i^!ilV ii# mf- JfiiMMii); ^^m. \i;!!»li (Snrnf U Slaiu i^rl^nnl IGibrara Cornell University LIbrsry KF2170.U58 1913 Opinions of the United States Commerce C 3 1924 019 363 401 W r4 Cornell University wMj Library The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924019363401 o S -P e eS o o »• O -rt 01 ■a » 03 S3 O J3 ^ rH +> i-l -H M i^ C CD -d eJ W C Si 03 hH ^^ S^ rQ cd ^-. r-M X} , o TJ (D 05 -P ^ od (D C -p u tn 0) O a 73 ^ o3 C -p a to c~- w ^ >* ^ bO a (^ • 03 • • aJ • > — rH tn • • I to in O r rH rH in M O to a a o o a !■* o o •CQ tn CO o OO^^NOC«OTiJC~tCOi-<«0<:JJ I t I > I I I I i I I I I I I I t I I - _.H>-ieNjc--coOi-i«o«;j*io«ot-t~o»cO'd'0 -p (3 c-iooo«#mo»iooooOf-iiow •p o -p (D •rl ^> 3 CO fO «5 Opinions of the United States Commerce Court CASES ADJUDGED IN THE UNITED STATES COMMERCE COURT February, 1911, to March, 1918 Volume I WASHINGTON 1913 3 /2» ;2<^'f %. JUDGES OF THE COMMERCE COURT DURING THE TIME OF THESE OPINIONS. Martin A. Knapp/ Presiding Judge. KoBBRT W. Akchbald/ Jvdge. William H. Hunt,' Jvdge. John E. Garland/ Judge. JtJLiAN W. Mack,' Judge. Jambs A. Fowler, Assistant to the Attorn^. General. WmrKBD T. Denison, Assistant Attorney General. Blacebttbn Estebline, Special Assistant to the Attorney General. Thtjblow M. Gordon, Special Assistant to the Attorney General. P. J. Farrbll, Solicitor for interstate Commerce Commission. Charles W. Nebdham, Assistant Solicitor for Interstate Commerce Com- mission. George P. Snyder, Clerh. Frank J. Starek, Marshal. ' Original designation December 31, 1910^ to serve for five years. ^ Original designation February 1, 1911, to serve for four years; ceased to be a member of the court on January 13, 1913. ^ Original designation February 1, 1911, to serve for three years. * Original designation February 1, 1911, to serve for two yeare; redesig- nated February 1, 1913, to serve for five years. • Original designation February 1, 1911, to serve for one year; redesignated February 1, 1912, to serve for five years. S-13 (jll) INDEX. No. Page No. Fed. Rep. United States reports. Anaconda Copper Mining Co. v. United States. Arkansas Fertilizer Co. v. United States. Atchison, Topeha & Santa Fe JR. Co. v. Interstate Commerce Commission {Cal- ifornia Switching Cases). Same, dissenting opinion Atchison, Topeka & Santa Fe R. Co. v. Interstate Commerce Commission (Lemon Case. See No. 61). Atchison, Topeka & Santa Fe R. Co. and Union Pacific R. Co.v, United States (Intermountain Rate Cases). Atchison, Topeka & Santa Fe R. Co. v. United States (Lemon Case. See No. 7) Atlantic Coast Line R. Co. v. Interstate Commerce Commission (Kiser Boot & Shoe Case). Attorney General, United States, ex rel.v. Union SUick Yard & Transit Co. etal. Same (rehearing) AvMtsta, Ga., Chamher of Commerce v. United States. Baltimore & Ohio R. Co. v. United States (Sugar Lighterage Case). Baltimore & Ohio Southwestern R. Co. V. United States and Cincinnati & Columbus Traction Co. Benson, Robert D., et al. v. United States (Pipe Line Cases). Chamber of Commerce of Augusta, Ga., V. United States. Cincinnati & Columbus Traction Co., Balto. & Ohio Southwestern R. Co. v. United States and. Crane Iron Works v. United States Denver & Rio Grande R. Co. v. Inter- state Commerce Commission. Eagle White Lead 'Co. v. Interstate Com- merce Commission. Florida East Coast R. Co. v. United States Goodrich Transit Co. v. Interstate Com- merce Commission; White Star Line v. United States. Hooker, James J., v. Interstate Com- merce Commission. Lehigh Valley R. Co. v. United States (Meeker Case). Louisville & Nashville R. Co. v. Inter- state Commerce Commission (New Or- leans Board of Trade Case). Louisville & Nashville R. Co. v. United States and Nashville Grain Eixihange et al. V. United States. (Application for temporary injunction.) Louisville & Nashville R. Co. v. United States (Final Hearing). (Nashville Grain Case.) 54 42 2 50 51 61 3 15 15 65 49 47 445 283 3 27 83 229 537 255 189 225 477 95 325 375 Not re- ported. 193 p. 667 188 p. 229 188 p. 929 190 p. 591 191 p. 856 Not appealed. Do. Not appealed. 194 p. 449 192 p. 330 . - .do 197 p. 66 200 p. 779 195 p. 962 197 p. 66 195 p. 962 Not re- ported. 195 p. 968 188 p. 256 200 p. 797 190 p. 943 188 p. 242 Not re- ported. }l95 p. 541 191 p. 37 197 p. 58 Not appealed. 226 U. S., 286. Do. Not appealed. 226 U. S., 14. Not appealed. 226 U. S., 14. Not appealed. Do. 225 U. S., 302. 224 U. S., 194. 225 U. S., 302. Not appealed. 227 U. S.,.88. Not appealed. Case No. No. Fed. Rep. United States reports. Louisville & Nashville R. Co.; United States ex rel. Stony Fork Coal Co. v. Nashville Grain Exchange et al. v. United States and Louisville & Nashville R. Co. V. United States. {Application for temporary injunction.) Norfolk & Western R. Co. v. United States {North Carolina Rate Case). Ohio Oil Co. V. United States {Pipe Line Case). Omaha & Council Bluffs St. Ry. Co. v. Interstate Commerce Commission {Omaha Bridge Case). Pennsylvania R. Co. v. Interstate Com- merce Commission {Coal Car Distribu- tion Case). Prairie Oil either operated by a common carrier engaged in interstate commerce as defined in the act or which is a highway of interstate commerce, could fur- nish. Whichever be the true construction of this clause (So. By. Co. v. U. S., supra) the Stock Yard Co., as lessor, is the owner of such a railroad, and therefore comes within the provisions of section 20. What the obligations are which that section im- poses upon such owners, we are not now called upon to decide. Third. None of the present activities of the Stock Yard Co. as the owner and manager of the stock yards and hotel business, hereinabove fully de- tailed, in our judgment, make it a common carrier. The facilities which it affords may enter to a cer- tain extent into the carriage of live and dead stock by the railroads with which it has occasion to deal. And the services which it renders in that connec- tion may take on a public character. (Gotting v. Kansas City Stock Yards, 183 U. S., 79, 85.) But that does not affect the case. A carrier must transport or carry. It must actually engage, in other words, in the carriage of goods or persons from point to point, of which there is no semblance in anything which is done here. (JJmon Stock Yards v. U. S., 169 Fed., 404, 406.) It is said, however, that the charter of the Stock Yard Co. contemplated that it should build and operate a railroad to connect with the trunk lines which enter Chicago, and empowered it so to do ; and that it can not escape this charter obliga- 22 tion or put off the character of a conunon carrier thereby impressed on it, either "by not exercising the power or by turning over to another company the railroad which it built. The corporate charac- ter of a company — and much less the business in which it is engaged — ^is not determined by its re- served and unused powers. {Tiffany v. La Plume Condensed Milk Co., 141 Fed., 444 ; Gate v. Connell, 173 Fed., 445.) It is what it does,, and not simply what it may do, by which it is to be judged. A cor- poration would in no sense be a common carrier if it never constructed or ran a railroad or other means of transportation merely because it had the charter power. But the Stock Yard Co. did exercise such power ; it built and operated the railroad. It was, at that time, a common carrier. (Cattle Raisers' Ass'n V. F.W.D. G. Ry. Go., supra. ) It has, however, pur- suant to its charter power, leased its entire railroad property. Thereupon the railroad, with the loco- motives and cars required to run it, went out of the possession and control of the Stock Yard Co., which thereafter confined its operations to the stock-yard business under its other charter powers. Clearly the mere reversionary ownership of the railway, which it retained, did not make it a carrier or im- pose upon it the obligations or duties of a carrier. While under the law of lUinois (Penn. Go. v, Ellett,Admr.,l?>2 111., 654) and of some other States, a lessor is liable like a common carrier for damages caused by its lessee, an independent operating com- pany, the weight of authority appears to be con- 23 trary to this view. (1 Elliott on Railroads, sec. 468.) In any event, the Federal courts in Illinois have refused to follow the Illinois doctrine (Yates V. Ill Central By. Co., 137 ¥ed.,943;CurtisY.C.,C., G. & St. L. By. Co., 140 Fed., 777) on the ground that this is a question of general law. Moreover, whatever may be the liability of a lessor railroad for damage to persons or property while being trans- ported over the railroad owned by it but operated by a lessee, that liability, if any, is due to the obli- gations imposed upon it by the State. The State may declare that a non-operating lessor shall be liable to the same extent as a common carrier for such damages. It can not, however, by such a dec- laration make the lessor a common carrier in fact, within the meaning of the act to regulate commerce. Common carrier as therein used is to be taken in its ordinary signification of the one engaged in the actual work of transportation ; that is, the operat- ing company. Any doubt that may theretofore have existed on this point is, in our judgment, re- moved by the amendment of 1906 to section 20 of the act, whereby, in express terms, the owner of a railroad engaged in interstate commerce is referred to in contradistinction to the common carrier sub- ject to the act. The decision of the Interstate Com- merce Commission in Independent Befiners' Ass'n. V. P. B. Co. (6 I. C. C. R., 52) in so far as it holds the lessor, merely as lessor, liable for the lessee's violation of its obligations under the interstate- commerce act is not to be supported. 24 The commission in that case, however, based the liability of the lessor also on the fact that it re- ceived as rental not a fixed annual sum, but one- half of the gross revenues. A holding of the Cir- cuit Court for the Western District of Pennsyl- vania, in accordance with this ruling of the com- mission, that lessor and lessee thereby were to be deemed in a sense joint operators, was, however, reversed in the Circuit Court of Appeals. (West- ern N. Y. & P. B. Go. V. Penn Refining Co., 137 Fed., 343, 356.) There would seem to be no dif- ference in the relation between a lessor and a lessee when, as in that case, the rental is a per- centage of the gross receipts, and when, as in this case, the rental is a percentage of the net receipts. The test of a joint operation by lessor and lessee corporations, like that of a partnership between individuals, is not a sharing merely in the net profits of the enterprise. (Holmes v. Old Colony B. B: Co., 5 Gray, 58.) The Stock Yard Co. can not be deemed a joint operator with the Junction Co. and therefore a common carrier within the act to regulate commerce, merely because it receives two-thirds of the net revenues of the Junction Co. or because its auditor acts for both companies. Even if the Investment Co., by reason of its own- ership of the stock of the Junction Co., could be held to be in such control of the Junction Co. as, for some purposes, to make the two identical, neverthe- less, the Stock Yard Co. would not thereby, and through the ownership by the Investment Co. of 25 90 per cent of its stock, become a common carrier. It was tlie common carrier's ownership of 99 per cent of the stock of the Wharf Co. organized for the very purpose of furnishing it terminal facilities as a part of the interstate system, that, in South- ern Pacific Terminal Co. v. I. G. C. & Young (219 II. S., 499) was held to make the Wharf Co. a part of the common carrier's system and, therefore, a common carrier subject to the act. We see no analogy to the situation in this case. Fourth. I'he Investment Co., whatever may be its control over the Junction Co. or the Stock Yard Co., can not, in any sense, be deemed a common carrier. Its ownership of the entire stock of the Junction Co. would not make it, any more than such ownership would make an individual, a com- mon carrier. It might be termed, in a sense, the owner of a common carrier, but, as it is not itself a common carrier, it does not, in our judgment, come within section 1 of the interstate commerce act, or section 3 of the Elkins Act. Fifth. While section 1 of the Elkins Act as amended (act of June 29th, 1906, 34 Stat., 584, 587), after prohibiting " any person or corpora- tion " from rebating or discriminating in respect to an interstate transportation, subjects to criminal prosecution " any person or corporation, whether shipper or carrier," who knowingly violates its provisions, section 3 of the Elkins Act, under which this suit is brought, authorizes equity pro- ceedings to enjoin such offenses only when a 26 " common carrier " has committed or is about to commit them. If the decision in I. C C. v. Revch- man (145 Fed., 235) correctly holds that one who is neither shipper nor carrier can be prosecuted under section 1 — as to which we intimate no opinion — ^the question whether the proposed pay- ment to the Pfaelzers could in any way be deemed such a rebate or discrimination could be tested by proceedings thereunder in the proper forum. We have found it unnecessary to determine or even to consider it, in view of our conclusion that neither the Stock Yard Co. nor the Investment Co. is a common carrier. Section 6 of the interstate-commerce act imposes a positive duty on common carriers subject thereto in respect to the filing of tariffs and other docu- ments. Section 20, on the other hand, merely au- thorizes the commission to require reports from common carriers and owners of railroads engaged in interstate commerce. There is no allegation in the petition filed in this cause that the Interstate Commerce Commission in any manner, either by general or special order or otherwise,, has ever required the Junction Co. or the Stock Yard Co. to furnish any such reports as are contemplated under section 20. In the absence of such an order, no mandamus to make such reports can be issued by this court. It follows, therefore, that the petition must be dismissed, not only as against defendants other 27 2 ' than the Junction Go. and the Stock Yard Co., hut also as against the Stock Yard Co., and the relief prayed for under section 20 of the act must he denied as against the Junction Co. The mandatory writ will he issued against the Junction Co., as a common carrier subject to the act, to comply with its obligations under section 6 thereof. Aechbau), Judge, dissenting in part. The petition is well dismissed as to the three re- spondents, with respect to whom it is found that neither the Elldns nor the interstate commerce act apply. It is held, however, that the Junction Rail- way Company is a common carrier engaged ia in- terstate commerce and therefore liable to publish tariffs and to make reports, and as to this I feel compelled to dissent. Nothing of the kind can be predicated on the use which the Junction Railway Company permits of its tracks by the trunk-line carriers as a connecting link, to haul by their own motive power through trains moving from one to the other, east or west. In the loan of its tracks for this purpose, however regular or persisted in, it is not exercising any of the functions of a common carrier even though it take toUs therefor, any more than a turnpike road, upon which people travel ; or a toll bridge spanning a stream, which accommodates those who go across ; or a canal, which, without doing any towing, merely maintains a waterway for public use. (Moore Carriers, p. QQ, 67 ; Kentucky tfe Indiana Bridge Co. 28 V. Louis. (& Nash. B. B., 37 Fed., 573, 615 ; Grigshy V. Ghappell, 5 Eich. (S. C), 443.) The traffic wMch, by leave of the Junction Railway Company, goes on over its tracks in this way is that of the trunk lines using them and not of the Junction Railway. The charges for through carriage, in- cluding this part of the movement, are made by and paid to these lines, and the Junction Railway does not participate by division or otherwise therein. Neither does it know or come in contact with the shippers or consignees or with the freight which is so moved. It simply lets its road and gets pay for its use at so much a car, which neither makes it a carrier nor constitutes an engagement by it in inter- state trade. Neither is there anything to make it a common carrier in what it does at the Union Freight Sta- tion, which it maintains, in the way of receiving, distributing, and forwarding L. C. L. freight. So far as it acts with respect to this for the Baltimore & Ohio RaUroad it acts as the local agent of that company, and is not chargeable in any larger de- gree. The receiving, loading, and forwarding which it does for others, including the collection of freight charges, when required by the trunk- line carriers to be prepaid, and the giving of re- ceipts which are exchangeable for bills of lading therefor, may be of a somewhat more general character. But in no respect do they amount to a transportation of such freight by the Junction Railway on its own account, nor does the Junction 29 .. fj Eailway Company in any sense act as a common carrier with respect thereto. It merely serves as a receiving and forwarding agent, for which it is compensated by the trunk line carriers by which its services are invoked. Having no concern as such agent in the transportation of this freight, nor any interest in the freight rates charged, and the services being complete when rendered and con- fined to the' mere handling of the freight in the act of receiving and forwarding it, there is nothing in any of this upon which a common carriage can be charged. (Moore Carriers, p. 68.) And the same is true also with regard to the weighing of freight which it does, even though these weights are at times made the basis of freight charges and adjustments between carrier and consignor or consignee. These activities are alluded to at this time, not only because they are set up in the bill, but because they are necessary to be considered in connection with the other things which it does in determining the character which the Junction Railway Company in fact bears, which, to the ex- tent of these activities at least, is plainly that of a mere intermediary or local agency of the trunk- line companies for which the services are per- formed. And this character, in all that it does, it consistently maintains. The so-called hauling and switching services, however, remain. And for a full understanding of them, they must be given somewhat ^t large. The practice in this regard with respect to live and 30 dead freight is not exactly tlie same. Where in- bound live stock originates outside of the State, and is destined to points in the stockyards district, the trunk line on which it arrives generally hauls it with its own motive power over the tracks of the junction railway from the connecting point to the unloading docks, chutes, and platforms of the stockyards company; although horses are usually delivered by the Junction Railway Company after having been received from the trunk line by which they are brought in. Outbound carload shipments of live stock, however, which originate in the stock- yards district and are destined to points outside the State, after being loaded into cars placed by the Junction Railway Company at the loading chutes of the stockyards, are hauled by the Junction Rail- way over its tracks and delivered at the proper con- necting point to the trunk line which is to trans- port them beyond. Dead freight in carload lots brought by the trunk line carriers from points out- side of the State, destined to points in the district served by the Junction Railway on the. line of its tracks, and sometimes also destined to points be- yond, is placed by the trunk line roads on what are known as the receiving tracks of the Junction Rail- way, each car being marked with a card, giving the name of the consignee, by which its destination may be known. And these cars the Junction Rail- way Company picks up with its own motive power and delivers to the designated consignee or indus- try; or, where they are destined to points beyond 31 2 ;■ the State, delivers them to the proper connecting outgoing trunk line, according to the destination indicated thereon. Through shipments of this kind move on bills of lading covering the whole dis- tance traversed, including the tracks of the Junc- tion Railway. And the same is true of consign- ments to and from the Union Stockyards or the in- dustries of the stockyards district adjacent to the railway company's line. But the Jimction Rail- way Company is not known to the shipper or the consignee in the transaction, all that it does being done for the trunk line carrier which employs it, by which it is paid so much a car. And this payment also it receives as a distinct switching charge, re- gardless of whether the car is loaded or empty, or where it is to go to or where it comes from. The question then is whether by reason of what it so does the Junction Railway Company is a common carrier engaged as such in the transportation of persons or property in interstate trade, within the meaning of the law. It is claimed that it is because it participates in the movement of the freight which passes over its tracks in the channels of commerce in the way which has been described, in which movement, it is said, it is an integral and essential factor and not a mere local aid. (C. N. 0. <& T. P. B. B. v. Inter. Com. Com., 162 TJ. S., 184.) But to me that does not seem to be the case. The part which it takes in that movement is a purely local and inci- dental one, in no respect having anything to do 32 with the movement of freight, as freight, and much less as interstate freight, its services being confined to the mere handling of the ears in which the freight is contained, this being carried on and com- pleted also wholly within the State, and not, in any respect, extending to anything beyond. It. knows no one outside of the trunk line carriers by which it is employed, and does not come in contact or have any relation with the shipper or consignee except as agent of the trunk line carriers in the receiving and delivering of freight. Nor has it anything to do with the freight rates charged, the tolls which it gets being taken care of by the trunk lines without appearing in those rates. The serv- ice which it performs is a mere shifting or switch- ing service, having no relation to anything outside of that so far as it is concerned. Its undertaking is to shift the cars and not the freight which they contain, in the movement of which freight it has no interest, and as emphasizing this it is paid by the car without regard to contents, origin, or desti- nation, whether to or from points within or with- out the State. When the cars are being moved by the Junction Railway Company the carrier for which in each instance this is being done, in legal contemplation as well as in actual effect, is trans- porting them, the Junction Railway Company, by its engineers and employees, being merely the me- dium by which it is accomplished. To engage in transportation within the meaning of the law there must be a participation in the result; to merely touch it in passing, as here, is not enough. The statute was enacted to regulate interstate com- merce, and there must be a direct or proximate con- nection with interstate shipments to bring the case within its terms ; and the mere local shifting or han- dling of cars in which the commodities move inci- dentally in transit, wholly within the State where it is done, Avithout any share in the freight paid, the service rendered being performed for the carrier by which the through transportation is being done, is not, in my judgment, engaging in interstate com- merce in the commodities or in the interstate trans- portation of them, with which alone the statute undertakes to deal. It is no doubt true that railroads performing similar switching services to those which we have here have been held to be engaged in interstate commerce, within the meaning of the safety appli- ance law. (United States v. Col. d N. W. R. B., 157 Fed., 321 ; United States v. Union Stock Yards of Omaha, 161 Fed., 919 ; Belt Line B. B. v. United States, 168 Fed., 542; Union Stock Yards of Omaha v. United States, 169 Fed., 404.) But there is by no means a unanimity of opinion among the judges by whom these cases were decided, and, as is pointed out by Judge Sanborn, in the lead- ing one (United States v. Col. & N. W. B. B., 157 Fed., 321) the safety appliance act is to be given a broader construction than the interstate commerce act, even though in the description of the carriers, who are made subject to it, the same 13707— u — 3 34 terms largely are employed in each; the one act dealing with the physical or mechanical instru- mentalities of interstate commerce, looking to the safety of employees, while the other is directed to the business or commercial side, regulating the rates and practices which are there to prevail. These decisions therefore, as it seems to me, are misleading and valueless as precedents, and are not to be applied. Neither is the case like that of MacNamara v. Washington Terminal Company (39 Wash. Law Rep., 458), recently decided by the District of Oo- liunbia Court of Appeals, on which much reliance is placed. The case there arose under the employ- ers' liability act, the validity of which, so far as the District of Columbia is concerned, does not depend, as it is pointed out, on the right of Congress to legis- late with regard to interstate or foreign trade ; and the question simply was whether the Terminal Com- pany was a common carrier engaged in trade or commerce in the District within the meaning of the law. Whether the Terminal Company, however, was engaged in interstate commerce was also held to be involved ; and, passing upon that question, it was decided that it was. But the considerations which led to this result are to be observed. The tracks and station of the Terminal Company, it is to be noted, are not mere facilities for the handling of passengers and baggage at Washington. As to the railroads entering the city, the Terminal Company completely monopolizes everything that is done. 35 By its agents and employees it controls the opera- tion of trains over its tracks into and out of the station, and with its engines it shifts empty cars in the making up of trains. Steam railroad passenger traffic, entering and leaving Washington, is thus completely and exclusively managed, operated, and controlled by the Terminal Company within the zone occupied by its station and tracks. The con- clusion reached, in view of this, was that it was not to be taken as a mere line of railroad, carried on wholly and independently within the District, but that it was a direct component part of the various railroad systems engaged in interstate commerce, through which an entrance into Washington was obtained. And it is this integral and indispensable part which it has in interstate trade coming into and going out of the city that is the criterion by which its position as a medium of interstate com- merce is to be judged. It is, in other words, as with the Southern Pacific Terminal (219 U. S., 498), its relation to and systematic connection with the inter- state railroads, of which it forms the Washington end, and its direct participation in the handling and management of the passenger and express traffic there, that makes it a common carrier en- gaged in interstate commerce within the meaning of the Federal law. The distinction between that case and the one in hand is clear. The Junction Railway Company was not organized to supply terminal facilities, nor does it in fact supply them for any interstate s 2< *-^ 3^ railroad or business, Nor is it a component part of any such railroad system, Nor does it, in the hauling and switching services which it performs, take the place for the time being, as to consignor or consignee, of the trunk line carrier for which it acts. It simply moves back and forth, by means of its engines and employees, cars which it is put by the trunk line carriers in the way to take, to which carriers in the performance, of that service it is alone responsible therefor. It is not an agency of commerce as such, State or interstate, but of the railroads which have that commerce in charge. It is true that it has a railroad which it operates, over which that commerce incidentally moves. But that does not change the character of the services in which it is engaged. The part which it plays, the relation which it assumes, and the result of what it does, begin and end, so far as it is con- cerned, with the immediate service which it ren- ders, which negatives the idea that anything like interstate commerce is intended or involved. Not engaging as a common carrier in such transporta- tion, it is not brought in consequence within the terms of the act, and can not be required either to publish tariffs or to make reports. And the peti- tion ought therefore, in my judgment, to be in all respects denied. O United States Commerce Court. No. 15 — October Session, 1911. United States ex rel Attorney Ccbneral V. Union Stock Yard and Transit Co. et al. ON PETITION FOR REHEABING. Mr. Blackburn Esterline and Mr. William E. Lamh, special assistants to the Attorney Gteneral, for the United States. Mr. Ralph M. Shaw for Union Stock Yard and Transit Co. of Chicago and for the Chicago Junc- tion Railway Company. Mr. Willard M. McEwen for Louis Pfaelzer & Sons. Before Knapp, Presiding Judge, and Archbaid, Hunt/ Carland, and Mack, Judges. [February 13, 1912.] Mack, Judge: It is urged that this court, in the opinion here- tofore filed, has too narrowly limited its jurisdic- tion in declining to consider whether or not the 28108—12 proposed payment by the Stock Yards Company to the Pf aelzers is a rebate or discrimination for- bidden by law. Counsel contend that inasmuch as the Junction Co. which is alleged and has been found by us to be a common carrier engaged in interstate com- merce is one of the defendants, therefore, under section 2, as well as under section 3, of the Elkins Act, other parties not common carriers involved in the subject matter of the proceedings may like- wise be proceeded against in the same action. But as we stated in the former opinion, two entirely separate cases have been joined in this proceeding, the one against the Junction Co. and the Stock Yards Co. to compel compliance with sec- tions 6 and 20 of the act to regulate commerce; the other against the Stock Yards Co., the Invest- ment Co., and the Pfaelzers, under the Elkins Act, to enjoin an alleged discrimination and rebate. While we have not, of our own motion, dismissed the petition for misjoinder of actions and multi- fariousness, nevertheless we can not deal with the case otherwise than as involving the two distinct causes of action; the fact that the Junction Co. is a party to the first of these does not make it also a party to the second. ITo relief of any kind is prayed for against it in respect to the alleged dis- crimination and rebate. If, as we interpret sec- tions two and three of the Elkins Act, a proceeding thereunder in equity can not be maintained against parties other than a common carrier engaged in interstate commerce unless on proper allegations relief is also sought against the commission by such a carrier of one or more of the acts therein pro- hibited, the fact that the Junction Co., which is such a carrier, is a party defendant on the other branch of the case furnishes no basis for this pro- ceeding against the other defendants. But counsel further urge that, inasmuch as the Stock Yards Co. is, in good faith, alleged to be an interstate common carrier, this court not only has jurisdiction but is in duty bound to determine the legality of the contract with the Pf aelzers. There is no question as to the jurisdiction of the court in the premises; the petition purports to state a case under the Elkins Act. If the defend- ants had admitted that the Stock Yards Co. was an interstate common carrier, the only question to be determined by this court would have been the legal- ity of the contract. But when the defendants de- nied this allegation, they raised an issue of fact the determination of which necessarily preceded any consideration of the issue of law. When that issue of fact was decided in their favor the peti- tion had to be dismissed. The court nevertheless had the power and the right to base its decision on either or both of two possible grounds, and if we had been clearly of the opinion that such a contract as the one in question, made by an interstate common carrier, were legal, .Z % 4 the petition would have been dismissed on both grounds. The only case stated, or that could properly have been stated in the petition, was one charging that an interstate carrier had made a contract in viola- tion of the law. Defendants, however, are now asking us to decide a totally different question — whether or not such a contract made by one not a carrier is legal. However important it may be to them to secure an authoritative ruling thereon, any answer that we might give would not be responsive to the issues raised in the case before us, and would, therefore, be a mere dictum, and of no binding force. No authority has been vested in this court to ad- vise parties, on their application, whether pro- posed undertakings would, if consummated, vio- late the law, or, on the application of the Govern- ment, to enjoin the commission of alleged illegal acts, except only when such an injunction is sought against an interstate common carrier. An order tvill therefore be entered in accordance with the original opinion filed herein. O United States Commerce Court. Nos. 50 and 51. — October Session, 1911, Atchison, Topeka & Santa Pe Railway Co. ET al,,, petitionees, vs. United States of America, respondent. ^No. 50. '-J Union Pacific Railroad Co. et al., petitioners, vs. United States of America^, respondent. No. 51. Interstate Commerce Commission^, City . of Spokane et al.^ Chicago Association of Com- merce, Portland Chamber of Commerce et al.. Interior Counties Freight Bureau of South- ern California et al., Gmoux Consolidated Mines Company, inter-\^ners. ON MOTIONS FOR PRELIMINARY INJUNCTIONS AND ON MOTIONS TO DISMISS. For opinions of Interstate Commerce Commis- sion see 21 1. C. C. Rep., 329 and 400. Mr. Charles Donnelly, Mr. F. G. Dillard, and Mr. Bohert Bunlap, with whom Mr. T. J. Norton, Mr. E. C. Lindley, Mr. R. B. Spott, Mr. Burton 16540—11 1 Hanson, Mr. James G. Jeffery, Mr. H. A. Scan- drett, Mr. W. F. Merrin, and Mr. Gardiner Lathrop were on the brief, for the petitioners. Mr. J. N. Teal for cities of Seattle, Tacoma, and Portland. Mr. James A. Fowler, Assistant to the Attorney General, for the United States. Mr. P. J. Farrell for the Interstate Commerce Commission. Mr. H. M. Stephens for city of Spokane et al. Mr. Byron Waters for Interior Counties Freight Bureau of Southern California et al. Before Knapp^ Presiding Judge, and Archbald, HxJNT, Carland^ and Mack, Judges. [Nov. 14, 1911.] Mack, Jtidge: These cases involve the constitutionality and in- terpretation of section 4 of the act to regulate com- merce of February 4, 1887, as amended June 18, 1910 (36 Stat., 539), and the powers of the Interstate Commerce Commission thereunder. The sections as originally framed and as amended follow in parallel columns. The omis- sions from the original section and the additions in the amended section are italicized. Seo. 4. That it shall be un- Sec. 4. {As amended June lawful for any common car- 18, 1910.) That it shall be rier subject to the provisions unlawful for any common car- of this act to charge or re- rier subject to the provisions ceive any greater compensa- of this act to charge or re- tion in the aggregate for the transportation of passengers or of like kind of property, under substcmtially similar , circumMcmces cmd conditions, for a shorter than for a longer distance over the same line, in the same direction, the shorter being included within the longer distance; but this shall not be construed as authoriz- ing any common carrier with- in the terms of this act to charge and receive as great compensation for a shorter as for a longer distance: Pro- vided, however. That upon application to the Commis- sion appointed under the pro- visions of this act, such com- mon carrier may, in special cases, after investigation hy the Com/mission, be author- ized to charge less for longer than for shorter distances for the transportation of passen- gers or property; and the Commission may from time to time prescribe the extent to which such designated com- mon carrier may be relieved from the operation of this sec- tion of this act. ceive any greater compensa- tion in the aggregate for the transportation of passengers, or of like kind of property, for a shorter than for a longer distance over the same line or route in the same direction, the shorter being included within the longer distance, or to charge any greater compen- sation as a through route than the aggregate of the interme- diate rates subject to the provi- sions of this act,' but this shall not be construed as authoriz- ing any common carrier within the terms of this act to charge or receive as great compensa- tion for a shorter as for a longer distance : Provided, however, That upon applica- tion to the Interstate. Com- merce Commission such com- mon carrier may in special cases, after investigation, be authorized ly the Commis- sion to charge less for longer than for shorter distances for the transportation of passen- gers or property; and the Commission may from time to time prescribe the extent to which such designated com- mon carrier may be relieved from the operation of this section: Provided further. That no rates or cha/rges law- fully existing at the time of the passage of this a/mendatory act shall he required to be changed hy reason of the pro- visions of this section prior to the expiration of six month after the passage of this act, nor in any case where applica- tion shall have heen filed lefore the Conimission, in accordance with the provisions of this sec- tion, until a determination of such application hy the Com- mission. Whenever a carrier hy rail- road shall in competition with a water route or routes reduce the rates on the carriage of arty species of freight to or from competitive points, it shall not he permitted to increase such rates unless after hearing hy the Interstate Commerce Com- mission it shall he found that such proposed increase rests upon changed conditions other than the elimination' of water competition. At the time of the amendment a number of com- plaints of unreasonable and unjustly prejudicial rates filed by commercial bodies of the so-called intermountain cities, such as Spokane, Washing- ton; Reno, Nevada; and Phoenix, Arizona, were pending before the Commission. Similar com- plaints had been filed and partial adjustments thereof made at various times, beginning with the year 1892. Because of the amendment, the Com- mission refrained from finally determining the commodity rates to which these cities were entitled on west-bound traffic, believing that orders made under applications for relief, as provided in sec- tion 4, would obviate the necessity therefor. Applications were duly filed in a form prescribed by the Commission, which required carriers to state that the rate to the intermediate points should not be more than a certain number of cents per 100 pounds, per ton, per car, or per package, in excess of the rates to the farther point, in and by which applications the carriers asked to be allowed to maintain the Pacific coast terminal rates then in force, lower than the rates to intermediate points fixed by specified tariffs on file with the Commission- After a full hearing and investigation two reports and orders were made. Each report was entitled in the matter of the application under sec- tion 4. One of them was also entitled in the matter of the then pending Nevada and Arizona complaints (21 I. C. C. Rep., 329), although the order based thereon was entitled only in the matter of the ap- plications under section 4 ; the other report was also entitled in the matter of the then pending Spokane and Salt Lake City complaints (21 I. C. C. Rep., 400), although the order based thereon was entitled only in the matter of the Spokane complaint. The first order provided that for the purposes of the disposition of the applications the United States should be divided into five zones (being the same as those specified in a Transcontinental Tariff on file) , as follows : changed hy reason of the pro- visions of this section prior to the expiration of six months after the passage of this act, nor in any case where applica- tiooi shall have heen filed hefore the Conimission, in accordance with the provisions of this sec- tion, until a determination of such application iy the Com- mission. Whenever a carrier hy rail- road shall in competition with a water route or routes reduce the rates on the carriage of any species of freight to or from competitive points, it shall not he permitted to increase such rates unless after hearing iy the Interstate Commerce Com- mission it shall he found that such proposed increase rests upon changed conditions other than the elimination of water competition. At the time of the amendment a number of com- plaints of unreasonable and unjustly prejudicial rates filed by commercial bodies of the so-called intermountain cities, such as Spokane, Washing- ton; Reno, Nevada; and Phoenix, Arizona, were pending before the Commission. Similar com- plaints had been filed and partial adjustments thereof made at various times, beginning with the year 1892. Because of the amendment, the Com- mission refrained from finally determining the commodity rates to which these cities were entitled on west-bound traffic, believing that orders made under applications for relief, as provided in sec- tion 4, would obviate the necessity therefor. Applications were duly filed in a form prescribed by the Commission, which required carriers to state that the rate to the intermediate points should not be more than a certain number of cents per 100 pounds, per ton, per car, or per package, in excess of the rates to the farther point, in and by which applications the carriers asked to be allowed to maintain the Pacific coast terminal rates then in force, lower than the rates to intermediate points fixed by specified tariffs on file with the Commission- After a full hearing and investigation two reports and orders were made. Each report was entitled in the matter of the application under sec- tion 4. One of them was also entitled in the matter of the then pending Nevada and Arizona complaints (21 I. C. C. Rep., 329), although the order based thereon was entitled only in the matter of the ap- plications under section 4 ; the other report was also entitled in the matter of the then pending Spokane and Salt Lake City complaints (21 I. C. C. Rep., 400), although the order based thereon was entitled only in the matter of the Spokane complaint. The first order provided that for the purposes of the disposition of the applications the United States should be