as from the Missouri River crossings to the same destinations. This adjustment is forced by competition. If the lines via the Missouri River crossings did not make the same rates to Montana and Washington points that are available via the Twin Cities they could get none of that business. The class rates from Chicago to Oklahoma City moving via Kansas City are on a scale of $1.50 per 100 pounds first class, of which the carriers between Chicago and Kansas City receive as their division 48 cents. The class rates from Chicago to Texas common points apply- ing via Kansas City are on a scale of $1.57 per 100 pounds first class, of which the carriers between Chicago and Kansas City receive 47.1 cents. The class rates from Chicago through Kansas City to El Paso, Tex., are on the scale of $1.69 per 100 pounds, first class, of which the carriers between Chicago and Kansas City receive as their division 47.1 cents. The distance from New York to the Missouri River Cities is substantially the same as from Chicago to El Paso. On transcontinental traffic from the Atlantic seaboard to the Pacific coast terminals, carriers west of Chicago receive as their division of the class rates for the haul between Chicago and the 384 FXJNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT Missouri River crossings on the first five classes in cents per 100 pounds the following: Class 12 3 4 5 Rate 33 28.50 24.75 22.50 19.50 From these divisions of through rates accepted by the carriers between Chicago and the Missouri River crossings and from the admission of the Chicago, Biu-lington and Quincy Railway Com- pany in its answer that they give said carriers some profit, com- plainants argue that the rates charged from the Mississippi River crossings to the Missouri River crossings are unreasonably and unjustly high. Defendants answer this by asserting that a low division of the through rate for a long haul is not fairly comparable with the local rate between the same points; that the through rates are not made or controlled by them; that they are frequently made in competition with water transportation to the Pacific coast terminals or to the Gulf ports, and that while none of them can be said to represent less than the actual cost of the service they can not be considered in and of themselves as remunerative and can not be fairly taken as a measure of their rates. Manifestly, a carrier may not properly or lawfully engage in transportation at a rate less than the cost of the service. So to do would place an improper and unlawful burden upon other traffic, but if a carrier elects to accept a low division of a through rate for a long haul rather than to stay out of that business it can not be held to have thereby committed itself to that division as a measure of the reasonableness of its other rates for transportation be- tween the same points on business from or to different destinations or of a different character. Complainants argue that the cost of transportation on eastern and western roads is about the same; that the average rate per ton per mile received by the western roads is greater than that received by the eastern roads, and that the conditions of trans- portation are so substantially similar that it would be entirely fair to project to the Missouri River the same rate per ton per mile that represents the rates from the Atlantic seaboard to the Mississippi River. There are, however, differences in the physi- cal conditions. The density of population and of traffic is ma- terially less west of the Mississippi River, and the cost of opera- tion is greater, due among other things to higher wages and BUHNHAM, HANNA, MUNGER CO. V. C, R. I. & P. RY. CO 385 higher cost of fuel and other necessary supplies. It seems clear that the lines west of the Mississippi River are entitled to a somewhat higher charge than would be received for the same service on the lines east of the Mississippi River and it seems that the only question to be determined here is whether or not the class rates of the defendant carriers between the Mississippi River and the Missouri River Cities on business from the sea- board and destined to the Missouri River Cities are too high. It seems patent that any change in the rates east of the Mis- sissippi R,iver, even if warranted, would fail to accomplish what the complainants desire, because whatever of advantage accrued therefrom to the Missouri River Cities would accrue to a like degree or extent to their principal competitive commercial cen- ters to wit, New York, Chicago, St. Louis, and the Twin Cities. The average short-line distance between the nearest Mississippi River crossings and the individual Missouri River Cities is about 275 miles. The average distance between the Mississippi River crossings, via which the rates apply, and the Missouri River Cities is 325 miles. As has been before stated, the local class rates between the Mississippi and the Missouri River cross- ings are in cents per 100 pounds: Class 1 2 3 4 5 Rate 60 45 35 27 22 And these are the rates that are added to the rates up to the Mississippi River crossings to make up the through rates from the Atlantic seaboard to the Missouri River Cities. Are these rates as so used and the through rates resulting therefrom, unwarrantedly high or unduly discriminatory or unjustly preju- dicial? Can they be changed with out doing injustice else- where? As has been seen, the first class rate from the Atlantic sea- board to Chicago is 75 cents, and to the Mississippi River cross- ings is 87 cents. From Chicago to the Missouri River cross- ings the first class rate is 80 cents, and from the Mississippi River to the Missouri River is 60 cents. The through first class rate from the seaboard to the Missouri River is, therefore, $1.47; the combination on Chicago is $1.55 and on St. Louis is $1.47. The St. Louis jobbers can, so far as freight charges are concerned, purchase in the east and sell at all points east of the Missouri River Cities cheaper than can the jobbers in the Mis- 386 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT souri River Cities, while at the same time the St. Louis dealers can sell in the Missouri River Cities themselves and at some points beyond them just as cheaply as can the dealers located in the Missouri River Cities. The Chicago dealer seems to have a handicap of 8 cents on the first class rate as compared with St. Louis. This no doubt is due to the fact that direct lines from the seaboard to St. Louis, belonging to one system, make the rate to St. Louis. The class rates from the Atlantic seaboard to Sioux City when made upon the Mississippi River combination throUgh any crossing East Burlington to East Dubuque, inclusive, are the same as to Omaha. The combination on Chicago is the same to Sioux City as to the Missouri River Cities. The combination on Mississippi River crossings south of East Burlington is higher to Sioux City. If the local class rates of defendants between the Mississippi and Missouri rivers were reduced, it would give the same degree of advantage to all the producing and distributing centers on and east of the Missouri River, and their relative advantages or disadvantages would not be changed, while a very serious inroad upon the revenues of the carriers would inevitably result, and at a time of industrial depression when it could not well be borne. Such a change would necessitate corresponding changes in the rates to and from intermediate points and would probably be reflected in changes in commodity rates as well. The local class rates between the rivers are high, but this is not the time to precipitate such a violent change as would follow an important reduction of them. The first class rate from Buffalo to Chicago, about 540 miles, and from Pittsburg to Chicago, about 465 miles, is 45 cents. From Cincinnati to Chicago, 306 miles, it is 40 cents. Complainants urge that defendant carriers west of Chicago and the Mississippi River crossings have, from their operations, accumulated enormous surpluses and that therefore they can not fairly present the plea of financial difficulty. Especial atten- tion is called to the reports of the defendant, Chicago, Burlington & Quincy Railway Company, which show a surplus of nearly $42,000,000. The carrying of this item in reports is certainly misleading to those who are not otherwise acquainted with the true facts. This surplus is in no sense available cash or free surplus. The record in this case shows that it simply represents BUHNHAM, HANNA, MUNGER CO. V. C, H. I. & P. RY. CO. 387 the amount of earnings that have been expended in past years for betterments and improvements in the road, and additions to its equipment. An abundant share of the prosperity and development of the trans-Mississippi and trans-Missouri territories has come to the Missouri River Cities, from which this complaint comes, but the fact that they have prospered in the past as a result of rapid expansion and development of new territory may not be taken as conclusive evidence of the correctness or justice at this time of the rate adjustment that has prevailed in the past. We are not impressed with the view that the system of making rates on certain basing lines should be abolished. No system of rate making has been suggested as a substitute for it, except one based upon the postage-stamp theory, or one based strictly upon mileage. Either of these would create revolution in transporta- tion affairs and chaos in commercial affairs that have been builded upon the system of rate making now in effect. It must not, however, be assumed that a basing line for rates may be established and be made an impassable barrier for through rates, or that cities or markets located at or upon such basing line have any inviolable possession of, or hold upon, the right to distribute traffic in or from the territory lying beyond. Devel- opment of natural resources, increase in population, growth of manufacturing or producing facilities, and increased traffic on railroads create changed conditions which may warrant changes in rates and in rate adjustments in order to afford just and rea- sonable opportunity for interchange of traffic between points of production and points of large consumption. We can not agree with the argument that the rates from the Atlantic seaboard or from Chicago to the Missouri River Cities should be the same as or lower than rates from same points to the Twin Cities. As has been seen, the rates to the Twin Cities can not escape the influence of the water and Canadian com- petition. As has been stated, the through rates from Atlantic seaboard territory to the Missouri River Cities are made by adding to- gether the rates from points of origin to the Mississippi River crossings, using proportional rates when such are available, and the local class rates from the Mississippi River crossings to the Missouri River Cities. The through rates so established are, in our opinion, unreasonably high. This is so because those 388 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT portions of the through rates which apply between the Mississippi River crossings and the Missouri River Cities are too high. These are defendants' " separately established rates " which are " applied to the through transportation," and, therefore, the through rates should be adjusted by reduction of those factors or parts thereof which are found to be unreasonable. Out of consideration for long-established custom in rate con- struction and publication, involving different classifications, we refrain from establishing joint through rates, and, permitting the rates from Atlantic seaboard territory to the Mississippi River crossings to remain as at present, we conclude that the separately established rates of the defendants, Chicago, Rock Island & Pacific; Chicago, Burlington & Quincy; Chicago, Mil- waukee & St. Paul ; Chicago & Northwestern, and Chicago Great Western Railway companies, applied between the Mississippi River crossings and the Missouri River Cities to the through transportation of shipments moving under class rates and coming from the Atlantic seaboard, taking New York as representative, should be reduced to the following scale: Ckss 1 2 3 4 5 Rate 51 38 30 23 19 and that these rates should also be applied to the transportation of through shipments which move under class rates and which originate at points of origin specified on pages 3 and 4 of com- plainants' Exhibit A, same being the aforesaid Western Trunk Line Tariff No. 786, I. C. C. 678, or at points taking the same rates. These rates should also be applied on traffic from same points of origin destined to Sioux City, Iowa, when it moves through any of the Mississippi River crossings, East Burlington to East Dubuque, inclusive. As to the other defendants, the complaint should be dismissed. An order will be entered in accordance with these views. CLASS AND COMMODITY RATES TO SALT LAKE CITY 32 I. C. C. 551 (1916) By the Commission: The present class rates, in both directions, and some 210 com- modity rates, westbound, as also a few eastbound, between Chicago, Mississippi River, Missouri River, and intermediate CLASS AND COMMODITY RATES TO SALT LAKE CITY 389 territory, on the one hand, and Utah common points on the other, were prescribed by this Commission in Commercial Club, Salt Lake City, v. A., T. & S. F. Ry. Co., 19 I. C. C, 218; 21 I. C. C, 400; hereinafter referred to as the Salt Lake case. They became effective November 15, 1911. The class rates are on the scale per 100 pounds, first class, of $2.45 from or to Chicago, $2.27 from or to Mississippi River points and $1.90 from or to Missouri River points. The commodity rates so prescribed attach to commodity de- scriptions which follow in the main those in use to the Pacific coast. The respondents have filed their joint freight tariff, Trans- Missouri No. 20-H, I. C. C. No. 287, effective April 1, 1914, revising the existing class and commodity structure with gen- eral trend upward. Against these proposed rates protests have been lodged with us by representatives of Salt Lake City, Mis- souri River, Iowa, Mississippi River, and Chicago interests, as well as on behalf of a large number of other eastern points which are affected. This tariff is under suspension in this proceeding until January 30, 1915. Upon petition of respondents the proposed rates on iron and steel articles were, by order of June 26, 1914, eliminated from this proceeding and transferred to another. The following table shows the relation of cl9,ss rates in effect prior to November 15, 1911, present rates, and those proposed. In this report all rates are stated in cents per 100 pounds. To Utah common point s. From — 1 2 3 4 5 A B C D E Missouri River points: Prior 205 190 200 265 227 247 285 245 265 175 162 170 220 189 205 240 207 223 153 142 150 188 163 177 198 172 185 128 119 126 155 134 143 160 139 149 106 98 100 128 HI 116 133 115 121 106 98 105 130.5 111 102'.5 138 115 128 83 77 ,80 102.6 88 94 110 95 101.5 75 70 70 92 80 81 ■97 84 86 50.5 50 50 64 57 59 69 62 64 4?, Present 49, ProTiosed 4?, Mississippi River points : Prior 53 Present 48 49 Chicago: Prior 58 52 .54 390 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT Utah and Montana common points are said to be competitive territories, with rate adjustments which have always been inter- related. The first-class rate from Chicago to Montana common points is $2.65. Taking this as base, the respondents construct the proposed class scale as follows: They deduct from the Chicago-Montana rate of $2.65 the differential of 65 cents between Chicago and Missouri River points, as fixed by the Commission on traflBc moving to Colorado in Colorado Mfrs. Asso. v. A., T. & S. F. By. Co., 28 I. C. C, 82; 29 I. C. C, 544, and thus arrive at $2 as the first-class rate, Missouri River-Utah. The lower class rates on this $2 scale are made by application of the following percentages: Class 1 2 34 5 ABCDE Percentage 100 85 75 65 50 55 40 35 25 21 Subject, however, to observance of the St. Paul-Montana com- mon-point class rate as maximum. The class rate from and to the Mississippi River and Chicago, respectively, are then con- structed by adding to these Missouri River-Utah rates the Mis- sissippi River and Chicago differentials over the Missouri River, as fixed or approved by the Commission in the Colorado Manu- facturers case; supra. These differentials are: Class 1 2 3 4 5 A B C D E Mississippi River 47 35 27 20i 16 18 14 13 9 7 Chicago 65 53 36 25 20 24J 21 17 14 11 The resulting sums constitute the class rates from or to these points, respectively, to or from Utah common points. But here, also, the Chicago-Montana rates are observed as maxima be- tween Chicago and Utah. The class rates from Peoria, 111., are fixed midway between the Chicago and the Mississippi River rates. Those from St. Paul, Minn., are transferred from the Chicago to the Mississippi River basis, thus observing the suggestions made in Minneapolis Traffic Asso. v. C, B. & Q. R. R. Co., 22 I. C. C, 259. Those from Duluth, Minn., and Memphis, Tenn., are retained on the Chicago basis as at present. Class A rates are made higher than fifth class, as shown by the percentage table. This accords with our ruling in the Colo- rado Manufacturers case, supra. The present commodity rates, where not prescribed in the CLASS AND COMMODITY KATES TO SALT LAKE CITY 391 Sale Lake case, are those voluntarily established by respondents, subject to observance of two alternative clauses, one fixing the Spokane rate as maximum and the other fixing the Montana common-point rate as maximum. The proposed tariff eliminates these clauses and states the specific rate in each instance. It revises the descriptions and restores differential adjustments from different territories of origin in effect for many years prior to the order in the Salt Lake case, supra, by taking as base the proposed commodity rates from Chicago and adjusting with relation thereto the proposed rates from Mississippi River territory, Peoria, St. Paul, Memphis, and Duluth. In this adjustment commodity rates from Chicago to Spokane and Montana common points still operate as maxima to Utah common points, and rates from Missouri River territory are generally held at 80 per cent of the Chicago rate, follo,wing the relation prescribed in the Salt Lake case, supra. As thus proposed, many of the Chicago-Utah commodity rates are less than the Chicago-Montana, and the Missouri River- Utah commodity rates are in most instances less than the St. Paul-Montana commodity rates. The commodity list, both in the existing and in the proposed tariffs, is un- usually large, due in part to the effect of water competition to the Pacific coast and the resulting need of commodity de- scriptions corresponding to those used by water competitors, and by transcontinental lines meeting that competition. The present commodity list is, as to rates, on a basis lower than that generally obtaining in western classification territory. Rates to Utah common points from the Mississippi River and Missouri River territories were made on the basis of 96 per cent and 80 per cent, respectively, of the commodity rates from Chicago. This gave to Utah rates relatively lower than to Kansas and Colorado, and actually lower than to Montana. It will be observed from the foregoing comparative table of prior, present, and proposed class rates, that in some of the class rates no increase is sought. So also in commodity rates, increase is not without exception. Respondents estimate that of the commodities in question, 187 show increase, 158 reduction, and 68 no change at all. But changes in descriptions and mixtures make the comparison some- what uncertain. The correctness of this estimate is challenged by protestants. 392 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT The justification by respondents rests largely upon comparison of the proposed rates with those now in effect to Montana, Arizona, Nevada, Colorado, and Kansas, and the bearing of the Pacific coast adjustment upon intermediate territory which is affected by operating conditions more severe than those obtaining east of Colorado common points. Protestants claim that the existing adjustment to Utah was fixed by the Commission after thorough investigation and should not be disturbed; that rates to Montana were not fixed by the Commission, and hence should not be taken as a basis for com- parison; that the rate relation is not improved by the proposed adjustment; that the reductions do not compensate for the in- creases; that these increases are not warranted by change in conditions or any showing that present rates are not remunera- tive; and that for these and other reasons respondents have failed to sustain the burden of proof imposed by statute. Much evidence was adduced in support of these and other con- tentions, but we shall content ourselves with reference to some of the more significant facts. The short-line distance from Chicago to Butte is 1,512 miles, and to Salt Lake City, 1,528 miles. These destinations are fairly representative of the Montana and Utah common points, respectively. Between Chicago and Butte the highest elevation on any line is about 6,400 feet. Between Chicago and Salt Lake City the Union Pacific rises to over 8,000 feet and the Denver & Rio Grande to over 10,000 feet in crossing the continental divide. Distance, grade, and curvature are important elements in cost of service, especially on mountain lines. Mention has been made of the relation between class rates to and from Montana and the proposed class rates to and from Utah. As to commodity rates, comparison of those proposed to Utah which show increases, with rates on the same commodities to Montana for equivalent hauls, discloses a lower average com- modity rate to Utah. The Arizona comparison shows that Chicago-Phoenix class rates, fixed by the Commission in Maricopa County Commercial Club V. S. F., P. & P. Ry. Co., 19 I. C. C, 257, average 116.45 per cent of the proposed Chicago-Utah class rates. The distance from Chicago to Phoenix is 115.3 per cent of the distance to Salt Lake City. CLASS AND COMMODITY RATES TO SALT LAKE CITY 393 The Nevada comparison is as to rates from Omaha. Class rates from that city to Elko and Winnemucca, Nev., were fixed by the Commission in Railroad Commission of Nevada v. S. P Co., 19 I. C. C, 238. Their average is 122.6 per cent of the pro- posed class rates between Omaha and Utah. The average dis- tance between Omaha and these Nevada points is 1,295 miles, or 124 per cent of the 1,037 miles between Omaha and Salt Lake City. It will be observed that the resulting per ton-mile earnings on the proposed class rates to Utah are less than to Arizona, although the distance is shorter, and very little higher than those to the more distant points in Nevada. Since our decision in the Salt Lake case, supra, class rates to and from Colorado points, and certain commodity rates west- bound to those points from Chicago, Mississippi River, and Missouri River territory, as there defined, being the territories of origin here involved, were prescribed by this Commission in the Colorado Manufacturers case, supra. The haul to Colorado common points is a prairie haul; the farther haul to Utah com- mon points in a mountain haul. On the line of the Union Pacific the rise and fall west of Cheyenne, Wyo., which is in the Colo- rado common-point group, is over twice that east of Cheyenne, despite an expenditure during recent years of over $10,000,000 in improvement of the line west. The other main line between Colorado and Utah common points, the Denver & Rio Grande, has also, and even more recently, expended millions in the improvement of its mountain road. On both lines the adverse mountain conditions compel higher operat- ing expenses than on the prairie lines, because of decreased locomotive efficiency, necessity for helper service, constructive mileage and slower schedules resulting in higher wages to train crews, increased inspection and repair of both track and equip- ment, and other exceptional conditions. The average class rate proposed between the territories of origin involved and Utah is 169 per cent of the average class rate to and from Colorado, as so fixed by this Commission. The average distance to Utah is 166 per cent of the average dis- tance to Colorado. Similar comparisons made with respect to each main point of origin, except Omaha, show similar results. It thus appears that the Utah class rates are, on a distance basis, about 102 per cent of the Colorado class rates. 394 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT Comparison of the proposed commodity rates to Utah, which show increases, with rates on the same commodities to Colo- rado approved by us, disclosed that as to either Chicago, Mis- sissippi River, or Missouri River trafiBc, Utah would have an average commodity rate which is lower on a per ton-mile basis than that to Colorado. The excess of such Utah commodity rates over the corresponding Colorado rates would be almost exactly 50 per cent. The present Commission made Utah class rates exceed the present Commission made Colorado class rates by almost 60 per cent. The rule is well recognized that ordinarily the per ton-mile yield should decrease with distance. But this rule should find full application only where the conditions of haul are substan- tially similar, and where a prairie haul is compared with a mountain haul, as here, the general rule may well be qualified. Further justification of these proposed rates is to be found in the Colorado Manufacturers case, supra, and State of Kansas v. A., T. & S. F. Ry. Co., 27 I. C. C, 673, when read together. In the Colorado case- this Commission regarded it as obvious that the spread between the Kansas rates and the Utah rates was not sufficient to afford Colorado the relief to which it was entitled without seriously impairing the revenues of the carriers. They were confronted with the alternative of lowering the rates from Colorado common points to jobbing territory lying farther west or of increasing the rates to Utah. Adoption of this latter alternative has resulted in the filing of the tariff under suspen- sion in this proceeding. Evidence adduced by merchants of Salt Lake City shows that while Denver can job westward on the line of the Denver & Rio Grande toward Salt Lake City more than 500 miles. Salt Lake City in jobbing back east against Denver is under the that distance. But in the west a normal jobbing territory usually lies largely to the west of the 'jobbing point, and Salt Lake City in jobbing back east against Denver is under the handicap of a back haul. It is true, as urged by these merchants, that the proposed class rates to and from Utah show a higher percentage of lower to first than obtains in the class rates to and from Colorado. The