divided into five zones (being the same as those specified in a Transcontinental Tariff on file) , as follows : Zone No. 1 should comprise all that portion of the United States lying west of a line called Line No. 1, which extends in a general southerly direction from a point inomediately east of Grand Portage, Minn. ; thence southwesterly, along the northwestern shore of Lake Superior, to a point immediately east of Superior, Wis. ; thence southerly, along the eastern boundary of Transcontinental Group F, to the in- tersection of the Arkansas and Oklahoma State line ; thence along the west side of the Kansas City Southern Railway to the Gulf of Mexico. Zone No. 2 should embrace all territory in the United States lying east of Line No. 1 and west of a line called Line No. 2, which begins at the interna- tional boundary between the United States and Canada, inamediately west of Cockburn Island, in Lake Huron; passes westerly through the Straits of Mackinac ; southerly through Lake Michigan to its southern boundary; follows the west boundary of Transcontinental Group C to-Paducah, Ky. ; thence follows the east side of the Illinois Central Railroad to the southern boundary of Transcon- tinental Group C ; thence follows the east boundary of Group C to the Gulf of Mexico. Zone No. 3 should embrace all territory in the United States lying east of line No. 2 and north of the south boundary of Transcontinental Group C, and on and west of line No. 3, which is the Buffalo- Pittsburgh line from Buffalo, N. Y., to Wheeling, W. Ya., marking the western boundary of Trunk Line Freight Association territory ; thence follows the Ohio River to Huntington, W. Va. Zone Xo. 4 should embrace all territory in the United States' east of line No. 3 and north of the south boundary of Transcontinental Group C. Zone No, 5 should embrace all territory south and east of Transcontinental Group C, The order then proceeded as follows : "It is further ordered, (1) That those portions of the above-numbered applications that request au- thority to maintain higher commodity rates from points in Zone No. 1 to intermediate points than to Pacific coast terminals be, and the same are hereby, denied, effective November 15, 1911 ; (2) that peti- tioners herein be, and they are hereby, authorized to establish and maintain, effective November 15, 1911, commodity rates from all points in zones num- bered 2, 3, and 4, as above defined, to points inter- mediate to Pacific coast terminals that are higher to intermediate points than to Pacific coast termi- nals ; provided, that the rates to intermediate points from points in zones numbered 2, 3, and 4 shall not exceed the rates on the same commodities from the same points of origin to the Pacific coast terminals by more than 7 per cent from points in Zone No. 2, 15 per cent from points in Zone No. 3, and 25 per cent from points in Zone No. 4. The Commission does not hereby approve any rates that may be established under this authority, all such rates being subject to complaint, investiga- tion, and correction if they conflict with any other provisions of the act. ' ' The second order is similar in all respects except that it refers only to Spokane and certain other intermountain cities, and expressly provides that 8 the carriers shall comply therewith for a period of not less than two years. The two suits brought in this court to enjoin the enforcement of these orders, respectively, were heard together. The same questions are presented in each of them. First. We agree with the Commission that sec- tion 4 of the act to regulate conunerce as amended June 18, 1910, is constitutional. The Commission concedes, and we concur therein, that if the first pro- viso in this section is to be literally construed and if, under such construction, no limit has been im- posed upon and no standard given to guide the exercise of the Commission's discretion in granting authority to depart from the rule for- bidding a lesser rate for the long than for the short haul in the same direction and over the same line or route, the proviso would be unconstitutional as an unlawful delegation of legislative power. We concur, too, in the Commission's view that if the proviso were for this reason illegal the entire sec- tion would thereby be nullified, inasmuch as both the context and the history of the act demonstrate that the proviso is an integral part of the section, and that a hard and fast rule absolutely prohibiting such a lesser rate would not have been enacted. To determine, however, the true meaning of the proviso, the entire act must be examined. In the light of the other sections, and of the legislative and judicial history of the long and short haul clause, we are of the opinion that the guide to the exercise 2 3"^ of the Commission's discretion is to be found in the other sections of the act, thereby making the discre- tion to exempt carriers from the prohibition in fact not unlimited, and imposing upon the Com- mission not merely the right but also the duty to grant such exemption whenever, on investigation, it shall find that no violation of any section of the act would thereby be involved. If, therefore, the proposed rate, lower for the long than for the short haul, violates no provision of the act, and if, in particular, it neither tends to produce an unreasonable rate for the short haul nor operates unduly to prejudice the short-haul point and unduly to prefer the long-haul point, it is the duty of the Commission to grant exemption from the hard and fast rule laid down in the first clause of section 4. Second. The orders sought to be enjoined do not establish absolute rates for either the long or short haul or prescribe the extent, in dollars and cents, that the short-haul rate may exceed the present or some definitely fixed long-haul rate, but they do establish a relation between any long-haul rate that the carrier may put into effect and the short-haul rate, determining that from zone one the western short-haul rate shall not exceed the long-haul rate, and that from zones two, three, and four, the short- haul shall not exceed the long-haul rate by more than 7%, 15%, and 25%, respectively. The Commission found specifically that the Pa- cific coast rates from part of this eastern territory 15540—11 2 10 were forced by water competition, and that the rates from other parts were forced by market com- petition ; for example, that the railroads based the New York-Seattle rate on the ocean competition and that they granted the same rate from St. Paul to Seattle in order to enable St. Paul to compete with New York in the Seattle market. Under the fourth section as originally framed, it was decided (E. T., etc., By. Go. v. 1. C. C, 181 U. S,, 1, and cases cited therein) that carriers might, in the first instance and without applica- tion to the Commission, make the rate less for the long than for the short haul, if, in fact, the circumstances and conditions were not substan- tially similar, taking their chances on a subsequent determination by a court that they had erred in so doing and had thereby violated the law. They could, however, and in many instances did, apply to the Commission for the authority. After the sec- tion was construed as not requiring such an appli- cation in the first instance, the carriers, it was aften charged, abused their privilege by making the rate for the long haul less than for the short haul, although the circumstances and conditions were substantially similar ; this charge was, in any event, one of the causes that led to the amendment of the section whereby the clause " under substantially similar circumstances and conditions" was elimi- nated therefrom. The practical change thereby produced in section 4 was to compel the carriers to 11 5. 3 ■ make application to the Commission if they desired to continue this practice. The violation of the long and short haul rule is, however, only one instance — a most striking and irritating one, it is true — of the preference and prejudice which, when undue, is prohibited by section 3. Any violation of the original fourth section would necessarily involve a violation of the third section and, e converso, if the lesser rate for the long haul than for the short were not in violation of the third sec- tion it could not be in violation of the original fourth section. In E. T., etc.. By. Co. v. /. C. C, supra, the court held that when it is established that the rates charged to the shorter distance point are just and reasonable in and of themselves, and that the lesser rate for the longer haul is not wholly unremunerative and has been forced upon the car- riers by competition at the longer distance point, it must result that a discrimination springing alone from a disparity in rates can not be held to be, in legal effect, the voluntary act of the carriers, and that therefore the provisions of the third section will not apply. The prohibition of the third section, it was said, is directed against undue preference arising from the voluntary and wrongful act of the carriers, and does not relate to acts the result of conditions wholly beyond the control of such carriers ; the lesser rate for the long haul could not produce an unjust preference under the third sec- 12 tion when the competitive conditions at the longer distance point which had caused the lesser rate would produce the same preference, even though the carrier were forbidden to meet the competition. For example, as Seattle can get its supplies from New York by water, and Spokane, because of its location, can not do so, Seattle can not be said to be unduly favored merely because the rail carrier, in order to meet the water competition, charges a lesser rate from New York to Seattle through Spokane than from New York to Spokane, pro- "vdded the Spokane rate is reasonable per se and the Seattle rate not unremunerative. And so, too, if the St. Paul-Seattle rate is reduced to a point less than reasonable per se although hot unremu- nerative, to meet the New York-Seattle rate in order to enable the St. Paul merchants to compete with New York merchants at Seattle, Spokane could not complain merely because this rate is made less than the St. Paul-Spokane rate. In each of these cases Spokane is not unduly prejudiced, be- cause if the lower rail rate to Seattle were for- bidden Seattle would nevertheless, by reason of its location, be able to secure its supplies by water, and would therefore in the nature of things have this advantage over Spokane. While the primary question in the E. T., etc., Ry. Co. case, supra, was as to the right of the carriers, in the first instance and without application to the commission, to make lesser rates for the long than 13 ,*— ._ for the short haul, inasmuch as the original com- plaint charged a violation of both the third and the fourth sections, the court necessarily consid- ered section 3, and held that it could not be violated by making a lesser charge for the long than for the short haul, if the long-haul rate was forced by competition and was not unremunerative. This construction of section 3 was not dependent upon the clause in section 4 which, by the amend- ment of 1910, has been stricken out. It was based upon the language of section 3 itself, which forbade not any preference but only an undue preference, and upon the determination that, in the nature of things, there could be nothing undue in a prefer- ence which was caused by the natural geographi- cal situation, and which would continue even if there were no railroad carriage. The amendment to section 4, therefore, has not changed the con- struction of section 3, and it follows that no unjust prejudice to Spokane and other interior points can now be predicated merely on the fact that the rate from any of the eastern territory is less to the Pa- cific coast terminals than to the intermediate points. The Commission also found, however, that the present Pacific coast rates from zone one had not been proven by the carriers, upon whom the burden was laid, to be less than reasonable per se. Assuming that they were fully reasonable per se, the Commission would have the power to refuse ex- emption from the long and short haul requirement. 14 for under these circumstances any higher rates to intermediate points could be condemned as unrea- sonable and thus in violation of section 1 of the act. But the order of the Commission as to this ter- ritory is not limited to a denial of the applications in the form in which they were presented, that is, to a denial of the maintenance of the then prevail- ing rates to the coast concurrently with higher rates to the interior points. It forbids the carrier to maintain any coast rate lower than the con- temporaneous intermediate rate from these points. In other words, if the carrier from St. Paul in order to meet new water competition from ISTew York should reduce the St. Paul-Seattle rate to a point less than at present and less than a rate reasonable per se, but nevertheless somewhat re- munerative, it would be compelled, under this order, to grant the same rate to the interior point, even though, under these circumstances, a reason- able rate to the interior point higher than the un- reasonably low rate to the coast point forced upon the carrier by such market competition under penalty of losing the business would not be in vio- lation of section 1 or of any other provision of the act. This is likewise true of the order as to rates from the other zones. It is not based upon the current coast rates. It determines the relation of the short- haul rates to any coast rates that might be estab- lished by the carriers. It makes illegal a rate from Chicago to Spokane more than 7 per cent higher 15 „ , , ..- * '-' than an unreasonably low but remunerative Chicago-Seattle rate forced by competition, even though the Chicago-Spokane rate be reasonable per se and not in violation of any prQvision of the act. Is the Commission empowered to make such an order? It is urged that even if it must grant an application for relief, when the lower long-haul rate involves no violation of the act, nevertheless it may determine the extent of the exemption and there- fore it may fix the relation of rates. But to sustain the constitutionality of the pro- viso in section 4 it must be read as imposing the duty on the Commission not only to grant exemption from the hard and fast rule when thereby no sec- tion of the act is violated, but also to grant such exemption to the extent that no section of the act is thereby "vdolated; that is, the carrier is entitled under the act to be granted authority to charge as much less as it please for the long haul than for the short haul, provided the Commission shall first determine that it does not thereby violate any other provision of the law. In granting authority to make an absolute long-haul rate lower than some short-haiil rate, the Commission would have the -power and the duty to prevent a violation of sec- tion 1 and, by virtue of its authority to deter- mine reasonable rates, to fix the short-haul rate. Doubtless the Commission could, moreover, in order to prevent a violation of section 3, make rela- tive rates in so far as this might be necessary to pre- 16 vent an undue preference. For while, under the de- cision in E. T., etc., By. Go. v. I. G. G., supra, undue preference could not be predicated merely on the fact that the rate was less for the long than for the short haul, when the former was forced by water, market, or any kind of competition, it might be predicated thereon if the short-haul rate were not likewise based upon the same competition in so far as and to the extent that it ought fairly to be influ- enced thereby. For example, if the St. Paul-Seattle rate be made less than reasonable although remu- nerative to meet the forced New York-Seattle rate so as to enable St, Paul to compete with New York in the Seattle market, Spokane might complain of unreasonable prejudice against it if the St. Paul- Spokane rate were made higher than the New York-Spokane rate and thereby similar competi- tion were prevented at Spokane. So, too, as its merchants could get their supplies through Seattle at a price based on the New York-Seattle freight rate plus the back-haul rate, Spokane might have grounds for complaint of undue prejudice if the rate either from St. Paul or New York to Spokane were made higher than the rate from such point to Seattle plus the back haul, because only to the ex- tent of the back-haul cost could Spokane be said to be in any different position than Seattle, and therefore only to that extent could it justly be deprived of the benefits of the same competitive forces which determine the Seattle rate. 1'^ ■'■, (I c But neither the equality of rates on shipments from zone 1 nor the relation between the rates on shipments from the other zones, as fixed in the order of the Commission, can be sustained upon any such considerations. In so far as the Commission attempts thus to determine the relation of the long and short haul rates, irrespective of absolute rates, it goes beyond any authority that has been vested in it, for it is not in the power of the Commission to say that 100 per cent, 107 per cent, or any given percentage of an unlaiown less than reasonable rate to the coast is necessarily a maximum reasonable and non-discriminatory rate from the same point of origin to an interior point. The practical effect of the Commission's order is either to compel a blanket rate from the entire east to the entire west, or to prevent the carriers from getting all the business which they now secure with- out loss by making rates which enable merchants to meet market competition. For example, if the forced New York-Seattle rate is $1, the St. Paul- Seattle rate can not be made higher by the St. Paul carrier, unless it gives up the benefit of busi- ness which market competition at Seattle might bring to it. As long as it charges no one else an unreasonable rate, and as long as it does not carry under cost, it is entitled to grant St. Paul the market competitive rate of $1. Under the order, its rate to Spokane in that event could not exceed $1, while the New York carrier could charge 18 $1.25, The latter, however, would also have the right to enable New York to meet St. Paul com- petition in Spokane. To do this it would have to reduce the New York- Spokane rate to $1. The result would be either to compel a blanket rate from all points east of St. Paul to all competitive points west of St. Paul or to force the carriers to give up some business which could be carried without loss to themselves or damage to anyone else. The Com- mission's order, moreover, does not even secure to Spokane the market competition of St. Paul and New York, since it empowers the railroads to charge a higher rate from New York, which might exclude New York from the Spokane market. In a word, unless some through business is given up, the effect of the orders would be to put Spokane and other interior points on an equality with Seat- tle and other Pacific coast points, at least from zone one, — a position to which they would not be entitled under all circumstances in view of their relative locations, the former four hundred miles more or less in the interior, the latter on the coast. It follows that the motions to dismiss the peti- tions must he denied and that writs to enjoin the enforcement of the orders, pending the final determination of the cases, must be issued. And it is so ordered. Aechbald, Judge, concurring: It is conceded that if the right to approve or dis- approve of an application by a carrier to charge more for a shorter than for a longer haul is left by 19 a^-; the fourth section of the interstate commerce act, as it is at present amended, to the uncontrolled dis- cretion of the Commission, the section is invalid; also, that the proviso taken as it reads in terms con- fers such unlimited discretion ; and that the section is only therefore to be saved in case a guide is found in other provisions of the statute. " That section provides," says Mr. Commissioner Prouty, '' that no carrier shall charge more for the short than for the long haul unless upon appli- cation to the Commission permission to do so is granted by it. If this section were read by itself and were taken at its literal face meaning, the Com- mission would possess unrestricted power to grant or deny such application. It could permit in one case and refuse in anothei*, according as its fancy might dictate. So construed, the pro-^dso would probably be void as a delegation of legislative au- thority. The making of rates is a legislative func- tion. To say whether a carrier shall or shall not be allowed to charge more for the short than for the long haul is virtually the making of rates, and therefore an attribute of the legislature. To invest an administrative body like this Commission with that unrestricted and unguided authority would be to give it legislative power, which can not be done under our Federal Constitution. It is one thing to authorize such a body to administer the law in accordance with certain rules and standards pre- scribed by the legislature and an entirely different thing to turn over to it the exercise of the legislative 20 discretion itself. ' ' Proceeding to consider whether the proviso could be separated from the rest of the section and the prohibitive part of it, where the charging of more for a shorter than for a longer haul over the same line in the same direction is for- bidden, be sustained without regard to it, it was further held that the proviso was an essential part of the section which manifestly would not have been enacted without it, and that the whole must there- fore stand or fall together. This is a correct expo- sition of the law, and could not have been better stated than is done in the opinion of the Commis- sion. But I do not see how, in the face of it, to escape the conclusion that the section is invalid. It is sustained by the Commission by importing into it the provisions of the first and third sections, which respectively prohibit unreasonable rates and unjust discriminations, where the requisite guide is found, as it is claimed, for the action of the Com- mission. " Bearing in mind," says the same learned and able Commissioner, ' ' the authority which the Commission now administers in prescrib- ing a reasonable rate and in declaring and correct- ing an undue preference, it seems evident that the purpose of Congress was to commit to this body the duty of determining whether if the carrier was per- mitted to charge a higher rate at the intermediate point that would result in a violation of the provi- sions of the act. But in so doing the Commission can not act arbitrarily. It must investigate each case, and if after such investigation it is of the 21 > ^ ^^ , opinion that a departure from the rule of the fourth section would not result in unreasonable rates or undue discrimination it must permit that de- parture. If, upon the other hai^d, it is of the con- trary opinion, it must refuse the permission. Such is the only possible construction which can be put upon this section in connection with the entire act, and if any doubt as to the real purpose of Congress could exist, it must be effectively put at rest by an examination of the history of the passage of this measure. ' ' Undoubtedly the statute is to be taken as a whole and the different sections read together, but I fail to see how this helps out the matter. By the first section it is prescribed that all charges for .any service rendered or to be rendered by carriers sub- ject to the act in the transportation of passengers or property shall be just and reasonable, and every unjust and unreasonable charge is prohibited and declared unlawful. This does no more than enact the common into the federal law, and neither adds to nor detracts from the rights of such carriers, except as it inferentially recognizes their right to a just and properly remunerative rate, in prohibiting an unjust and unreasonable one.i But how does this assist the Commission in any given case whether to enforce or relieve the carrier from the greater short than long haul charge prohibited by the first part of the section in question, or what direction or guide to that end does it afford ? No doubt it in- sures to the carrier that the short-haul charge shall 22 be reasonably remunerative where it has not been voluntarily abandoned, although the Commission in the order made has entirely disregarded this. But that is only half of the problem to be solved, if, indeed, it is that much. The point is that it affords no guide in determining when a disparity between the short and the long haul shall be permissible, which is the question which in each case is to be de- cided by the Commission. But it is further said that at this juncture the third section comes in, and authorizes a less charge for a long than for a short haul, provided an undue or unreasonable prefer- ence or advantage does not result to any person or locality over any other. But this provision of the statute is not permissive, but prohibitive. It for- bids in brief any undue discrimination, as the first forbids unjust or unreasonable rates, or the fourth the particular kind of discrimination against which it is leveled. It may be, correlatively or by infer- ence, that a right to discriminate is recognized when it can be done without injustice or prejudice. But how again does this afford a guide to the Com- mission in determining when a greater short than long haul charge shall be sanctioned? The fourth section in express terms declares that except as extenuated by the action of the Commission a greater short than long haul charge is per se a dis- crimination and advantage which is unjust and undue, and not to be tolerated. And how is it pos- sible, then, to say that a prohibition against wliat is undue furnishes a guide or rule in determining when it shall result that that which so on its face is to be regarded as undue shall no longer be so ? There shall be no undue discrimination, says the third section. A greater short than long haul charge is an undue discrimination, says the fourth. At what, then, do you arrive by combining the one with the other ? Or where is here to be found the criterion or standard which is to enable the Com- mission to say when and under what circumstances that which it is bound otherwise to say is an unjust and undue preference or advantage of one locality over another is not so ? All the guide there is, is its say-so. But if it rests merely on that the enactment is confessedly void, and the action of the Commission has nothing to sustain it. And that is the only con- clusion which I can reach with regard to it. It is held good by the court for the reasons given by the Commission, but to this I can not agree, and feel compelled in consequence to give expression to the views which I entertain to the contrary. There are at least such grave doubts with regard to the va- lidity of the section that the question might well be pkssed by at this time, there being other grounds upon which the invalidity of the action of the Com- mission may be rested. For there can be no reasonable doubt that, asfevim ■ ing that the fourth section is valid, the orders of the Commission go far beyond the power conferred by it. The authority given by the proviso is upon application of the carrier in special cases after in- vestigation to permit the charging of less for longer 24 than for shorter distances, the Commission having the right from time to time to prescribe the extent to which the carrier may be relieved from the abso- lute prohibition against this, which is otherwise imposed upon it. There must thus in each instance be an application by a carrier, and a special case which entitles the carrier to relief — ^whatever. that may mean — must be set up and made out. And this fixes the limits of the Commission's authority. Its duty is to investigate what is so brought before it, and, if a case warranting it appears, to approve the application ; or if not, to refuse it. The Commission can not go on if it does not approve and make rates, or lay down rules by which they shall be made, upon its own initiative. The carrier in making appli- cation for approval does not submit or subject itself to any such exaction. The right to inaugurate to this extent still remains with the carrier the same as before the amendment. The authority assumed by the Commission here is not to be implied from the right to prescribe the extent to which from time to time the carrier may be relieved, in the words of the statute. This refers to the special case in each instance which the carrier is required to make out in order to get the approval of the Commission, and is necessarily confined to it. In this respect the pjiraseology of the section is not changed, and it never by any previous construction was carried outside of this, nor is there anything now which requires it. It may be that the appli- 25 5- v^-3 cations made by the carriers here for the approval of existing long and short haul tariffs, blanketing the country, went beyond the statute. But if that was the case, the proper course to pursue was to throw them out upon that ground. The mere fact that they were in this form gave the Commission no authority to go on and prescribe rates by the whole- sale. The orders in controversy extend to the en- tire continent from east to west, saving only a com- paratively small section in the southeast, which is reserved for subsequent consideration. This can not by the broadest construction of the law be brought within it. By no device can the whole United States be made a " special case "; nor can the Commission, upon any just conception of its powers, lay down a hard and fast rule which shall apply to every long and short haul case wherever originating or whatever its destination from east to west across the country. Nor is this saved by the establishment of zones with varjdng percentages. As pointed out in the opinion of the court, this entirely disregards the right of the carriers to have considered what in each instance is a reasonable rate between points involved. It also overrides the established right of the carriers to make a less than reasonable rate to and from competitive points from whatever cause that competition arises. And it is an attempt to overcome the advantages pos- sessed by coast over inland cities in the face of what nature has provided. All this is fully discussed in • ^-xj 26 the opinion of the court, in which I fully concur, and to which I can add nothing of consequence. •For these reasons, without regard to any others, the orders of the Commission were clearly invalid, and an injunction against them is properly to be granted, the motion to dismiss being necessarily overruled as the consequence. But I can not see my way to go beyond this and declare the fourth section valid, on which, if anything is to be said, my opinion is to the contrary. United States Commercii«ftiA?^^^^ No. 3. — October Session, 1911. Atlantic Coast Line R.R.Co. et al., petitioners, V. Interstate Commerce Commission, respondent, United States, M. C. Kiser Co., and J. K. Orr Shoe Co., interveners. Mr. Alfred P. Thorn, Mr. R. Walton Moore, Mr. Frank W. Gwathmey, and Mr. John K. Graves for petitioners. Mr. James A. Fowler and Mr. Blackburn Esterline for United States. Mr. P. J. Farrell for Interstate Commerce Com- mission. Mr. William A. Wimhish for M. C. Kiser Company and J. K. Orr Shoe Company. On Demurrer to Bill and motion to dismiss. (For report of Interstate Commerce Commission, see 17 I. C. C. Rep., 430.) Before Knapp, Presiding Judge, and Archbald, Hunt, Carland, and Mack, Judges. [December 5, 1911.] Garland, Judge: March 31, 1910, petitioners filed their bill in the United States Circuit Court for the Eastern District 36319— No. 3—11 1 of Virginia against the Interstate Commerce Com- mission for the purpose of having an order of said Commission, dated November 27, 1909, and effective April 1, 1910, wherein it was found that the rail and water rate of Central of Georgia Railway Company, Southern Railway Company, Seaboard Air Line Railway Company and the Receivers thereof, Atlantic Coast Line Railroad Company, Ocean Steamship Company, and Merchants and Miners Transportation Company, of $1.05 per 100 pounds for the transporta- tion of less than carload shipments of boots and shoes from Boston and New York to Atlanta, Georgia, to the extent that it exceeded 95 cents per 100 pounds, was unreasonable, unjust, and unduly discriminatory, suspended and annulled. The order also required the said companies to cease and desist, on or before April 1, 1910, and for a period of not less than two years thereafter abstain, from charging, collecting, or receiving the rate so held to be unlawful, and to establish on or before April 1, 1910, and maintain for a period of two years thereafter, a charge for the transportation of less than carload shipments of boots and shoes by water and rail from Boston and New York to Atlanta, Georgia, a rate which should not exceed 95 cents per 100 pounds. The Commission answered the bill in the United States Circuit Court, and the M. C. Kiser Company and the J. K. Orr Shoe Company, having been allowed to intervene, filed their several demurrers in said coiirt. Subsequently the case was transferred to this court, and the United States, having here been allowed to intervene, filed its motion to dismiss under the stat- ute. The case is now, after argument, submitted for decision upon the demurrer of the M. C. Kiser Com- pany and J. K. Orr Shoe Company, and the motion of the United States to dismiss. The motion to dis- miss so far as it goes covers the same grounds as the demurrer. The demurrer, however, being both gen- eral and special, specifies as grounds of demurrer other matters not specifically mentioned in the motion to dismiss. It would seem proper, therefore, to con- sider the motion to dismiss and the demurrer together. Speaking in a general way, the bill presents two grounds of attack upon the order of the Commission; first, that the rate of 95 cents per hundred pounds established by the order for the transportation of boots and shoes from Boston and New York to Atlanta is so unreasonably low as to deprive petitioners of a right guaranteed to them by the fifth amendment to the Constitution of the United States in that their property will be taken for a public use without just compensation; and, second, that said order, while in form within the powers of the commission, was such an irregular and unreasonable exercise of authority as to render it void. The demurrer being special and directed to particular paragraphs of the bill, it will be necessary to consider the grounds of the demurrer separately. It is specified as a ground of demurrer that the Georgia Railroad, the Norfolk and Western Railway Company, Clyde Steamship Company, and Old Dominion Steamship Company were not parties to the proceeding before the Commission which resulted in the making of the order complained of, and that therefore there is a misjoinder of petition- ers. It is alleged, however, in paragraphs 4 and 11 of the bill that the petitioners are and have been for at least ten years participating in the rail and water transportation of boots and shoes from Boston and New York to Atlanta, and the manner in which this traffic moves is pointed out. It is also alleged that the volume of traffic to which the reduction of rates required by the order complained of, if enforced, will by the terms thereof apply, is very large, and will necessarily and inevitably cause corresponding reductions not only by such of the peti- tioners as are named in said order but by the other petitioners as well, in all such less than carload rail and water rates on boots and shoes from all the other New England and Eastern ports to Atlanta and practically to all other Southeastern points; and that the volume of such traffic to which such reductions will necessarily apply is tremendous in amount, and that the revenues of all of the petitioners will be greatly and seriously impaired if the order is allowed to remain in effect. From these allegations, admitted by the demurrer, it appears that the petitioners last above named have sufficient interest in the rail and water rate to be made parties to the suit. (Peavy v. Union Pacific Company, 176 Fed. 409. Affirmed by Supreme Court November 13, 1911.) Another ground of demurrer is that, the Ocean Steamship Company of Savannah and the Merchants and Miners Transportation Company were parties defendant to the complaint and proceedings before the Commission which resulted in the making of the order complained of, and therefore this court can grant no relief without their presence. It is a sufficient answer to this contention to say that this case is not an appeal or writ of error where all parties against whom the decree or judgment is rendered must join in the appeal or writ, or in lieu thereof a summons or severance must be had, but it is a plenary suit in equity, and- certainly any party against whom an order establishing rates is made may petition this court for redress without joining other parties to the order, the injury, if any, being several, and not joint. (Peavy v. Union Pacific Com- pany, supra.) Paragraph 10 of the bill is demurred to upon the ground that the petitioners therein named, to wit, the Georgia Railroad, Norfolk and Western Railway Company, Clyde Steamship Company, and Old Dominion Steamship Company, were not necessary parties to the complaint before the Commission; and if they, as carriers participating in the traffic affected, have any just cause of complaint such complaint may and should be presented to the Com- mission, which is authorized by law to grant rehear- ings and to modify its orders. WhUe we think it is entkely proper for parties against whom an order 6 has been made to apply to that body for a rehearing, we know of no rule that makes it a condition prece- dent to the bringing of a suit in this court for the pur- pose of setting aside the order. {Peavy v. Union Pacific Company supra.) Paragraph 11 of the bill is demurred to upon the ground that it fails to state the volume of the traffic affected, the revenues derived therefrom, and to what extent these revenues will be affected by the enforcement of the order complained of, and upon the further ground that the bill fails to state what reductions in other rates will necessarily and inevitably follow the enforcement of the order, by what carriers, and between what points such reductions would be made, and the extent of such reductions. The only purpose of paragraph 11 is to show that the carriers which are complainants in this proceeding and which were not parties before the Commission have such an interest in the controversy as entitles them to be made complainants, and we think the paragraph is sufl&ciently specific for that purpose. Paragraph 13 of the bill is demurred to upon the ground that no facts are stated to support the con- clusion that in establishing the rates and charges condemned in the order complained of the com- plainants were not making or giving any undue or unreasonable preference or advantage to any ship- per, locality, or description of traffic, or subjecting any special locality or description of traffic to any undue or unreasonable prejudice or disadvantage. As the commission condemned the rates which were complained of only because they were unreason- ably high, the allegations in paragraph 13 would seem to be irrelevant, and for this reason we do not stop to consider whether it is sufficiently specific or not, but will sustain the demurrer thereto. Paragraph 16 is demurred to upon the ground that a mere conclusion of law is pleaded and no facts are alleged showing wherein the enforcement of the order in question will deprive the complainants or either of them of any right guaranteed by the Con- stitution of the United States. An inspection of said paragraph shows that it is mere argument and therefore is bad on demurrer. Paragraph 18 is demmred to upon the ground that it is hypothetical, and upon the further ground that in order to support the general conclusion therein pleaded the bill should show the amount of revenue necessary and sufficient for the maintenance of com- plainants as common carriers in the discharge of their duties to the public, and to what extent such revenue would be affected by the readjustment of rates upon a basis as low as that prescribed by the order com- plained of. We think the demurrer is well taken, as there is nothing to show the extent to which the carrier would be compelled to construct and apply its other rates upon the basis of the rates named in the order complained of. Paragraphs 20 and 21 are demurred to upon the ground that no facts are alleged in support of the gen- eral conclusion therein pleaded. An examination of said paragraphs has convinced us that the de- murrer as to these paragraphs should be overruled. Paragraph 22 of the bill is demurred to upon the ground that the facts therein alleged do not support the allegation that the order complained of is based upon an erroneous theory. We think the para- graph is sufficient as against the demurrer. We do not now, however, decide whether it is material or not. Paragi-aph 23 is demurred to upon the ground that the facts therein pleaded are immaterial to any issue in the case. An inspection of said paragraph con- vinces us that the demiu-rer is well taken. Paragraphs 24, 25, and 26 are demurred to upon the ground that the facts therein alleged do not sup- port the conclusions reached. As paragraph 24 is clearly irrelevant and immaterial, the demurrer there- to will be sustained. It is held in Interstate Commerce Commission v. Chicago, Rock Island and Pacific Rail- way (218 U. S., 85), that railroads can complain of rates which affect their revenue but not as to how they affect shippers and places. The demurrer to paragraphs 25 and 26 is overruled for the reason that, assuming said allegations tu be material, they suffi- ciently set forth facts with reference to the matters therein pleaded. Assuming but not deciding that a violation of the fifth amendment to the Constitution of the United States may be based upon an order which estab- lishes a rate on a single article or commodity, we proceed to examine the allegations of the bill upon 9 > ^..:^ which it is sought by the pleader to found such a violation. If a case of confiscation is charged at all in the bill, it is contained in paragraphs 12, 14, 15, 17, and 19, which paragraphs are as follows : 12. Complainants allege that their rates and charges filed with said commission and now in effect applying to the transportation by rail and water of boots and shoes in less than carload quantities from Boston and New York to Atlanta are just and reasonable charges for the service rendered within the meaning of the act to regulate commerce. 14. They show that said rates and charges are not more than reasonably compensatory — that is to say, that the revenue therefrom is not more than suffi- cient to pay the actual cost of the service rendered in the transportation of said traffic and a reasonable profit. 