illustrative table which follows gives these percentages to the points specified. CLASS AND COMMODITY RATES TO SALT LAKE CITY 395 Comparative percentage relations of lower class rates to first-class rates applying from Missouri River points to the destinatims shown. TO — 1 2 3 4 5 A B C D E Salt Lake City: Present 100 100 100 I ^""^ 100 85.3 85.0 80.0 86.8 86.5 74.7 75.0 64.3 73.2 73.1 62.6 66.0 52.5 63.2 63.0 51.6 50.0 40.9 53.2 52.9 51.6 55.0 48.7 63.2 52.9 40.5 40.0 36.5 41.6 41.6 36.8 36.0 32.2 33.2 33.2 26.3 25.0 28.7 31.6 31.5 22.1 21.0 25.2 Proposed Denver Phoenix Reno 28.4 Winnemucca 28.2 From this table it appears that Utah is fairly treated in this respect; indeed, the percentages proposed by the respondents in the new rates are, on the whole, slightly lower than the percentages in the rates now prevailing. These latter, and the Colorado rates as well, were prescribed or approved by the Commission. The objection is urged, and properly so, against the use of. the Chicago-Montana rates as a measure of comparison, because they are not the rates of this Commission. The rates which it is now proposed to increase were fixed by this Commission after long and exhaustive investigation. They were made effective only after thorough test and a fair ascertainment that they were nonconfiscatory. It is elementary that Utah should not be com- pelled to pay increased rates merely to relieve Colorado. Nor should it pay rates which are merely the outcome of a compro- mise between the carriers and the Colorado interests. But it would appear that Utah common points, \mder the present ad- justment, are really in a position of exceptional advantage, and we find it unnecessary to rely upon the Chicago-Montana com- parison in reaching our conclusions. Those conclusions are dictated by the Colorado, Arizona, and Nevada comparisons, as also by the comparison of conditions affecting cost of service and competition east of Colorado common points with such conditions west, and the application of the result of this latter comparison to our finding in the Colorado Manufacturers case, supra. While the fact that a proposed revision of general up- ward tendency will remove present inequalities as between com- peting points may not of itself prove the reasonableness of the increased rates, it is certainly entitled to serious considera- tion as tending thereto. 396 FUNCTIONS OF I. C. C. IN ENFOKCEMENT OF ACT The present rates to Utah were, as stated above, fixed in large part by this Commission; but it must also be remembered that we have since considered and fixed corresponding rates to Kansas and Colorado, and those rates have their bearing on the whole western adjustment. The statute itself, in giving to our rate orders a life of only two years, recognizes that conditions which determine reasonableness are siibject to change. Even in the Salt Lake case we intimated that it was " perhaps probable that the effect of increased wages and increased cost of supplies will be more seriously felt in the future than it has been in the past." Since the Salt Lake case the Union Pacific has volun- tarily observed the rates there prescribed as maxima to points east, in accordance with the long-and-short-haul clause, and the Denver & Rio Grande, upon order of this Commission, has observed the Utah maxima on traffic to points east of West- water, Utah. Grand Junction Chamber of Commerce v. D. & R. G. R. R. Co., 23 I. C. C, 115. In the Salt Lake case we made it clear that the latter line should receive consideration in fixing rates, even though the other main line, the Union Pacific, was the short line, and therefore on the plane of first importance. The return earned by the Denver & Rio Grande on its property investment in recent years has been small. This the protestants do not deny, but they question the efficiency of its management. We find it unnecessary to consider this here. The record before us contains some evidence showing that under the proposed rates Rockford, 111., together with other points in northern Illinois and some in southern Wisconsin, have been placed upon the Chicago basis, and it is urged that they should take the lower Peoria basis. We are not prepared to say that the showing by respondents in justification of group changes is overcome by the evidence of protestants on this point. The evidence before us does not reach every individual rate, or set of rates, in the suspended tariff, and those on iron and steel articles have been expressly reserved for consideration in another proceeding. The protestants who represent Iowa show that the proposed class and commodity rates do not preserve to interior Iowa points the zone basis prescribed by this Commission in Iowa State Board of Railroad Commissioners v. A. E..R. R. Co., 28 I. C. C, 193, at 201. The respondents recognize the merit of TEXAS COMMON POINT CASE 397 this protest and say of record that whatever class rates this Commission finds to be justified between Missouri River points and Mississippi River points on the one hand, and Utah points on the other, will be made the basis for such zone rates. It was also agreed of record that the respondents will make proper adjustments on the zone basis of the commodity rate structure in so far as the needs of interior Iowa demand. The Commission expects these Iowa rates to be adjusted immediately. Upon all the facts of record we are of opinion, and so find, that the respondents have sustained the burden of justifying the proposed tariff, subject to any revision which may becomie necessary through application of our Fourth Section Order No. 124, in City of Spokane v. N. P. By. Co., 21 I. C. C, 400, or any modification thereof, excepting, however, the proposed rates on iron and steel articles, which are reserved for consideration elsewhere, and the Iowa zone rates, which are to be adjusted as agreed of record. An order will be entered accordingly vacating the suspension, except as to the rates comprised in the iron and steel schedule, and effective January 30, 1915. TEXAS COMMON POINT CASE 26 I. C C. 528 (1913) Harlan, Commissioner: In view of the vigorous protests made by commercial organiza- tions representing the towns affected, the Commission by its order of June 1, 1912, suspended certain commodity tariffs filed by the southwestern lines, the respondents herein, for the avowed purpose of restricting the area of what is known as the common point territory of Texas. The necessary consequence of the tariffs, if allowed to become effective, will be to piit out- side that territory and into the so-called differential territory a number of towns that for years have enjoyed common point rates. The rate adjustment to Texas points has often been referred to as unusual and peculiar; as a matter of fact, it is unusual 398 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT only in the extraordinary extent of the territory affected by the adjustment. It is really nothing more or less than a very broad rate group, not duplicated elsewhere in the country except by the even larger rate group established under the tariffs of the transcontinental lines. The competitive conditions out of which the common point rates grew have been explained in Dallas Freight Bureau v. M., K. & T. Ry. Co., 12 I. C. C, 427, and need not be repeated here. It will be sufficient to say that the common point territory, as now constituted under the tariffs of interstate carriers, comprises all that part of Texas .lying east of a line commencing at Quanah on the north and running thence in a southerly direction through Big Springs and San Angelo to Corpus Christi on the Gulf of Mexico. This western boundary is indicated on the accompanying map by the dotted line. In general, all points in this very large territory, 500 miles in extent from north to south and 450 miles from east to west, take the same commodity rates from any point in the United States on or east of the Missouri and Mississippi rivers. In the northern part of the territory is an area commonly known as the burnt district, to which lower rates are in effect from Kansas City and intervening territory. The territory ly- ing west and south of the common point territory is known as differential territory, and to all points within it rates are made by adding differentials to the common point rates. There is also a territory in the vicinity of Galveston and Houston to which rates lower than the common point rates are applied ; but with these rates we are not concerned here. The average distance from St. Louis to Texas common points is 800 miles; this was our finding in the R. R. Commission of Texas v. A. T. & S. F. Ry. Co., 20 I. C. C, 463, and it is submitted here to be approximately correct at this time. The common point rate adjustment in Texas has been a matter of comparatively slow development. It originated out of the fact that interior Texas is accessible through so many gateways ; traffic flows into all parts of the state not only by way of the ocean and gulf and on the Red River, but over the rail lines entering the state through its eastern and northern boundaries. The competition of the carriers reaching the state from these dif- ferent directions resulted in putting a large part of the state on the same rate level, and was largely, if not altogether, responsible for the successive extensions of the common point territory TEXAS COMMON POINT CASE 399 toward the west. Possibly the orders of the state commission respecting state traffic may have contributed to the extension of the common point territory for interstate traffic; but an ex- perienced railroad witness said on the hearing that this was not the case. It is altogether clear, however, that this is an ac- curate view of the situation. Nevertheless, it is true that the successive extensions of the territory, so far as interstate traffic is concerned, have voluntarily been made by the carriers in the •PRESENT BOUNDARY • PROPOSED BOUNDARY sense that they have not been required under any order of this Commission. In a number of cases before us communities in differential territory have demanded that they be included in common point territory, but in none of them did we find the record sufficient to justify such an order. So far as interstate traffic is concerned it appears, therefore, that the carriers have been forced by competition among themselves and by other conditions to enlarge the common point territory. The last ex- 400 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT tension was made on September 19, 1904, at which time the present western boundary line was established. That extension took out of differential territory and put into common point territory certain towns, among which the most important were Sweetwater, Big Springs, San Angelo, Brady, and Ballinger. These communities have therefore enjoyed the com- mon point rates for more than eight years. By the tariffs under suspension it is proposed now to raise their rates by restoring them to differential territory. As heretofore stated the present common point territory has been a matter of slow development. But the changes that have taken place in it have been in the direction of enlargement; there has been no restriction or draw- ing in of its boundaries. There is of record some vague im- pression that a restriction was attempted in 1906 ; but if it was made effective at all it was for a period of less than 40 days. The tariffs under suspension here are the first definite under- taking on the part of the carriers to narrow the area; it is proposed to do this by establishing the western boundary line farther toward the east, thus taking certain towns out of com- mon point territory and to that extent broadening the so-called differential territory. It is substantially admitted of record that the proposed in- crease in the rates of these towns, by taking them out of common point territory and putting them into differential territory, was not based on any real consideration of the merits of the new rates or upon any substantial consideration of the rate relation of those communities to other communities in common point territory. The fact is that recent railroad construction has left the respondents on the horns of a dilemma; they must either raise the rates of the towns in question by putting them out of common point territory and into differential territory, or they must lower the rates of Amarillo by taking it out of differential territory and putting it in common' point territory. Being compelled by new conditions to accept one of these alterna- tives, the respondents frankly state of record that they took the course that would have the least effect upon their revenues. In other words, Amarillo hasi grown to such importance and has so large a traffic that the loss of revenues attending the lowering of its rates by putting it in common point territory would be substantially greater than the gain resulting from raising the rates of the points in question by putting them TEXAS COMMON POINT CASE 401 back into differential territory. The latter course was therefore adopted and is the purpose underlying the tariffs under sus- pension. Should Amarillo be brought into common point territory the direct effect on its revenues, as estimated by the Santa Fe, will not exceed $25,000 a year. But the indirect effect, it is thought, will be of greater consequence for the reason that the Amarillo rates will have to be graded back into Oklahoma and Kansas. The Roswell rates, and rates into Roswell territory, will also be affected to some extent, a relation of rates between Roswell and Amarillo having been established in Roswell Commercial Club v. A., T. & 8. F. By. Co., 12 I. C. C, 339. It is clear that the effect on the revenues of the other south- western lines will not be so great as upon the revenues of the Santa Fe. The estimates offered by the Santa Fe of the effect on its revenues from the inclusion of Amarillo in common point territory include both class and commodity traffic. It may be well to add that the class rates to common point ter- ritory are still under the control of our orders in the R. R. Commission of Texas v. A. T. & S. F. Ry. Co., 20 I. C. C, 463; it is understood, however, that upon the expiration of the order in May next the respondent lines propose to take similar steps to narrow the conmion point area with respect to class traffic also. Practically the only effort made by the respondent carriers to meet the burden cast upon them by the statute, of justifying this proposed increase in the rates of a number of more or less substantial communities, was by showing that unless the rates are increased another and a competing community will be entitled to lower rates than it now enjoys. It was suggested that the logical western boundary of the common point area would be the line established by the carriers in 1887, just west of Fort Worth; that, however, is not the line proposed by the tariffs under suspension. It was also said that the country surround- ing the towns in question had been so affected by droughts during the past four or five years as to modify its outlook as an agricultural country and cause the farmers to some extent to revert to cattle grazing. But an earnest protest was made at the hearing against this view, and certainly the enthusiastic descrip- tions of the country by some of the witnesses gave no indication of any lack of hope in its steady and sound development. It 402 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT was also asserted that new settlers are no longer coming into the country and that there has been an actual decline in the population of some of these towns. It must be remembered however, that the towns in question have long been in common point territory; that they were put there voluntarily by the carriers, and because, in the judgment of the carriers, their rela- tion to competing points in the territory not only justified but required them to be put on the same rate basis. It is true that the absence of rain for some years has slowed up their growth, which prior to that time had been rapid and contmuous. This burden these commimities have been compelled to bear, and must continue to bear should it develop that there has been a permanent change in climatic conditions. The effect of the drought is also shown in the revenues of the carriers; but, ap- parently on the assumption that the droughts will continue for the indefinite future, the carriers, instead of sharing the consequences with the shippers, now seek to relieve themselves of the burden by increasing their rates. These climatic conditions have been emphasized by the respondent lines, but they have not under- taken to show any other change in the relations between the towns in question and other communities that are to remain in conamon point territory. All these trading centers are still in competition with one another, and the conditions which caused the carriers to put them on the same rate basis with one another still exist. An attentive examination of the record has led us to the con- clusion that the carriers have not justified the proposed increased rates for these towns, and have therefore failed to meet the burden of proof, imposed upon them by the statute. When first put into common point territory the traffic of these communities was substantially less in volume than at this time. They con- tend, therefore, that if they were then entitled to common point rates they are much more entitled to them now. They also call attention to the fact that they were voluntarily put in common point territory by the carriers, and that their business had been adjusted to that rate basis. They regard it as an especial hardship now to have higher rates added to the burdens that the successive droughts have put upon them. Moreover, it appears that in some cases the short-line mileage is less now than when they were first put into common point territory. The short-line distance from Kansas City to San Angelo, for example, TEXAS COMMON POINT CASE 403 was then 857 miles. It is now 732 miles. From St. Louis the short-line distance was 1,059 miles. It is now only 940 miles. There is another fact upon which some stress is laid: Most of these towns have contributed to the new construction of the car- riers, and in addition have subscribed for substantial amounts of bonds. Ballinger paid $80,000 to the Abilene & Southern ; Brady gHve $45,000 in cash to the Santa Fe, and in addition donated to it its entire right of way through the county and town and also its station grounds, at an additional expense of $45,000. San Angelo contributed to the Kansas City, Mexico & Orient $100,000 in money ; it also donated its right of way through the county and bought $300,000 of its bonds. When the Santa Fe built its line from San Angelo to Sterling City in 1910, San Angelo donated the right of way and $40,000 in cash. The droughts have interfered with the payment of some of these amounts; in other cases the carriers have extended the notes, and in some instances have canceled the pledges. It is but proper to state these facts, although we have attached no im- portance to them in reaching the conclusion that the plan pro- posed by the respondents, of putting these towns back into differential territory, has not been justified of record. We find from the evidence adduced of record that the rateis proposed by the respondents on the traffic of the communities in question are excessive and unreasonable,. and that any rates upon such traffic for the future in excess of the rates on the traffic of adjacent points in the common point territory of Texas will also be unduly discriminatory. The common point territory is perhaps unduly large and we have so intimated on various occasions. Its extension has not been favored by this Commission. Nevertheless when the south- western lines prepare to narrow its boundaries they must do so in fair regard to the rights of the communities which they pro- pose to exclude, in their relation to the communities which they propose to retain within the favored area. They have failed to do this in these tariffs. They have simply attempted to keep Amarillo out of common point territory by excluding its imme- diate competitors, overlooking the fact that these competitors of Amarillo have rights growing out of their relation with other communities that are still to remain in common point territory. The difficulty here is that the respondent lines have not gone far enough; they have made no effort to reform the boundaries of 404 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT the common point territory on proper and consistent grounds but only an effort so to reform it as to keep Amarillo out. The intervention of Amarillo herein asking that it be given common point rates is the real issue before us. The tariffs by which it is proposed to exclude certain competing towns from common point territory were filed by the southwestern lines simply in anticipation of a demand on the part of Amarillo for common point rates. The same relief was demanded by Ama- rillo in 1906 in Nobles Bros. Grocer Co. v. F. W. & D. C. Ry. Co., 12 I. C. C, 242; and a proper understanding of the present situa- tion requires a brief reference to the conditions then existing. At that time the rails of the Santa Fe and of the Texas & Pacific in this part of Texas were substantially 250 miles apart; between Amarillo on the Santa Fe and Sweetwater on the Texas & Pacific was a" vast stretch of country without a railroad and de- voted almost exclusively to grazing. There were a few small settlements but no town of importance. On this record it is shown that there were no wholesale houses at Sweetwater until after our decision in that case, and only two jobbing houses at Big Springs. There was no town of commercial importance on the Texas & Pacific, and the wagon roads, leading from Amarillo into this country to the south, were substantially better than the country roads extending northward from points on the Texas & Pacific. The result of these conditions was that the merchants of Ama- rillo with their wagons were early in control of the jobbing busi- ness throughout this area. In consequence Amarillo's population rapidly increased, numerous jobbing houses were established there, and in 1906 we were asked in the case cited to extend the limits of common point territory by including Amarillo within it. We denied relief, but because of its proximity to Kansas City we held that Amarillo ought to have the so-called burnt district rates. Even while that case was pending before us the relation of Amarillo to the general situation had begun to change. The Pecos & North Texas, now a branch of the Santa Fe, was build- ing southward from Amarillo in the direction of Sweetwater ; and shortly after our decision was announced that line was operating trains into Plainview, 74 miles south of Amarillo. It reached Lublock, 121 miles south of Amarillo, at the close of the year 1909, and entered Sweetwater in July, 1911. As con- struction progressed settlers came into the country in large num- TEXAS COMMON POINT CASE 405 bers, ranches were broken up into farms, and agriculture took the place of cattle grazing -as the principal occupation in the country districts. In the meanwhile Sweetwater has grown from a hamlet of 1,000 persons to a thriving town with a population of 5,000 inhabitants. Jobbing houses have been established there, and they reach out into the territory to the north as keen rivals of the merchants of Amarillo. At this time it in fact appears that Sweetwater is the most active competitor of Amarillo in the country that lies between them. Sweetwater has an advan- tage over Abilene and Big Springs in that it has a direct route, over one line only, into this territory to the north, while the route from the other two points is indirect and involves a two- line haul; under the state tariffs their distributing rates are therefore higher. The most important factor in the general situa- tion, however, is that Sweetwater also has an advantage over Amarillo in that it is within the common point territory while Amarillo is in differential territory. Amarillo's rates are higher, although its haul is shorter. The indication of record is that a large part of the merchandise distributed in this extensive ter- ritory between Amarillo on the north and Sweetwater on the south moves over the Santa Fe rails through Amarillo. The Amarillo rates being higher than those of Sweetwater and there- fore in conflict with the fourth section, although protected for the present by fourth-section applications. These very material changes in conditions at Amarillo and in its relation to the surrounding territory prepared the carriers for the demand made upon them by the merchants of Ama- rillo, soon after our decision in the case last cited, for an entire readjustment of the rate situation. There can be no doubt at all from the record that the southwestern lines serving Amarillo felt that there was some justice in its demands. It is not necessary, however, to recount the history of the negotiations that followed. They were somewhat protracted, but finally reached a point where both sides were ready to make concessions. Growing out of the negotiation came a suggestion by the car- riers that if the commercial interests of Amarillo would select a list of the commodities in which they were most interested the carriers would endeavor to establish rates upon them on a parity with the common point rates. It should be borne in mind that the jobbers of Amarillo were not contending that their rates were unreasonable, but only that they were discriminatory as 406 FUNCTIONS OF I. C. C. IN ENFOBCEMENT OF ACT compared with the rates enjoyed by Quanah, Sweetwater, and other points in common point territory. The merchants therefore presented such a list of commodities, and we think it fairly established by the record that there was practically an under- standing that, on these commodities, rates would be fixed on a parity with common point rates. This plan, however, was never made effective. Although there are some indications that the severe droughts of the last five years retarded the development of Amarillo as they have retarded the development of the surrounding country, nevertheless during the last 10 years its population has increased from 1,400 to 14,000. It is one of 11 first-class post-ofSces in the state of Texas; it has five banks, with aggregate deposits in November, 1912, of over $3,000,000 ; it is reached by four lines of railroad, the Rock Island, the Fort Worth & Denver City, the Southern Kansas of Texas, and the Pecos & North Texas, the last two being now in the Santa Fe system. It is a large jobbing center, distributing in less-than-carload shipments traffic that comes inbound in carload lots. There are five