15. Complainants show that none of their rates or charges, as aforesaid, are unjust, unreasonable, un- justly discriminatory, or unduly preferential or prej- udicial, or otherwise in violation of said act, within the meaning of section 15 of said act. 17. Complainants show that the rates sought to be established by said order are not just and reasonable rates or charges for the transportation of the prop- erty aforesaid, but, on the contrary, are unjust and unreasonably low rates or charges; and complain- ants allege that the establishment of such rates is in excess of the power and authority of the said de- fendant commission under the said act to regulate commerce, more particularly section 15 thereof, and that said order is in violation of said act and in con- travention of the Constitution of the United States, more particularly the fifth amendment thereof, the 16319— No. 3—11 2 10 benefit and protection of which said act and said amendment the complainants specially claim. 19. Complainants show that the rates ordered to be established are less than reasonably compensatory, affording them revenue not sufl&cient to pay the actual cost of service rendered in the transportation of said traffic and a reasonable profit, thereby violating said act and said amendment to the Constitution of the United States, the benefit and protection of which said act and said amendment the complainants specially claim. Paragraph 12, above quoted, is demurred to upon the ground that the bill states no facts upon which to found a general allegation that the rates in effect prior to the making of the order complained of were just and reasonable charges for the service rendered and that said paragraph states a mere conclusion without supporting it with allegations of issuable facts. Paragraph 14 is demurred to upon the ground that the complainants fail to allege the actual cost of the service rendered in the transportation of the traffic affected, or to show the revenue actually derived from such traffic, and also fails to show the amount of the profit derived by the complainants, respectively, from such traffic, or what constitutes a reasonable profit for the service performed. Paragraph 15 is demurred to upon the ground that no facts are stated upon which to found the conclusion pleaded that none of the rates or charges upon the traffic affected are unjust, unreasonable, unjustly dis- criminatory, or unduly preferential or prejudicial. 11 . ;- Paragraph 17 is demurred to upon the ground that no facts are pleaded tending to show that the commis- sion in making the order complained of exceeded its power and authority. Paragraph 19 is demurred to upon the ground that the bill fails to show the cost of the service rendered and the revenue derived therefrom, together with the profit earned thereon, and hence fails to show beyond a doubt that the enforcement of the order complained of will necessarily amount to the taking of petitioners' property without compensation and without due process of law. We think the demurrer in some of its specifications as to the paragraphs mentioned must be sustained. In determining this question we must remember that the petitioners are asking this court to enjoin and sus- pend an order of the Commission fixing rates for the future, in the making of which the commission exer- cises a legislative function. The importance of the judgment we are asked to render in the matter must not be overlooked. Before we may annul the order we must be clearly satisfied it is our duty to do so. In view of the character of the order and the importance of our action in reference thereto, we believe that this court is entitled to, and must require of the petition- ers a full and fair statement of all the facts upon which they rely for relief. It is only in rare instances that conclusions of fact or law may be rightly pleaded. The court ought to be permitted so far as possible to draw its own conclusions from the facts 12 stated by the pleader. In the present case we think the pleader should inform the court as to what is meant by the words "reasonably compensatory." What may be "reasonably compensatory" in the opinion of the pleader may not be so in the opinion of the court. Likewise, we think the court should be informed as to what the pleader means by the words "reasonable profit." Perhaps if the pleader should state what he would regard as a "reasonable profit" the bill would be bad on its face. Again, it is alleged that the revenue derived from the transportation of boots and shoes from Boston and New York to At- lanta under the old rate was not more than sufficient to pay the actual cost of the service rendered and a reasonable profit. We think we are entitled to some showing as to what the revenue derived from the traffic is, and, if possible, the cost of service. If the cost of transporting a single commodity can not be shown, and it seems to be conceded that it is rarely possible to do so, then such other facts in lieu thereof as may make out a violation of the fifth amendment to the Constitution should be stated. We do not say that in cases where cost of service can not be shown a violation of the fifth amendment may not be made out in other ways, but when petitioners undertake to plead the items of revenue, cost of service, and profit, we are entitled to more information concerning them than is contained in the bill in this case. What- ever information exists bearing upon the contentions of petitioners is largely in their possession, and in cases of this kind no material information should be 13 '/ L 7 withheld, consistent with the rules of good pleading. We are sustained in these views by the decisions in L. & N. R'y. Co. v. Siler (186 Fed., 190), and Southern Pacific Co. v. Campbell (189 Fed., 182). We now come to consider the second general ground of attack upon the order of the commission,, namely, the exercise of power in such an unreason- able manner as to render the order void. Paragraph 27 is demurred to upon the ground that none of the facts therein alleged tend to support the conclusions pleaded. Said paragraph alleges that the Commission took into consideration in making its order certain factors which it is alleged could have no influence with the commission in reaching a proper decision. WhUe we do not wish to be understood as now deciding that the facts set forth in para- graph 27 would render the order complained of void, they are of such persuasive force if true as to cause us at this time to overrule the demurrer as to this paragraph. Paragraphs 28 and 29 are mere arguments, and as to them the demurrer is sustained. Paragraphs 30, 31, 32, and 33 are demurred to upon the ground that the Commission being an expert tri- bunal, appointed by law and informed by expe- rience, is not limited in its consideration of questions presented to the evidence formally offered and intro- duced by the parties, but in the exercise of its ad- ministrative function it may and should have re- course to all sources of pertinent information and should apply its expert knowledge and accumulated 14 experience to the determination of the question whether particular rates are or are not just and reasonable. The paragraphs last above mentioned are as follows : 30. Complainants show that the said defendant commission exceeded the authority delegated to it by the said act and erred as a matter of law in the following particular also: They allege that no evidence was introduced before said defendant com- mission tending to show that a rate of 95 cents per hundred pounds from Boston and New York to Atlanta for the carriage of the traffic involved in the proceeding before said commission was, is, or would be a fair, just, reasonable or nondiscriminatory rate, or a rate fairly compensatory for the service rendered; and complainants show that the ascertain- ment of such rate was based not upon any competent evidence nor upon any evidence, but was the result of mere conjecture, and that said order, based on con- jecture, as aforesaid, is in excess of the authority of said commission and will, if enforced, violate the rights of said complainants under the said act to regulate commerce. 31. Complainants allege that the said finding and said order of said commission is unauthorized and erroneous in the following respect : In that it appears from the report of the commission which accompa- nied the said order that the commission in arriving at its conclusion misapprehended the evidence which was introduced in the said proceeding. The cormnis- sion was apparently controlled by its belief that complainants and other carriers had voluntarily established and applied for a long period a rate of 85 cents on boots and shoes in less than carloads, whereas 15 complainants aver that said rate of 85 cents was never voluntarily established; that independent of the action of a court which compelled its application, it was never in force except for a few days, and that its enforcement for a long period was required by a judi- cial decree which restrained the complainants from charging any higher- rate. 32. The complainants further show unto your honors that the rates now in effect are just and reason- able rates in themselves. They show that at the hearing before the defendant no evidence was offered, heard, or introduced tending to show that said rates were unreasonable, unjust, or unlawful in and of them- selves; that there was no such evidence of the cost of the actual service for which such rates were charged, the value of such service, or as to the various elements which are properly to be considered in determining whether or not a given rate is reasonable in and of itself. Your complainants therefore show that the said order is not based upon evidence tending to show the unreasonableness of the rates in effect, and that in such respects the order is unjust, unreasonable, un- lawful, in excess of the authority of said defendant under said act to regulate commerce, and in violation of the Constitution of the United States, more par- ticularly the fifth amendment thereto. 33. Complainants show that said order is not based on any finding or conclusion of said defendant that said rates are unjust or unreasonable in themselves for the service involved in said transaction, and com- plainants show that in this respect said order exceeded 16 the authority of said defendant and is in violation of said amendment to the Constitution of the United States. It will be observed that the allegations of the bill are to the effect that there was no evidence offered, heard, or introduced tending to show the existing rates to be unjust, unreasonable, or unlawful in and of themselves, or that a rate of 95 cents per hundred pounds from Boston and New York to Atlanta for the carriage of the traffic involved would be a fair, just, and reasonable rate. If the contention raised by the demurrer goes so far as to say that the Commis- sion may rely wholly upon their expert knowledge and accumulated experience to condemn an existing rate and establish a new rate for the future in its place, we must hold that the demurrer should be overruled. The Commission, in the investigation of any question, may bring to its solution the accumu- lated experience and expert knowledge of its mem- bers, and it would be its duty to do so, but before an existing rate may be condemned there must be a finding of some sort that it is unjust and unreasonable {Interstate Commerce Commission v. Stickney, 215 U. S., 105), and this finding must be based upon evidence of which the carrier is apprised so that it may meet the case brought against it if it so desires. Further, if it shall be claimed in support of the demurrer that the Commission may condemn an existing rate whenever it is of opinion that it is unjust and unreasonable, and that this opinion may be based merely upon the expert knowledge and accumulated experience of its members, then, 17 indeed, is a carrier not only deprived of the equal protection of the law but of the protection of aU law. Certainly the carrier is entitled to some proceeding which may in truth be called due process of law before its property rights may be invaded. The importance of the question raised requires an examination of the statute under which the Com- mission acts when it decides to establish a rate for the future. Section 15 of the act to regulate com- merce, as it stood when the order in this case was made, provided as follows: " * * * That the commission is authorized and empowered and it shaU be its duty whenever after full hearing upon a complaint made as provided in section 13 of this act * * * i^ shall be of the opinion that any rates or charges whatsoever de- manded, charged, or collected by any common car- rier or carriers subject to the provisions of this act for the transportation of persons or property as de- fined in the first section of this act * * * are unjust or unreasonable, or unduly discriminatory, or unduly preferential or prejudicial, or otherwise in vio- lation of the provisions of this act, to determine and prescribe what will be the just and reasonable rate or rates, charge or charges to be thereafter observed in such case as the maximum to be charged." By the plain language of the law the power of the Commission to prescribe a rate for the future can not be exercised unless after full hearing on com- plaint made it shall be of the opinion that any of the rates or charges whatsoever demanded, charged, or collected by any common carrier or carriers sub- ject to the provisions of the act, for the transpor- 18 tation of persons or property as defined in the first section of the act, are unjust or unreasonable, or unjustly discriminatory, or unduly preferential or prejudicial, or otherwise in violation of the provisions of the act. The word " opinion" must be interpreted with reference to the connection in which it is used in the law. It is only after full hearing upon complaint made that the law gives any weight or significance to the opinion of the commission; that is, it is only when the opinion results from the full hearing that it can be used as the basis of further action by the commission. It is true that in making up the opinion of the commission its members may and it is their duty to call to their aid their knowledge and experi- ence, but if Congress had intended that the commis- sion could make up its opinion from the knowledge and experience of its members independent of any evi- dence in the particular case, then it was idle to pro- vide for a full hearing, as an opinion of the commission could be formed as well without as with the full hearing. A full hearing not only means an oppor- tunity to be heard by the carrier, but an investigation by the commission itself of the lawfulness of the rate in question. It is distinctly alleged in the language above quoted from the bill, which is admitted by the demurrer, that at the hearing which resulted in the making of the order complained of in this case no evidence was offered, heard, or introduced tending to show that the existing rates were unreasonable or unjust, but that said order was the result of mere conjecture and 19 _. .,3 speculation. The allegation that there was no such evidence offered, heard, or introduced is an allegation of fae^ so far as the question of pleading is concerned, but whether or not there is at the close of a final trial any evidence to sustain a finding of fact made by a judicial or quasi judicial tribunal is always a question of law, which in a case Uke the one at bar, this court has jurisdiction to determine. (Ward v. Joslin, 186 U. S., 142, 147; United States Fidelity & G. Co. v. Board of Comm'rs, 145 Fed., 144, 151, 76 C. C. A., 114, 121; Laing y.Rigney, 160 U. S., 531, 540; South- ern Pacific Co. V. Pool, 160 U. S., 438, 440; The Francis Wright, 105 U. S., 381, 387; Clement v. 7ns. Co., 7 Blatchf., 51, 53, 54, 58, Fed. Cases No. 2, 882; Fisher y. Scharadin, 186 Pa., 565-569; Dela- viare, L. & W. R. Co. v. Converse, 139 U. S., 469, 472; Howe et al.v. Parker et al., C. C. A. Eighth Circuit, opinion filed October 12, 1911.) The demurrer therefore, so far as it is general, vMl be overruled. So far as it is special it will be overruled as to paragraphs numbered 10, 11, 20, 21, 22, 25, 26, 27, 30, 31, 32, and SB, and sustained as to paragraphs numbered 12, 13, I4, IS, 16, 17, 18, 19, 23, 24, 28, and 29. It results that the motion to dismiss will also be denied. Leave to amend petition within SO days is granted. The United States is granted permission to answer the original petition within 10 days, and to plead to the amended petition if one is filed within 10 days from the date of the service of a copy thereof. O United States Commerce Court. No. 31. — October Session, 1911. The Pennsylvania Railkoad Company, petitioner, V. The Interstate Commerce Commission, respondent. The United States et al., interveners. ON FINAL HEAEING. (For opinions of the Interstate Commerce Com- mission see 19 I. C. C. Rep., 356 and 392.) ' Mr. F. B. McKenney, with whom Mr. Henry Wolf Bikle, Mr. John G. Johnson, and Mr, Francis I. Gowen were on the brief, for petitioner. Mr. Blackburn Esterline, special assistant to the Attorney General, with whom Mr. James A. Fow- ler, assistant to the Attorney General, was on the brief, for the United States. Mr. P. J. Farrell for Interstate Commerce Com- mission. 25101—12 Mr. A. M. Liveright for Hillsdale Coal & Coke Co. and Clark Brothers Coal Mining Company. Mr. William A. Glasgow, jr., for W. F. Jacoby & Company. Before Knapp^ presiding judge, and Abchbald, Hfnt^ Cabland, and Mack, judges. 'I [December 5, 1911,] Knapp, Presiding Judge: On- January 1, 1906, the petitioner adopted and put in force the following rule or regulation for the allotment and distribution of cars to bituminous coal mines : Commencing January 1st, 1906, assigned cars, i. e., cars for Pennsylvania Railroad fuel supply, foreign railroad cars specially consigned for the fuel supply of railroads consigning such cars, and individual cars assigned by the owners to specified mines for loading, will be charged against the ca- pacity of the mines at which they are placed. The difference between the rated capacity of a mine and the capacity of the assigned cars placed for loading wiU be the rated capacity on which all other cars will be prorated. Some two years later, as the record indicates, cer- tain mine operators, viz, The Hillsdale Coal & Coke Company, Clark Brothers Coal Mining Company, and W. F. Jacoby & Company, filed complaints against petitioner with the Interstate Commerce Commission, alleging that the regulation above 3 %11 quoted was discriminatory, and therefore unlawful, the proceedings being known on the Commission's docket as Nos. 1063, 1111, and 1139. To these com- plaints answers were made in due time, and the Commission, on March 7, 1910, after full hearing, entered two orders, one entitled in No. 1063 and the other in Nos. 1111 and 1139. These orders are sub- stantially alike, and the material parts of each read as follows : This case being at issue upon complaint and answer on file, and having been duly heard and sub- mitted by the parties, and full investigation of the matters and things involved having been had, and the Commission having, on the date hereof, made and filed a report containing its conclusions thereon, which said report is made a part hereof; and it appearing that it is and has been the defendant's rule, regulation, and practice, in distributing coal cars among the various coal operators on its lines for interstate shipments during percentage periods, to deduct the capacity in tons of foreign railway fuel cars, private cars, and system fuel cars, in the record herein referred to as " assigned cars," from the rated capacity in tons of the particular mine re- ceiving such cars and to regard the remainder as the rated capacity of that mine in the distribution of all " unassigned " cars : It is ordered, That the said rule, regulation, and practice of the defendant in that behalf unduly dis- criminates against the complainant and other coal operators similarly situated and is in violation of the third section of the act to regulate commerce. It is further ordered, That the defendant be, and it is hereby, notified and required on or before the 1st day of October, 1910, to cease and desist from said practice and to abstain from maintaining and enforcing its present rules and regulations in that regard, and to cease and desist from any practice and to abstain from maintaining any rule or regu- lation that does not require it to count aU such as- signed cars against the regular rated capacity of the particular mine or mines receiving such cars in the same manner and to the same extent and on the same basis as unassigned cars are counted against the rated capacity of the mines receiving them. The dates fixed for these orders to become effect- ive were afterwards postponed to December 1, 1910, at which time they went into effect and have since been complied with by petitioner. In the meantime, and on October 4, 1910, the bill herein was filed against the Commission, in the Circuit Court of the United States for the Eastern District of Pennsylvania, to set aside and annul the orders in question for reasons that will be hereafter stated. Pleading to this bUl, the Commission demurred to the first nine paragraphs and answered, by admis- sions and denials only, the allegations in the re- maining paragraphs. About the same time the Hillsdale Coal & Coke Company and Clark Broth- ers Coal Mining Company, the complainants before the Commission in Nos, 1063 and 1111, obtained leave from the Circuit Court to intervene, and thereupon filed their joint demurrer to the bill, specifying various grounds of objection thereto. 5 %1 ^ The case was transferred to this court upon its or- ganization, and here the United States intervened, on leave granted, and adopted as its own the demur- rer and answer of the Commission. When the case came on for iinal hearing on the pleadings then on file, the firm of W. F. Jacoby & Company, complain- ants before the Commission in No. 1139, were allowed to intervene, and they also adopted as their own the pleadings of the other interveners. The sole question to be decided is the power of the Com- mission to make the orders which the suit seeks to set aside, and that question arises on the demurrers above mentioned. The authority of the Commission to regulate the distribution of cars, particularly coal cars, in times of car shortage has been the subject of considerable litigation; and such authority has been so fully upheld and defined in recent decisions of the Su- preme Court that any extended discussion of this case would seem to be unsuitable. It is admitted, or at least not denied, that the Commission had jurisdiction of the parties to and the subject matter of the proceedings which re- sulted in the orders sought to be enjoined, and no question is made as to the regularity of those pro- ceedings. Indeed, the precise grounds upon which these orders are claimed to be illegal are not made altogether clear, though it is less difficult to discern the purpose of petitioner in prosecuting the suit. It seems to be conceded that if the orders apply only to cars furnished for interstate shipments — as the 6 recital which precedes the mandatory provisions might be held to imply — they are undoubtedly valid. But the petitioner contends that they apply also, or may be construed and enforced by the Commission as applying, to cars for intrastate as well as inter- state shipments, and that so construed they are in excess of the Commission's authority; and this ap- pears to be the sole objection upon which petitioner relies. Assuming without deciding that the orders in question should be or can be so interpreted, we are nevertheless of opinion that they are within the powers delegated to the Commission. In the course of its business as a common carrier the petitioner transports large quantities of coal to both intrastate and interstate destinations, and its cars are used indiscriminately in this service. The coal opera- tors whose complaints were investigated by the Commission, and at whose instance the orders were made, ship their products to points within or points without the State of Pennsylvania, as market condi- tions or other trade interests may dictate. A large part of the business is interstate, but it is conducted in its entirety by shipper and carrier alike as a unit of operation with little or no regard to the bounda- ries of the State in which the trafi&e originates. In view of these facts, which are wholly undis- puted, we see no reason to doubt the authority of the Commission to make these orders, even though they are intended to have the application and effect which petitioner appears to apprehend. This con- 7 a 2 i dusion necessarily follows, as we conceive, from the principles so clearly stated and so instruc- tively discussed by Mr. Justice (now Chief Jus- tice) White in Interstate Com. Gom'n v. Illinois Central B. Co. (215 U. S., 452). Indeed, we are unable to find any substantial basis for distinguish- ing that case from the one at bar. The subject mat- ter is the same in both, the facts are strikingly similar, and the orders of the Commission of nearly identical import. In that case, as in this, the Com- mission found as a fact, upon evidence which per- mitted different inferences to be drawn, that the regulations complained of operated with discrimi- nating effect, and under such circumstances the con- clusions of the Commission, as to matters within its jurisdiction, are binding upon the courts. This conclusion is fortified by the recent decision of the Supreme Court in Southern Railway Co. v. United States (decided October 30, 1911). That case, it is true, arose under the safety-appliance laws, but the controlling principle involved applies equally, in our judgment, to the question here pre- sented. It may be true, as petitioner contends, that the rules condenaned by the Commission are more equi- table than those which conform to the orders in question, but that would in no wise justify annul- ling the orders, as was distictly held in the Illinois case, supra. It may also be true that the enforcement of regu- lations in conformity with these orders, if applied to cars for intrastate as well as interstate ship- ments, would result in some conflict with the duties of petitioner under the laws of Pennsylvania — though how this could happen is not very appar- ent — ^but if this is or proves to be the case, it fur- nishes no ground for our interference, since Federal authority to the full extent that it may be exerted supersedes and limits State authority. Holding this opinion, we see no occasion for con- struing these orders. The sole question with us is the question of power; and if the orders here in- volved, upon any reasonable construction of their provisions, are within the powers conferred upon the Commission, the exercise of those powers, under the circumstances of this case, must be upheld. The demurrers should be sustained and the peti- tion dismissed with costs, and it toill be so ordered. ICakland, Judge, concurring : I concur in the result reached in this case for the reason that the order of the Commission when properly construed only relates to the distribution 'of coal cars for interstate shipment, and that the finding of the Commission upon the question of unlawful discrimination on the record presented to us is conclusive. Upon the other matters discussed in the opinion of the court, I express no opinion. O United States Commerce Court. No. 42 — October Session, 1911. The Arkansas Fertilizer Company, petitioner, V. The United States, respondent, and The Inter- state Commerce Commission, intervening respondent. ON FINAL HEARma. Mr. E. L. McHaney for petitioner. Mr. James A. Fowler, assistant to the Attorney General, and Mr. Blackburn Esterline, special assist- ant to the Attorney General, for the United States. Mr. Charles W. Needham for Interstate Commerce Commission. Before Knapp, Presiding Judge, and Archbald, Hunt, Garland, and Mack, Judges. [December 5, 1911.] Knapp, Presiding Judge: This case involves the meaning and application of a provision in the sixteenth section of the act to regulate commerce, as amended in 1906, which reads as follows: "All complaints for the recovery o/" danir ages shall he filed with the commission within two years 16981— No. 42—11 1 from the time the cause of action accrues." What is the "cause of action" here intended to be defined and when does it "accrue?" The typical facts appearing in the record disclose the concrete form in which the question is now pre- sented. In February, 1907, the petitioner shipped a carload of fertilizer from Little Rock, Arkansas, to Ravanna, Arkansas, billed to one A. S. Stuckey. The shipment was routed over the St. Louis, Iron Moun- tain & Southern, and the Kansas City Southern, and moved for a short distance in the State of Texas, thereby making it interstate. On February 15, 1907, the petitioner prepaid charges at the rate of 15| cents per 100 pounds, amounting to $85.05, and later the delivering carrier demanded the additional sum of $66.15, based on a rate of 28 cents, which was the lawful tariff rate in force at the time the shipment moved, and this sum was paid by petitioner on March 30, 1910. In September, 1910, some three years and seven months after the transportation service was per- formed, the delivering carrier, in behalf of petitioner, applied to the Interstate Commerce Commission for authority to refund the sum of $59.40 (which would result in a charge of 17 cents on the shipment in question), making the express admission that the tariff rate of 28 cents, which petitioner had paid as above stated, was unjust and unreasonable, and agreeing to maintain for the required period a rate of 17 cents, which was established by a tariff filed with the Commission about that time. Following its ruling in Blinn Ijumber Co. v. Southern Pacific Ca. (18 I. C. C. Rep., 430), the Commission denied the application on the ground that it was without juris- diction to allow the refund, because more than two years had intervened between delivery 5f the ship- ment to the consignee and the filing of the claim for reparation. Thereafter and on June 5, 1911, the petition herein was filed to set aside and annul the order of the Commission. The United States filed an answer, and the Commission also intervened and answered. The petitioner thereupon filed motions to dismiss the answers as not stating a defense to the cause of action alleged in the petition. On this record, and the briefs of counsel, the case was sub- mitted without oral argument. The answer of the United States, which is in the nature of a special demurrer, alleges that the facts set forth in the petition do not constitute a cause of action, and also alleges that this court is without jurisdiction to hear and determine the case. Juris- diction is challenged on the ground (1) that the commission has made no "order" respecting peti- tioner's claim, and consequently there is no basis for the suit, and (2) that the refusal of the commis- sion to authorize the refund, if it be deemed in any sense an order, relates to the payment of money only • and is therefore not within our jurisdiction. The latter objection is disposed of by the decision just rendered in Southern Railway Co. et al. v. United States et al. (No. 44), and the reasons stated for the conclusion therein reached need not here be repeated. It is only necessary to add that if this court has jurisdiction to set aside an order of the Conunission whiT3h awards reparation, it has also jurisdiction to set aside an order which denies reparation. The form in which the Commission's refusal was expressed in this instance is not shown by the record, nor does it seem to us at all important, since the peti- tion alleges and the answer of the Commission admits that leave.to refund was denied without consideration of the merits of the claim, and solely because its allowance was prevented by the statutory provision above quoted. While the sixth paragraph of the petition, and perhaps the prayer for relief, may be open to technical criticism, it appears plain to us that the pleadings taken together sufl&ciently define, and therefore require us to decide, the real matter in con- troversy between the parties, namely, whether the Commission was correct in its construction of the law in the Blinn case and in applying that construction to petitioner's claim. What, then, is the true meaning of the so-called limitation ? Did it deprive the Commission of author- ity to permit or require these carriers to repay the amount which they had collected in excess of a reason- able charge? If so, the Commission was right and the petition herein should be dismissed; if not, the order in question^for that which has all the effect of an order may be treated as an order — should be set aside to the end that the Conomission may be free to consider petitioner's claim upon its merits. The contention of petitioner is easily compre- hended and may be summarized as follows: There must be some injury for which redress is afforded by "the recovery of damages." If an excessive rate is charged the injury occurs when payment of that rate is enforced, and the measure of recoverable damage is the excess of such payment above a reasonable rate. But until the shipper is compelled to pay the exces- sive amount no injury has been inflicted and conse- quently no "complaint" can be made. Therefore, a " cause of action" does not arise, because there is no damage, until the unreasonable rate has been actually collected. In this case the balance of the tariff rate, which was a concededly excessive rate, was paid in March, 1910, a little less than six months before the delivering carrier applied for leave to refund ; and we regard the application then made, since it was so regarded by the Commission, as the equivalent of filing a complaint. We recognize the force of this contention, which is undoubtedly sustained by the common-law rule and numerous decisions in which that rule has been up- held. Indeed, it may be admitted that if this case ' is governed by the principle which obtains in the fields of contract litigation the ruling of the Commis- sion involved an error of law which the courts may be invoked to correct. But we are of opinion that the question here pre- sented is not controlled by the general rule, and that the Commission correctly construed the limiting provision in the Blinn case and therefore properly- rejected petitioner's claim. This provision in the sixteenth section, inserted in 1906, is only an in- cidental and relatively unimportant part of a com- prehensive scheme of regulation which was in- augurated by the act of 1887 and has been expanded and strengthened by successive amendments. The pervading purpose of that scheme is the prevention of unjust discriminations and the enforcement of equal treatment as between all shippers in like situation. Clearly, the provision in question should be so con- strued as to advance that purpose if such a con- struction be in any view permissible. But if the construction contended for by petitioner is sustained it follows that judicial sanction would be given to certain preferences of obvious injustice and the aim of the law as a whole thereby measurably defeated. In other words, the limitation under review would be held to impair the beneficial pur- poses of the act by creating an obnoxious and inde- fensible exception to its requirements. This pro- . vision, moreover, in common with other amendments adopted at the same time, was designed to make the law in its entirety more efficacious, and also de- signed to protect from depletion, after the lapse of two years, railway earnings resulting from the ap- plication of tariff charges. To hold that the ruling of the commission was erroneous would therefore not only legalize a device for offensive favoritism, but also to an extent subvert the special purpose for which 7 Ig '1 this amendment was enacted. It is difficult to be- lieve that such a result was ever intended. In construing remedial statutes, especially those of a generic character, courts have not hesitated to restrict and modify the ordinary meaning of words and phrases, and even of entire paragraphs, in order to harmonize conflicting or inconsistent provisions and so enable all of them to contribute in proper degree to the object sought to be accomplished. Instances of this kind are too familiar to require citation. Indeed, the Supreme Court in the Abilene case (204 U. S., 426) declared that a right of action as old as the common law had been taken away by the act to regulate commerce, since otherwise full effect could not be given to the purpose of that statute to prevent discriminations. Bearing in mind how rarely suits were brought to recover damages for excessive railroad charges, and how easily collusive delay in the payment of freight bills could be util- ized, as the Commission points out, to give prefer- ences which are actual rebates, it seems well within precedent to reject petitioner's contention and to uphold a construction under which, as Commissioner Lane observes, "the act becomes workable and enforceable from the standpoint of shipper, carrier, and the Commission itself." Any serious doubt in this case should disappear, as we think, when once it is clearly perceived that the relations between shipper and carrier are no longer contract relations; that the rights and obli- gations of both are fixed not by mutual agreement 8 but by the mandate of the statute; that the duty of the shipper to pay and of the carrier to collect the tariff rate in force when the transportation takes place, even though that rate be grossly excessive, is a duty imposed by legislative enactment; and that it is beyond the power of the parties to evade or modify this duty by any consent or understanding. In other words, since the obligation to pay the tariff charge springs from a positive law, the extension of credit because such charge is claimed or admitted to be unreasonable can not be granted by the carrier or accepted by the shipper. It follows that the reasons for the general rule above adverted to are altogether wanti g in the case here presented, and therefore the rule itself should be denied application. Moreover, when all the provisions of the act and supporting laws are taken together, and the doctrine of the Abilene case kept in mind, it becomes evident that the basis of a claim for reparation, which is the kind of "action" referred to in the limitation clause, is the existence at the time the claimant's shipments moved of an unreasonable rate established by the carrier's tariff and imposed upon all shippers alike; and that there can be no "recovery of damages" except as incident to a determination by the Commis- sion that such rate was unreasonable, including the extent to which it was unreasonable, and the fixing of a lawful rate for the future, unless the carrier has in the meantime voluntarily made the proper reduction. The real cause of action is the publication of a rate that is unlawful because excessive, and it "accrues" 9 «% < , as to a particular shipper when his property is trans- ported under that rate. As Conunissioner Harlan says in his concurring report in the Blinn case: "The unlawfulness of the rate is the shipper's cause of action, and the amount actually paid by him in excess of a lawful rate is but the measure of his damages. The wrong done to the shipper, with re- spect to shipments already made, arises out of the publication by the carrier of an unlawful rate and the obligation imposed upon the shipper by the publi- cation to pay that rate. The bar of the statute therefore commences to run when the obligation of the shipper to pay the unlawful rate has become a completed obligation, namely, upon the delivery of the shipment to him at destination, and manifestly can not be postponed by the failure of the shipper to fulfill his obligation. It is true that there can be no recovery of damages unless the unlawful rate has been paid; nevertheless, the inquiry in any such pro- ceeding is whether the published rate was excessive, and, if so, to what extent. That is the issue, the cause of action, as well as the subject matter of the contro- versy between the shipper and the carrier; and when resolved in favor of the shipper the extent of his damages on a particular shipment is a mere matter of calculation, wholly incidental to the controversy. " At common law one who had paid an excessive rate could ordinarily maintain a suit to recover the excess. His cause of action obviously arose when the damages were incurred; that is, when he was compelled to pay 16981— No. 42—11 2 10 that rate. Prior to such payment he had no common- law remedy because he had suffered no injury. The contract obligation to pay the excessive charge did not damage him, because that obligation was unen- forceable as to the excess above a reasonable charge. But such an action can no longer be maintained, as the Supreme Court decided in the Abilene case, swpra. The present obligation is statutory and not contractual. The shipper is now bound to pay the full tariff rate, even though it be unreasonable, and is therefore deprived of his former defense, if suit be brought to enforce payment of the tariff rate, unless the statute makes provision for his relief. It follows from this change in the law that, whether he actually pays the tariff rate or only incurs the obligation to do so, he can neither sue for damages in the one case nor on the other defend a suit for the tariff charge, unless the Commission shall have found that such tariff rate was unreasonable, and the extent to which it was unreasonable, when his property was transported. The regulating statute gives the shipper a right to reparation, that is, a right to- complain to the Com- mission and, if the facts justify, obtain its findings and order accordingly. The order in such case is not the real basis of his suit or defense at law, but rather a condition precedent thereto. In other words, the shipper may complain of a tariff rate not only to secure its reduction for the future, but also, if his traffic has moved under that rate, to have the Com- mission determine what would have been a reasonable rate thereon; and, as respects the authority of the 11 . , Commission, it would not matter whether the rate had been paid or partly paid or remained wholly un- paid. If paid, the report and findings of the Commis- sion would fix the portion he was entitled to have refunded; if not paid, his statutory obligation would be ascertained. The nature of the order awarding damages in con- nection with the reduction of the rate might therefore vary according to the situation at the time the Com- mission made its report. If payment had been made the order would require the carrier to refund the ex- cessive amount, and the shipper could then sue at law for his damages, offering the order as 'prima facie proof of his case. If payment had not been made the only reparation that the shipper could secure would be the