or six wholesale groceries there, one of them doing a business of over $1,000,000 a year. One hardware firm has a business approximating $425,000 a year. In addition there are wholesale dealers in dry goods, fruits, bicycles, agricultural implements, and other substantial articles of commerce. It is a common point with respect to state traffic and has been since 1905; it therefore en- joys common point rates from Galveston and other Texas ports. A hardware merchant testified that 40 per cent of his shipments came through the gulf ports. It takes burnt-district rates along with Sweetwater and Quanah. But on traffic from St. Louis and defined territories it takes a differential over common point rates, to its substantial disadvantage as a jobbing point. The merchants and shippers of Amarillo have presented their case with great earnestness and in the confident belief that the relief prayed must necessarily be granted on the showing made. On the other hand, the defense offered by the respondents is directed largely to the consequences of such a step rather than to the merits of the demand. Moreover, although in their confer- ences and correspondence with the representatives of Amarillo the southwestern lines have shown a clear appreciation of the changed conditions above described and of the necessity of giving Ama- rillo some relief, nevertheless they have hesitated to make it TEXAS COMMON POINT CASE 407 a common point, not because of the direct effect of such a read- justment of rates upon their revenues but rather because of its indirect effect. They point out that the present area of the com- mon point territory is larger than any state in the Union except Colorado, Montana, and New Mexico, and embraces a large part of the population and area of the state. The fear expressed by the carriers is that, if Amarillo is given common point rates, the result will be finally to extend such rates to the entire state. Dalhart, for example, on the Rock Island, 82 miles north- west of Amarillo, has always had the same rates as Amarillo; and in Boswell Commercial Clvh v. A. T. & S. F. Ry. Co., 12 I. C. C, 339, as hereinafter stated, we fixed a relation of rates between Amarillo and Roswell; lower rates to Roswell would therefore follow a lowering of the rates to Amarillo. It is con- tended also that towns on the Rock Island between Amarillo and Texola, and on the Fort Worth & Denver City between Quanah and Amarillo, would have to be put in common point territory; and that points westward and southward, now taking differentials grading up from Amarillo, would require revised rates. The estimated loss for the past year, of the Southern Kansas of Texas and the Pecos & Northern, on the basis of all these rate revisions that the carriers assert would necessarily follow the granting of common point rates to Amarillo, was $25,517.76. After a careful examination of the record we are not prepared fully to grant the prayer of the intervening petition of Amarillo. We have said that the common point territory of Texas has been enlarged from time to time, but has never been restricted. The statement is not altogether accurate. As a matter of fact an effort to force a reduction in its divisions caused the Fort Worth & Denver City to make certain arrangements with its con- nections that finally resulted in extending common point rates to Amarillo. This took place in November, 1891, and Amarillo continued to have the benefit of a rate parity on interstate traffic with towns in common point territory until June 10, 1895, a period of nearly four years. But this occurred many years ago and the conditions that brought it about were special in char- acter. It is an incident in the rate history of Amarillo to which we can attach little importance now. The rights of Amarillo must be determined in the light of present conditions. Viewed from that standpoint there can be no doubt that we would not hesitate 408 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT on this record to put Amarillo on a parity with Quanah, for example, on traffic moving from such a distance as St. Louis and the defined territories, if those two points could be considered by themselves and wholly apart from other points in Texas. But the rights of Amarillo can not be considered without giving some heed to the conditions that surround it. Quanah is in the common point territory, an already unusually extensive rate group which on strong grounds we have been and still are re- luctant to enlarge. Such rate structures must have boundaries somewhere. Their limits must be prescribed and definitely located ; and wherever the line may be drawn the point next be- yond it is necessarily on a higher rate level. In some cases the increase is harshly abrupt. This is the plight of Amarillo. But now to put it in the favored territory, not improbably would soon result in making the common point area coterminous with the boundary lines of the state. This we think should be avoided and we are disinclined to take any step tending to- ward such a result. On the contrary there are substantial reasons, although not developed on this record, for thinking that the present common point territory, so far from being enlarged, could well be broken up into several different zones or groups, and this some day may be found to be necessary. Nevertheless we think on this record that Amarillo is entitled to some relief. Although located well to the north in that part of the state commonly called the Panhandle, it is a gateway through which flows a growing volume of traffic into Sweetwater and other jobbing points in the common point area; and apparently it is the route over which a large part of the traffic now moves when destined to the territory intervening between Amarillo and Sweetwater. All these and other facts of record, as well as the principle involved in the fourth section, lend no small force to Amarillo's contentions. But in view of the far-reaching conse- quences of an order putting it in common point territory we are not prepared to take that course. As we have just stated it is entitled on the record to some relief; this is clearly demon- strated. But substantial justice will be done, we think, by re- quiring the southwestern lines to carry out the suggestion, at one time practically agreed upon, of giving to Amarillo rates upon certain commodities on a parity with common point rates; to that extent violations of the fourth section will be avoided. We shall expect the respondents to arrange to do this promptly RAILKOAD COMMISSION OF NEVADA V. S. P. CO. 409 without an order; but we shall reserve the record for such further consideration as the attitude of the carriers with respect to this suggestion may seem to make necessary. RAILROAD COMMISSION OF NEVADA V. SOUTHERN PACIFIC COMPANY 19 I. C. C. 238 (1910) Lane, Commissioner: The highest main-line rates to be found in the United States are those from eastern points to stations in Nevada. For carrying a carload of first class traffic containing 20,000 pounds from Omaha to Reno the Union Pacific-Southern Pacific line charges $858. If a like carload is carried 154 miles further, to Sacra- mento, the charge is but $600. The first class rate to the more distant point, Sacramento, is $3 per 100 pounds, and to the nearer point, Reno, $4.29 per 100 pounds. If a like carload of freight originates at Denver, 500 miles west of Omaha, the same rates to Reno and Sacramento apply; and if the freight originates at Boston, 1,700 miles east of Omaha, the rates are the same. This interesting rate condition arises out of two simple facts: (1) The whole of the United States from Colorado common points to the Atlantic seaboard, barring a few of the southeastern states, is one wide group or zone from which practically uniform rates to the Pacific coast water points are made, and (2) the rates to Reno are based upon these blanket rates to coast cities, and amount to the sum of the rates to the coast plus the local rates back to point of destination. This great zone, extending from the Rocky Mountains to the Atlantic, a distance of over 2,000 miles, from which practically uniform rates are made to Pacific coast terminal cities, is proba- bly without parallel in the railroad world, excepting for a similar eastward blanket extended to Pacific coast producing points. The zone in which the same rates apply on California citrus fruits, for instance, extends from Salt Lake City on the west to Portland, Me. It is manifest that the transcontinental railroads have made a near approximation to the postage-stamp system of rate mak- ing. Their policy has been to give to all eastern producing mar- 410 FTJNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT kets an opportunity to sell to the terminal cities upon a parity as to transportation charges and to give to Pacific coast pro- ducing points access to all eastern markets upon a like basis. To the great basin lying between the Rocky Mountains and the Sierra Nevadas the carriers have in a limited degree extended this same policy by making rates into Nevada based on the coast cities, and thus, the carriers say, they give to this territory the advantage of its proximity to the Pacific seaboard; that the rates to the latter are made low because of water competition between the Atlantic and Pacific ports — lower than would be justified were Sacramento and San Francisco not upon the water — and that Nevada rates would be still higher but for its nearness to the Pacific coast. The state of Nevada, through its railroad commission, now comes asking that Nevada points be given the same rates as are now given to Pacific coast terminals, urging that these coast rates are not unreasonably low in themselves, and are not the product of any real water competition. The complaint originally filed in this case made the Southern Pacific the sole defendant; the reasonableness of the rates from the east to Nevada were not attacked, excepting in so far as they are based on the rates to further western points, and in- clude a back-haul charge. As the complaint then stood the peti- tion was that this Commission should hold it to be unreasonable for the Southern Pacific, delivering freight at Reno and other points in Nevada, to charge for a back-haul which is not in fact given, and that we should adjudge the rates to Sacramento to be unreasonable as applied to the intermediate points. Later the complaint was amended by adding carriers east of Ogden forming a single through route from the Atlantic coast. So that the petition of Nevada now is that from all points upon this through route reasonable rates shall be fixed which shall not exceed those now applicable on shipments from such points to the more distant coast terminals. It is suggested by the com- plainant that we bring in other carriers as defendants, so that the entire eastern territory may be covered by our order. This we think unnecessary, assuming, as we do, that the conclusions here reached as to a through route from the east to the west will be adopted and established by other lines similarly situated. BAILEOAD COMMISSION OF NEVADA V. S. P. CO. 411 CONSTRUCTION OF NEVADA RATES. To reach a clear understanding of the basis upon which Nevada rates in general are now fixed, it is necessary to bear primarily in mind the fact before referred to, that the carriers of the coun- try have united in establishing a zone 2,000 miles in width from which rates are practically uniform to what are known as " coast terminals." There are 152 of these coast terminals, 97 of which are in California. They are points more or less arbitrarily estab- lished by the carriers, but which are either upon inlets from the ocean or rivers running to such inlets, or are but slightly removed from such water points. The most prominent coast terminals are Seattle, Tacoma, Portland, Sacramento, San Jose, Stockton, Oakland, San Francisco, Los Angeles, and San Diego. To these coast terminals are extended what are known as " ter- minal rates " on westbound transcontinental traffic. These rates apply either from all of eastern defined territory or from separate groups therein. The shaded portion of the accompanying map indicates eastern defined territory and the groups into which it is divided. These groups are lettered from A to J. A is limited to New York City piers, and has to do only with ship- ments by steamship via Gulf ports; B covers New England territory; C, New York territory and the middle states, with New York City as the principal point; D, Chicago and adjacent territory; E, the Mississippi River, with St. Louis as the principal city; F, the Missouri River; G, Kansas; H, Okla- homa; I, Texas; and J, Colorado, with Denver as its central point. Class rates. — Coming, then, to the construction of the Nevada class rates, we find that the carriers have employed three methods of construction during the past two years. Prior to January 1, 1909, there existed a body of what were known as intermediate class rates to Reno from certain designated eastern points. These rates were, on first class — From Chicago-Milwaukee common points 353.90 From Mississippi River common points 3.70 From Missouri River common points 3.50 From Colorado common points 3.00 An alternative clause gave Reno the right to the combination rate based on Sacramento whenever that should be lower. This 412 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT indefinite method of stating rates the Commission condemned in a general ruling. The tariffs were then changed so as to cancel the alternative clause and the intermediate class rates and thus to make all Nevada rates base on Sacramento. This was the .. SAM , (FRANCISCO' ' SACRAMENTO' ' -RENOi I HUMUTii ELKOiiSf OGOENQ •5i! £.| OMAHAn CHICAGO' 5 5 5 S se= ,, = .,, = :g^ " C0 (B en >4 c» K> ca Zo — • W0AM3N^ ""'^^H.'^^^-f-ZiHi./^^^"^'^ situation when the case was heard. Later, however, in June of last year, a third plan was adopted, and that now obtains, viz., to divide Nevada into two zones with Humboldt as the dividing point. Points west of Humboldt take the Sacramento combination. Points east of Humboldt take generally the Ogden combination. It is unnecessary herein to trace the history and RAILROAD COMMISSION OF NEVADA V. S. P. CO. 413 the effect of these various changes in the method of rate basing. We shall deal with the rates to all Nevada points as joint rates. And inasmuch as rates on all ten classes were quoted by the carriers' tariffs from all eastern defined territory to coast ter- minals and therefore by combination to interior points, at the time when this proceeding was brought, we shall consider that our jurisdiction extends to the installation of such rates to all of such territory. To ascertain the rate upon a shipment from New York to Reno one looks in vain for any one tariff in which such rate is to be found. By examination of the tariff of the Transcontinental Freight Bureau, to which the Southern Pacific Company is a party, this note is discovered: Rates to intermediate points. " When no specific rate is named to an intermediate point shown in Transcontinental Freight Bureau Circular No. 16-C (I. C. C. No. 864) , supplements thereto, or reissues thereof, rate to such an intermediate point will be made by adding to the rate shown to the point designated herein as " Terminal," which is nearest destination of shipment, the local rate from nearest terminal point to destination." Turning to Transcontinental Freight Bureau Circular No. 16-C (the issue at the date at which this complaint was brought), we find Reno named as an intermediate point, and that the near- est terminal to Reno is Sacramento, 154 miles west of Reno. We find, then, by returning to the Transcontinental Freight Bureau west bound tariff, the rate applicable upon the ship- ment to Sacramento. Then, having ascertained this from a tariff to which all of the carriers from New York to Sacramento are parties, we must next find the local rate from Sacramento to the destination of the freight, which is east of Sacramento. This local rate, Sacramento to Reno, we find in a tariff to which the Southern Pacific Company alone is a party. Thus we have, through a maze of tariffs, at length discovered the rate from New York to Reno, which is made up of a joint through rate to Sacramento and a local rate of the Southern Pacific Company alone from Sacramento back to Reno. The all-rail class rates, in cents, per 100 pounds from eastern 414 FUNCTIONS OF I. C. C. IN ENFORCEMENT OP ACT defined territory to coast terminals were, when this case was brought, as follows: Class 1 2 3 4 5 A B C D E Groups B, C, D, E, F, G, H, and I. . . GrouD J $3.00 3.00 $2.60 2.60 $2.20 2.00 $1.90 1.76 $1.65 1.60 $1.60 1.40 $1.25 1.20 $1.00 .95 $1.00 .85 $0.95 80 An examination of present tariffs will show that from New England and New York territories (Group B and C) no class rates below fourth class are now extended. Prior to January 1, 1909, however, and at the time this complaint was brought,, rates were given for the full 10 classes from these groups, and such rates upon the $3 scale are now given to coast terminals from Group A, the freight being carried from the New York City piers to New Orleans and Galveston by ocean carriers and thence by rail. It will also be seen that from Group J slightly lower rates are made on all classes below second class than are made from other groups. With these exceptions, how- ever, the rates are uniform throughout the whole eastern defined territory as to classified freight. The local rates on classes from Sacramento to Reno are as follows: Class .12345ABCDE Rate 129 112 102 87 78 78 24 23.5 25.5 25.5 The result of the combination on Sacramento is therefore to produce the following rates to Reno: From Groups B, C, D, E, F„ G, H, and I: Class 12345ABC D E Rate 429 373 322 277 243 238 159 133^1 125i 120J From Group J: Class 12345ABCDE Rate 429 373 302 262 238 218 154 128i llOJ 105| Rates to points east of Humboldt, such as Winnemucca and Elko, under the present method of making rates on the Ogden combination, vary as the rate from point of origin to Ogden. RAlLEOAD COMMISSION OF NEVADA V. S. P. CO. 415 The effect of this change in method of making rates may be illustrated briefly by the statement that the first class rate to Reno from Chicago prior to January 1, 1909, was $3.90, whereas it is now $4.29; from Missouri River $3.50, and now $4.29. To Elko, on the other hand, the first class rate from Chicago is now $4.27, as against a previous rate of $4.72^, when the rate based on Sacramento. For many years the class rates to interior points, such as Reno, were no higher than to the terminals. On April 11, 1893, the practice of maintaining lower terminal rates was instituted. The first line of figures in the table below shows the Reno rates when this case was brought; the second line, the rates in 1892; and the third line, the difference, or the amount by which the rates have been increased. Class 1 2 3 4 5 A B C D E Missouri River common points. . . 1892 rates 429 350 373 300 322 250 277 200 243 175 238 175 159 155 133i 125 1254 110 120^ 100 Difference 79 73 72 77 68 63 4 8i 15i 20i Mississippi River common points. 1892 rates 429 370 59 373 320 53 322 260 62 277 205 72 243 180 238 182 159 163 133i 130 125i 115 1201 105 Difference 63 56 3i m 15J 429 390 373 340 322 270 277 210 243 185 238 190 159 170 133^ 135 125i 120 i?ni> 1892 rates 110 39 33 52 67 58 48 5i Wi Commodity rates. — While there are many hundred commodity rates extended to coast terminals, there are but few given to intermediate points. On the following articles the commodity rates are the same to Utah and Nevada points as to Pacific coast terminals from Group D, E, F, G, H, I, and J of eastern defined territory, which include all points from Chicago west: Apples; bananas; beer, in wood; bones; broom corn; butter, butterine, oleomargarine, eggs, cheese, and dressed poultry; cars, street; barley, corn, rye, oats, and speltz, c. 1. and 1. c. 1.; bran and shorts, c. 1. and 1. c. 1. ; brewer's grits, brewer's meal, corn meal, 416 FXJNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT corn chop or chop feed, chopped corn, cracked corn, and hominy ; buckwheat, c. 1. and 1. c. 1.; wheat, c. 1. and 1. c. 1.; cooperage, cranberries; fertilizers, n. o. s. ; household goods, c. 1. and I. c. 1.; live stock; machinery, mining; mineral-water bottles, returning; oil cake and oil-cake meal; onions; onion sets, 1. c. 1.; packing- house products; pineapples; plaster, building; poultry, alive; railway equipment; and staves and headings. As to all but two or three of these conamodities, the rates are the same to Reno as to Sacramento from Chicago. That is to say, the blanket rate made from all eastern defined territory to coast terminals on these commodities is applied from Chicago to Reno. There are a few other commodities upon which com- modity rates are given to Reno which are somewhat higher than the rates from Chicago to Sacramento, viz., automobiles, buggies, carriages, wagons, vehicles, and coal, coke, and guano from certain far western points. From an examination of the tariffs it appears that the transcontinental commodity rates — rates from eastern defined territory to the coast terminals — are at the present time higher than they were ten years ago by a very considerable percentage and this regardless of the fact that the base of supplies has been constantly moving westward, thereby narrowing the distance between point of production and consumption. VOLUME OF NEVADA TKAFPIC. Nevada is colloquially known as the " Sage Brush State," and from the car window it presents the spectacle of an almost un- interrupted waste. Railroad men speak of it as a " bridge " — unproductive territory across which freight must be carried to reach points of consumption. The figures of the Southern Pacific demonstrate, however, that while Nevada traffic may at one time have been negligible such is no longer the case. Some time before this proceeding was brought the Southern Pacific Company, which is the lessee of the Central Pacific running from Ogden west into California, brought suit in the United States circuit court for the district of Nevada attacking certain rate schedules upon state traffic established by the state commission. In support of its case the Southern Pacific Company filed an afiidavit made by Mr. C. B. Seger, auditor of the Southern Pacific Company, showing the earnings of the Central Pacific on business wholly within the state, on business passing RAILROAD COMMISSION OP NEVADA V. S. P. CO. 417 through the state, on business originating in and passing out of the state, and on business originating outside and having its destination in the state, for the fiscal year . ending June 30, 1907. Mr. Seger said by way of explaining his figures: " The freight earnings accruing to and made by said Southern Pacific Company in Nevada, being the revenue itself, with- out reference to its disposition under any lease, agreement, or otherwise, are derived for the said fiscal year 1907 from through and local business, understanding by local business such as is strictly intrastate in character, picked up and laid down within the limits of the state of Nevada, and understanding by through business such as is interstate in character. Further differ- entiating, said interstate business consists, first, of business originating outside and coming into the state; second, of busi- ness originating in and passing out of the state; and, third, of business originating outside the state, having destination be- yond the state, and, in relation to the state itself, simply passing through the state. The freight earnings for said fiscal year, and pertaining to the said business as above classified, are set forth under the appropriate heads, and are, in fact, as follows:" Revenue Percent- age of total $159,791.40 1,683,687.69 831,802.96 0.02 Originating outside and coming into the state Originating in and passing out of the state .20 .10 2,675,282.05 5,578,282.28 .32 .68 8,253,564.33 1.00 Surprising as these figures are they apparently do not fully set forth the extent of Nevada business at this time, as is shown by an exhibit filed by the Southern Pacific Company in the present case, giving the business west of Ogden for the single month of February, 1909, which may be epitomized thus: 418 FUNCTIONS OF I. C. C. IN ENFORCEMENT CT ACT Revenue Percent- age of total Tonnage Percent- age of total Intrastate $29,001.00 314,379.65 0.03 .38 4,715 64,367 0.04 Into and out of Nevada and Utah west of Utah .50 Passing through the state 343,380.65 495,128.37 .41 .59 69,182 60,271 .54 .46 Total for month of February, 1909 838,509.02 1.00 130,453 1.00 Another most interesting showing is made by the Seger affida- vit as to passenger business on the Southern Pacific in the state of Nevada for the year 1907, the figures given being these: Revenue Percentage Intrastate Originating outside and coming into the state. . Originating in and passing out of the state. . . . Passing through the state $286,235.65 357,511.55 267,582.85 1,962,915.33 10 9 13 22 32 68 Sum total. 2,874,245.38 100 The statement for the month of February, 1909, referred to above, sets forth very clearly not only the volume of business going into and out of Nevada and the earnings of the Southern Pacific thereon, but also gives a specific analysis of the sources of the traffic, showing the volume which comes into Nevada from the east and that which comes from California. Under " Question 2 " below will be found a statement of the freight received at Nevada and Utah points from points west of Cal- vada, which is a station directly on the California-Nevada state line. This table, however, should not mislead; a con- siderable percentage of the traffic from California is traffic of eastern origin reshipped from California to Nevada. The table also includes coal and other commodities of very large tonnage (approximately one-half of the total in weight) coming from points west of eastern defined territory. RAILROAD COMMISSION OF NEVADA V. S. P. CO. 419 Total Territorial movement Tons Southern Pacific earnings Oross total tonnage and earnings of the Southern Pacific Co. for the month of February, 1909. . . 913,302 $3,422,529.00 Question No. 1 freight via Ogden to California 37,886 22,385 320,220.55 174,907.82 Freight via Ogden from California 60,271 495,128.37 Question No. 2 Freight via Ogden to points in Nevada and Utah . . Freight received at Nevada and Utah points from points west of Cal vada 17,485 16,823 18,381 11,678 66.284.88 144,965.00 Freight via Ogden from points in Nevada and Utah Freight forwarded from points in Nevada and Utah 33,462.77 69,667.00 64,367 314,379.65 Question No. 3 A Freight received in California, San Francisco and north, from all points in California, including in- terchange with connecting lines in CaHfornia. . . . 