finding of the Commission that the tariff rate was unreasonable, to such a degree as might be de- termined; and, for aught we can see, the Commission in such case could make an order which would be available to the shipper as prima facie proof of his defense to the carrier's suit. The cause of action before the Commission, how- ever, is the same in either case, viz, to secure a reduc- tion of the tariff rate and a finding as to the damages resulting from its exaction, whether in cash or in the obligation, otherwise binding, to pay the unreasonable tariff rate; and this cause of action accrues, in our judgment, not when the exaction is enforced, but when the obligation is incurred — that is, when the service is performed. Its nature remains unchanged by reason of subsequent payment, if payment was not 12 made at the time, since such postponed payment affects only the form and not the substance of the Commission's order. To interpret the statute as denying relief to a shipper who has not yet paid an unreasonable charge, although the carrier a;dmits his complaint of unreason- ableness and offers to remit the excess if the Commis- sion will give its permission, would require him to go through the meaningless form of paying a sum of money to which the carrier is not entitled and which the Commission would immediately require the car- rier to refund. Nevertheless, such permission must be obtained, because otherwise the refund would be unlawful on the part of both shipper and carrier. While the statute in terms provides that the Com- mission may order the carrier to pay damages, we do not feel required to interpret the word "pay" in the narrow sense of a money transaction. It is equally a payment, within the contemplation of this provision, to be relieved from an obligation which the law im- poses; and an order to remit the excess above a reason- able charge, which the Commission has fixed, is in substance and effect an order for the "recovery of damages" within the meaning of the clause in question. The purposes of the act as a scheme of regulation and the language of the provision in question indicate clearly that this is a limitation which operates without the aid of pleading. So far from being a defense which the carrier may or may not interpose, it is in effect a restriction upon the authority of the Commis- " 7 IS sion itself, since its plain intent is to deprive that body of jurisdiction to allow reparation after the lapse of two years. A similar provision relating to claims against the United States reads as follows: " That every claim against the United States, cog- nizable by the Court of Claims, shall be forever barred, unless the petition setting forth a statement of the claim be filed in the court or transmitted to it under the provisions of this act within six years after the claim first accrues." Construing this provision the Supreme Court held that it could not be waived and need not be pleaded^ {Finn v. United States, 123 U. S., 232, 233.) The conclusion we have reached in this case is sup- ported, in some measure at least, by a further consid- eration. The ruling of the Commission in the Blinn case is more than the decision of a particular contro- versy; it is also the administrative construction of the law by the tribunal charged with its enforcement. It is now nearly two and a half years since this ruling was promulgated. During that time it has been applied in numerous instances and come to be widely known and generally accepted. Under such circum- stances the ruling should not be set aside, except for the most convincing reasons, and such reasons have not, in our judgment, been made to appear in this case. {New Haven R. R. v. Interstate Com. Com'n, 200 U. S., 401.) Believing that the Commission was right in reject- ing petitioner's claim, and agreeing substantially with [ 14 the views expressed by Commissioners Lane and Harlan in the Blinn case, we see no occasion for more extended discussion. It follows that the petition herein should he dismissed with costs, and it will he so ordered. Archbald, Judge, concurring: I agree that the petition should be dismissed, but not on the ground that the proceedings before the Commission were not in time, on which I do not undertake to pass. The Government has moved to dismiss for the reason that as the case stands there is no order of the Commission to be reached; and that all, in effect, that we are asked to do is to give a construction to the statute different from that expressed by the Commission, which, aside from an actual adjudication, it is not our province to do. This motion, if well taken, can not be disregarded, and in my judgment it clearly is. The petitioner was not a complainant before the Commission. The proceedings there were instituted by the carrier and consisted of a petition asking leave to make reparation for an excessive freight charge which had been admittedly exacted on a single shipment some time before. The Commission refused to entertain the petition on the ground that according to its previous ruling in Blinn hwrnher Co. V. Southern Pacific R. R. (18 Inter. Com. Rep., 434) it was too late, more than two years having elapsed since the goods were shipped and the excessive charge made, although it was within two years of the time when the rate was paid. The present peti-^ tion is by the shipper, and, after setting forth the factSj complains that the construction so placed by the Commission on section 16 of the interstate com- merce act, that a cause of action on a claim for repa- ration accrues within the meaning of the law on the date when the freight is shipped, and is barred unless complaint is made to the Commission within two years from that time, is erroneous, and should be set aside and held for naught by this court. The prayer is that "the petition be heard and granted," and that the petitioner " be permitted to file its claim for reparation with the Commission and have all other and proper relief." The case has been submitted on briefs, counsel for the petitioner not being able to be present. The question involved is an important and difficult one, and, for a correct solution, needs all the light possible by way of oral argument, and we lack that valuable aid. No merely advisory opinion is to be indulged in, and that, having regard to the record, is all, as it seems to me, that would result here. As already stated, the shipper made no complaint to the Com- mission. The carrier simply asked leave to redress what it had done, by repaying the excess charge. It may be that this practice is sanctioned by the statute, but it can not be made to take the place of that which is required of the shipper before he has ground for coming here. Where the shipper has a grievance he is to apply to the Commission (sec. 13), setting forth his cause of complaint, the carrier being 16 called on to satisfy it or show cause why it should not. And if the Commission, after a hearing (sec. 16), decides that the shipper is entitled to damages, an order is to be made on the carrier to pay by a day certain, which the shipper, on failure of the carrier to comply, may enforce by proceedings against it in court. It is with regard to complaints of this character that it is provided that they shall be filed with the Commission "within two years from the time the cause of action accrues and not after"; the meaning of which is the subject of controversy here. The essence of the proceedings which are thus pro- vided for by the statute is to be maintained, and this calls for a complaint by the shipper as the funda- mental thing. A petition by the carrier for leave to make good to the shipper that which is the subject of cornplaint is not a substitute therefor. The closer the statute is adhered to the less chance is there to go astray. The difficulty is that neither the issue nor the outcome in the two proceedings is the same. The one is adversary, however the carrier may come in and admit it, and looks to an order which the carrier is required and may be compelled to obey; the other merely seeks permission to make redress, which, being sanctioned, if at all, by reason of the general supervision of the Commission over the affairs of interstate carriers, is more or less a matter of discretion, and upon being refused leaves the parties practically as they were before. Where the shipper complains and an order in his favor is made he has something on which he can proceed. Or, if 17 J. ^.7 it is refused, under our ruling in the Proctor & Gamble case (188 Fed., 221), upon a proper showing he would have ground for relief here. But where on applica- tion of the carrier the right to make reparation is denied, there is no order adverse to the shipper, in contemplation of law, however much it may stand in the way of his getting his money in practical effect, the carrier without the approval of the Commission not caring to take the risk. It can not be said, in other words, that, by the refusal of the petition of the carrier, the shipper is denied a right which he is entitled to maintain. It is stiQ open to him to make his complaint to the Com- mission and get a ruling thereon. And it is only the attitude already taken by that body, or, as it is charged in the petition, the construction put by it on the statute, which stands in the way. But complaint might just as well be made of the ruling in the Blinn lumber case, on which the Commission relies, that being where the trouble begins. The right to file a claim for reparation with the Commission, which is prayed for, is thus, in fact, in the petitioner's own hands. There are other considerations which are opposed to a petition by the carrier being taken as the equivalent of a complaint by the shipper, as for in- stance, if the shipper is not content with the repara- tion proposed, a situation with which on any such basis it would be awkward to deal. It is difficult to see also, how, if the carrier is willing to make repara- tion and the Commission is satisfied that there is no collusion, the matter of time should stand in the way. 18 But without enlarging further, it seems to me, that only by the most extreme construction can the re- jection of the carrier's petition be regarded as an order of the Commission, over which we have jurisdiction, and with respect to which at the instance of the ship- per we can grant relief and particularly the relief here asked; and that the motion to dismiss should be granted for this reason, but not for the reason that the petition presented by the carrier to the Commission was not in time. Carland, Judge, dissenting: I am unable to concur in the result reached by the majority. Section 16 of the act to regulate com- merce provides : "That if, after hearing on a complaint made as provided in section thirteen of this act, the Commis- sion shall determine that any party complainant is entitled to an award of damages under the provisions of this act for a violation thereof, the Commission shall make an order directing the carrier to pay to the complainant the sum to which he is entitled on or before a day named. * * * a.11 complaints for the recovery of damages shall be filed with the Com- mission within two years from the time the cause of action accrues. * * *" By the very language of the statute itself, the two- year limitation only applies to complaints for the recovery of damages; therefore, it can not be claimed that Congress intended to fix any limitation as to Complaints where no damages were claimed. It is 19 'I, . ! true, that section 13 of the act provides that no com- plaint shall be dismissed because of the absence of direct damage to the complainant, but this last pro- vision has no application to complaints which have for their only object the recovery of damages; other- wise, such a complaint could not be dismissed even if no damage was shown to the complainant. There are other complaints provided for in section 13 to which this provision would be appUcable. The limi- tation of two years being restricted to complaints for the recovery of damages, it necessarily results that a complaint which does not claim damages is not within the limitation. The words "cause of action," mentioned in the statute, must not be confounded with the proceeding to establish such cause of action before the Interstate Commerce Commission. The cause of action must exist before the proceeding can be had. In other words, the cause of action must not be confounded with the remedy. The cause of action which exists in favor of a shipper for an unreasonable and unjust charge for the transportation of freight is the cause of action which the shipper has against the carrier; and if he has paid no unjust charge he has no cause of action against the carrier, and therefore he has no right to file a complaint before the Commission for the recovery of damages, as he has suffered no dam- age. The shipper's right of action in the case at bar accrued whenever the event happened which enabled it to file a complaint with the Commission showing on its face that it had suffered damage, and the shipper 20 could not, until it had been injured by the payment of the excessive charge, claim damages. The attempt to sustain the result reached in this case by claiming that the obligation of the shipper to pay reasonable and just rates is now statutory and not contractual is not convincing, first, because the obligation to pay reasonable and just rates is no less contractual now than it was before the act to regulate commerce. The statute provides that all charges made for any service rendered or to be rendered in the transportation of passengers or property or in con- nection therewith shall be just and reasonable. So did the common law. The implied obligation to pay such charges arises from the delivery of the property of the shipper to the carrier to be transported and is as much a matter of contract now as ever; and, second, conceding for the sake of argument that the obligation to pay is statutory, this fact is in no way determinative as to when a shipper is damaged. In the absence of a declared intention to the con- trary, we must presume that Congress used the words "cause of action accrues" in the sense that, it is ad- mitted, they are understood by the legal profession in similar cases. If Congress desires that the period of two years' limitation shall commence to run from the time the freight moves, it can easily amend the law. It is our duty to declare the law, not to make it. The fundamental error, it seems to me, in the rul- ing of the Commission, arises, first, by confounding the remedy or proceeding of the shipper before the Commission with the cause of action which the ship- 21 30 3 per has against the carrier; and, second, by attempt- ing to put a construi^tion upon the statute of limita- tions that will carry out the desire and purpose of the Commission in the performance of its administrative duties. It is urged that to leave it to the carrier and shipper to determine when the payment of the exces- sive freight rate shall be made permits the carrier and shipper to wait until all other shippers have paid their charggs and then take up the matter of repara- tion with the particular shipper who has been given a long credit, and thus to bring about a preference or discrimination, and perhaps a form of rebate. But even if this is so, a fear on the part of the Commission that discriminations and rebates may result from a construction of the statute different from the one established in the Blinn case is no reason for giving a meaning to the statute at variance with all prece- dent. The Commission at one time decided, con- trary to its former rulings, that it was illegal for a car- rier to pay the actual cost of elevating grain at a transfer point, and one of the grounds of this decision was the fear on the part of the Commission that this payment would open the door for the payment of rebates and undue discriminations; but the courts seem to have held that the fear that some Ulegal practice might result was no reason for condemning a practice otherwise honest and lawful. (Interstate Commerce Commission, appellant, v. F. H. Peavey & Co., et al., decided by the Supreme Court Nov. 13, 1911.) — .. •'■■ *-/ - I am of the opinion that the attempt to apply the law as stated in T. & P. Ry. Co. v. Aheline Cotton Oil Co. (204 U. S., 426) is beside the question, as in the case at bar it is simply a question of the proper construction of an ordinary statute of limitations in which the construction of no other portion of the law seems to be involved. Nor am I persuaded that the doctrine of the Blinn case, enunciated by the Commission in May, 1910, contrary to all their pre- vious rulings and subject to a dissent of two of the members of the Commission, establishes any construc- tion of the statute so long continued as to be of any weight in deciding the present case. I am of the opinion that the Conmiission could raise the ques- tion of the statute of limitations itself, and also that under the pleadings as they stand in this case the question whether there was a formal order is fore- closed. I am further of the opinion that the fertil- izer company, being the real party in interest, may, under well-recognized principles of equity jiirisdic- tion, maintain the petition in this case, although it filed no complaint with the Commission. {Inter- state Commerce Commission v. Diffenbaugh, United States Supreme Court, Nov. 13, 1911; 176 Fed., 409.) The order of the Conomission should be vacated and the case heard by it on its merits. I am authorized to say that Judge Hunt concurs in this dissent. United States Commerce Court. No. 44. — OcTOBEK Session, 1911. Southern Railway Company, et al., petitionees, V. United States of America, respondent. Interstate Commerce CoMMissiojir, intervening respondent. ON MOTION TO DISMISS FOR WANT OF JURISDICTION. Mr. R. Walton Moore, Mr. Merrel P. Callaway, Mr. Charles J. Rixey, jr., Mr. Alfred P. Thorn, Mr. Henry T. Wickha/m, and Mr. W. S. Bronson for the petitioners. Mr. Blackburn Esterline, special assistant to the Attorney General, with whom Mr. James A. Fow- ler, Assistant to the Attorney General, was on the brief, for the United States. Mr. P. J. Farrell, for the Interstate Commerce Commisson, Before Knapp, Presiding Judge, and Archbald, Hunt, Garland, and Mack, Judges. December 5, 1911. Hunt, Judge: The only question now before us pertains to the jurisdiction of the Commerce Court. The petition was filed by the Southern Railway Company and the Chesapeake and Ohio Railway 17812—11 Company, asking in effect that two certain orders of reparation in favor of the St. Louis Blast Fur- nace Company made by the Interstate Commerce Commission be annulled and that pending suit the enforcement of each of said orders be enjoined. The Commission intervened in this court and joins with the United States in a motion to dismiss the petition because each of the orders made by the Conunission and referred to in the petition is an order for the payment of money only, and the Com- merce Court has no jurisdiction over the subject matter. By the terms of the act to create a Commerce Court (approved June 18, 1910) exclusive jurisdic- tion of these several kinds of cases, among others, was conferred upon it : ' ' First. All cases for the enforcement, otherwise, than by adjudication and collection of a forfeiture or penalty or by infliction of criminal punishment, of any order of the Interstate Conunerce Commis- sion other than for the payment of money. " Second. Cases brought to enjoin, set aside, an- nul, or suspend, in whole or in part, any order of the Interstate Commerce Commission." There was express denial of enlargement of the jurisdiction of the circuit courts as such jurisdic- tion was vested when the act to create the Com- merce Court was passed. The act merely though precisely transferred to and vested in the Com- merce Court exclusively whatsoever power the cir- cuit courts had theretofore possessed to hear and determine the kinds of cases or proceedings enu- merated. We have so held in The Procter and Gamble Company v. United States (188 Fed., 221). In the grant of jurisdiction to the Commerce Court, exclusive yet full though it is in the classes of cases discussed, there is an express provision that nothing in the act shall affect the jurisdiction possessed by any circuit or district court of the United States over cases or proceedings of a kind not within the classes enumerated in the para- graphs of section 1 heretofore referred to. Bear- ing in mind the language of the exception of all cases for the enforcement of orders for the pay- ment of money, it at once becomes apparent that actions at law where right of jury trial is pre- served can not be tried in this court. However, as to such actions, the statute is not silent, for the language of that clause of section 1 of the act cre- ating this court, whereby it is affirmatively pro- vided that the act shall not affect the jurisdiction possessed by any circuit or district court of the United States over cases or proceedings of a kind not within the classes enumerated in the act estab- lishing the Commerce Court, clearly comprehends them and preserves the rights of parties as they existed before June 18, 1910. Such a construction of the act makes each part effective by cutting out from the jurisdiction of the circuit courts and transferring to this court exclusive jurisdiction over vairious kinds of cases, yet reserving the juris- diction in those courts as it was possessed over cases which but for the exception would have been included in the general clause. The language which defines an order which may be affected by decree of this court is unrestricted ; " any order " which is involved in a direct suit to enjoin, set aside, annul, or suspend, provided al- ways it is a case where a circuit court formerly possessed jurisdiction to annul, set aside, or sus- pend. And that prior to June 18, 1910, the circuit courts had jurisdiction is evident, for the language of section 16 of the Hepburn Act of June 29, 1906, expressly vested in such courts power to hear and determine suits to enjoin, set aside, annul, or sus- pend any order of the Commission. We can not read into the clause which confers jurisdiction upon this court words of limitation other than those which formerly circumscribed the powers of the circuit courts, nor can we except from the described kinds of cases where injunction, annul- ment, or suspension may be had orders for the pay- ment of money. The fundamental principle that Congress is presumed to have expressed its mean- ing with due deliberation, and that it is not within the power of the court to go beyond the plain ex- pressions of the legislature, prevents the court from holding otherwise. We need go no further now than to hold that since the approval of the act creating this court, a carrier which is ordered to pay damages, and which could have gone to the circuit court in equity to have such an order annulled or enjoined, has now the right to ask this court to enjoin or annul or suspend such an order, provided always it can show grounds for equitable relief. And as the ju- risdiction of this court over such a case is exclusive, it follows that no other court can entertain a bill in equity for the direct purposes of annulment or sus- pension as aforesaid. We are urged to adopt the view that when Con- gress excepted from the kinds of cases over which the Commerce Court may exercise jurisdiction the enforcement of an order for the payment of money, it could not have intended to authorize us to annul such an order, it being said that when the circuit court tries an action at law to enforce such an order, that court necessarily has power to deny relief, on the ground that the order is illegal and void, and that therefore there is a destruction of that clause of the act which makes the jurisdic- tion of this court exclusive over cases to annul any order of the Commission. The difficulty with this reasoning lies in confounding these two propositions : On the one hand, an express affirma- tive denial of power to this court to try an action sounding in tort as does one to recover damage for excesses of rates collected as ordered by the Com- mission, wherein right of trial by jury must be pre- served; and on the other hand, an express grant to this court of exclusive authority to hear and decide a petition brought to annul or enjoin an order of the Commission, l^o suit having for its purpose the annulling of an order for the payment of money is brought in the circuit court, and none can be, the jurisdiction of tMs court being exclusive in actions of that kind. The case in the circuit court is one to recover damages upon an order duly made by the Commission. True, a defense, among others available, may involve the validity of the order upon which plaintiff bases his action, but we need not dwell upon what questions may be pre- sented in the circuit court, for we have no jurisdic- tion over them. It is plain, however, that if such a defense is sustained in the circuit court, the ruUng does not thereby affirmatively annul and set aside the order of the Commission ; it merely determines that as between the parties before it the order is not a valid legal basis for the particular claim sought to be enforced. In actual practice, where law and equity courts are invoked, there may arise some opportunity for varying views upon the valid- ity of an order of the Commission. Surely, though, instances of divergent views will not happen more often than they do under any system where sepa- ration of law and equity obtains, and in any event ai*e not of such serious apprehension as to justify a construction of the statute which would subtract from the lawful authority deliberately conferred by Congress upon this court exclusively to enjoin, set aside, annul, or suspend, in whole or in part, " any order " of the Conunission. As what we have said is controlling upon juris- diction, the only question now presented, the motion to Msmiss, must be denied. So ordered. O United States Commerce Court. No. 18. — October Session, 1911. 3/1 RtJSSE & BUHGESS V. Interstate Commerce Commission, respondent; AND United States, Illinois Central Railroad Company, and Atchison, Topeka & Santa Fb Railway Company, interveners. ON DEMURRER TO PETITION. For opinion of Interstate Commerce Commission see 13 Inter. Com. Com. Rep., 668. See also 190 Fed., 659. Mr. W. A. Percy for petitioners. Mr. P. J. Farrell for Interstate Commerce Com- mission. Mr. James A. Fowler, assistant to the Attorney General, and Mr. Blackburn Esterline, special assistant to the Attorney General, for the United States. Mr. B. Walton Moore, Mr. Frank W. Gwathmepj Mr. Bohert Dunlap, and Mr. T. J. Norton for in- tervening carriers. Before Knapp, Presiding Judge, and Archbald, Hunt, Garland and Mack, Judges. 28092— No. 18 — 12 [February 13, 1912.j Aechbald, Judge. Complaint was made to the Commission by the petitioners, Russe & Burgess, with others, against numerous railroads, members of the Trans-Conti- nental Freight Bureau, charging that excessive rates had been exacted for the transportation of lumber from Chicago and Mississippi River points to the Pacific coast, and asking for reparation. The Commission, upon due investigation, found that the existing rate of eighty-five cents per hundred pounds was more than was reasonable; that seventy-five cents was a reasonable rate, which it fixed as the maximum rate for the future; and that the complainants were entitled to repara- tion on this basis for shipments subsequent to the filing of their complaint, but not on prior ship- ments because of laches. And on application for a rehearing by complainants this ruling was re-af- firmed. The petitioners thereupon filed their biU in the Circuit Court of the United States for the Northern District of Illinois, praying that the order of the Commission, so far as it denied repara- tion prior to the filing of the complaint, be set aside and the Conunission enjoined and required to pro- ceed and correct its order so as to allow the repara- tion contended for, ascertaining by appropriate ^ 31 ' action the amounts severally due to the different petitioners. There was also a prayer for a decree against the respondent railroads for the amount of the excess charges which had been paid, but it was admitted that this feature of the case could not be maintained and it was therefore abandoned On the organization of the Commerce Court the case was transferred here, and — ^without stopping to note certain intermediate proceedings — ^it now comes up, on demurrer to the petition in which all parties join, on the general ground that the court has no authority to review the action of the Com- mission in the premises. The exact position taken by the Commission with regard to the petitioners' claim for reparation is best shown by what it has to say of it. After finding that the eighty-five cent rate complained of was an unreasonable rate and that seventy- five cents at most was just and reasonable and for two years thereafter not to be exceeded, and hav- ing also considered whether the shippers had in fact been damaged, the excess rate as it was con- tended having been added to the price at which the lumber was sold and paid for by the consumers, which contention was negatived, the Commission, speaking by Mr. Commissioner Prouty,'says: " These complainants were shippers of hard- wood lumber to this destination, and they were entitled to a reasonable rate from the defendants for the service of transportation. An unreasonable rate was in fact exacted. They were thereby de- prived of a legal right, and the measure of their damage is the difference between the rate to which they were entitled and the rate which they were compelled to pay. If complainants were obliged to follow every transportation to its ultimate result and to trace out the exact commercial effect of the freight rate paid, it would never be possible to show damages with sufficient accuracy to justify giving them. Certainly these defendants are not entitled to this money which they have taken from the com- plainants, and they ought not to be heard to say that they should not be required to refund this amount because the complainants themselves may have obtained some portion of this sum from the consumer of the commodity transported. ' ' It was thus distinctly found that an unreasonable rate had been exacted by the carrier ; that thereby the shippers were deprived of a legal right; and that they had been damaged the difference between what they had been compelled to pay and that which was just and reasonable. And from this it would seem to follow that they were entitled to rep- aration for that which had thus been unlawfully re- quired of them, the refusal of which relief by the Commission amounted to the denial of a legal right where it should have been upheld. The Commis- sion meets the situation, however, as follows : "Neither," as it is said in the report, "should these complainants be permitted to slumber upon 5> ;' their rights and to accumulate against these de- fendants a claim for damages which may not repre- sent in its entirety an actual loss to the complainants. The burden of an unjust freight rate usually rests upon the consumer, who cannot and does not re- cover. Claims for reparation should therefore be promptly presented and actively prosecuted. We shall allow the complainants reparation in this case in the amount of the difference between the rate actually paid and the rate of seventy-five cents, which is established and which is found to have been a reasonable rate from the date of the filing of this petition, but, following the case of Thompson v. Illi- nois Central R. R., no reparation will be allowed by reason of shipments made previous to the date of the filing of the complaint." The Commission, in other words, after finding all the elements of a just and legal claim in favor of the petitioners against the carriers which have in- tervened, has denied reparation as to anything pre- ceding the filing of the complaint, on the ground that in its opinion the petitioners were guilty of laches. Upon what considerations laches is predi- cated, other than delay, is not indicated. But without dwelling upon this the fact remains that, in the face of the admitted showing made, repara- tion was refused as to shipments before the com- plaint was filed, although allowed after that date, a distinction for which there is no apparent sanc- tion. Having made out a complete prima facie legal claim the petitioners were entitled to have it recognized and sustained to its full extent, and reparation awarded accordingly. ISTo doubt the claim was subject to the limitation imposed by the statute (sect. 16), by which complaints of this char- acter must be filed with the Commission within two years from the time when the cause of action ac- crues, whatever be the construction given to that provision. Arkansas Fertiliser Co. v. United States, not yet reported. But there is nothing to sustain the idea that any part of it could be thrown out upon the equitable ground of laches. The plain question presented in every application for reparation is whether the rate which has been charged is reasonable or unreasonable ; and if un- reasonable, the extent to which it is so. On this both the shipper and the carrier are entitled to an explicit finding ; this, if found in favor of the ship- per, being the foundation of his cause of action. Texas d Pacific R. B. v. AMlene Oil Co., 204 U. S., 437. Morrisdale Coal Co. v. Penn. R. R., 183 Fed., 929. Rohinson v. Bait. & Ohio R. R., decided by the Sup. Ct. Jan. 9, 1912, not yet reported. And, except possibly to determine the shipments to which the rate which is condemned applies, and the number of tons or pounds, or however the freight is measured, in order to get at the gross over pay- ment and award damages accordingly, the duty of the Commission ends with this finding. It can add nothing to the case which is so made out nor 7 3/7' detract anything from it. The prima facie right of the shipper to reparation at the hands of the carrier, with these facts found in the shipper's favor, is thereby established, and the rest is for the courts, in case the order of the Commission is not accepted and complied with. It is not for the Commission to consider and pass upon other ques- tions which may arise, by which the ultimate right to recover may be affected. It does not try out the ease on its merits, but only the one particular phase of it. And above all is not the Commission empowered to restrict the operation of a claim in aU respects valid on its face upon the supposed applicability of some equitable doctrine, such as laches. In the present instance the order of the Com- mission, limiting the reparation allowed to ship- ments after the complaint was filed, is the result of a clear misapprehension of the law, which ren- ders it invalid. St. Louis Hay & Grain case, 214 U. S., 297. Stichney case, 215 U. S., 98. Willa- mette Valley case, 219 U. S., 433. Inter. Com. Commission v. Union Pacific B. R., decided by the Sup. Ct. Jan. 9, 1912, not yet reported. As already stated, the petitioners, judged by the Commission's own report, apparently made out a perfectly legal claim, not only as to shipments after the complaint but also as to those before it. The right to repara- tion, in view pi this, can not be limited, as has been done, to that which accrued after the complaint was 8 filed. The petitioners are entitled to go back of that, so far at least as concerns the proceedings before the Commission, until barred by the statute ; and to have the merits of their claim considered and passed upon unhampered by any mistaken view to the con- trary. The petition therefore on its face sets forth a good case for relief, and there is no ground for the demurrer. The demurrer will he overruled and the respond- ents directed to answer over. United States Commerce Court. No. 19. — October Session, 1911. Thompson Ltjmbee Company V. Interstate Commerce Commission, respondent; AND United States, and Illinois Central Rail- road Company, interveners. ON DEMURRER TO PETITION, For opinion of Interstate Commerce Commission see 13 Inter. Com. Com. Rep., 657. Mr. W. A. Percy for petitioners, Mr. P. J. Farrell for Interstate Commerce Com- mission. Mr. James A. Fowler, assistant to tlie Attorney General, and Mr. BlacMurn Esterline, special as- sistant to the Attorney General, for the United States. Mr. B. Walton Moore and Mr. Frank W. Gwath- mey for Illinois Central Railroad Company. Before Knapp, Presiding Judge, and Archbald, Hunt, Carland, and Mack, Judges. 28092— No. 19—12 [Febrttaey 13, 1912.] Archbald, Judge: This case does not differ in principle from that of Russe & Burgess just decided. Indeed the two are linked together by the Commission, the decision in the one on the subject of laches being given as a rea- son for the decision in the other. The rate complained of before the Commission was that on hardwood lumber from Memphis to New Orleans for export. The rate charged was twelve cents a hundred pounds, and complaint was made against the Illinois Central Railroad, the Yazoo & Mississippi Valley Railroad, and the St. Louis, Iron Mountain & Southern Railroad, these being the three lines by which shipments of such lumber are made between the points mentioned at the rate in question. The Commission dismissed the complaint as to the St. Louis, Iron Mountain & Southern, but held that as to the Illinois Central and the Yazoo & Mississippi Yalley the twelve-cent rate was unreasonable, ten cents per hundred pounds being fixed as the maximum. The Yazoo & Mississippi Yalley was not served in the present case and has not appeared, and the case therefore proceeds only against the Illinois Central. As to the reparation claimed on the ten-cent basis, the Commission said : 2 ^x/ '* We can not award damages in this case based upon the use of the twelve-cent rate up to the date of the filing of the complaint because of the laches of the complainants and because the record does not conclusively disclose that the rate was imreasonable prior to said date. The questions of law as to the reparation and the amount thereof under the above ruling will be reserved for con- sideration at a later date." Not satisfied with the situation in which the case was so left, the petitioners applied for a rehearing and modification of the order, assigning among other things that the Commission erred in the rul- ing made, it being urged in that connection in the brief filed that there was no place for the applica- tion of the doctrine of laches, nor for any limita- tion other than that imposed by the statute, and that in holding the petitioners to conclusively prove the unreasonableness of the rate prior to the filing of the complaint the Commission was enforcing a degree of proof not justified upon any principle. But notwithstanding this, and with its attention thus caUed to the matter, the Commission in a fur- ther report declined to modify the order. The present bill was then filed, the same as in the Eusse & Burgess case, in the Circuit Court of the United States for the Northern District of Illinois, and after the same intermediate proceedings comes up now on demurrer by the Interstate Commerce' Com- mission joined in by the United States and the Illinois Central Railroad intervening. ISTothing need be added to what is said in the Russe & Burgess case on the subject of laches. So far as the action of the Commission in refusing complete reparation is based on the application of that doctrine to shipments which preceded the fil- ing of the complaint, it is clearly invalid. The other ground assigned by the Commission for its action, in our judgment, is equally untenable. To require conclusive proof of the unreasonable- ness in the past of the rate complained of was to set up a standard which is exacted, if ever, in only the most extreme eases. " Where an adverse presump- tion is to be overcome, or, on grounds of public policy and in view of peculiar facilities for perpe- trating injustice by fraud and perjury, a degree of proof is sometimes required which is variously des- ignated as ' clear, ' ' clear and conclusive, ' ' clear, precise, and indubitable,' ' convincing,' ' un- equivocal,' &c." 17 Cycl., 771. Conclusive evi- dence is that which is incontrovertible — that is to say, either not open or not able to be questioned. Wood V. Chapin, 19 E". Y., 509, 515. Where it is said that a thing is conclusively proved, it means that that result follows from the facts shown as the only one possible. People v. Stephens, 13 N. Y., Supp., 1112, 1114. Conclusive proof means, either a presumption of law, or evidence so strong as to overbear everything to the contrary, Haupt v. Pohlman, 24 N. Y. Sup. Ct., 121, 127. In a civil action the complainant is never bound +n do more than sustain his case by a preponder- ^ y. '■: ance of tlie credible evidence. Louis. & Nash. R. B. V. Jones, 83 Ala., 376. Ford v. Chambers, 19 Cal., 143. Treadwell v. WhitUer, 80 Cal., 574. Williams V. Watson, 34 Mo., 95. Strauss v. Field, 90 N. Y., 640. Grabtree v. iJeet?, 50 lU., 206. McDeed v. McDeed, 66 111., 545. G^rai;es v. CoweZZ, 90 111., 612. To instruct a jury that they must be conclusively convinced is a manifest error. Hiester v. Laird, 1 W. & S., 245. In the case in hand it was only necessary for the petitioners to show by a preponderance of proof that the rate in the past — as it was found by the Commission that it would be for the future — ^was not a just or reasonable rate ; and if they did this, it was aU that could be required of them. No doubt the Commission had the right to call for proof that was reasonably convincing. But it had no right to array itself against that which was produced, to the extent of holding that it was not conclusive; which was in effect saying that nothing short of what was incontrovertible would satisfy it. Nor can this be passed over as an inadvertence or as meaning no more than that the evidence so far as concerned the past was not satisfactory. If this was all there was to the case of course nothing could be made of it. But by the petition for a re- hearing and the argument that was made in that connection the attention of the Commission was directly called to the effect of the ruling, and after due consideration it was adhered to. If therefore the matter was left in any doubt by the original report there can be none by tbe later one. By the express reiteration of the former ruling it was thereby declared, not that the evidence was not satisfactory or unconvincing, but that it was not conclusive, and that none other would be sufficient. This was asking more of the petitioners than was warranted, and the action of the Commission in refusing reparation as to the past upon that ground is invalid. It is said, however, that the question of repara- tion was reserved for further consideration, and that there is therefore nothing final. But accord- ing to the report the only reservation was of the question of law as to the amount of reparation to which the parties were entitled under the ruling made, which in no respect relieves the situation. As already said in the Russe & Burgess case the pe- titioners were entitled to have the resaonableness or unreasonableness of the rate in controversy con- sidered and determined fairly and squarely upon the merits, unhampered by any misconception as to the extent or character of proof required of them, and they are now entitled to be relieved from the adverse result under which they rest, which has been brought about by the error complained of. As the case stands they have applied for relief and been put off with only a part of that which they claim, the rest having been ruled out on a clear mis- apprehension. The demurrer is overruled with leave to the respondents to answer over. O United States Commerce Court. No. 4. — April Session, 1911. Louisville & Nashville Railroad V. Interstate Commerce Commission, responbent. United States, intervening respondent. OH FINAL HEARING ON BILL, ANSWER, AND PROOFS. For opinion of Interstate Commerce Commission see 17 Inter. Com. Com. Rep., 231. For opinion of Circuit Court, refusing preliminary injunction, see 184 Fed., 118. Mr. Helm Bruce and Mr. W. G. Bearing for peti- tioners. Mr. W. E. Lamb for Interstate Commerce Com- mission. Mr. J. A. Fowler, Assistant to the Attorney General, and Mr. Blackburn Esterline, special assistant to the Attorney General, for the United States. Mr. Alfred P. Thorn and Mr. Walker D. Hines for Southern Railway. Mr. Edward Barton for Baltimore & Ohio South- western Railroad. 18866— No- 4—12 1 Before Knapp, Presiding Judge, and Archbald, Hunt, Garland, and Mack, Judges. [Feb. 28, 1912.] Archbald, Judge: A brief history of this case will aid in understand- ing the questions to be decided. For a number of years prior to 1907 the through rates on certain classes of freight over the Louisville & NashvUle Rail- road, the present petitioner, from New Orleans, La., to Montgomery, Selma, and Prattville, Ala., were higher than the rates on the same classes from New Orleans to Mobile, an intermediate point, plus the rates from Mobile to Montgomery and the other places mentioned. The through rates from New Orleans to these places were also similarly higher than the rates to Pensacola plus the rates from there to the same destinations, the two situations in this respect being identical. This somewhat peculiar condition was brought about, as it is alleged, by the fact that the rates from New Orleans to Mobile and Pensacola were made lower than might justly have been charged, as weU as lower than the general basis of rates prevailing in that section of the country, because of the neces- sity for meeting water competition between these places; from which policy it resulted, as is to be gathered from the record, that the rail line of the petitioner greatly increased its tonnage, and eventu- ally secured the bulk of the traffic, the rail rates being continued for a number of years after the water com- petition had practically been eliminated. Following, however, the enactment of the Hep- burn law in 1906, the Interstate Commerce Commis- sion, in an administrative ruling, which has several times been re-affirmed, announced that through rates in excess of the combination of intermediate rates would be regarded as prima facie unreasonable, and that the burden would be on the carrier to defend them. Subsequently to this, and possibly prompted by it, in June, 1907, the Montgomery freight bureau, on behalf of the commercial interests of that city, filed with the Commission a formal complaint against the raUroad, alleging that the higher through rates to Montgomery than the combination on Mobile, on certain classes and commodities, subjected Mont- gomery to undue prejudice and disadvantage, in favor of Mobile, in violation of section 3 of the interstate commerce act. Influenced by this, no doubt, and by the ruling of the Commission referred to, the rail- road, on August 13, 1907, advanced its rates from New Orleans to Mobile and Pensacola on certain classes of freight, by varying amounts sufficient in each case to make the new combination on Mobile and Pensacola correspond with the through rate to Mont- gomery. This action of the railroad, coupled with subsequent reductions on a number of articles, by taking them out of their respective classes and giv- ing them special commodity rates, apparently had the effect of satisfying the commercia,! interests of Montgomery, and nothing further seems to have been done in consequence upon the complaint filed by the freight bureau of that city. This did not, however, satisfy all parties. For a number of years the rates out of New Orleans had been the subject of agitation by the New Orleans Board of Trade, and at various dates, in October and November, 1907, complaints were accordingly filed with the Commission by that body, severally charging that the rates to Mobile and Pensacola as recently advanced by the railroad, and the through rates to Montgomery and the points grouped with or based thereon, were unjust and unreasonable in them- selves as well as in comparison with the rates from Memphis, St. Louis, and Louisville. A restoration of the rates in effect to Mobile and Pensacola prior to August 13, 1907, was thereupon prayed, and a reduction of the rates to Montgomery, so that they would not exceed a combination of the locals by way of these places as thus established. The adjust- ment of certain commodity rates relatively to St. Louis and Memphis was also asked for. The railroad duly answered these complaints, deny- ing that the rates in force were unjust or unreasonable, and setting forth in detail the facts and circumstances relied on to justify them. But after answering and before any hearing by the Commission had been entered upon, the railroad voluntarily established special commodity rates on a number of articles which had been complained of, thereby making the rates on all articles, or at least on most articles, from New Orleans to Montgomery points, as well as to Mobile and Pensacola, the same as or lower than the rates from Memphis and the other places named to these destinations. This was the undoubted in- tention of petitioner and appears to have been gen- erally if not completely carried into effect. The three New Orleans cases were heard by the Commission together and were disposed of Novem- ber 26, 1909, in a single report and order. This order, in substance, condemned the advance in rates to Mobile and Pensacola on the classes involved as imjust and unreasonable; directed the restoration of the rates in force prior to August 13, 1907, to these places; declared the through rates to Montgomery, Selma, and Prattville, to the extent that they ex- ceeded the sum of the locals by way of Mobile and Pensacola prior to that date, to be also unjust and unreasonable; and prescribed for the future certain maximum rates to be maintained by the railroad for the statutory two-year period. The rates which were so prescribed to Mobile and Pensacola were the same in each case as the rates which had existed prior to the advance made by the company, and the rates to Montgomery were exactly equal to the rates to Pensacola and Mobile as so restored, plus the rates from these places to Montgomery, which remained unchanged; the rates to Selma being made up in the same way, and those to Prattville having the prevail- ing arbitrary added. This order, by its terms, was to go into effect February 1, 1910, but was postponed by supple- mental orders until April 15, following; prior to which time a bill in equity was filed by the railroad against the Commission in the Circuit Court of the 6 United States for the Western District of Kentucky, and an application made for a preliminary injunction. This application was heard by three circuit judges on bill and affidavits, and was denied by the court in an opinion by €Judge Severens (184 Fed., 118); after which the order of the Commission became effective and has since been complied with. The Commission having answered the bill, an ex- aminer was appointed and a large amount of testi- mony taken on behalf of the petitioner, the entire proceedings before the Commission, including the testimony submitted to it, being also under objec- tion made a part of the record. No proof was offered in opposition to this in support of the order, the Commission taking the position that having been made after a full hearing, upon due consideration of the issues involved and in the exercise of the au- thority conferred by the statute, the order was not open to question. Upon the organization of the Commerce Court the case was transferred here, and now comes up for disposition upon final hearing. It has been ably and elaborately argued in all its dif- ferent phases, but there is only one that it seems necessary to pass upon, and that is, whether the Com- mission, in the order which it has made, has not in a legal sense acted as charged in such an unreasonable manner that its order is invalid, having nothing of substance or persuasive force upon which it can rightly be predicated. This is claimed to result be- cause the reasons assigned in the report either do not justify the conclusion reached or are so at vari- 7 , d .V ance with the undisputed facts that effect has plainly not been given by the Commission to the evidence which was produced before it; and therefore, as it is put in the petition — repeated frequently in various connec- tions — ^the "order is unreasonable, unjust, unlawful, arbitrary, and oppressive and in excess of the author- ity granted and powers conferred upon" the Com- mission by the amended act to regulate commerce. Stated in another form the question is whether this order, tested by the principles recently emphasized by the Supreme Court in Interstate Com. Com. v. Union Pacific R. R., decided January 9, 1912, should not be set aside because there was no substantial evidence to sustain it. That is to say, whether the Commission, while in form acting within the authority conferred by the statute, has not in effect disregarded it. And it is to this question that we therefore address ourselves. In this connection we take occasion to say that if the conditions dealt with in the report of the Commission were substantially as they are there described, we should have little hesitation in dis- missing the petition. For even though in that case it might seem doubtful to us whether the Commission had reached a just conclusion, it would nevertheless appear that there was room for differences of opinion, because different inferences were able to be drawn, and in such case the conclusions of the Commission should be accepted as to matters thus clearly within its juris- diction. But the question here is whether the report can fairly be regarded as of that character. On the 8 taking of testimony in the circuit court after the preliminary injunction had been refused, the entire evidence before the Commission was introduced into the record, and it is to that evidence that reference is made in this opinion unless otherwise stated. That evidence we have read and re-read with the utmost care, and it is because of our inability to understand how, on the facts which there appear, the report before us could have been made, that the difficulty under which we labor arises. By the express provisions of the statute (sec. 15) before going on to prescribe future rates the Com- mission must reach the conclusion that the existing rates established by the carrier are un- just and unreasonable. It is the duty and the privilege of the carrier in the first instance to fix the rates to be charged {Inter. Com. Com. v. Chicago Great Western Railroad, 209 U. S., 108, 119), and it is only where after due notice and a full hearing — whether on complaint of a shipper or upon investiga- tion by the Commission of its own motion — ^it is made to appear that the rate is unjust and unrea- sonable, that the Commission is empowered to fix another. The hearing which is so provided for is not a perfunctory one. The carrier is entitled to know and to rely on what is adduced at it, either for or against the existing rate, and the Com- mission is not authorized to disregard it and reach a conclusion not at all justified by it. If the rate at- tacked is shown to be unjust, it may be abrogated and a new one established. But if that is not the outcome c ■'> of the hearing and on the contrary it is clearly shown that the rate is not unjust, the evidence as to this can not be put aside, and if it is, and the Commis- sion without reference to it proceeds to condemn the rate and to fix another, its action is invalid. After the most careful consideration we are forced to conclude that the action of the Commission in the present instance is of that character. Having regard to the evidence, the only tangible ground upon which it will be found to rest is the fact that there had been an advance in the rates to Pensacola and Mobile, and that the Montgomery rate exceeded the sum of the rates through these points as they stood prior to this increase, making the increase in these intermediate rates the only proof of unreasonableness, not only as to Pensacola and Mobile, but Montgomery also. It is conceded by counsel for the Government that if this were true as to the rates to Montgomery, the order of the Commission would be invalid, because it would not be based on the reasonableness or unreasonable- ness of these rates independently considered. And it is just as clear that if the reduction to Mobile and Pensacola was a mere restoration of the rates pre- viously in force, based solely on the advance made by the railroad, it is equally indefensible. And, taking the case as it stands, there is practically nothing else, as it seems to us, that can be made out of it. Not but that other reasons are given by the Commission. But it will be found upon examination, as stated above, either that they are entirely unsupported by 18866— No. 4—12 2 10 the evidence or are involved in such capital mistakes with respect to it, or are in themselves so inconse- quential as to the reasonableness or unreasonableness of these rates, that nothing can be consistently predi- cated upon them. And this we will now endeavor to demonstrate. The New Orleans-Montgomery rate, which has been set aside by the order of the Commission, was one of very long standing and was established with great circumspection. In 1886 Hon. Thomas M. Gooley, whose attainments are too well known to dilate upon, the first chairman of the Interstate Com- merce Commission, was called upon by the raUroads running into what was designated as the southeastern territory to arbitrate and adjust the relative rates from crossing points on the Ohio and Mississippi Rivers to certain places such as Montgomery and others within the section of country roughly described as lying between the Memphis & Charleston RaUroad on the north, the Gulf of Mexico on the south, the Chattahoochee River on the east, and the MobUe & Ohio Railroad on the west. He was not to determine specific rates, but their relation to each other. This question had first been submitted to Mr. James R. Ogden, as commissioner of certain associated rail- roads running into this territory, and after he had passed upon it it was submitted to Judge Cooley, who virtually affirmed Mr. Ogden's rulings. So far as the present comparison is concerned it is sufficient to note that it was thereby decided that the rates from Louis- vUle, Evansville, Cairo, and other Uke points on the 11 a, V, i ,■■ Ohio River, to Birmingham, Montgomery, Selma, and other points within the defined territory should be the same; that the rates from East Cairo, Columbus, Hick- man, and points on the Mississippi in Kentucky should be two cents less; and that the rates from Memphis, Vioksburg, and New Orleans should be four cents less. An adjustment of rates was made by the railroads in accordance with this, including those from New Orleans to Montgomery and other points in that section, and these rates were maintained, at least so far as class rates are concerned, until the building of the Kansas City, Memphis & Birmingham Rail- road from Memphis to Birmingham, which made a very much shorter line than had previously existed between these cities, when the rates on the first six classes of freight from Memphis to Birmingham were greatly reduced below what they had been, and those from New Orleans to Birmingham were also reduced to correspond relatively, in accordance with Judge Cooley's adjustment. The reduction from New Orleans to Birmingham, however, proved too great and could not be maintained, and the rates between these places were at first restored to the original figures, and then reduced to an intermediate position; and this brought about a reduction on rates for these classes between New Orleans and Montgomery, Montgomery being intermediate to Birmingham. The final adjustment of these rates was reached in 1896, and as fixed at that time they remained sub- stantially unchanged until 1910, a period of 14 years, when the Commission made the order in question. 12 The original careful determination of the New Orleans-Montgomery rates, in their relation to those from Ohio and Mississippi River points into the same territory, in accordance with the Cooley arbi- tration; the subsequent readjustment of them upon the building of the Memphis and Birmingham short line; and their long continued acceptance by the busi- ness public, during which time freight moved freely under them; all strengthen the presumption in favor of the reasonableness of these rates; against which there is practically nothing to militate except the previous competitive water rates from New Orleans to Mobile and Pensacola, and the combination to be made on them to Montgomery. The conclusion is thus forced and indeed is patent on the face of things that the Montgomery through rates as now fixed by the Commission are nothing more than the restored competitive Mobile and Pensacola rates plus the previous rates from those places to Montgomery. There is no change, as it will be noted, in the rates from Mobile and Pensacola to Montgomery. The change in the Montgomery through rate is effected by reducing the rates from New Orleans to the inter- mediate points named and combining them with the rates from there to Montgomery, the reduction in the New Orleans-Montgomery through rates being exactly the same as the reduction made in the rates to Pensacola and Mobile as to every class except one — class E — where the through rate is reduced 1 cent, as against a 5 cent reduction to Mobile, and none at all to Pensacola. This coincidence is 13 3^7 too significant to be a mere accident, or to fail to reveal the consideration which influenced it. It extends to the through rates to Selma and Pratt- ville, as well as to Montgomery, not only by way of Mobile but of Pensacola also, an exactitude which it is impossible to account for except upon the ground which has been suggested. ■ Not only is the reason- ableness or unreasonableness of the through rates to Montgomery, as fixed by the Commission, thus made to depend on the reasonableness or unreasonableness of the Mobile-Pensacola part of them, but they are all obliged to stand or fall on the fact of this coincidence, by which, as conceded by counsel, they are not able to be defended. It is true, as already stated, that there are other reasons assigned by the Commission in its report for the reduction in the New Orleans-Mont- gomery rates, but, with due respect to the Commis- sion, they do not bear up under examination. The relation of rates established by the Cooley arbitration and the disturbance inevitably to re- sult from a disregard of it was pressed upon the Commission as strong grounds against the proposed changes. " The Cooley arbitration of 1886," it is said in the report, " has been strongly urged * * * as a reason for the non-reduction of the present advanced rates. This arbitration established a relation of rates as between the several Ohio and Mississippi River crossings, applying upon products from the territory north and west of those rivers destined to southern and southeastern territory, by fixing a basis for making rates from these several basing points to 14 the southeastern territory, with the object of main- taining an equitable relation and equality of the basing rate as between said points on goods trans- ported to southeastern territory, but we do not understand that this arbitration undertook to fix the actual rates for carriage from the several basing points to destinations in this territory. However, if such were the case, the building of new railroads, competition, and other causes forced many depar- tures from the adjustment and the rates made under it, until it has become materially altered, and it is inevitable and proper that it should yield to meet new and changed conditions." From this, which is all the Commission has to say on the subject, it would be supposed that the Cooley award was only a basis of adjustment accepted many years before, but which had come to have little more than historical value. In other words, that it was merely a starting point from which departures were frequently and freely made. If this were so, the Commission might properly regard it as of no great importance and certainly as fiirnishing no substantial obstacle to further modification by the reduction of rates from New Orleans. But the record before the Commission, as we read it, does not warrant the inference apparently intended from the statement above quoted. Taken by itself the statement is not literally inaccurate, since it seems that some changes were made at various times in the rates on particular articles by taking them out of their respective classes and giving them special commodity rates, and to such 15 - V w extent as changes of this character were made they may be regarded, in a sense as departures from the Cooley arbitration basis. Moreover, the fact that the complaint of the New Orleans Board of Trade embraced in terms commodity rates as well as class rates, and that there was more or less testimony at the hearing which must have related to commodity rates, doubtless accounts for what the Commission says upon this subject. But when it is remembered that no change of consequence in class-rate relations had taken place since the original adjustment, except the one heretofore explained, and that the order in question pertains only to class rates from New Orleans the matter presents itseK in a very different aspect. Surely the long continuance of these class rates, which are the basis of the rate structure in that territory, and which must be assumed to have been equitably adjusted as between the various competing towns on the Ohio and Mississippi Rivers by the Cooley award, was a valid and persuasive objection to any order which would have a disturbing effect upon the class-rate situation. Nor was the force of thig objection appreciably lessened by the circumstance that some articles were taken out of the classes from time to time and given commodity rates. Particu- larly is this so in view of the fact that the Commis- sion's report contains no intimation that class rates from other points should be reduced, clearly indi- cating that the order in question was not predi- cated upon any finding or contention that this class- rate adjustment was unfair to New Orleans. When 16 therefore the facts in this regard are fully perceived their important bearing upon the controversy seems evident, and they are not to be dismissed from con- sideration, as they appear to be by the Conamission, on the mistaken view that "the building of railroads, competition, and other causes had forced departures from the adjustment of rates under it until it had become materially altered, as was inevitable and proper to meet changed conditions;" as suggested. As a further reason for making the order in ques- tion the report of the Commission contains the follow- ing: "It was stated by the principal witness for the defendant that between points on its line where the through rate exceeded the combination of rates from point of origin to a competitive point and from said competitive point to destination, shippers were given the benefit of the combination rate, and this provision appeared in special circulars and was very generally observed as a rule for the adjustment of freight rates; and such having been formerly the custom of the defendant, it would seem now to work no especial hardship upon it to reduce rates to the basis of the former combination." The reference here is to the testimony of Mr. C. B. Compton, the traffic manager of the Louisville & NashAdlle Railroad, who has been with that road in continuous service in various capacities for some 40 years. But a careful reading of his testimony dis- closes no basis for the statement quoted, if it was meant thereby to imply that the Mobile combination was at any time allowed on through shipments to Montgomery. On the contrary, it clearly appeared that such shipments had always paid the Montgomery rate, and that the Mobile combination could be secured only by shipping first to Mobile and then reshipping to Montgomery, as seems to have been done in a few instances. Indeed, this is recognized as the fact by the Commission, since it is stated in an earlier part of the report that "prior to August 13, 1907, shippers, in order to get the benefit of the lower combination, sometimes shipped locally to Mobile and then reshipped to Montgomery, Sehna, and Pratt- ville." Of course, if the fact had been otherwise, and the road had ordinarily or frequently carried Mont- gomery traffic on the Mobile combination, the com- mission might well say that it would be no great hardship to require the carrier to publish in its tariff the actual rates which it habitually accepted; but the undisputed evidence shows that the full Mont- gomery rate was constantly applied to Montgomery shipments, and we fail to see how that circumstance tended to show that the Montgomery rate was unreasonable. It is undoubtedly true, as testified by Mr. Compton, that it was a more or less general practice to protect through shipments against the combination of locals, and a rule to that effect was carried by his road in certain of its local tariffs ; but there was no such rule in the tariffs naming rates to Montgomery territory, and nothing whatever appeared at the hearing to in- dicate that through traffic to Montgomery was ever carried at less than the Montgomery rate. A colloquy 18866— No. 4—12 3 18 occurred in the course of Mr. Compton's examination in which he seems to have admitted that the rule in the local tariffs referred to, not being limited in terms, might be claimed to have authorized the application of the Mobile combination to Montgomery shipments. But the point is not what those tariffs might have been construed to mean, but what the actual practice was in respect of the traffic in question. Evidently the road was always careful to maintain this Mont- gomery rate. Everything indicates that it consist- ently did so. And it seems plain to us that the ac- ceptance on other parts of the system of combination rates which were lower than through rates had no tendency to show that these particular rates were un- reasonable. In short, when the undisputed facts re- garding this feature of the case, as they appeared before the Commission, are taken into account, they not only do not sustain the conclusion of the Com- mission, but seem to be rather of contrary import. With respect to the through rates from New Orleans to Montgomery, as well as the southeast territory generally, it is further said by the Com- mission, in justification of its action, that: "It was shown that the merchants of New Orleans have heretofore made ineffectual efforts to secure better rates to this territory, as higher rates were in effect from New Orleans to this territory than existed from distributing centers at greater distances west and north of said territory, the situation being such that New Orleans was cut off from the trade of this sec- tion as to many products, and greatly restricted and 19 i , / s burdened as to many others, on account of the high rates of transportation." Tested by the complaints of the New Orleans Board of Trade, which, as above shown, embraced in general terms commodity rates as well as class rates, this statement can not be said to be whoUy incorrect. Prior to the adjustments already re- ferred to, and which were voluntarily made by the carrier, months before the order in question was issued, it was perhaps true that New Orleans mer- chants were at some disadvantage because the class rates from New Orleans on certain articles may have been higher than or out of line with the commodity rates from other points on those articles. But this cause of complaint, to whatever extent justified when the proceedings before the Commission were instituted, was substantially if not wholly removed before the hearing was concluded by the reductions and adjustments hereinbefore mentioned, which resulted in actual rates from New Orleans lower on most articles and not higher on any article than rates from Memphis and other points west and north of Montgomery. And this was apparently recognized by the Commission to be the case, since it made no order respecting commodity rates. But when the paragraph quoted is tested by the class rates, which are the only ones reduced by the Com- mission's order, it is not only not supported by the testimony, but the contrary is shown by proof that is not open to question. Instead of being dis- criminated against by the class rates to Montgomery 20 territoiy, New Orleans has had an actual advantage over the Ohio and upper Mississippi River towns, an advantage over Memphis in the higher classes and at least equality with it in the other classes, and an equality with Huntington, Vicksburg, and the lower Mississippi points to Memphis ; aU of which is established by comparative tables which stand unchallenged and by the tariffs, as we are advised, then on file with the Commission. So far, there- fore, from sustaining the action of the Commission, the undisputed facts in this regard tend unmistakably to a contrary conclusion. But the Commission also mentions that the rates from New Orleans to Montgomery, Selma, and PrattviUe were higher on all the classes than those from typical points in the Southeast, where the distances were greater, such as Brunswick and Savannah, Ga., Charleston, S. C, Wilmington, N. C, and Nashville, Tenn. ; to say nothing of Virginia and North Carolina points, which are referred to in another connection. But in this comparison the Commission for its initial points goes over into an entirely different territory. It leaves the Missis- sippi and Ohio Rivers and goes to the Atlantic coast, in the Carolinas and Georgia, without any suggestion that traffic conditions from there to Montgomery and Selma are at all similar to those from New Orleans, which is the subject of com- parison, the only basis of contrast being one of distance. The railroad company in its bill makes complaint of this and avers that the conditions 21 :- are so dissimilar as to render the comparison un- justified, and that no issue as to the reasonable- ness or unreasonableness of the rates so applied as a standard was made, nor any evidence introduced which was addressed to that inquiry. And this the Commission in its answer admits, conceding that there was no fixed relation between the rates from these points and those from New Orleans; which we understand to mean no definite or determining relation. So also with regard to the rates " from New Orleans to certain stations just outside of Montgomery on the Mobile & Ohio Railroad," which are said by the Commission to be less than the rates to Montgomery by the Louisville & Nashville. The bill avers that these were unimportant local points, which did not enter into competition with Montgomery; that the trafiic to them was insignificant; that no testimony was taken concerning them; and that the Louisville & NashviUe Raih'oad does not publish or participate in or have anything to do with them. And the Commission, answering this, admits that the reason- ableness of the rates to these local points was not in issue, and that no attempt was made to determine whether or not they were reasonable, and that it did not undertake to determine the reasonableness of the rates prescribed in the order complained of on the basis of the rates referred to. But if all this be so, it is difficult to see why there was any reference made to them at all, or why they were put forward by the Commission, in the way they were, to justify the 22 order, if they had no influence upon it. The effect of the answer therefore is to eUminate this part of the report, aside from the other considerations which also do so. Equally immaterial is the statement that the rates from Virginia cities to Montgomery and Selma are less than from New Orleans, although covering twice the distance; or that those from north Atlantic ports to points in the southeastern territory basing on Montgomery are more favorable, length of haul and number of lines considered; which are some of the minor things entering into the decision. And es- pecially is this to be said of the water rates from New York and Boston to Mobile and New Orleans, which have no perceptible bearing on the rail rates between the latter two places in the connection in which they are cited. By contrast with this, it might be inquired why the Commission in making comparisons took no note of the rates established by the railroad commissions of Alabama and Georgia, which show that, for 141 miles, the distance between New Orleans and Mobile, the accepted-as-controlling factor in the situation, the rates by the Louisville & Nashville Railroad, which have been condemned and reduced by the Commission as unjust and unreason- able, were materially less than the maximum or so-called standard tariff established by the Georgia commission, and much lower still than the rates which were permitted to the Southern Railway in 23 ^Cf-J Alabama, Georgia, Tennessee, and South Carolina; as will appear by the comparative table which is reproduced below, as taken from the evidence. Class— 1 2 3 4 5 6 E. Louisville & Nashville rates from New 50 75 60 58 62 57 57 52 39 63 50 50 52 49 49 45 38 56 45 46 42 41 45 41 31 44 35 37 39 32 35 32 27 35 28 31 31 27 28 25 16 29 23 27 24i 19 22 20 20 Southern Railway rates fixed by commis- sions of Ala,bama and Georgia for 141 miles 35 Minimum or standard tariff of Georgia Eailroad Commission, 141 miles Southern Railway rates in Tennessee, 141 miles 28 32 Southern Railway rates in South Caro- lina, 141 miles 31 Southern Railway rates, Chattanooga to Birmingham, 143 miles 27 Southern" Railway rates Birmingham, Ala., to Columbus, Ga., 157 miles Southern Railway rates, Chattanooga to 27 27 Let US not be misunderstood upon this point. We recognize, of course, that comparisons are very com- monly made in the investigation of rate cases, and that they may often be quite persuasive. The com- petency of such evidence is not questioned nor the right of the Commission to give it due weight. Neither is it doubted that the Commission may receive evidence of this kind, giving to the facts so shown their proper value, without proof of similarity of conditions. But what we do hold is that the com- parisons made by the Commission in its report in this case, taking into account all the facts and cir- cumstances disclosed at the hearing, had no eviden- tiary bearing upon the reasonableness of the rates 24 in dispute, and therefore furnish no appreciable sup- port of the Commission's conclusion. As a further justification for the reduction of the rates to Montgomery the Commission suggests that the rate per ton per mile, on an average of the fib-st six classes of freight, is much greater from New Orleans than from Memphis, St. Louis, or Louis- ville. It is not said, as will be noted, that the rates to Montgomery are higher than from Memphis and the other places mentioned, but that, consid- ering the distance, the rate per ton per mUe is greater. But it is the ordinary and recognized rule that the ton-mile rate should decrease as distance increases, other things being equal, and we therefore fail to see how the lower ton-mile rate for the greater distances from Memphis, St. Louis, and Louisville tended in any respect to show the unreasonableness of the rates here in question. Finally, as a summing up of this part of the case, the Commission says : " The manufacturers and ship- pers of oil, paper, stovepipe, tinware, galvanized tubs, furniture, soap, window glass, paints, hardware, and other articles of like kind in daily use, testified that they were unable to trade in the Montgomery and Selma territory on account of the high rates, and that upon former occasions they had made special efforts to build up a trade with cities located in this territory and points basing thereon, but in every instance they were compelled to abandon the fight on account of better freight-rate concessions from other markets, though at greater distances. With 25 3 L/.q respect to practically all of the commodities above enumerated schedules of comparative rates and dis- tances were filed corroborating complainant's con- tention." This statement also can be explained only on the theory that it relates to what the New Orleans Board of Trade alleged in its complaints and to conditions which may have existed in some degree before the road made the reductions and adjustments already mentioned. But having reference to the class rates in question, to which the Commission's order is con- fined, we are unable to find any evidence which tends to sustain the observations made with regard to the inability of New Orleans dealers to trade in the Montgomery-Sehna territory. Take, for instance, the testimony of George P. Thompson, a wholesale grocer of New Orleans, the first witness who has anything to say on the subject. His testimony has mainly to do with Mobile and Pensacola. But being asked by counsel whether it would be possible to increase his business with Mont- gomery if the rates were adjusted on a fair basis he says that it would ; a self-evident proposition, but by no means showing that the rates in force were not what they ought to be. The further statement which he is led to make by suggestion of counsel, that the rates from Memphis to Montgomery are lower than from New Orleans, can not refer to class rates, it being irrefutably shown that they are in fact higher. And the comparison made by counsel in a long lead- ing question with regard to the rates from Baltimore, 18866— No. 26 to which Mr. Thompson gives hesitating assent, is of no more significance than the similar comparison with other North Atlantic points made by the com- mission, already referred to. It is true that as to certain canned goods, such as beans and peas, he is handicapped, as he says, by the rates from such points as St. Louis and Memphis. But here again the ref- erence must be to commodity rates which have been adjusted, and must have been so understood by the Commission, as it does not include peas and beans in the list of articles said to be discriminated against by the rates to Montgomery. And this must also be kept in view when it is said by Mr. Thompson that he is kept out of that territory unless he is willing to absorb a part of the rates; which is not true as to class rates, the only ones which are here in question. W. 0. Hudson, manager of the Marine Oil Com- pany, the next witness, confesses that he knows noth- ing with regard to the Montgomery-Sehna case. Being asked if he could do business in Montgomery if the rate were reduced to 13 cents a hundred, the re- duction subsequently made by the Commission, he declares that he could not, that the rate would eat him up, the explanation that he gives being that the great bulk of the oil which he handles comes from the Ohio and eastern fields, which are much nearer to Mont- gomery than he is. Notwithstanding this, and although he is the only witness who testified on the subject, oil is given by the Commission as one of the commodities shut out by the high rates from New Orleans into this territory. 27 ij-y E. C. Palmer, a wholesale paper man, admits that business with Montgomery has not been materially injured by the advance in rates, but avers that it will be when his customers understand the situation. He thinks that Nashville has an advantage over New Orleans in the rate on paper (as no doubt it has); and that, as compared with Baltimore, considering the haul, the New Orleans rate is "a little out of line" (although it is not in fact higher); but that, compared with LouisvUle, it is fair enough. And so far as being kept out of Montgomery is concerned, he says that, on the contrary, he ships there constantly. No one can read the testimony of this witness without being convinced that, except possibly as to Nashville, New Orleans is not only not discriminated against, but has an actual advantage in the rates on paper over every place that it comes in competition with in the Mont- gomery-Selma territory. A. D. McBride, a salesman engaged with the Na- tional Enameling & Stamping Company, says that he sells goods in Mobile and Pensacola, but not in Montgomery or Selma, because Atlanta, Ga., has lower rates and gets the business. As compared with St. Louis and LouisvUle he does not see that New Orleans is at a disadvantage, notwithstanding the efforts of counsel to have him say so. The com- petition which affects him is with Atlanta, and that is the whole of it. Nor even there does he charge that the advantage is an unfair one, but simply that the Atlanta rate to Montgomery is lower, and keeps him out of there. Notwithstanding this state of 28 the evidence, however, stovepipe, tinware, and gal- vanized tubs, the commodities that this witness deals in, he being the only one called to testify with regard to them, are included by the Commission among those which it is declared that New Orleans dealers on account of the high rates have been unable to sell in the Montgomery-Sehna territory, being com- pelled to abandon the fight, as it is said, after an attempt to build up the trade, a statement as to which there is no approach in the testimony. J. W. C. Wright, president of the New Orleans Furniture Manufacturing Company, says that Mont- gomery is not important to them. They ship some furniture there, but have not solicited the trade very strongly; and substantially the same thing is testi- fied by P. Jung, of the Crescent Bed Company, an iron-bed manufacturer. S. Steinhart, a manufacturer of soap, sells soap in Montgomery, where he says he encounters a rate of only 19 cents from NashvUle as against 23 cents from New Orleans, but there is no 23 cent class rate from New Orleans, and he must therefore be referring to a commodity rate, which, as we have already seen, has no bearing. J. W. Bray, another witness, who is treasurer and manager of the Campbell Glass & Paint Company, says that they are shut out of Montgomery and Sehna, the rates being such that they are unable to ship there. But so far as the paint business is con- cerned, he also says that it is handled entirely from St. Louis, where his company has a house from which 2y : ;-■: they prefer to ship, the rate being more advan- tageous; and that as to their glass business, Mont- gomery is not a normal point for it, which hardly makes out that the rates from New Orleans are too high or that he has ever tried unsuccessfully to ad- just them. Harry Moore, who is in the wholesale hardware business, declares that he can not compete with St. Louis, Louisville, and Nashville; but he gives as a reason, that, while these places are only one-half the distance from producing centers, such as Pitts- burgh and that territory, they pay one-third the rate, and are thus able to get into Montgomery and Sekna, and places basing on them, at much less than he can. But the discrimination here, as is evident, is in the rates from producing centers to the dis- tributing points named; and it is impossible to expect that this should be made up to New Orleans by a back rate to Montgomery that would absorb the difference. It is difficult therefore to see, in view of the testi mony of these several witnesses, how furniture, soap, window glass, paints, and hardware were included as they are in the statement by the Commission, which has been referred to. George Weigand, who is in the provision business, and who has been " howling to heaven, " as he says, with regard to the rate increase complained of, refers only in this to the rates to Mobile, having never tried to go to Montgomery or Selma. 