189,827 365,168.00 Question No. SB Freight picked up and laid down in Nevada and Utah and freight moving between Nevada and Utah — 4,046 144 499 26 21,839.00 Utah to Utah 948.00 TTtah t,o Npvada 5,122.00 1,092.00 Nevada to Utah 4,715 29,001.00 There was a time, doubtless, when Nevada traffic, save to the mines on its westernmost border, was but trifling. At present, however, it has a traffic, both freight and passenger, which is far too considerable to be overlooked under the rule de minimis. And it is to be remembered that the figures given apply to but one road, whereas a second is in operation across the state to the south, and a third is beginning operations on the north. 420 FUNCTIONS OP I. C. C. IN ENFORCEMENT OF ACT SOURCES OF EASTERN TRAFFIC. It is interesting in this connection to regard the point of origin of this eastern freight. The railroad commission of Nevada had access to the billing of all shipments reaching Reno, and from these compiled a series of statements which appear to show that the great body of Nevada traffic which comes directly from the east via Ogden originates west of the Indiana-Illinois state line. From one exhibit it appears that of the 1,063,687 pounds of less-than-carload shipments originating in eastern defined ter- ritory and delivered at Reno during the months of January, February, March, and April, 1908, only 10 per cent originated at the Atlantic coast cities of New York, Boston, and Phila- delphia, and only 25 per cent in Connecticut, District of Columbia, Maine, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, and Virginia. This exhibit further shows that on the traffic moved the charges were $32,719.30; that if terminal rates had been applied charges would have been $21,956.24; and that the difference is $10,748.07. In other words, the charges on these shipments to Reno were 48.3 per cent higher than would have been the charges on the same shipments had they been carried over the mountains to Sacramento. Another exhibit shows that of 21,000,000 pounds of carload freight, earning $278,000, moved from eastern defined territory into Reno, 9,500,000 pounds, earning $120,000, moved in at rates no higher than terminals. It further shows that only 4,500,000 pounds of the 21,000,000 originated east of Chicago. This ex- hibit shows, aside from the products carried to Reno at ter- minal rates, that the charges were, for the year 1908, $157,824.94; that the terminal charge would have been $99,679.90; and the difference, $58,524.40. In other words, the charges on carload shipments to Reno were 59 per cent higher than the charges on the same shipments would have been had they been carried to Sacramento. Commissioner Thurtell estimated from the figures at his hand that the total receipts under present rates upon business brought into Reno via Ogden for the year 1908 amounted to $454,343.69 and under terminal rates the revenue would have been $363,865.23, a reduction of $90,478.46. The statement also shows that the revenue to the Southern Pacific from this busi- RAILROAD COMMISSION OF NEVADA V. S. P. CO. 421 ness was $268,516.40 and would have been under terminal rates $178,037.94, a reduction of $90,478.46, or about 33 per cent. Expressed in revenue the Southern Pacific on the haul from Ogden to Reno earned $11.51 per ton, while if terminal rates had been charged its earnings would have been $7.63 per ton. On the whole, the figures given in this case, which are the most authoritative thus far presented to the Commission with reference to the sources of westbound transcontinental trafiic, indicate that less than 25 per cent of the traffic into Reno from the east originates east of Chicago, while 75 per cent originates between Chicago and Denver. In other words, the needs of the people on the west coast may be and are in great part supplied from sources nearer home than the Atlantic seaboard. The manufacturing center of the country has moved west- ward and rates from the Atlantic seaboard that were once necessary are now almost unused. It may be historically the fact, as the carriers assert, that the transcontinental blanket rates given to the Pacific coast cities were put in to meet water competition from the Atlantic coast points, and that these rates were extended westward from the Atlantic as matter of grace to western manufacturers and producers ; to-day, however, it might well be said that this blanket is extended not westward, but eastward, so as to give the eastern manufacturer or jobber some opportunity to reach the far western markets. WATER COMPETITION. As we have seen, the rates are higher on almost all commodities from eastern producing points to Reno than on these same com- modities to Sacramento, the more distant point. Without ex- planation this constitutes a violation of the long-and-short-haul clause of the act. The carriers justify the lower rates to the more distant point upon the ground of water competition. They say that the rates charged to Reno and other Nevada cities are reasonable in themselves measured by the cost of the service to the carrier or the value of the service to the shipper, and that rates to the coast cities measured by these standards are too low to be considered reasonable and would not be in effect but for the force of water competition. The Nevada commission, on the other hand, contends that while some commerce does move from the Atlantic seaboard by water, the volume is so small that it is not influential in determining the present rate to the coast 422 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT terminals; that the coast rate itself is reasonable, and therefore that the application of a higher rate to an intermediate point can not be justified. The making of higher intermediate rates, they strongly urge, is a matter of railway policy and not of rail- way necessity, in that the railways wish to develop the coast cities as jobbing centers to the exclusion of interior points; that the revenues of the carriers would not be seriously impaired were this policy abrogated and as low rates given to the inter- mountain country as are now extended to the coast cities. It is no reflection upon the traffic manager of a railroad to say that he bases his rates upon some line of policy. He deals directly, and in most cases exclusively, with the producer or the jobber. His concern is to keep these patrons satisfied and at the same time bring to his railroad the greatest possible revenue. This is what he means by saying that he charges what the traffic will bear. He regards as reasonable whatever rate will make for the best interest of his road, and in determining this he adopts a line of policy which affects either favorably or unfavorably the industrial growth of the communities which the carrier serves. The restrictions of the act to regulate commerce are govern- mental limitations placed upon the unlimited and arbitrary dis- cretion of traffic officials. While the latter may adopt policies which they regard as most favorable to their roads, such policies must be restricted by the inhibitions of the law which this Commission must enforce. The policy of making Reno rates base upon those extended to the more distant point may not be justified upon the ground that Reno traffic will bear that im- position, but may be justified by conditions obtaining at the more distant point which the carrier may meet without offense to any provision of the act. And this brings directly to our consideration the question of water competition at Sacramento and other coast terminals. It is, of course, a physical fact that commerce may be carried by water from the eastern seaboard to the Pacific coast. It is ad- mitted by all, and substantiated by the evidence in this case, that some commerce does actually so move. An estimate has been made by complainant that approximately 3,000,000 tons of transcontinental traffic reaches the coast terminals during each year by rail, while the highest figure given as the volume of traffic reaching those points by water from the eastern seaboard is under 10 per cent of the rail movement. The fact, however. RAILROAD COMMISSION OF NEVADA V. S. P. CO. 423 that it moves in large or small quantities does not of itself sus- tain the contention that the present rates from eastern defined territory to coast terminals are so low as not to make a reasonable return to the carrier for the service performed. A movement of traffic may be affected by water competition at a more distant point and yet a rate made up of the combination of the rate by water plus the rate back be unreasonable and unjust. Nevada, Utah, Arizona, and Idaho are nearer to the Pacific coast than to the Atlantic, but this does not of itself justify charging them over- land rail rates which will give them none of the advantages arising out of their shorter distance to an easterij base of supplies. Nor does it follow that a rate to a point on the seaboard is lower than would be justified if that point were not so situated. In short, it is not sufficient to state that the terminal points are situated on the water to excuse the imposition of higher rates at intermediate points. There has been little difficulty experienced from time to time by the rail carriers in raising rates to the Pacific coast; the only live water competitor on the Pacific to-day is a line which bases its rates on the rail tariffs, and the rates of both the rail and the water lines change simultaneously. Ways can be found, and have been found, by which the presence of the ocean as a con- trolling, or even greatly meddlesome, factor in the fixing of rail- road rates can be nullified. There is no doubt but that rail rates have been influenced at times to all the Pacific ports by water carriers, and of course there is the possibility that at any time this water competition may become seriously aggressive and potent. The United States is not a maritime nation at present, and her coast line on the Pacific side is served in great part by such water carriers as the railroads permit to live. While, therefore, physical conditions at the coast are dissimilar to those at interior points the rates to the coast are not necessarily less than in fairness the traffic should carry. The water carriers between the Atlantic and the Pacific coasts at present charge rates from 25 to 40 per cent less than their railroad rivals. To get this business the water carrier at the eastern port reaches inland and absorbs a rail rate of 20 cents upon commodities which carry more than a 50-cent water rate to the Pacific coast. The American-Hawaiian Steamship Company then transports the freight by water to the Tehuantepec road, where it is trans- shipped across the IsthmusJ a^d being loaded again is carried 424 FUNCTIONS OF I. C. C. IN ENFOBCEMENT OF ACT to a Pacific coast port and there reshipped either by rail or water to certain designated points of destination inland from the port. In such a movement there is involved a rail haul of 400 or 500 miles, at least six, and possibly more, separate hand- lings of each parcel of freight, and a haul by water of fully 5,000 miles. Freight moving via Panama is subject to even heavier conditions. It is insisted by the Nevada commission that water competition of this character is not sufficiently aggressive or formidable to compel the railroads to make any other rates to the coast terminals than those which from reasons of policy they are at present making. The suggestion is not without pertinence that if four different transportation services, three by rail and two by water, involving at least six handlings of the freight and a total haul of 5,500 miles, can be furnished profitably at from 60 to 75 per cent of the rail rate, the compensation to the rail carrier for an all-rail haul of 2,500 miles, with no handling and but two terminal charges, should produce ample revenue to the rail carrier. There are many interesting developments in this and other transcontinental cases touching this matter of competition by water. For instance, the lowest rate does not in all cases apply to and from the seacoast points. There are many commodities upon which the rates from Chicago and Kansas City to Sac- ramento and San Francisco are less than they are from New York. And yet it is said to be the competition from New York that produces the low rate. In no case is the rail rate from New York less than is the rate from other portions of eastern defined territory, while of course in all cases New York is nearer the source of the competing force, the ocean. This is accounted for by the carriers on the ground that by taking the same, or a lower, rate from the interior points to the coast terminals the rail car- rier avoids the longer rail haul, the points of origin and des- tination being nearer together. This is an application of what the carriers term " market competition," but it is not a strong argument to sustain the theory of water competition. As usually applied by carriers market competition results in the hauling of commodities produced at places distant from the point of consumption to compete with the same commodities from points nearer to the point of consumption. In this case, however, market competition is said to be the controlling factor which justifies a rate from an interior point less distant from RAILROAD COMMISSION OF NEVADA V. S. P. CO. 425 destination. Thus we have a $3 rate from New York to Sacra- mento to meet water competition, and a $3 rate from Kansas City to meet market competition. We also have a $4.29 rate from Kansas City and from New York, to Reno, as a reasonable rate because of water competition from New York to Sacramento. We do not regard the divisions of rates as in any wise con- clusive as to the reasonableness of rates between certain points, but such divisions are sometimes of signifiicanoe. In the present case we find that if 100 pounds of freight is shipped from Boston, or New York, or Chicago, or St. Louis, or Omaha to Sacramento on the $3 rate, and another 100 pounds of the same kind of freight is shipped from the same points to Reno on the same day, the carriers east of Ogden receive precisely the same earnings upon both shipments; but the Southern Pacific, west of Ogden, receives far more upon the Reno shipment than on the Sacramento shipment. This is illustrated in the following table: Earnings of South- From — To — Rate Earnings east of Ogden em Pacific Company (west of Ogden) Cents Cents Cents Group B, Boston f Sacramento \ Reno 300 429 211.3 211.3 88.7 217.7 Group 0, New York J Sacramento JReno 300 429 211.3 211.3 88.7 217.7 Group D, including Chicago, etc f Sacramento ] Reno 300 429 181.9 181.0 118.1 248.0 Group E, inckiding Mississippi River 1 Sacramento 1 Reno J Sacramento \ Reno 300 429 174.5 174.5 125.5 254.5 Group F, including Missouri River . . 