3U S. Odenheimer, a manufacturer of cotton goods, makes general complaint of the discrimination in rates from all competitive points where there are cotton mills to Montgomery and Mobile, But it appears from his testimony that there are cotton mills at Montgomery and Mobile as well as at New Orleans, to say nothing of the other places men- tioned, and it is altogether unreasonable to expect that rates on cotton manufactiu-es should be put so low that mills at other points shall be able to compete with those actually on the ground. The Commission makes no reference to cotton goods in connection with the Montgomery rate, and therefore evidently took this view. Mention was also made by this witness, that the rates southerly from Montgomery to New Orleans were lower than those northerly from the one place to the other. But the explanation given him by the company was that there are a good many empty cars going in the direction of New Orleans and none the other way, which might properly justify the distinction. R. J. Wood,, manager of the Gulf Bag Company, manufacturers of burlap bags, testifies that at one time, although not recently, they consigned goods to friends in Mobile to have them reconsigned to other points in Alabama, because the combination on Mobile was less than the rates through there. He also says that the question of the rates from New Orleans to Montgomery and Selma being higher than the combination on Mobile was an old one, and had been up ever since he was connected with the New 31 3^\r Orleans Board of Trade, some seven years, complaint being made and efforts put forth to correct it. All that his company have ever asked, as he says, is the same rates that eastern ports have to points halfway distant to New Orleans, which they have never got, and are therefore at a disadvantage. They have better rates, comparatively speaking, according to this witness, to the Carolinas than to Alabama and Georgia, and there are eighteen or twenty points in Georgia to each of which the mileage is less from New Orleans than from New York, Philadelphia, or Bal- timore, and yet the rates are invariably higher; in consequence of which the southeast, for his company, is a dumping ground, where they get rid of any over- plus, but do not expect to make money. They sell at Atlanta, but make nothing. That city is a bag consumer, but there is a bag concern there, and Atlanta itself complains of New Orleans. This ex- tract from the testimony of this witness is perhaps unnecessary, as the Commission does not include bur- lap or gunny bags among the articles alleged to be discriminated against, so far as concerns the Mont- gomery-Selma territory. It is only Mobile as to which this is predicated with regard to these articles, and it will be noted that what he says has no appli- cation to Mobile. In this connection a protest, dated August 6, 1 902, drawn up by the attorney of the New Orleans Board of Trade, was introduced in evidence before the Com- mission, in which the existence of discriminating rates against New Orleans into the southeastern territory 32 was charged, the fact that the through rate to Mont- gomery and Selma was higher than the Mobile com- bination being also mentioned. New Orleans and Mobile, as it is there contended, stand in the same relation to the sources of supply and are competitors to points beyond them, and claim is made that out- bound rates from New Orleans should therefore carry but slight differentials. The rest of the paper is mainly an argument why New Orleans should be put on an equality of rates which would permit of com- petition with New York and Baltimore as weU as Georgia, the Carolinas, and Virginia — a broad ques- tion not in issue here, as already pointed out, and therefore not relevant or properly to be considered. This completes the evidence on this branch of the case and there is no need to dwell on the view to be taken of it. Considered severally or collectively, it contains nothing which we can discover that sup- ports the conclusions of the Commission with respect to the Montgomery rates, outside of the fact that, if the reduction is to stand to Pensacola and MobUe, it calls for a reduction to Montgomery to equalize the sum of the locals. It is not simply that the weight of the evidence does not sustain the reasons assigned by the Commission in its report, but that there is no substantial basis for those reasons in the testimony passed upon. The Mobile and Pensacola rates remain to be con- sidered, both on their own account and as the essential basis of the rates to Montgomery. It is to be noted with regard to these that as the law then stood the 33 mere fact that they were increased by the company over what they had been previously creates no pre- sumption that they were not fair and reasonable. (Interstate Commerce Commission v. Chicago Great Western Railroad, 209 U. S., 108.) Nor did it justify the Commission in putting them back to what they had been, without regard to whether that could be properly said of them. But this again is practically all that there is to sustain the Commission's action. It is undisputed that these rates to Pensacola and Mobile were the result of severe water competition, and that this had disappeared at the time of the increase. "At the date of the hearing," say the Commission, "carriage by water was infrequent and cut but little figure as a competitor" with the railroad. It is also stated that while the rates by rail were generally higher than by water, this was not the case in the third, fourth, and fifth classes, under which the bulk of the freight between New Orleans and Mobile moved; notwithstanding which, the Commission proceeded to reduce the rates for these classes to what they had been before, actu- ally making them 6, 9, and 8 cents, respectively, be- low the established water rates- as they then stood. Take also the relative result brought about by the Commission's action. It may be that no point should be made of the fact that, taking the rate on first- class goods, which the Commission accepts as fair, having made no change in it, the other rates are disproportionately low by comparison. This is the uncontradicted testimony of some of the witnesses, 34 though it may be said that the Commission was not bound to adopt their view of it. But that there is a material disparity is observable on the face of things, and also that it breaks in upon the ratio established by the railroad, which was accepted and lived up to all these years — a, somewhat significant circumstance. More than that, however, in making the rates on fifth and sixth class goods 35 cents each to Montgomery and 15 cents each to Mobile, while they are 20 and 15 cents, respectively, to Pensacola, the classification is inconsistent, to say nothing of the testimony of some of the witnesses, who assert without contra- diction that if 15 cents is correct for the sixth it is too low for the fifth class; while in fixing the rate to Montgomery at 77 cents on second class and 55 on third class — based on a 37 and 25 cent rate to Mobile, respectively — there is a drop of 22 cents, which, according to the undisputed evidence, creates a disproportion between these two classes that is unprecedented in all that territory. And the same is true as to the 12-cent drop between these classes in the rate to Mobile, which is a reduction of 33 per cent on the face of one and 50 per cent on the face of the other, according to the one that is taken for com- parison. It is no answer as to any of these Mobile rates that there were the same inconsistencies in the formerly prevailing rates of the railroad. These were competitive rates with respect to which noth- ing reliable can be predicated without knowing just what produced them. The resort to them for justification in this way merely serves to demon- 35 ^Sj strate the intimate relation which they bear to the order of the Commission. It is said, however, in the report of the Commis- sion that the Mobile and Pensacola rates had remained substantially unchanged for over 20 years, and that there was no evidence that they had not been com- pensatory. At the time this statement was made the increased rates were in force which were established in 1907, and not the old ones in existence before that. And it was the unreasonableness of these new rates which the complainants in the proceeding had the burden of showing. There was no adverse presump- tion to be indulged, as we have seen, because of the increase. (Interstate Commerce Commission, v. Chi- cago Great Western Railroad, 209 U. S., 109.) Nor is a voluntary rate, established to meet competition, to be taken as the meastire of what is reasonable. (Lake Shore R. R. v. Smith, 173 U. S., 684; Frederick v. N. Y., N. H. & H. R. R., 18 Inter. Com. Com. Rep., 481, 484; Breese v. Trenton Mining Co., 19 Inter. Com. Com. Rep., 598, 600.) And yet that in effect is just what the Commission did in suggesting, in defense of the reduction and restoration which it Undertook to make, that the previous rates were not shown negatively not to have been compensatory. It was not incumbent on the railroad at that stage to make this out, but on the complainant to show that the rates as they stood were unjust and unreasonable. The position taken here, on behalf of the Commission^ is that a rate, however low, can not be condemned as unjust if it yield any, the most 36 insignificant, return above the cost of service, a proposition we are not prepared to accede to. As further justifying the reduction made, it is declared by the Commission that the rates to Mobile and Pensacola exceeded the rates from New Orleans to other water-transportation points, such as Natchez, Vicksburg, Greenville, and Memphis, where the dis- tances are greater. This clearly is not true as to Mobile, whatever may be the case as to Pensacola. The rates from New Orleans to the Mississippi River points mentioned, as contrasted with those to Mobile, according to the schedule at the time on file with the Commission, will appear by the fol- lowing table: Classes — 2 40 37 3 32 25 4 25 18 5 20 15 6 17 15 E Bates to Natchez, Vicksburg, Greenville, and 15 Bates to Mobile as reduced by the commisBion. 15 It may be that the Commission in the statement which it made had the rates in mind as raised by the railroad, as to which, however, it would be true only with respect to the third, fourth, and fifth classes. But that is not the way it is put, nor is it the use made of it in argument, which is that the rates to Mobile as they previously stood and as they were reduced and restored still exceeded those to the other water-transportation points which are mentioned, which is a clear misapprehension. 37 ^^C •s.-- It is also said by the Commission in the same con- nection that these rates exceed those from Nashville, Memphis, Cincinnati, and Louisville to points ap- proximating the same distance. There is no way of knowing on what this is predicated, there being no reference to any schedules or tables of comparison by which to verify it. Neither is there anything in the evidence before the Commission which apparently warrants it. And by contrast, in the evidence taken under the bill which is now before us, it is proved without contradiction that in a large number of in- stances the fact with regard to the rates from the places named is just the opposite. Another ground taken by the Commission to justify its action is that the rates between New Orleans, Mobile, and Pensacola, until the advance made by the railroad, were identical in both directions, west- ward as well as eastward, a condition which pre- vailed, as it i^ said, between other cities, such as New Orleans, Memphis, Greenville, Vicksburg, and Nat- chez, and that the raising of rates in the one direction resulted in a disturbance of relations between points where geographic and conmiercial conditions called for equality. But it has often been recognized by the Commission that the mere fact that a rate is higher one way between the same points than it is the other does not prove that the higher rate is un- reasonable. (Duncan v. Atch., Topeka & Santa Fe, 6 Inter. Com. Com. Rep., 85, 103; McLoon v. Boston & Maine R. R., 9 Inter. Com. Com. Rep., 642; Weil V. Pa. R. R., 11 Inter. Com. Com. Rep., 627.) And 38 this is particularly true where there is a preponder- ance of empty cars moving in the one direction, of which there is here some suggestion. There is also some evidence that the rates westward from Mobile to. New Orleans are lower than they should be; all of which goes to show that there is practically nothing to be made out of this contention. It is further said by the Commission that the ad- vances made from New Orleans to Mobile in the enu- merated classes were severely felt by certain shippers in the former city, especially those engaged in job- bing canned goods, lard, flour, coffee, oil, crackers, pickles, vinegar, beans, etc.; that New Orleans is an important distributing market for canned beans, some four hundred to five hundred carloads being handled there; and that the increase on this com- modity was particularly burdensome, if not prac- tically prohibitory of shipping into New Orleans and out to Mobile. That the advances made in the rates on these classes of goods would be severely felt by certain shippers is not a sufficient reason for hold- ing that they were not what they ought to be. Such an advance would of course be felt, and so would any other change in market conditions which affected the cost of handling. With regard to the other statements made by the Commission in this connection, it is undoubtedly true that New Orleans and Mobile are both jobbing points; but so far as concerns beans, they get their supply from practically the same markets and at the same freight rates. In this respect they are rivals ; and it is altogether out of 39 >--:-'!*. line to expect that the rates on beans from New Or- leans to Mobile should be so reduced that the jobbers in New Orleans can compete with those in Mobile, and thus invade the latter's own home market. A counter protest from the jobbers in Mobile, if this were done, would be in order as a matter of self- protection, and would have to be listened to. The same is true with respect to the other commodities named ; as it is also with regard to paper, stovepipe, tinware, tubs, and galvanized-iron tubs, as to which, according to the Commission, the advance in rates made by the railroads would have to be absorbed by the manufacturers. The evidence with regard to all this is not in con- flict. Take, for example, the testimony of George P. Thompson, president of the New Orleans Grocers Association, which has already been referred to in connection with the rate to Montgomery. He has been selling canned goods, crackers, and baking powder at Mobile for a number of years, as he says, and the advance in rates, according to his state- ment, has affected him materially. There has also been a serious falling off in peas and beans, partic- ularly the black-eyed beans which are dried in bags, the best coming from California. Mobile, as he says, is a large consimier of these for export and other- wise, and' if New Orleans is shut out from there, it means a control of the bean business by the rail- road. But he admits that Mobile can buy beans from California as cheaply as he can, and that the rate from there to each of these two cities is the 40 same. And he, therefore, when you come to analyze it, simply wants the local rate from New Orleans to MobUe kept down to a point where he can have a chance to compete at MobUe or places basing on there with the Mobile jobber on the same product. So also with regard to canned goods, baking pow- der, candles, etc., the rates on which from Mem- phis to Mobile are shown to be less than from New Orleans; the comparison so made is of no particular significance without a consideration of how the rates from Memphis happen to be what they are (whether these rates are class or commodity), and why that city enjoys this apparent advantage. Mr. Thompson also speaks of New Orleans as a great distributing port for olive oil and coffee, and thinks that recog- nition should be given it on outbound rates accord- ingly; but except that MobUe buys oil from New Orleans he makes no application of his statement. W. 0. Hudson, manager of the Marine Oil Com- pany, says he is forced into competition at Mobile with oil from the Ohio oil field, from whence also he gets his supply from the National Refining Company, which has refineries at Cleveland, Marietta, and Findlay. He stocks up for Mobile from there, but it would suit him better to do so from New Orleans, which would relieve him from the necessity of carry- ing so many men, and where his facilities are greater. These purely personal considerations have no bearing, of course, on the reasonableness of these rates, which are not to be fixed to accommodate any particular person's business. 41 3 4vV There is but one witness, Mr. E. C. Palmer, who has anything to say about the paper industry. Testi- fying eight months after the advance in rates had gone into effect, while he feels that it may be injurious when his customers get onto the idea, he admits that so far it has not been so. His concern also is only as to goods going through Mobile to points beyond and not as to Mobile proper, although he does busi- ness there. New Orleans, as he says, is the principal distributing point in the South for newspaper ma- terial, competing with St. Louis, Cincinnati, and Nashville, but having an advantage in rates, as a rule, from western points of manufacture, the rates to New Orleans and to Mobile being equal. There would seem to be nothing calling for relief in this situation. So, also, with reference to stovepipe, tinware, tubs, and galvanized tubs, Mr. McBride, of the National Enameling Company, says that the manufacturers have not been compelled to absorb the advance, as stated by the Commission, although he thinks it probable in the end that they may have to do so. Prices have been increased to the extent of the ad- vance, but no one in Mobile has declined to buy on account of it. It simply has increased the cost to the jobber, and he, in turn, sells higher to the retailer. He admits that the New Orleans manufacturers still have a lower rate to Mobile than any other point with which they come in contact; but the difference is slight, and it would take but a smaU advance to equalize it. The trade at Mobile has been accus- 42 tomed to buy goods delivered, and it is going to be difficult, as he says, to get the increase from them in the futiu-e, although the New Orleans manufacturer is now doing so. Under normal conditions the manu- facturers would have to absorb the advance and keep the Mobile jobber on a par with others, bat now it is done by the jobber. There is nothing in any of this to sustain the findings of the Commission which have been referred to, or to justify the reduction which it has ordered. The rates to Mobile were so low before that the manufacturers in New Orleans could afford to absorb them and did so. They can not perhaps afford to do so now. And because the Mobile jobber has become accustomed to get his goods free, the manu- facturers in New Orleans anticipate trouble. But this is a possibility which the railroad can not be required to prevent; and the situation as disclosed by this witness indicates that the former rate was certainly low. Again, the Commission makes the statement that the advance in rates on furniture, iron beds, etc., had practically closed out the business with Mobile in these articles, better rates being made on them from other manufacturing points, such as Atlanta, Ga., and High Point and Winston-Salem, N. C. This is a clear mistake of fact, due, no doubt, to in- advertence, but none the less serious, it being the uncontradicted evidence that, with one single excep- tion, where the rate from Atlanta to Mobile is a cent lower than from New Orleans, all the rates on all 43 367 the articles named from the three places mentioneid are not only higher, but very materially higher, than from New Orleans. It is true that, according to Mr. Wright, there is a restrictive loading rule with regard to furniture from New Orleans to Mobile which is not imposed as to Nashville and Memphis. But this does not apply to any other points, and, while it apparently gives some advantage to Mem- phis over New Orleans, Nashville is simply put on an equality with it. It is to this rule, also, and to the changed classification of mixed furniture in car loads, that he ascribes his loss of trade, rather thah to the present rate advances. The testimony of P. Jung, another iron-bed manu- facturer, is even less to the purpose. He says he never sought the Mobile field nor made any effort to get into Pensacola and has not been affected by the advance in rates to these places. Before the advance he solicited business throughout Alabama and Geor- gia, but found that he would have to guarantee rates as against Atlanta, High Point, and Winston-Salem, and that the trade did not warrant it. Evidently the increase did not harm nor would the reduction help him. This is all the evidence there is as to furniture and iron beds, and it is clear that it does not in any par- ticular support the statement of the Commission. It is fu!rther said, however, by the Commission that the advance in rates on bags, burlap, gunny, and jute, was vigorously oppoi^ed and a strong protest also made on account of the alleged discrimination 44 against New Orleans in cotton goods, it being asserted that other manufactiu-ing points were given more favorable rates. This is sought to be sustained as to cotton goods by a comparison of rates from Virginia and North and South Carolina points, as well as from Augusta, Ga., and even from New York and Boston. The suggestion that the advance was vigorously opposed or that a strong protest was made affords neither evidence nor argument. This is always to be looked for where there is an increase in prices, whether warranted or unwarranted. Nor is anything more to be made out of the rate comparison. The Commission does not say that the rates to Mobile on cotton goods are less from other manufacturing points than from New Orleans, which is not the fact, as is demonstrated by the evidence, but only that the rates are more favorable. But this is based on the mere matter of distance, which is no criterion, as already stated, without the consideration of other attending conditions. As pointed out also in con- nection with the Montgomery rates — according to the testimony of Mr. Odenheimer, on which this part of the case is evidently based — there are cotton mills both at Mobile and Montgomery, as well as at the other competing points named, and it is not to be expected that rates on cotton goods should be put so low that New Orleans manvifacturers would have an advan- tage over all others in that territory beyond what they already have; which would be the rankest dis- crimination. And the matter of biirlap and gunny bags is not much different. The testimony of Mr. 45 ^:^,,, . R. J. Wood is directed to this and has already been considered in another connection. So far as Mont- gomery and Pensacola are concerned, he frankly says that the advances have not injured his business. His complaint is as to points beyond, with regard to which he has not a little to say, but it has been dis- cussed above and there is no occasion to again go over it. This completes the case as to Mobile; and that with regard to Pensacola, except that it is still weaker, is no different. It is said by the Commission that the advance in rates " was not so heavy or so injurious to the merchants in New Orleans in their trade with Pensacola as the advance to Mobile, but they strongly protested against it, and it was shown that, propor- tionately, like conditions resulted from the advance as were produced by the increase in rates to Mobile." But there is nothing to sustain this statement. One witness, Mr. Palmer, a paper dealer, says that he would be affected in Pensacola the same as Mobile; but he is not affected at all at Mobile and can not, therefore, be at Pensacola. Another, Mr. Steinhart, who deals in soap, says that they get no orders from Pensacola because the rate is said to be so high; and what he wants and thinks the company should come down to, as he is not slow in saying, is a 10 or 12 cent rate, the same as on rice and sugar, which is hardly to be expected. The other witnesses called, to a man, declare either that they have no complaint to make or that their business at Pensacola is slight or that they have not been affected; and yet the Com- 46 mission finds with regard to the trade with Pensacola what has just been stated. Opposed to the evidence which has been thus re- ferred to — if there can be said to be any opposition to what is so irrelevant and wanting in persuasiveness on the question as to what is reasonable — there are several witnesses produced by the railroad company of large experience, who testify that the rates prescribed by the Commission, both to Mobile and Pensacola, as well as to Montgomery, are unjust and unfair, under all the circumstances, and among others; because they are less than those usually and ordi- narily charged by the company, as well as by other railroads for the transportation of like classes of property between other points in the South sepa- rated by similar distances; because the rates which were cut down permitted a free movement of traffic and there were no competitive or commercial condi- tions calling for a reduction; and because the rates as reduced would give to New Orleans an undue and unreasonable advantage and preference over Vicks- burg, Memphis, and other Mississippi and Ohio cross- ings, and would disrupt and destroy the relative adjustment and the general system of rates which have prevailed in the southeastern territory ever since the Cooley arbitration. It is also indisputa- bly shown that the New Orleans-Mobile line along the Gulf coast is exceptionally difficult and costly to operate; that a considerable portion of it consists of long trestles and bridges which are subject to extra- ordinary damage and sometimes to a complete 47 :^-i destruction by floods and freshets in the streams which they span; that its proximity to the Gulf lays it open to the full force of the Gulf storms and hurri- canes, by which it was entirely put out of business for nearly a month in the early faU of 1909, and for considerable periods at different times previously; that the intermediate territory traversed is so sparsely settled and its freight traffic so small that the suc- cessful and profitable operation of the line is nec- essarily dependent on the through traffic between New Orleans and Mobile and points beyond, in con- sequence of which the company has never received even a fair return from its operations; and finally, that the cost of operation by reason of the increase in wages, in maintenance, and in the price of locomotives, cars, and other matters of equipment, has grown so enormously in the last few years that to go back to rates established under earlier conditions, when there was active water competition, instead of being fair and reasonable, is to work great and manifest injus- tice in disregard and in the face of this undisputed showing. There was no attempt to meet the case as so made out for the company either by way of argument or otherwise. Counsel for the Commission and for the Government simply rely on the authority of the Commission to determine what is a reasonable rate and the conclusiveness of its judgment where it has done so, against which, it was argued, the courts can afford no relief unless the rate which has been fixed is shown to be confiscatory. But this contention, 48 as presented and sought to be applied in the case at bar, must be rejected. In our judgment, it was never intended to confer on the Commission any such un- restrained and undirected power. As already pointed out, the law provides for a hearing and it must be more than a shadow. Both parties are entitled to be confronted with the evidence on which the case is to be determined, and the conclusion reached must be a reasonable inference from the facts disclosed by the investigation. This construction of the Commis- sion's authority and the conditions which limit its exercise appear to us clearly and definitely settled by the recent decision ' in Interstate Com. Com. v. Union Pacific R. R., supra, which is the latest and fullest utterance of the Supreme Court in a case of the same general class as the one now under con- sideration. Tested by the principles laid down in that decision, we are of opinion that the order here drawn in question must be held invalid as exceeding the delegated powers of the Commission, because there was no substantial evidence to sustain it. It is not merely that the evidence preponderates in favor of the reasonableness of the rates which have been cut down. Concededly, that would not be enough to challenge the action of the Commission. Not only is the Commission vested with a discretion which can not be disturbed, and which we intend unqualifiedly to respect, but it is entitled to select the testimony which it will believe and rely upon, according as it addresses itself to the discriminating judgment of the Commission. But it is not within the authority of the Commission to reduce the rates in this or any other case not merely against the weight of the evidence produced to sustain them, but without anything substantial to warrant the conclusion reached or the reasons assigned therefor. And this we are convinced is a case of that character. The only discoverable basis for condemning the rates to Mobile and Pensa- cola is the fact that they had been advanced in 1907, and this of itseK was clearly not sufficient. Inter- state Com. Com. v. Chicago Great Western, 209 U. S., 108. If the long continuance of lower rates to these points or the circumstances connected with" their in- crease called for explanation, as suggested in the case cited, the explanation made by the carrier, in the absence of anything to discredit it, must be held to sustain the advance as against any presumption that it was unreasonable, and therefore there was nothing substantial to support its condemnation. Nor is there anything of substance to sustain the reduction of the Montgomery rates except the fact that they exceeded the former combination on Mobile and Pensacola. Outside of these facts, having regard to the undisputed evidence adduced at the hearing, the existing rates were not shown to be unjust or unrea- sonable and there was therefore no valid basis for the Commission's conclusion. And the petitioner is therefore entitled to a decree annulling the order. Mack, Judge, dissents. O United States Commerce Court. No. 4. — April Session, 1911. Louisville & Nashville Railroad V. Interstate Commerce Commission, respondent. United States, intervening respondent. ON FINAL HEAKINQ ON BILL, ANSWER, AND PROOFS. For opinion of Interstate Commerce Commission see 17 Inter. Com. Com. Rep., 231. For opinion of Circuit Court, refusing preliminary injtinction, see 184 Fed., 118. Mr. Helm Bruce and Mr. W. G. Bearing for peti- tioners. Mr. W. E. Lamb for Interstate Commerce Com- mission. Mr. J. A. Fowler, Assistant to the Attorney Gen- eral, and Mr. Blackhum Esterline, special assistant to the Attorney General, for the United States. Mr. Alfred P. Thorn and Mr. Walker D. Mines for Southern Railway. Mr. Edward Barton for Baltimore & Ohio South- western Railroad. Before Knapp, Presiding Judge, and Archbald, Hunt, Carland, and Mack, Judges. 32540—12 [March 12, 1912.J Mack, Judge, dissenting: The salient facts briefly stated are that prior to August, 1907, the through rates on certain classes from New Orleans to Montgomery exceeded the com- bination of rates in force from New Orleans to Mobile and Pensacola, respectively, and from these places to Montgomery. AU of the rates had been in force for many years. No change has been made in the rates on that part of the road between Mobile and Pensa- cola, respectively, and Montgomery, but in August, 1907, the rates from New Orleans to Mobile and to Pensacola, were advanced exactly enough to make the combination on these points equal to the through rate from New Orleans to Montgomery. While the railroad attempts to justify this advance by the assertion that the former rate was unreasonably low, having been put into effect many years before in order to cut out water competition, nevertheless it is admitted that the immediate cause of the advance was the announcement by the Commission of the rule that a through rate must not exceed the combination of the locals. To comply with the rule, it was neces- sary either to reduce the through rate from New Orleans to Montgomery to the sum of the locals or to raise one or both of the latter. The railroad chose the latter alternative; the Commission, by its order, endeavored to compel it to adopt the former. The Commission could do this only if it found that the new rates from New Orleans to Mobile and Pen- 3 57,7 sacola, respectively, and the unchanged rate from New Orleans to Montgomery were unreasonably high. If, on a review of the record before the Commission, this Court finds that there was no substantial evi- dence on which to base such a conclusion, it would be our duty to annul the order, inasmuch as the power of the Commission to reduce rates to a reasonable figure is conditioned on the opinion of the Commis- sion, formed after a full hearing, that the tariff rate is unreasonably high; not its arbitrary and uncon- trolled opinion, but its deliberate judgment based on substantial evidence produced at the hearing prescribed by the act. While this principle is that adopted in the opinion of the Court, I differ with my brethren in the appli- cation of it to the facts of this case. Whatever view I might have taken as to the reasonableness of the tariff rates had I been a member of the Commis- sion, I can not find that there is no substantial evi- dence to support the conclusions reached by it that they are unreasonably high. Let us first consider the raised rates from New Orleans to Mobile and Pensacola. While, as the majority of the court state, there is no presumption that they are unreasonable merely because the old rates have been raised, yet there is likewise no pre- sumption that they are reasonable merely because the carriers have put them into effect. When a rate is attacked immediately after it is made, there is no pre- sumption either for or against its reasonableness. If it has been in force for some time and traffic has moved freely under it, a presumption does arise that it is reasonable. That presumption would be sufficient to make out a prima facie case in favor of the reasonable- ness of the rate to which it applied and therefore to shift the burden of going forward with some evidence that it is unreasonable. Apply these fundamental principles to this case. There is no presumption one way or the other as to the new rates. The ultimate burden of proof, at the time of this hearing and until the amendment of 1910, was on the shippers to show their unreasonableness. The absence of any presumption that they are reasonable was demonstrated when it was shown that they were put into effect just prior to this complaint; and a prima facie case that the old rates are reasonable and the raised rates therefore un- reasonable was made out when it was proved that the former had been in force for many years. The burden of going forward with evidence that will meet this prima facie case, or in other words, the obli- gation to give some valid explanation of the increase, now devolves on the carrier. This may be satisfied by showing that the old rates were compelled by water competition and that they are unreasonably low by at least the amount of the increase. But if the shippers prove that these water competitive rates had contin- ued for many years after actual water competition in any real sense had ceased, and under conditions clearly negativing any danger of a recurrence thereof. 5 ^ J:-' the presumption of their inherent reasonableness again arises, and may, in the discretion of the Com- mission, be deemed sufficient proof thereof. The testimony before the Commission tended strongly to show that no renewal of water competi- tion was feasible after it had once ceased to be a factor in the transportation situation, because of labor conditions, wharf control by the railroads, and the justifiable fear that an investment in steamers by the shippers or others would be rendered worthless, inasmuch as the railroads would cut their rates to any extent necessary to secure the business. It must be remembered in this connection that at that time and until the amendment of 1910 railroads could cut their rates without restraint in order to destroy competition, and after accomplishing that purpose raise them again without the consent of the Com- mission. On these considerations alone and disregarding any other evidence the action of the Commission in finding the new rate unreasonably high to the extent' of the increase over the old rate from New Orleans to Mobile and Pensacola, respectively, ought, in my judgment, to be sustained as against the charge of arbitrary or unjustified action. We come next to the consideration of the New Orleans-Montgomery rate. A presumption of its reasonableness arises from the fact that it had been long in force. To overcome this presumption, the shippers showed, first, that it was customary both^ on this and other roads not to charge more for the through rate than the combination of locals, although admittedly this custom had not been enforced for this particular through traffic; secondly, that the Commission had now adopted a rule in accordance with the custom. Whatever the concession of the counsel for the Government may mean — and in my opinion it does not go so far as the majority of the court believe — the fact alone that the through rate exceeds the combination of locals is, in my judgment, an all- sufficient reason for a reduction to the extent of the excess. There may be peculiar and extraordinary circimistances which will cause the Commission to refrain from compelling such a reduction, but ordi- narily, and in the present case, the increased cost to the carrier of handling two local shipments and the economic waste involved therein as against a single through shipment, if the shipper should exer- cise his legal right of shipping from New Orleans to Mobile and then from Mobile to Montgomery on the local rates, amply justified the Commission ia promulgating its rule and in enforcing it by the reduction of the New Orleans-Montgomery through rate. Congress, moreover, has now, by the amend- ment of 1910 to section 4 of the act to regulate commerce, given this rule the force of law. That the reduction ordered by the Commission in the New Orleans-Montgomery rate was exactly enough to make the through rate equal the com- bination of locals as reduced is no more peculiar than that the increase by the carrier in the local New Orleans-Mobile and New Orleans-Pensacola rates was exactly enough to make the combination of locals as increased equal the former through rate. And when the principal witness of the carrier testifies (p. 323 of the testimony before the Commission) that in his judgment the raised rates "from New Orleans to Mobile are not too low, and I do not think they are too high," in other words, that they are exactly right, and he so testifies notwithstanding his frank admission (p. 272) that the cause of the raise was to check the application of the new rule to the old rates, the Conmiission can not, in my judgment, .be said to have acted arbitrarily in not accepting this view of the result effectuated by the raise. While I differ with my brethren in their criticism of a number of statements made in the report of the Commission, it is unnecessary to discuss them here. For example, the view taken by the Commission of the Cooley adjustment is fully justified, in my judg- ment, by the fact that the relation of rates thereby established in 1886, was departed from not as to some, but as to a great many commodity rates and that, too, at many times ; even as to class rates, there were departures not only in 1896, but also in 1905. Even though some errors of fact may be found in the report, these are clearly not the real basis of the order. Moreover, if any inequalities or undue preferences as against other localities result from the order of the Commission, they may be remedied on proper com- plaint, by the proper parties, to the Commission. The majority opinion is confined to a single ques- tion, and I have for that reason limited^ this dissent to a consideration of it. Without, therefore, discuss- ing the many interesting questions of confiscation and jurisdiction presented in the briefs and oral arguments, it suffices at this time to state that, in my opinion, the other grounds urged against the order of the Commission are equally unavailing and that the petition should be dismissed. United States Commerce Court. Q " No. 57 — February Session, 1912. United States op America, ex rel. Stony Fork Coal Co. et al., petitioners, United States, intervener, V. Louisville & Nashville Railroad Co. et al., respondents. ON PETITION FOR PEREMPTORY WRIT OF MANDAMTJg. Mr. T. G. Anderson for petitioners. Mr. Blackhum Esterline, Special Assistant to the Attorney General, for the United States, intervener, in support of the jurisdiction of the court. Mr. Albert S. Brandeis and Mr. William A. North- cutt for the Louisville & NashviUe Railroad Co. Mr. Alfred P. Thorn and Mr. John K. Graves for the Southern Railway Co. Before Knapp, Presiding Judge, and Archbald, Hunt, Carland, and Mack, Judges. [March 20, 1912.] Carland, Judge: November 15th, 1911, petitioners filed their peti- tion in this court, praying for a writ or writs of man- damus directed to the respondents, commanding 34707—12 1 them and each of them to perform their duties as common carriers in the matter of the transportation of coal. Upon the fiUng of the petition an alterna- tive writ of mandamus was ordered to issue by the court. The alternative writ, however, was not issued, but in place thereof a copy of the order allowing the same was served on the respondents, together with an order to show cause, returnable December 5th, 1911. Each respondent answered the petition filed, and the case was subsequently heard upon the peti- tion and the answers of respondents. At the hearing, the Louisville & Nashville Rail- road Company moved to dismiss the petition for want of jurisdiction. Petitioners moved for judg- ment on the pleadings. The following material facts appear therefrom: The Stony Fork Coal Company, Ralston Coal Com- pany, Monarch Coal & Coke Company, and Hignite Coal Mining Company own and operate coal mines in Bell County, Kentucky. The Louisville & Nashville Railroad Company and the Southern Railway Com- pany are common carriers engaged in the transporta- tion of freight, including coal, from coal fields and coal mines on their lines of railroad in the State of Kentucky to stations and points in the States of Tennessee, North Carolina, South Carolina, Georgia, Alabama, Florida, and Mississippi, which said last- mentioned States are known for the purposes of trans- portation as southeastern territory. Middlesborough is a town in Bell County, Kentucky, in what is known as the Middlesborough district of ' the bituminous coal fields of southeastern Kentucky. The Stony Fork Coal Company owns and operates a coal mine about nine miles west of Middlesborough at a station or point known as Stony Fork. The Ralston Coal Company owns and operates a coal mine about eight miles west of Middlesborough at a station or point known as Capito. The Monarch Coal & Coke Company owns and operates a coal mine about seven miles west of Middlesborough at a sta- tion or point known as Wilmont. The Hignite Coal Mining Company owns and operates a coal mine about eight miles west of Middlesborough at a sta- tion or point known as Covert. Eighty per cent of the total output of said mines is sold in southeastern territory. Each respondent operates a line of railroad from Middlesborough to said territory. The route to the said southeastern territory over the line of the Louisville & Nashville RaUroad from the petitioners' coal mines is so long and circuitous that said railroad company can not compete in the handling of coal traffic with the shorter and direct route via the Southern Railway, and publishes no rates over its said route applicable to said coal traffic. Said company, however, owns and operates a line of railroad commonly known as the Middlesborough Railroad, extending from a point at or near its Middlesborough depot to Stony Fork Junction, a distance of about 2.98 miles, and from said junction up the Stony Fork of Yellow Creek,, a distance of about 7.83 miles, this line being known as the Stony Fork Branch. The Southern Railway has the right by contract to use the Stony Fork Branch line jointly with the LouisviUe & Nashville Railroad. The stations or points where the petitioners' mines are located are situated on said Stony Fork Branch, and are designated as points of origin in the tariffs hereinafter mentioned. The Louisville & Nashville RaUroad Company has from time to time published joint and concurrent tariffs and duly filed the same with the Interstate Commerce Commission as pre- scribed by law, establishing through routes and joint rates on coal from said stations or points on the Stony Fork Branch, viz, Stony Fork, Capito, Wilmont, and Covert, to stations or points in the various other States mentioned and designated as southeastern ter- ritory. Said through route is via the LouisvUle & NashvUle Railroad to Middlesborough, and thence via Southern Railway to points of destination; said joint tariff being only applicable to such through route. The Southern Railway Company has duly published and filed with the Interstate Commerce Commission, Southern Railway Company coal tariff 8-ICC-A-4500, effective October 15th, 1911, in which said tariff the Louisville & Nashville Railroad Company is named as a participating carrier, and in which said last- named carrier has concurred according to law. Said Southern Railway tariff 8-ICC-A-4500 names the points or stations where petitioners' mines are located as points of origin for the shipment of coal, and said tariff advertises to the world that said Southern Rail- way will transport coal from said points of origin to southeastern territory for the rates therein mentioned. 