300 429 159.3 159.3 140.7 269.7 Neither at the hearings nor in the argument did the carriers east of Ogden contend that their divisions of these rates were unreasonable. The Southern Pacific, however, the carrier which makes the last 700 miles of a 3,100-mile haul, strenuously in- sists that its rates to the more distant points are compelled by water competition for the purpose of defending higher rates to intermediate points; while the carriers performing 2,400 miles 426 FUNCTIONS OF I. C. C. IN ENFOHCEMENT OF ACT of that service appear to regard the rate as entirely reasonable. The line from New York to Sacramento and Reno constitutes a through route and in law the carriers engaging therein con- stitute one line. If the Sacramento rate is less than a reasonable rate and the result of competition then it would seem fair to as- sume that all of the carriers engaging in the transportation so consider it and would accordingly demand a lesser division than the division they would be justified in requiring out of the higher rate to the intermediate point. The fact remains, however, that for the 2,400-mile haul from New York to Ogden the New York Central, the Lake Shore, the North Western, and the Union Pacific secure the same revenue out of the $3 rate to Sacramento that they do out of the $4.29 rate to Reno. This is graphically illus- trated by the following diagram showing the division of the rate : West of Ogden (Southern Pacific) O O East of Ogden (Lines Ogden to New York) Miles 2950 Reno 542 2408 Sacramento | 696 New York 3104 Division of first class rates in cents I 429 New York Reno 217.7 Sacramento 88.7 211.3 Reno 80 300 Rate per ton per mile in irulls 29 17.5 New York Sacramento 25.5 19.3 RAILROAD COMMISSION OF NEVADA V. S. P. CO. 427 PRODUCTIVE FREIGHT TERRITORY. We have gone extensively into an investigation of the condi- tions surrounding this traffic and in anywise governing the basis upon which the rates to Nevada from the east should be gov- erned. What has been said herein gives little more than a sug- gestion of the extent of the inquiry which has been made. We have, for instance, had reports made upon the financial condi- tion of the carriers involved, and their ability to meet any reduction which the Commission might direct without serious impairment of their revenues, an interesting fact in this connec- tion being this: During the past two years the operating revenues of the Southern Pacific Company's Pacific system have increased $8,000,000 while its operating expenses have decreased $5,000,000, thus producing an increased operating income of over $12,000,- 000, or a net increase of about $2,000 per mile of road. There appears in the record a compilation from the statistics of this Commisison for the years 1898-1907 in which it is shown that in these ten years the carriers in the Pacific coast territory doubled their freight tonnage, which rose from 18,000,000 to 35,000,000 tons; almost doubled their gross revenue; their receipts per mile increased over 70 per cent; their receipts per ton per mile increased from 1.07 to 1.25, or about 20 per cent; while the relation of expenses to earnings remained practically constant at 62.50 per cent. These figures are for all the roads in the Pacific territory. But if we take the Central Pacific alone we find it third in the list of Pacific coast roads in tons carried and the highest of all in freight earnings per mile ($13,453 per mile in 1907). While it is one of three railroads in the west carrying over a million tons of freight per mile of road — the average for the United States — the earnings of the Central Pacific per mile are 65 per cent greater than the average for the United States and 100 per cent greater than the average of the roads west of Chicago. CONCLUSIONS. The time has come, in our opinion, when the carriers west of the Rocky Mountains must treat the intermountain country upon a different basis from that which has hitherto obtained. Nevada asks that she be given rates as low as those given to Sacramento. The full extent of this petition can not be granted. In making rates to Reno from a territory broader than the whole 428 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT of continental Europe we have necessarily given consideration to existing rates to other intermediate points and to points upon the Pacific. We are of opinion that the class rates to Reno, Winnemucca, and Elko, and other points in Nevada upon the main line of the Southern Pacific Company, from stations on the lines of the defendants between New York and Denver and other Colorado common points are unreasonable and unjust and that for the future no higher rates than those set forth below should be charged to Reno and points east thereof to, but not including, Winnemucca : From — D E Denver and other points in Group J a Grand Island and other points in Group G a Omaha and other points in Group Fa Chnton and other points in Group Eo Chicago and other points in Group Do Toledo and other Cincinnati-De- troit common points b Buffalo and other Pittsburg-Buffalo common points b New York and common points & . S2.10 2.30 2.50 2.80 2.90 3.05 3.20 3.50 S1.82 2.00 2.17 2.42 2.51 2.63 2.76 3.01 S1.54 1.68 1.83 2.03 2.09 2.19 2.29 2.49 $1.33 1.45 1.58 1.71 1.76 1.81 1.87 2.00 $1.12 1.22 1.33 1.43 1.47 1.52 1.57 1.67 W.12 1.22 1.33 1.46 1.50 1.56 1.62 1.75 $0.87 .96 1.04 1.14 1.18 1.23 1.28 1.38 $0.70 .76 .83 .91 .94 .98 1.03 1.11 $0.66 .73 .79 .86 .89 .92 .96 1.03 $0.60 .65 .71 .78 .80 .83 .86 .93 a As designated in Transcontinental Freight Bureau Westbound Tariff 1-K, I. C. C. No. 920. b As designated in Nor. Pac. No. 23500, I. C. C. No. 3295. And that for the future no higher rates than those set forth below should be charged to Winnemucca and points east thereof to the Nevada-Utah state line: Class From — 1 2 3 4 5 A B C D E Denver and other points in Group $2.00 2.19 2.38 2.66 2.75 2.90 3.04 3.33 $1.72 1.90 2.06 2.30 2.38 2.50 2.62 2.86 $1.46 1.60 1.74 1.93 1.99 2.08 2.18 2.37 $1.26 1.38 1.50 1.62 1.66 1.72 1.78 1.90 $1.06 1.16 1.26 1.36 1.40 1.44 1.49 1.59 $1.06 1.16 1.26 1.39 1.43 1.48 1.44 1.66 $0.83 .91 .99 1.08 1.07 1.17 1.22 1.31 80.67 .72 .79 .86 .89 .93 .98 1.05 $0.63 .69 .75 .82 .85 .87 .91 .98 $0.57 Grand Island and other points in .62 Omaha and other points in Group Fa 67 Clinton and other points in Group E a 74 Chicago and other points in Group Da. 76 Toledo and other Cincinnati-De- 7Q Buffalo and other Pittsburg-Buffalo .82 New York and common points 6 . . .88 a As designated in Transcontinental Freight Bureau Westbound Tariff 1-K, I. C. C. No. 920. b As designated in Nor. Pac. No. 23500, 1. C. C. No. 3295. RAILROAD COMMISSION OF NEVADA V. S. P. CO. 429 In directing the carriers to establish these class rates we have taken into consideration the fact that the general policy of the carriers is to make commodity rates somewhat lower than class rates on commodities, the movement of which is regarded as necessary to the development of mercantile interests and industries. There are at present, as we have seen, a considerable number of such commodity rates into Reno, but these are en- ' tirely insufficient to meet the needs of Nevada if she is to become in any way an independent business community. There is no foundation in the record in this case for the establishment of such commodity rates. The theory upon which the case was presented eliminated all other considerations excepting the claim that all rates extended to Sacramento were reasonable as to Reno and other Nevada points. The Nevada petition was tanta- mount to a request that under our legal authority to establish reasonable rates we should fix the same rate from Denver as from Boston. We do not so construe our authority as to permit this Commission to make rates upon such a basis. Without doubt the commodity rates made to the coast terminals are reasonable from a great portion of eastern defined territory, but a governmental authority may not exercise the latitude in fixing a rate blanket which the carriers themselves have here exercised. In the Spokane case, 19 I. C. C. Rep. 162, some 600 commodity rates had been established voluntarily by the carriers, and the petition in that case was for the reduction of those rates to a reasonable figure. The carriers had made a special series of zones across the continent to meet the exigencies of the Spokane situation. In the case before us, however, no such favorable condition is presented. We have neither a schedule of com- modity rates with which to deal as to which specific complaint is made, nor have the carriers so divided the continent into' groups of originating territory, save in the sense that the trans- continental groups to the coast terminals, which are entirely different from those found in the Spokane case, supra, furnish a foundation for present combination rates to western Nevada. In view of this situation we shall make no order as to com- modity rates in this case at the present time, but shall direct the carriers to make a record of all shipments into Nevada from eastern defined territory during the months of July, August, and September, 1910, or during such other representative months as may be determined upon by the Commission after conference 430 FUNCTIONS OF I. C. C. IN ENFORCEMENT OF ACT with the carriers, and furnish the Commission with a statement showing as to each shipment the following facts : (1) The commodity; (2) the weight, carload or less than car- load; (3) point of origin and the transcontinental territorial group in which the same is situated; (4) rate that would be applied under the tariffs in .effect July 1, 1910; (5) the gross charges thereunder; (6) the rate applicable under the order made in this case; (7) the gross charges thereunder; (8) the rate that would be applied were the movement to Sacramento ; (9) the gross charges thereunder. The complainant will be ordered in this case, on or before October 1, 1910, to furnish to the Commission and to the de- fendant Southern Pacific Company a list of commodities upon which commodity rates are desired, together with an outline of the various territories or groups from which commodity rates should apply. We are of the opinion that justice can not be done to Nevada unless Nevada points are put on a practical parity with points in eastern Washington and eastern Oregon, and a further hear- ing will in due course, be held after the data here requested have been furnished by carriers and complainant. ARLINGTON HEIGHTS FRUIT EXCHANGE V. SOUTHERN PACIFIC COMPANY 22 I. C. C. 149 (1911) Prouty, Commissioner: During a portion of the years 1902 and 1903 the defendants maintained a blanket rate on lemons from Southern Califor- nia to most territory east of the Rocky Mountains of $1 per 100 pounds, and beginning with 1904 that rate was made applica- ble for the entire year. In November, 1909, this rate was ad- vanced to $1.15. In 1902 the corresponding rate on oranges was $1.25, but this was voluntarily reduced by the carriers in 1907 to $1.15, at which figure it was maintained during the year 1909. In 1905 this Commission held, as the result of an elaborate investigation, that the rate on oranges ought not to exceed $1.10, but inasmuch as the Commission at that time had no authority ARLINGTON HEIGHTS FRUIT EXCHANGE V. S. P. CO. 431 to prescribe a reasonable rate for the future this rate was never established. Upon the advance of the lemon rate, as above stated, Cali- fornia growers began proceedings attacking both rates as un- reasonable, and asking that the same be materially reduced. After careful investigation the Commission reached the conclu- sion that while in its opinion the rate of $1.15 upon oranges was a liberal one, it ought not at the present time to be disturbed. It did hold that the lemon rate ought not to exceed $1, and so ordered. 19 I. C. C. Rep., 148. From this order the carriers appealed to the Commerce Court and that court enjoined the order for reasons stated in its opinion of October 5, 1911. A., T.