5 j< $ 7 The Southern Railway Company contends that it is under no obligation as a common carrier or other- wise to furnish transportation at the points of origin mentioned, or with respect to shipments over the Stony Fork Branch to Middlesborough, because it is not the initial carrier, and admits that it has not furnished and will not furnish cars to the petitioners at such points unless compelled to do so by competent authority. The Louisville & Nashville Railroad does not acknowledge any legal or moral obligation to fur- nish cars or transportation to the petitioners for the shipment of coal from the points above mentioned to southeastern territory for the reason that it only performs a switching service for the Southern Rail- way in transporting coal from said points of origin to Middlesborough, and refuses to transport the coal of petitioners further than to Middlesborough. By reason of this dispute between the carriers the peti- tioners are deprived of the means of transporting their coal to the southeastern territory, and their business is destroyed save for a comparatively small amount of local shipments to local Kentucky points. Petitioners have repeatedly requested respondents to transport their coal to southeastern territory, but said requests have been continually refused, and by reason thereof petitioners have been obliged to cancel all orders for coal from said territory, and are now excluded from the systems of both respondents and placed in the position with respect to said southeast- ern territory of being on no railroad line whatever. instead of having the use and benefit of two raiboads, or at least one. It is alleged in the petition that respondents are, and each of them is, receiving freight, including coals, and transporting the same from all other stations and points and for all other shippers and mines in Bell County, Kentucky, to said southeastern territory. For the purpose of petitioners' case it is not necessary that said allegations be wholly established. We think it sufficient to show discrimination if it appears that respondents are transporting coal of other shippers from practically the same territory at the same rates to southeastern territory, and at the same time are refusing to transport the coal of petitioners. It is true that the foregoing allegation is denied in the answers of respondents, but we think the denial, so far as the transportation of coal is concerned, is destroyed by the fact that it appears from the admis- sions in the answers that both respondents are ship- ping coal from other mines in Bell County to the southeastern territory. Especially is this true when it appears from the record that respondents are oper- ating jointly the line of road known as Bennett's Fork Branch, running up Bennett's Fork of Yellow Creek from Stony Fork Junction. Briefly stated, the case made by the petitioners is this: They own and operate coal mines located upon the line of the LouisviUe & Nashville Railroad, known as the Middlesborough Railroad, which extends to Middlesborough, Ky. The Southern Railway Com- pany owns a line of road running from Middlesborough to the so-called southeastern territory, and has the right to operate the Stony Fork Branch of the Mid- dlesborough Raiboad. The Southern Railway has filed with the Interstate Commerce Commission and published according to law a joint tariff and estab- lished through routes from the points on the Middles- borough road, where petitioners' mines are located, to southeastern territory. The Louisville & Nashville Railroad has concurred in the tariff and through route established by the Southern Railway, and is named in said tariff as a participating carrier. Said carriers transport coal from other mines and for other ship- pers in Bell County, located in practically the same territory as those of the petitioners, to southeastern territory. In this condition of affairs the Louisville & Nash- ville Railroad refuses to move and transport the coals of the petitioners to southeastern territory for the reason that in connection with the traffic mentioned it simply performs a switching service, and that it is not its duty to furnish cars for any greater distance than to transport the coal to Mid- dlesborough. The Southern Railway Company re- fuses to transport the coals of petitioners for the reason that it is not the initial carrier and therefore is not obligated to send its cars up to the points where are located the petitioners' mines to there receive the coal, and that its whole duty is per- formed when it furnishes the cars at Middlesborough. But the petitioners are not interested in this dis- pute between the carriers except in so far as it pre- vents them from having then* coal transported, and only ask^that these common carriers, having estab- lished^through routes and joint rates from petitioners' mines^to southeastern territory, shall perform then- duty as such common carriers and move the coals of the petitioners in interstate commerce. This court has no jurisdiction to consider the question -of car distribution in advance of some action by the Interstate Commerce Commission, or to determine how many cars the Southern Railway shall furnish, or how many the Louisville & Nash- ville Railroad shall furnish, for the transportation of the petitioners' coal. It is believed, however, that this court has the undoubted jurisdiction upon the facts presented by the record to issue a writ or writs of mandamus directed to these common car- riers, conmianding them that so long as they estab- lish and maintain through routes and joint rates to southeastern territory they shall move and transport in interstate commerce the coals of the petitioners when tendered in such reasonable quantities as may be determined either by agreement with the carriers or by the Interstate Commerce Commission if they can not agree. We will now consider the objections made to our jurisdiction to grant any relief under the facts stated, and also as to what relief shall be granted if we have jurisdiction. At the inception of this case the Attorney General of the United States did not take part therein. Sub- sequently he was allowed to intervene in behalf of the 9 ,-., y petitioners. If there was an allegation of the peti- tioners that the application was now made by the Attorney General for a writ or writs of mandamus against the respondents at the request of the Inter- state Commerce Commission, we would have authority to grant such writ or writs if the facts should warrant us in so doing, under section 20 of the act to regulate commerce. This section only requires proof of a violation of some provision of said act. In the absence, however, of any showing that the application is now made by the Attorney General at the request of the Interstate Commerce Commission, we must act, if at all, under section 23 of the act. By subdivision 4, of section 1, of the act creating this court, we are given jurisdiction of " all such mandamus proceedings as under the provisions of section 20 or section 23 of the act entitled, 'An act to regulate commerce,' approved February 4th, 1887, as amended, are authorized to be maintained in the Circuit Court of the United States." Section 23 of the act, so far as material, reads as follows: "The Circuit and District Courts of the United States shall have jurisdiction, upon the rela- tion of any person or persons, firm or corporation, alleging such violation by a common carrier of any of the provisions of the act to which this is a supple- ment, and all acts amendatory thereof, as prevents the relator from having interstate traffic moved by said common carrier at the same rates as are charged or upon terms or conditions as favorable as those given by said common carrier for like traffic under 34707—12 2 similar coBditions to any other shipper, to issue a writ or writs of mandamus against said common car- rier bo move and transport the traffic or to furnish cars or other facilities for transportation for the party applying for the writ." This section not only requires that there must be some violation of the act to regulate commerce, but this violation must be one which prevents the relator from having inter- state traffic moved by said common carrier at the same rates as are charged or upon terms and condi- tions as favorable as those given by said common car- rier for like traffic under similar conditions to any other shipper. In other words, the violation of the act to regulate commerce on the part of the carrier must be such a violation as will amount to discrim- ination. By section 1 of the act to regulate commerce as amended June 18th, 1910, it is provided as follows: "The term 'transportation' shall include cars and other vehicles and all instrumentalities and facilities of shipment or carriage, irrespective of ownership or of any contract, express or implied, for the use thereof, and all service in connection with the receipt, delivery, elevation, and transfer in transit, ventilation, refrigeration or icing, storage, and handling of property transported; and it shall be the duty of every carrier subject to the provisions of this act to provide and furnish such transportation upon reasonable request therefor, and to establish through routes and just and reasonable rates applicable thereto, and to provide reasonable facilities for operating such through routes, 11 -', '1 J, ■ and to make reasonable ndes and regulations with respect to exchange, interchange, and return of cars used therein, and for the operation of such through routes, and providing for reasonable compensation to those entitled thereto." Again, by section 3 of the act it is provided : "E very- common carrier subject to the provisions of this act ■shall, according to their respective powers, afford all reasonable, proper, and equal facilities for the intei> change of traffic between their respective iiues, and for the receiving, forwarding, and delivering of passen- gers and property to and from their several lines and those connecting therewith." By section 7 of the same act it is also provided: "That it shall be unlawful for any common carrier subject to the provisions of this act to enter into any combination, contract, or agreement, expressed or implied, to prevent, by change of time schedule, car- riage in different cars, or by other means or devices, the carriage of freights from being continuous from the point of shipment to the place of destination." Considering the above provisions of the act to regulate commerce as applied to the facts in this case, it cannot be doubted that the respondents are violating some if not all of those provisions. It also necessarily follows that such violation is pre- venting the petitioners from having interstate traffic moved by respondents Upon terms or conditions as favorable as those given by said respondents for like traffic under similar conditions to any other shipper. 12 It is objected that we may not issue a writ or writs of mandamus in this case for the reason that the refusal to transport the coals of petitioners at all is not such a discrimination as is contemplated by the language of section 23; and that in order to come within the purview of said section the carrier must be actually transporting interstate traffic but not upon terms or conditions as favorable to one ship- per as are given to another shipper for like traffic under similar conditions. We believe that this is placing too narrow a construction upon said section. We believe that if respondents are carrying the coals of other shippers from the immediate territory ad- joining the petitioners' mines to southeastern terri- tory, and at the same time are refusing to carry the coals of the petitioners at all, they have not only violated the provisions of the interstate commerce act, but such violation prevents the petitioners from having their interstate traffic moved by respondents upon terms or conditions as favorable as those given by said respondents for like traffic under similar conditions to other shippers. It would lead to an absurd result if the court should be obliged to hold that discrimination might exist if respondents were charging other shippers fifty cents a ton for the transportation of coal to southeastern territory and at the same time were charging petitioners one dollar a ton for the same service, and yet there would not be discrimination if respondents refused to transport the coal of peti- tioners at all, for any price. This court is not now concerned with the arrange- ments which respondents may make for the trans- portation of petitioners' coal as between themselves. The determination of the question as to whether the Louisville & Nashville Railroad shall transport the coal of the petitioners to Middlesborough in cars of its own, there to be taken by the Southern Railway Company to points of destination in southeastern territory, or whether the Southern Railway Company shall send its cars from Middlesborough up the Stony Fork Branch to be there loaded with the coals of peti- tioners, and thence transported over the LouisviUe & NashviUe Railroad and the Southern Railway to points of destination in southeastern territory, or whether the Louisville & Nashville Railroad shall ship the coals to Middlesborough from points of ori- gin, there to be changed from the Louisville & Nash- ville cars to the cars of the Southern Railway, or as to the number of cars the Southern Railway Com- pany may be compelled to furnish to petitioners for the transportation of coal, or the number of cars the Louisville & Nashville Railroad may be obliged to furnish for the same service, nor the number of cars at which the mines of the petitioners shall be rated; these are questions either for the agreement of re- spondents between themselves or, failing in this, for the administrative action of the Interstate Commerce Commission. This court is now simply dealing with the plain question of law as to whether the respondents, as common carriers subject to the provisions of the 14 interstate commerce act, may be compelled to per- form a plain legal duty not involving any discretion on the part of the respondents and in the absence of any legal excuse or justification for the respondents to refuse to transport in interstate commerce the coals of the petitioners. It is insisted, however, by counsel for the respondents that by virtue of the decisions of the Supreme Court of the United States in Texas & PaciHc Railway Company v. Abilene Cot- ton Oil Company, 204 U. S. 426; and Baltimx)re & Ohio Railroad Company v. Pitcaim Coal Company, 215 U. S. 481, this court is prevented from granting any relief of the nature prayed for by the petitioners, for the reason that the jurisdiction, if any, to grant such relief is with the Interstate Commerce Com- mission. We do not so understand the ruling in the cases cited. In the Pitcairn case the Supreme Court, after holding that the United States Circuit Court could not issue mandamus in the matter of the dis- tribution of cars, for the reason that this was an administrative duty devolving upon the Interstate Commerce Commission, said : "This conclusion being in reason impossible, it must follow that, construing the provisions of sec- tion 23 in the light of and in harmony with the amendments adopted in 1906, the remedy afforded by that section, in the cases which it embraces, must be limited either to the performance of duties which are so plain and so independent of previous adminis- trative action of the Commission as not to require a 15 3 ^ 7 prerequisite exertion of power hy that body, or to com- pelling the performance of duties which plainly arise frorii the obligatory force which the statute attaches to orders of the Commission rendered within the lawful scope of its authority until such orders are set aside by the Commission or enjoined by the courts." We are firmly persuaded that the facts in the case at bar clearly bring it within the limitation declared by the Supreme Court, the writ of mandamus being issued only to compel the performance of a plain legal duty, a function which the Interstate Commerce Commis- sion could not exercise itself, nor could the Commis- sion take any action that would aid us in the decision of the question of law arising on this record. It is pertinent in this connection to inquire for what purpose did the respondents agree to establish a through route from the points of origin mentioned in the case at bar to the southeastern territory, and in connection therewith file and publish a joint tariff over said through route for the transportatiori of coal. It was a clear holding out that such carriers would transport the coals of the petitioners over the route for the rates mentioned in the joint tariff, and so long as they shall maintain the tariff described as 8-ICC- A-4500, or a like tariff, the law will compel them to transport the coals of the petitioners when tendered to them in such reasonable quantities as will enable the respondents to handle the same. Petitioners desire their coals moved in interstate traffic over the route and to the points in southeastern 16 territory. They are not primarily concerned with j ust how the handling of this traffic may be arranged be- tween the LouisviUe & NashviUe RaUroad and the Southern Railway. They do desire that the re- spondents shall be compelled to perform their plain legal duty and move in interstate commerce their coal. The Southern Railway seeks to excuse itseK from transporting the cars of petitioners by assert- ing that it is not the initial carrier, and that when it filed and published coal tariff 8-ICC-A-4500 it was acting as an agent of the Louisville & Nash- ville Railroad, and did not pretend to say that it would transport the coals of petitioner except as a connecting carrier. The Louisville & Nashville Rail- road Company seeks to excuse its refusal to trans- port the coals of the petitioners on the ground that it simply concurred in coal tariff 8-ICC-A--i500 as a participating carrier, and did not thereby intend to agree to transport the coals of the petitioners any further than to perform a switching service, as it is termed, from the mines in question down to Mid- dlesborough. But the law as applied to the case overrides this dispute between the respondents as to who shall fur- nish the cars or as to what proportion of cars shall be furnished by each, and says to the respondents: By your act in establishing a through route and joint tariff from points of origin on the Middlesborough Railroad, or the Stony Fork branch of the same, to the southeastern territory you have placed yourselves 17 Jh' > -1 in a position where you must transport the coals of the petitioners to said southeastern territory regard- less of your private disputes. Believing, as we do, that the facts in this case show a refusal on the part of respondents to perform their plain legal duty in the premises, we are of the opinion that the motion to dismiss made hy the Louisville & Nashville Railroad Company should be denied, and that a peremptory unit of mandamus should issue out of this court directed to each of said respondents, commanding them, their officers, and agents, so long as they maintain Southern Railway coal tariff 8-ICC-A-4500, or any like tariff, to transport the coals of the petitioners from the points mentioned on the Stony Fork branch of the Middlesborough Railroad to points of destination in the southeastern territory when tendered by said petitioners in such reasonable quantities as can be handled by said respondents, and it is so ordered. Archbald and Mack, Judges, dissent. O United States Commerce Court. No. 35. — February Session, 1912. The Denver & Rio Grande Railroad Co., PETITIONER, V. The Interstate Commerce Commission, respond- ent. The United States, intervening re- spondent. ON FINAL HEABING. (For opinion of the Interstate Commerce Commis- sion, see 17 I. C. C. Rep., 225.) Mr. Joel F. Vaile, with whom Mr. E. N. Clark and Mr. A. C. Campbell were on the brief, for petitioner. Mr. P. J. Farrell, for the Interstate Commerce Commission. Mr. Blackburn Esterline, special assistant to the Attorney General, with whom Mr. Winfred T. Deni- son, Assistant Attorney General, was on the brief, for the United States. Before Knapp, Presiding Judge, and Archbald, Hunt, Garland, and Mack, . Judges. 34357—12 [April 9, 1912.] Knapp, Presiding Judge: This suit was brought to set aside an order of the Interstate Commerce Commission, dated November 26, 1909, which in pffect required petitioner, the Denver & Rio Grande Raih-oad Co., to reduce its rate on beer in carloads, from Pueblo, Colo., to Lead- ville, Colo., when part of a through transportation from St. Louis, Mo., to Leadville, from 45 cents to 30 cents per hundred pounds. The principal ground upon which the order of the Commission is claimed to be invalid, and the only one that needs to be discussed, is that the order relates to the transportation of property received, handled, transported, and delivered wholly within one State, which is said to be not within the juris- diction of the Commission because of the first pro- viso in section one of the act to regulate commerce. It is conceded that the transportation in question was interstate commerce, because the traffic was carried by continuous movement from a point in one State to a point in another State, and was therefore subject to the regulating power of Congress, but the contention is made that the proviso mentioned covers such transportation as is here involved, and there- lore excludes it from the authority of the Commis- sion. The facts upon which this contention is based appear to be as follows: The Missouri Pacific Railway Co. operates a Une of railway from St. Louis to Pueblo, where it connects with a line of petitioner from Pueblo to Leadville 3 i; ■ and beyond. The rate affected by the order was appUed to carload shipments of beer which origi- nated in St. Louis during the years 1907 and 1908, and were transported therefrom by railroad through Pueblo to Leadville. The shipments in question were hauled by the Missouri Pacific to Pueblo and there delivered by that carrier without break of bulk to the Denver & Rio Grande, which completed the haul to Leadville. At the time these shipments moved, there was no joint rate of the two roads applying from St. Louis to Leadville, and the through charge was the local rate of the Missouri Pacific from St. Louis to Pueblo plus the local rate of peti- tioner from Pueblo to destination. In this connec- tion it appears that petitioner had no joint rates with any of its eastern connections at Pueblo, or other Colorado common points, on traffic moving to or from points in Colorado on its lines west of Pueblo and other Colorado common points, but was a party to joint tariffs on traffic moving between eastern points and points west of Colorado — as, for example, Utah and transcontinental traffic. The traffic in question was shipped by the William J. Lemp Brewing Co., of St. Louis, to the Baer Bros. Mercantile Co., of Leadville, the latter being the complainants at whose instance the rate in question was investigated and reduced by the Commission, and the transportation appears to have been con- ducted in the following manner : Upon receiving a carload of beer at St. Louis the Missouri Pacific issued to the consignor, the William J. Lemp Brewing Co., a receipt for the same, showing on its face that it was to be dehvered to Baer Bros. Mer- cantile Co. at Leadville, Colo., routed via the Denver & Rio Grande. This receipt described the articles shipped, with their aggregate weight, and bore a nota- tion to the effect that the shipment was tendered and received subject to the company's uniform bill of lading. The car in which the shipment was loaded was then moved by the Missouri Pacific on a local waybill from St. Louis to Pueblo, such waybill show- ing Baer Bros. Mercantile Co. as the consignee and LeadvUle as the destination, and containing a state- ment of the contents and weight of the car, with the freight charges of the Missouri Pacific computed on its local rate from St. Louis to Pueblo. Upon arrival at Pueblo the car was placed on the interchange track, where the Missouri Pacific and petitioner delivered carload traflBic to each other. The agent of the Mis- souri Pacific at Pueblo thereupon delivered to the agent of petitioner what is known as a "transfer sheet," which showed the consignor and point of origin, the contents and weight of the car, the freight charges of the Missouri Pacific to Pueblo, and also the consignee and destination of the shipment. The car was then taken from the interchange track by petitioner and moved to Leadville on a local way- bill which likewise named the consignor, and showed the consignee and destination, description of contents, the rate and charges to Pueblo, and the rate and charges of petitioner from Pueblo to Leadville. If the shipment were prepaid to destination, as gen- 5 l/i)S erally seems to have been the case, the Missouri Pa- cific paid petitioner the amount of its charges from Pueblo to Leadville; if not prepaid, petitioner paid the Missouri Pacific the charges of that carrier to Pueblo and collected the entire charges from con- signee at destination, such payments between the two roads being made in daily settlements. In either case the physical movement and handling of the car was precisely the same as would be the case under a joint rate and through bill of lading. The movement was continuous from origin to destination without the intervention of the consignor or consignee, and so far as they were concerned the transportation was like that over a single line. In control and management, and in fixing their respective local rates upon which these shipments moved, the Missouri Pacific and peti- tioner were entirely independent of each other, and there was no agreement or arrangement between them for through transportation from points on one line to points on the other, except such as is indicated by or may be implied from the manner in which such busi- ness was handled and their mutual dealings with re- spect thereto, as above described. Upon these facts, as stated above, it is contended with much earnestness that petitioner was a purely local carrier within a single State of the traffic in question, and therefore as to such traffic not subject to the jurisdiction of the Commission because of the proviso in section 1, which reads as follows : "Provided, however, That the provisions of this act shall not apply to the transportation of passengers or property, or to the receiving, delivering, storage, or handling of property wholly within one State and not shipped to or from a foreign country from or to any State or Territory as aforesaid. * * *" Briefly stated, the argument of petitioner's counsel is this: That section 1 of the act defines the classes of carriers subject to its provisions ; that it might be plausibly contended that the proviso aimed to ex- clude only their strictly intrastate business ; but that this construction is inadmissible because of the con- cluding phrase ''and not shipped to or from a foreign country from or to any State or Territory as afore- said," that is to say, because intrastate business destined to or coming from a foreign country is not excluded ; and that therefore it f oUows that as there may be foreign business handled whoUy in one State and not excluded, so there may be interstate business handled wholly in one State which is excluded. But it would also follow that the Congress, in devising a system of railway regulation, took care to include the intrastate carriage of foreign commerce — comparatively small in amount — and yet purposely exempted the intrastate carriage of interstate com- merce, which aggregates a very large volume. Only the plainest language would impute to the law- making body such an inconsistent and irrational intention. It seems clear to us that the language in question should not be so construed, and we reject the contention of petitioner because, in our judgment, it is based upon an erroneous hypothesis. Section one not only subjects to the act, first, certain carriers, but also, second, certain trans- portation. The proviso relates not to the carriers but to the transportation, and is therefore to be read in connection with the second clause of the section and not with the first. Summarized, the first clause relates to carriers engaged in trans- portation (a) wholly by rail, or (6) partly by rail and partly by water under a common arrangement, from (c) State to State, or (d) from the United States to or through an adjacent foreign country. For example, carriers transporting trafiic by rail from Albany to New York for shipment to Europe would not come under this definition whether or not there were a common arrangement for rail and water transporta- tion, but carriers engaged in moving traffic from Al- bany to New York by rail and thence by water to New Orleans, or from Albany to Buffalo by rail and thence by water to Toronto, would come within the defini- tion, if there were a common arrangement. It was interstate rail transportation that was primarily sought to be regulated, not interstate water trans- portation, and not the raU part, within a single State, of rail and water interstate transportation unless the rail carrier and the water carrier were under a common control management or arrangement. But as to transportation to a foreign country, unless wholly by water from point of origin to final destination. Congress had a different and definite purpose. Even though in that case there were no common arrangement between the rail and water carrier, even though no regulation of the ocean car- rier or the entirely independent lake or river carrier 8 was intended, nevertheless Congress deemed it impor- tant to subject to the act, and therefore by the second clause did subject, that part of such transportation as was conducted within this country, although confined to a single State and conducted by a line that had no connection of any kind with an ocean carrier or with any interstate traffic. Then, out of abundant caution, as it seems, and by way of disclaimer of any authority over a carrier that confined its busi- ness to one State, and was not engaged in such inter- state business as would bring it within the first clause, the proviso was added. The intended effect of this proviso was to exclude from the operation of the act such transportation, whether of persons or property, as was carried on whoUy within one State, other than that going to or coming from a foreign country. Having given jurisdiction over certain transportation that could be conducted either in more than one or in only one State — that is, the inland transportation of commerce to or from foreign lands — it disclaimed jurisdiction over domestic traffic confined strictly and wholly to a single State. This disclaimer naturally contained the limiting clause " not shipped to or from a foreign country," to avoid any possible conflict with what immediately preceded, and to prevent an inter- pretation which would exclude the Albany-New York part of the Albany-New York-Europe trans- portation in the example above given. The proviso therefore must be regarded as a disclaimer and not as an exception. It could not, of course, be an excep- tion to the second grant of jurisdiction over certain 9 l/ 0^ transportation, and it does not in any way refer to the first grant of jurisdiction over certain carriers, either by way of disclaimer or by way of exception. It results that rail carriers engaged in such transpor- tation of admittedly interstate commerce as is here considered were intended to be made subject to the act and are included in the classes of carriers to which the act applies. This construction gives consistent and appropriate meaning to those provisions of the first section which define the scope and application of the entire enact- ment. It sustains the act as a comprehensive scheme of regulation designed to include all interstate trans- portation wholly by railroad, or partly by railroad and partly by water when both are used under a common arrangement, and to exempt only that intra- state transportation which is not within the power of Congress to regulate. As was said by the Su- preme Court in Texas & Pacijic Railway v. Inter- state Com. Com. (162 U. S., 212) : " It would be difficult to use language more un- mistakably signifying that Congress had in view the whole field of commerce (excepting commerce whoUy within a State), as well that between the States and Territories as that going to or coming from foreign countries." Moreover, it seems plain to us upon the undisputed showing in this case that these carriers, as is now their duty under the amended act, have in fact established through routes from points on one road to points on the other, or at least between St. Louis 10 and Leadville. Their physical connection at Pueblo by means of interchange tracks and otherwise, their constant acceptance of carload traffic from each other, their daily settlement of charges on such inter- change traffic, and their habitual course of dealing with each other in the handling and transfer of through shipments, have brought about, in our opinion, those mutual relations which characterize through routes. Indeed, it is not perceived that their customary conduct of such business leaves any- thing to be done — and nothing was suggested in answer to inquiry on the argument of the case as to what could be done — to create the conditions which constitute through routes. Apparently they are doing for and with each other in respect of through traffic practically everything that the Commission could require under its present power to establish through routes where connecting carriers have failed or neglected to provide such facilities. The sixth section of the act recognizes three kinds or classes of rates, namely; the rates between dif- ferent points on each carrier's line; the joint rates of two or more carriers when they have established through routes and joint rates; and the "separately established rates" applied by a carrier on through traffic when there is a through route but no joint rate. This rate in question from Pueblo to Leadville seems to us clearly of the latter class. It is the rate which petitioner provided for through transporta- tion, and it was that rate, provided and used for that purpose, of which complaint was made as re- 11 suiting in an excessive through charge, and which the Commission by its order reduced. The circumstance that it was the same in amount as the purely local rate of petitioner between the same points does not alter its character as a separately established rate applicable to through shipments. In our opinion both the carrier and the traffic were within the terms of the act, and the Commission had full jurisdiction to make the order in question. See Interstate Com. Com. V. Chicago, R. I. & Pac. Ry. (218 U. S., 88), where the Supreme Court sustained an order of the commission which reduced the local rates of certain carriers between the Mississippi and Missouri Rivers when applied to through traffic from eastern terri- tory. We do not say that a carrier located wholly within a State may not so conduct its business as to be in fact and in law a purely intrastate carrier, nor do we attempt to point out what such a carrier must do or not do to escape regulation under the act. It is sufficient to hold that the petitioner in this case, upon the undisputed and conceded facts, is subject to the provisions of the regulating statute as to the traffic and transportation here in question; and it foUows, since no other ground of relief is presented by the record, that the petition should be dismissed, and it will he so ordered. O United States Commerce Court. ft..-' No. 40. — February Session, 1912. Norfolk & Western Railway Company, et al., petitioners, V. United States of America, respondent. Interstate Commerce Commission, Corporation Commission of North Carolina, interveners. ON FINAL HEARING ON BILL, ANSWER, AND PROOFS. Mr. Albert S. Brandeis, Mr. I/ucian H. Cocke, and Mr. R. Walton Moore for petitioners. Mr. Blackburn Esterline, with whom Mr. Winfred T. Denison was on the brief, for the United States. Mr. Charles W. Needham for the Interstate Com- merce Commission. Mr. T. W. Bickett, Attorney General of North Carolina, for the Corporation Commission of North Carolina. Before Knapp, Presiding Judge, and Archbald, Hunt, Carland, and Mack, Judges. [April 9, 1912.] Hunt, Judge: Some time in 1908 the Corporation Commission of North Carolina filed a complaint before the Interstate 37349-12 1 Commerce Commission against the Norfolk and West- ern Railway Company, the Louisville and Nashville Railroad Company, and the Cleveland, Cincinnati, Chicago and St. Louis Railway Company, alleging that the rates from Chicago, Cincinnati, and St. Louis and other western points in Ohio, Indiana, Kentucky, Illinois, and other States, to Winston-Salem, Dur- ham, and other points in North Carolina, on classes, grain and grain products, and other commodities, were unjust and unreasonable in and of themselves, and unjustly discriminatory and unduly preferential and prejudicial as compared with rates on the same •commodities to Roanoke, Lynchburg, Petersburg, and Norfolk, in Virginia, and that the rates to Win- ston-Salem, Durham, and other places in North Caro- lina along the lines of the Norfolk and Western should be reduced to the same basis as obtained for the said Virginia cities. The Norfolk and Western Railway Company and the Louisville and Nashville Railroad Company filed a joint and several answer, denying the material allegations of the complaint. On May 27, 1908, the Southern Railway Company and the Sea- board Air Line Railway and its receivers intervened as parties defendant, and were given the benefit of the answer of the Norfolk and Western and the Louis- ville and Nashville companies. On June 7, 1910, the Commission, after a hearing, filed its report and made an order to the effect that the Norfolk and Western Railway Company desist from charging local class rates on traffic from Roanoke, Virginia, to Winston- Salem, North CaroUna, and from Lynchburg, Virginia, to Durham, North Carolina, in excess of those named in the following table : Per 100 pounds. Per barrel. Class. Class. 1 2 3 4 5 6 A B c D E r H 52 as. 42 as. 34 as. 25 as. 21 as. 17 as. 15 as. 18 as. 15 as. 13 as. 21 as. 30 as. 25 Per 100 pounds. Per ton (2,000 pounds). Per carload. Class. Class. Class. K L M N P as. lOJ $1.60 J1.8S $31.00 $21.00 $17.00 The local class rates in effect when the order of the Commission was made were as follows: Class. 1 2 3 4 s 6 A B C D E F H K as. 61 61 as. 51 61 as. 42 42 as. 32 32 as. 28 28 as. 21 21 as. 17 17 as. 22 22 as. 21 21 as. 18 18 as. 28 28 CIS. 42 42 as. 32 32 as 14 ■WiTlstOTl-HftlftlTl , . 14 Class. L M N P $1.90 1.90 $2.20 2.20 $35.00 $26.00 2R-0n $22.00 29-00 Petition for rehearing was filed by the Norfolk and Western, the Southern, and the Seaboard Air Line Railway Companies. Rehearing was denied. Thereafter, the Norfolk and Western Railway Com- pany, the Southern Railway Company, the Seaboard Air Line Railway, and the Louisville and N^ishville Railroad Company, as petitioners, filed their joint petition in this court and prayed for the annulment of the order of June 7, 1910. After setting forth the proceedings had before the Commission, petitioners allege substantially: (1) That the reasonableness of the rates of the Norfolk and Western from Roanoke and Lynchburg to Winston-Salem and Durham was not in issue before the Commission; (2) that the order of the Commission operates to defeat the purpose of the Commission as expressed in its report, because of a mistaken view by the Commission of the effect of its order; (3) that the order should be set aside be- cause of an inconsistency which results in arbitrarily compelling the application of lower rates on certain traffic than the Commission found were reasonable; and (4) because the Commission erred and exceeded its authority in disregarding the interests of the carriers other than the Norfolk and Western. The Corporation Commission of North Carolina has inter- vened. The United States and the Interstate Com- merce Commission filed answers, in which they denied certain averments and set up the proceedings before the Commission. Application for a preliminary in- junction was denied by this court. Thereafter, evidence was heard before one of the judges of the court, and the case is now here upon a final hearing. The Norfolk and Western Railroad extends from Cincinnati and Columbus on the west to Norfolk, 5 t^/1 Virginia, on the east, and to Hagerstown, Maryland, on the north. One of its divisions extends from Rad- ford, Virginia, to Bristol, Tennessee; another south from Roanoke, Virginia, to Winston-Salem, North Carolina, a distance of 122 miles; another division extends south from Lynchburg, Virginia, to Durham, North Carolina, a distance of 1 1 7 miles . Lynchburg is 54 miles east of Roanoke on the main line. The South- ern Railway runs to Durham and Winston-Salem. It has its own rails into Louisville, St. Louis, and Evans- ville, from which points in connection with other roads it operates in the Carolina territory and into Winston-Salem and Durham. The Seaboard Air Line reaches Durham from the north. The Louis- vUle and Nashville Railroad runs from Cincinnati to New Orleans, with a division extending to Norton, Virginia. It also runs from Nashville to St. Louis. Trafl&c over its lines to the Virginia cities is handled in connection with the Norfolk and Western via the Norton gateway, and in connection with the Chesa- peake and Ohio through the LouisviUe gateway, and in connection with the Southern through Jellico, Tennessee. The Norfolk and Western, with its con- nections, is the short line from Chicago to Winston- Salem and Durham. From Louisville, Cincinnati, and East St. Louis, the short line to most Carolina points is via the Louisville and Nashville, and the Southern and its connections. Rates by this route from Chicago and East St. Louis to CaroUna terri- tory are made upon combinations which do not exceed the Virginia cities combinations. From Louis- ville and Cincinnati through rates are made by using proportional rates to Virginia cities, plus locals beyond, the proportionals equaling the differences between the Chicago rates to the Virginia cities and the locals from Chicago to Cincinnati. The Com- mission makes the situation clear by giving the pro- portional rates on the numbered classes in cents per one hundred pounds, as follows : Class 12 3 4 5 6 Rate 32 28 22 15 12 10 And exempUfies by taking the Chicago- Virginia cities rate on first class, which is 72 cents per one hundred pounds, and the Chicago-Cincinnati local, which is 40 cents, finding the proportional rate to be the difference, which is 32 cents. By adding this proportional to the local from Virginia cities to Winston-Salem and Durham, the through rate from Cincinnati and LouisviUe, first class, was made 93 cents. The proportionals as used by the Commission applied to grain and packing-house products were, respectively, 11 and 15 cents. It appears that after- wards the proportionals were taken out and thus the combination was the local rate to the Virginia cities plus the rate fixed by the Commission. Considering the first point made by petitioners, that the reasonableness of local rates between Roa- noke and Winston-Salem, and between Lynchburg and Dunham, was not in issue before the Commission, we find the allegations of paragraph 13 of the com- plaint before that body as follows : "13. That the published and exacted rates be- tween stations in Virginia and West Virginia along the line of the Norfolk and Western Railway and sta- tions in what is known as the Durham and Winston divisions, along the lines of said railway in North Carolina, as is shown by Tariff I. C. C. No. 3156, North Carolina Interstate No. 1, are unjust and unreason- able, in and of themselves, and unduly discrimina- tory against the said points in North Carolina." The third and fourth clauses of paragraph 12 of the joint and several answer of the Norfolk and Western and the Louisville and Nashville companies, filed be- fore the Commission, read as follows : "Respondent, the Norfolk & Western Railway Company, denies that the published and exacted rates between stations in Virginia and West Virginia along the line of respondent, and stations on what are known as the Durham and Winston divisions, along the lines of its railway in North Carolina, are unjust or unreasonable, in and of themselves, or unduly discriminatory against the said points in North Carolina. "Respondent, the Louisville & Nashville Railroad Company, not being in position to participate in the traffic between the points referred to in Paragraph XIII of the complaint does not therefore deem it essential to either deny or affirm the allegations as contained therein." Examination of Tariff I. C. C. No. 3156, Norfolk and Western Railway Company, effective Novem- ber 15, 1907, shows on its face that it contains the. 8 rates applicable to shipments from Roanoke and Lynchburg, Virginia, to Winston-Salem and Durham, North Carolina. The complaint also sets forth the routes from designated western cities, Cincinnati, St. Louis, and others, to Winston-Salem, Durham, and other places in North Carolina, and to Roanoke, Lynchburg, Petersburg, and Norfolk, in Virginia, called the Vir- ginia cities. In the exhibits made part of the com- plaint were the published and exacted rates from these western cities to the Virginia cities on certain numbered and lettered classes and commodities shown on the schedule attached to the complaint; and the rates from the western cities named to Winston-Salem, Durham, and other places in North Carolina on the numbered and lettered classes and on certain commodities were also made part of the complaint. It was specifically charged that mer- chants and shippers in the Virginia cities have a preference and advantage over merchants, manu- facturers, and shippers at Winston-Salem, Durham, and other places in North Carolina in the distri- bution of products, commodities, and merchandise, and that under the unjust and unreasonable adjust- ment of rates and charges merchants and dealers and others at Winston-Salem, Durham, and other North Carolina places have been unable to compete with the Virginia cities in the reshipment of merchandise and manufactured goods in the territory contiguous to Winston-Salem, Durham, and other places in North CaroUna. As part of the complaint, an exhibit showed that the short line distances by rail from the western cities to the Virginia cities and to Winston-Salem, Durham, and other places in North Carolina were over the rails of the Norfolk and Western. It was alleged that the rates and charges of the defendants for the transportation of the various kinds and classes of property to Winston- Salem, Durham, and other places in North Carolina, from the western cities, were unreasonable and unjust in and of themselves, and relatively, as com- pared with the rates and charges from the same points to the said Virginia cities, and that the said rates were unjustly discriminatory and prejudicial; that the rates and charges upon shipments originating at western cities destined to Winston-Salem, Dur- ham, and other points in North Carolina, are at a much greater rate per ton per mile than the rate per ton per mile on shipments destined to the Virginia cities; and that for the distances in North CaroUna or over that portion of the distance south of the Virginia cities named, the rate per ton per mile is still greater than the rate from the point of origin to the said Virginia cities, and that the rates over that portion of the Norfolk and Western in North Carolina are higher than those over any portion of this line. The schedules of rates were referred to in support of the petition. Taking all these averments, and considering that there is specific mention of the Durham and Winston- Salem divisions of the Norfolk and Western, and that the local rates were necessarily included in the 37349—12 2 10 through rates, as the local formed a large part of every through rate to the North Carolina points, it is easily gathered that the local rates were involved in the issues. It may be that if there had been a challenge to the complaint upon the ground that it was lacking in particularity, amendment might have been ordered, but considering that liberality of state- ment which is allowed in pleadings before the Com- mission, the investigation into such local rates was authorized. C. H. & D. R. R. Co. v. Interstate Commerce Commission, 206 U. S., 142; Siler v. Louisville and Nashville R. R. Co., 213 U. S., 175. The next contention is in substance that it appears from the report of the Commission that it adopted a mistaken view, and that this mistaken view was of such a character as to have vital effect upon its find- ings; and hence that this court has the power and should correct the error so made. This contention is based upon the report of the Conmiission, wherein it was assumed that "the present method of constructing through rates by the defendant carriers from Chicago, St. Louis, and Louisville, and by the Norfolk and Western Railway Company from Columbus, Ohio, to Winston-Salem and Durham, respectively, would be continued." "It is our view," the Conamission ob- served, "that such injustice in the rates from these points of origin to the destinations involved as may result from the present excessive rates of the Norfolk and Western Railway Company from Cincinnati will be removed, and that for the present at least no order 11 1^2'b need be made as to the traffic moving from the said points of origin other than from Cincinnati." Petitioners urge that the Commission, in prescribing maximum through rates from Cincinnati to Winston- Salem and Durham, disregarded the " present method " alluded to, such method being the construction of a through rate on any given article of traffic from a western city to Winston-Salem or Durham by adding a fixed proportional of the rate proper between the western city and the Virginia city to the local between the Virginia city and the North Carolina destination; and, further, that by naming figures which do not rep- resent combinations made in the way just described, the relation sought to be maintained between Louis- ville and western points other than Cincinnati can not be preserved. The Norfolk and Western estab- lished the rates from Cincinnati as prescribed by the order, but no reduction of rates has been made by any of the other carriers. These rates before the execu- tion of the order were the same from Louisville to Winston-Salem and Durham as from Cincinnati to those points. Now it is argued that if the method of construction recognized by the Commission should be used in making new rates from Louisville — that is to say, adding the proportionals which are em- ployed as a factor under the present method to the new locals from the Virginia cities to Winston- Salem and Durham — the rates from Louisville will > become less than the rates fixed for the Norfolk and Western from Cincinnati, although the dis- tance is greater. But granting that the order which 12 runs only against the Norfolk and Western does affect rates on other roads carrying from other points than Cincinnati, there is no sufficient reason advanced upon which this court may enjoin against the order of the Commission. Of coiirse adjustments of rates oftentimes do have effect upon adjacent territory. These matters, however, were considered and ex- pressly referred to by the Commission in its report, saying: " We are not unmindful that it is our duty to con- sider rates applied over the entire territory likely to be affected by a change in rates to particular points. It is doubtless true that a reduction in rates to Win- ston-Salem and Durham to the Virginia cities basis would disarrange the whole system of rates now based thereon and made with reference thereto. We have heretofore found that conditions at Winston- Salem and Durham do not justify the extension to them of the Virginia cities rates. This is not equiva- lent, however, to a finding that rates to Winston- Salem and Durham are reasonable. * * *." The conditions described would seem to be inev- itable, yet it is far from being a sufficient reason for defeating the regulation of the particular rates which were under direct investigation. Ordinarily, rates not involved in the inquiry before the Commission will adjust themselves to the conditions brought about by the order, but even though the assumption that they will adjust themselves is erroneous, and the basis for the assumption involves a mistaken factor as to such other rates, still it does not necessarily 13 t.,/: lead to the conclusion that the regulation of the rate directly involved in the order is invalid or that the order fixing such a rate should be annulled by judicial authority, provided always the rate so directly in- volved and fixed is reasonable and just for shippers and carriers, with relation to the particular destina- tions concerned. It may be, too, that the lowering of a rate between two distant points will result in rates to intermediate points over the same line being inconsistent with the provisions of section 4 with reference to the long and short haul clause of the act to regulate commerce, but if so, there presumably is occasion for reducing such rates to intermediate points. In order to sustain reasonable rates to intermediate points, unreason- able rates between more distant points can not be sustained. It is not for us to say whether the Commission has properly attached great or little weight to evi- dence adduced upon a given point, or whether the conclusion reached by the Commission upon testi- mony as to facts alone shows mistake as to some particular fact not essential or vital to the proceed- ing; or inadvertency; or is not such a conclusion as this court might have reached. If the particular matter in issue and inquired into was one of fact and a full hearing was afforded, and the conclusion reached is supported by substantial evidence, it wiU not be nullified by the coiu-ts. Interstate Commerce Commission v. Union Pacific R. R. Co. et al., 222 U. S., — . 14 Special attention is addressed to grain rates. The Commission found no justification upon the facts appearing for condemning as unreasonable or other- wise unlawful the commodity rates on grain east- bound in carloads. Petitioners point out that the grain rate from Cincinnati to Winston-Salem and Durham as thus approved was 28J cents per one hundred pounds; that the commodity rate on grain in carloads from Cincinnati to Roanoke and Lynch- biu-g is 14 cents, and that the any-quantity rate pre- scribed from Roanoke and Lynchbm-g to Winston- Salem and Durham is 13 cents, making a total of 27 cents, and it is said that under the fourth section as amended, carriers being compelled to observe the combination of intermediate rates, the Norfolk and Western has found it necessary to publish a rate of 27 cents. From this it is argued that although 28^ cents was given ''the stamp of reasonableness" by the Commission as the grain rate from Cincinnati to Winston-Salem and Durham, compliance with the order results in a rate of 27 cents. The testimony heard in this court upon the issues presented goes to show that the Cincinnati-Roanoke grain rate of 14 cents was compelled by competition with the Chesa- peake and Ohio, and that with the 14 cent rate from Cincinnati to Roanoke and Lynchburg, the Com- mission having prescribed the 13 cent local rate, the Norfolk and Western had no alternative other than to make a through rate to Winston-Salem and Dur- ham of 27 cents. About 15 per cent of the traffic hauled by the Norfolk and Western to Winston- 15 i.v -^ 7 Salem and Durham is grain. Carrying out the argu- ment, it is said that other carriers of grain to the North Carolina destinations must make their rates correspond to the 27 cent rate of the Norfolk and Western and suffer the reduction of revenue inevitably to foUow. In this connection the evi- dence shows that of the Seaboard Air Line traffic from the west in 1910, 55 per cent was grain and grain products delivered at Durham, while only about 30 per cent of such products was delivered there in 1911. It would seem, however, that there is nothing to prevent the carriers interested from going before the Commission and asking that they be allowed to make a through grain rate of 28J cents instead of 27 cents, which is the combination of the local rates. Apparently there is no restriction upon the power of the Commission to determine such a question, in view of the peculiar situation with reference to the Virginia cities rates. But without deciding whether or not the Commission, under section 4 of the Act to regulate commerce as amended in 1910, is authorized to allow a through rate which is higher than the aggregate of the intermediate rates, it can not be successfully disputed that the order of the Commis- sion reducing the rates from Lynchburg and Roanoke to the North Carolina points involved to 13 cents for the distances — 122 miles to Winston-Salem and 117 miles to Durham — was in itself the fixing of a rea- sonable and just rate. Assuming that the rate from Cincinnati to Roanoke and Lynchburg is forced by competition to an unreasonably low point, still the 16 carrier has no right to coraplain because it can not maintain an unreasonably high rate between Eoan- oke and Lynchburg and Winston-Salem and Durham. Stress is laid upon what is called a "misconcep- tion" of the relation of other carriers to the western business, in that the Commission stated that the carriers which intervened before it did not "in any significant amount participate in traffic to Winston- Salem and Durham from the points in question." Again we encounter what was a question of fact. The report of the Commission refers to the pressure upon the attention of the Commission of the "possi- bility of disaster " to the interests of the intervening carriers if the prayer of the petition should be granted. Evidently there was evidence showing that besides the Norfolk and Western, the Louisville and Nash- ville, the Southern, and the Seaboard Air Line Rail- roads participated in the traffic. In the motion for a rehearing the moving parties recognized this, saying : " While there is no detailed eAddence on the subject in the record, it was made to appear that the intervening carriers are very largely interested." True, in this court it was testified that in 1910, for instance, the LouisviUe and NashviUe delivered at Norton 44.3 per cent of the total tonnage delivered at Winston-Salem by the Norfolk and Western, and in 1911, 28.8 per cent, and that in 1910 of the total tonnage delivered by the Norfolk and Western at Durham 49.2 per cent was received from the Louis- ville and NashviUe at Norton, and in 1911, 39.1 per cent, and it was the opinion of the traffic manager 17 / / I ^1 of the Norfolk and Western that this decrease in the Norton percenta,ge was accounted for by the lowering of the rates below the Louisville and Nash- ville rates via Norton. The testimony also tended to show that in September, 1910, the Southern delivered at Durham 384,993 pounds of the western traffic, and in September, 1911, only 256,090 pounds, and to Winston-Salem proper from Cincinnati and passing through Cincinnati in September, 1910, via the Southern the movement was 332,413 pounds, and in September, 1911, 120,104 pounds; and that from and via Cincinnati and from and via other Ohio River crossings said to be affected by the reduced rates the movement via the Southern in September, 1910, was 2,213,711 pounds, and in September, 1911, 1,609,611 pounds. There was also evidence tending to show that certain business that formerly moved into Durham from Petersburg and Rich- mond over the Seaboard Air Line now moves from Lynchburg by reason of the reduction ordered by the Commission. We must remember, however, that the Commission was expressing its opinion upon the evidence which was before it when it made the order of June 7, 1910; hence so much of the evi- dence as shows that a volume of business which these other lines once had has been lost since the order of the Commission went into effect is not helpful in getting at the exact meaning of the term "sig- nificant amount" as used by the Commission. Some substantial participation having been proved 'if^ 18 before the Commission, whether the extent of it was worthy of being characterized as "significant" be- came a matter of inference from facts, and it is beyond the power of this court to say that as a matter of law the order must fall because of such characterization. We observe this express language of the Commis- sion in its report: "We have considered these rates from the viewpoint of distance and transportation conditions, by the amount of revenue received, as shown by per ton-mile calculations, and drawn into consideration all matters which in any way relate to traffic between the points involved." The petition for a rehearing set forth with care the grounds upon which the petitioners conceived the Commission had erred and misapprehended facts. The rehearing was denied, and no cause is made to appear to us for be- lieving that the conclusions of the Commission should be disturbed. The rates ordered to be put in force by the Norfolk, and Western being reasonable, we can not say that because other roads have not met the reduced rates and are losing traffic as a consequence the order of the Commission should be interfered with. Decree for respondents. O United States Commerce Court. No. 60. — February Session, 1912. Baltimore & Ohio Southwestern Railroad Com- pany AND Norfolk & Western Railway Com- pany, PETITIONERS, V. United States of America and Cincinnati & Columbus Traction Company, respondents. Interstate Commerce Commission, intervener. ON MOTION FOR PREIIMINARY INJUNCTION. For opinion of the Interstate Commerce Commis- sion, see 20 I. C. C. Rep., 486. Mr. Edward Barton, Mr. Theodore W. Reath, and Mr. R. Walton Moore, with whom Mr. Joseph I. Doran was on the brief, for the petitioners. Mr. Winfred T. Denison, Assistant Attorney Gen- eral, and Mr. Blackburn Esterline, special assistant to the Attorney General, for the United States. Mr. C. Bentley Matthews for the Cincinnati & Co- lumbus Traction Company. Mr. Charles W. Needham for the Interstate Com- merce Commission. 37660—12 Before Knapp, Presiding Judge, and Archbald, Hunt, Garland, and Mack, Judges. [April 9, 1912.] Archbald, Judge: This is a bill to set aside an order of the Interstate Commerce Commission. The proceedings before the Commission were instituted by the Cincinnati & Columbus Traction Company, an electric suburban railway, incorporated under the laws of Ohio, against the Baltimore & Ohio Southwestern Railroad and the Norfolk & Western Railway, two separate trunk lines running east and west across the State of Ohio. The proceedings were taken under the first section of the iaterstate-commerce act to compel a switch connec- tion at separate points with each of the railroads men- tioned, and also to secure through routes and j oint rates under the fifteenth section. There was a prayer in the latter connection that the railroads be required to exchange cars and equipment. The Commission in a joint order against both roads substantially granted the relief prayed for. The provisions of the act with regard to the com- pelling of switch connections are as follows : " Any common carrier subject to the provisions of this act, upon application of any lateral, branch line of railroad, or of any shipper tendering interstate traffic for transportation, shall construct, maintain, and operate upon reasonable terms a switch connec- tion with any such lateral, branch line of railroad, or private side track which may be constructed to con- 3 /^ . 5 :: nect with its railroad, where such connection is rea- sonably practicable and can be put in with safety and will furnish sufficient business to justify the construc- tion and maintenance of the same; and shall furnish cars for the movement of such traffic to the best of its ability without discrimination in favor of or against any such shipper. If any common carrier shall fail to install and operate any such switch or connection as aforesaid, on application therefor in writing by any shipper or owner of such lateral, branch line of rail- road, such shipper or owner of such lateral, branch line of railroad may make complaint to the Commission, as provided in section thirteen of this act, and the Commission shall hear and investigate the same and shall determine as to the safety and practicability thereof and justification and reasonable compensation therefor, and the Commi? iion may make an order, as provided in section fifteen of this act, directing the conunon carrier to comply with the provisions of this section in accordance with such order, and such order shall be enforced as hereinafter provided for the en- forcement of all other orders by the Commission, other than the orders for the payment of money." The words in italics were not in the act at the time the application for the switches in question was made to the railroads, nor at the time of the complaint to the Commission, which followed, but were intro- duced over a year afterwards, in June, 1910, by way of amendment. At the time the proceedings were instituted, therefore, the traction company had no right to file the complaint, and the Commission, in 4 consequence, except for the change in the law, would have been without authority to entertain it. Interstate Commerce Commission v. D. L. & W. R. R., 216 U. S., 531. After the testimony had been taken, however, and before any order had been entered, in March, 1910, immediately following the decision just cited, the case was reopened at the instance of the traction company to permit two shippers along the line of the road, one at Marathon and the other at Hillsboro, to be added as complainants. This was ob- jected to by the railroads on the ground that it could not overcome the want of jurisdiction when the case originated, and could not in any respect supply the necessary preliminary application in writing, which is required by the statute as the basis of the subse- quent proceedings. The Commission overruled the objection, and, having considered the case on the merits, made the following order: " This case coming on to be fiu"ther considered, and it appearing that the parties in interest have failed to put in effect the findings made by this Commission in its report herein, dated March 14, 1911, and that the above-named complainant petitions by counsel for an order of relief in the premises : " It is ordered that defendant The Baltimore & Ohio Southwestern Railroad Company be, and it is hereby, notified and required to construct, on or before the 15th day of February, 1912, and thereafter to main- tain and operate during a period of not less than two years, a switch connection for the transfer of inter- state traffic to and from the line of the above-named complainant company at Madeira, Ohio, the expense of installing such connection to be borne by said complainant. "It is fm-ther ordered that said defendant The Baltimore & Ohio Southwestern Railroad Company, be, and it is hereby, notified and required to con- struct, on or before the 15th day of February, 1912, and thereafter to maintain and operate during a period of not less than two years, a switch connection for the transfer of interstate traffic to and from the line of the above-named complainant company at or near HiUsboro, Ohio, the expense of installing such connection to be borne by said complainant. "It is further ordered that defendant Norfolk & Westeirn Railway Company be, and it is hereby, noti- fied and required to construct, on or before the 15th day of February, 1912, and thereafter to maintain and operate during a period of not less than two years, a switch connection for the transfer of interstate traffic to and from the lines of the above-named coinplainant company at or near HiUsboro, Ohio, the expense of installing such connection to be borne by said com- plainEint. "And it is fUrthet" ordered that defendants The Baltimore & Ohio Southwestern Railroad Company and Norfolk & Western Railway Company, according as their various lines may run, be, and they are here- by, notified and required to establish and put in force, on or before the 15th day of February, 1912, and for a period of at least two years thereafter to maintain, through routes to and from interstate points to and from all points on the complainant's line between and including Boston and Dodsonville, in the State of Ohio, in order that shippers at and between those points may have access to and from interstate points by interchange of cars under through billing and through charges based upon the rates of the respective carriers herein to and from the junction points estab- lished by this order, the complainant carrier having filed its local rates with this Commission as applicable to interstate movements over such through routes." Several objections are made to this order. In the first place, renewing the one made before the Com- mission, it is contended that the introduction, while the case was pending before the Commission, of entirely new and different complainants, who had made no previous application for the switches, was beyond the power of the Commission to allow, and vitiates the proceedings. An initial application in writing from the party entitled to make it at the time is essential, as it is said, in order to comply with the statute, and can not be dispensed with nor afterwards supplied, and, with all that has been done, is still lacking. Nor is this met, as it is urged, by the suggestion that the Commission is an administra- tive body not hampered by rules, and thus compe- tent to reform the proceedings in the way which was done to meet the exigency. It was also further objected that the Commission failed to determine the compensation to be severally made to the railroads for the switch connection with each which was ordered, having simply directed that 7 1/37 the expense of installation should be borne by the traction company, without, more, although the statute requires that, along with the question of the safety, practicability, and Justification for the switch connection, the Commission shall determine the reasonable compensation for it. And it is finally objected that, in excess of its powers or even of Congress itself to require (Central Stock Yards Co. v. Louisville & Nashville R. R., 192 U. S., 568; Same v. Same, 212 U. S., 132), the Commission ordered an interchange of cars along with through bUling. These are serious objections which would have to be carefully considered except for the conclusion which we have reached on the underlying question, viz, whether the traction company's road is a "lateral, branch line of railroad" within the meaning of the statute, which, if found against that company, is con- clusive. The Cincinnati & Columbus Traction Company was organized and is operated under the laws of Ohio as an electric interurban railway and is classified by those laws with street railways, by the provisions for which, and not those for steam railroads, it is con- trolled and regulated. It was chartered to con- struct a line of this character from Cincinnati to Co- lumbus, something over a hundred miles^ which has actually been built from Norwood, a suburb of Cin- cinnati, to Hillsboro, about half the distance. It is a common carrier of persons and property, and is also engaged in the transportation of express matter. 8 The Baltimore & Ohio Southwestern Raib-oad is a consolidated corporation organized under the laws of Ohio and Indiana, and operating an eastern and west- ern trunk line, through and across those States, into and through the State of Illinois, and also into the State of Kentucky. It reaches Hillsboro by a branch line which connects with its main line, running to Cincinnati. The Norfolk & Western Railway is organized un- der the laws of Virginia and operates a line of railway extending through parts of Ohio, West Virgiilia, Kentucky, Maryland, North Carolina, and Tennessee. It also has a branch line to Hillsboro, which connects with its main line to Cincinnati. In relative position to the line of the Cincinnati & Columbus Traction Company the Baltimore & Ohio Southwestern is to the north and the Norfolk & Western to the south of it, the traction company's railroad being intermediate between the two and substantially dividing the diamond-like section of territory lying in between them. At Norwood thd station of the traction company immediately adjoiilS that of the Baltimore & Ohio Southwestern, and for about six miles east from there its line not only parallels but is contiguous to the right of way of that rEtilroad, while a few miles further on, at Perinton, it practically adjoins the right of way of the Norfolk & Western, which it similarly parallels for about fouf miles to Stonelick; and at the other or eastern end, for a distance of some four or five miles, at HillsborOj it again parallels the tracks of the Baltimore & Ohio Southwestern, the rights of way of the two roads being immediately adjacent. As found by the Commission in its report, the com- munities common to the traction company and the railroads at the eastern end of the line in the vicinity of Hillsboro are reasonably well served by those roads with respect to interstate shipments; and the same is true also of the places at the other end, from Stone- lick westward, some of which are within a stone's throw of either the Norfolk & Western or the Balti- more & Ohio Southwestern. But at Boston, to the east of there, £l toWn of some five hundred inhabit- ants, the distance is about five miles by the country roads to Batavia and something less than that to Baldwin, both of them stations on the line of the Norfolk & Western, and not less than eight miles to the nearest station on the Baltimore & Ohio South- western, while Dodsohville, a town of one hundred and fifty people, still further east towards Hillsboro, is also some four dr five miles away from any station on the Baltimore & Ohio Southwestern and as much as eight miles frdm the nearest station on the Norfolk & Western. And between Boston on the west and Dodsonville on the east, a distance of about twenty miles, there are several villages, the largest of which is Fayetteville, with seven hundred inhabitants, which are from five to twelve miles distant from one or the other of the steam roads in question. Conceiving that the first set of places described were sufficiently served in interstate commerce by the Norfolk & Western Railway or the Baltimore & 10 Ohio Southwestern Raih-oad, the Commission de- clined, so far as they were concerned, to make any order establishing through routes or joint rates be- tween the steam roads and the traction company. But, on the other hand, this not being the case between Boston and Dodsonville, by reason of the distance from the steam roads, approximating not less than five miles in each instance, through routes and joint rates were established, and a switch con- nection given to make this effective. This connec- tion was directed to be made, as to the Baltimore & Ohio Southwestern Railroad, at or near Hillsboro on the eastern end, and at Madeira, a few miles out of Norwood, on the western; and as to the Norfolk & Western at Hillsboro only, nothing being said as to any connection with it to the westward. The exact points where the connections should be made were not indi- cated, but the feasibility of connecting in each in- stance is asserted, in view of the fact that when the traction road was in process of construction, ten or more years ago, there was such a physical connection with the one road at Madeira on the western end and with both roads on the eastern end at a point spoken of as Hillsboro Junction. It is intimated that if the parties can not agree as to the specific place for making the connection in each case, a more definite order will be entered. In considering whether upon this showing the Cin- cinnati & Columbus Traction Company is a lateral branch railroad, within the meaning of the law, it is to be observed that, according to the test applied by 11 :, the Commission, it is held to be such as to places and shippers along its line in the intermediate territory between Dodsonville and Boston, remote from and not sufficiently served by the trunk lines, but not as to those east or west of there, as the road approaches its termini, where this is not the case. But it is obvious that this is not and can not be the correct criterion. A road is or is not a lateral branch rail- road, according to the relation which it bears to the line with which a switch connection is asked. And this relation is one of road to road, and not of ship- pers or territory. A road, in other words, does not have the character of a branch or lateral road as to some shippers and territory and not have it as to others. There is no such dividing up or limiting it, nor can it be of that shifting kind. Looking to the purpose of the law, a road is a lateral branch road when it is tributary to and dependent on another for an outlet; that is to say, where it is essentially a feeder, contributing traffic and capable of interchang- ing it therewith. It is not such where it is in effect an independent and competing line. Nor is this any less the case because it may not compete as to a portion of the territory involved. It is the general effect which decides, and that is not in doubt here.. All three roads in the present instance have the same general east and west direction, and, so far as con- cerns Hillsboro on the east and Cincinnati or Norwood on the west, run between the same points. For half this distance also one or other of the steam roads draws its local traffic from and serves substantially 12 the same territory as the traction company. And so clearly are they, within the limits named, competing lines, that admittedly any attempt to consolidate the traction company with either of them would offend against the State if not the Federal law. Neither is it every carrier that is entitled to a switch connection with every other. As is said in the Rahwdy VaU&y Railroad case (216 U. S., 531), "Thei object was not to give a roving commission to every road that might see fit to make a descent upon a main line." It iS the dependent or tributary chalracter which gives rise to the right, and that is not determined by mere piroximity or terminal approach, or the fact that the road seeking a connection has come to the end of its line. The contrast in the statute is with a private side track constructed to connect with an interstate carried, with which a lateral branch road is thus associated and presumably intended to be compared. The point here is that the traction company's road, instead of being dependent or tributary, is in its own peculiar sphere, and, as to both the steam roads, an equal, independent, and competing line. Nor is this affected by the fact that as at present constructed it extends no further than Hillsboro or Norwood, and that upoti the arrival at either of these places its carriage of persons or property is at an end. This is true even of a trunk line, when its terminus is reached, without thereby making out the necessary relation by which a switch connection with another road is able to bd compelled. It may be that some shippers along the line of the traction company's road are not so fully 13 t., . > accommodated as they might be, as the case stands; and theu" needs are to be consulted to a certain extent without doubt. But this is not controUing, and their rights have necessarily to be worked out through the road for which in each instance a switch connection is sought, the character of which as a lateral branch line is only incidentally affected thereby. Without undertaking therefore to further define a "lateral branch line of railroad," we are clearly of opinion that the road of this traction company does not come within any reasonable meaning of the language used in the statute to describe the class of roads entitled to a switch connection. And if we are right in this view, the Commission was without jurisdiction to make the order in question. A preliminary injunction was therefore properly ordered and the motion to dismiss will he overruled. O United States Commerce Court. No. 54.— April Session, 1912. ^c/*i' Anaconda Copper Mining Co. and Boston & Montana Consolidated Copper and Silver Mining Co., petitioners, V. United States of America, Respondent, Inter- state Commerce Commission and Pittsburgh & Lake Erie Railroad Co., et al., interveners. ON MOTIONS TO DISMISS. Mr. William A. Glasgow, jr., and Mr. Charles D. Drayton, with whom Mr. James M. Beck and Mr. C. F. Kelley were on the brief, for the petitioners. Mr. Winfred T. Denison, Assistant Attornjey Gen- eral, with whom Mr. Thurlow M. Gordon, special assistant to the Attorney General, was on the brief, for the United States. Mr. P. J. Farrell for the Interstate Commerce Commission. Mr. George Stuart Patterson and Mr. Frederic D. McKenney, with whom Mr. Ora E. Butterfield, Mr. W. Ainsworth Parker, and Mr. R. Walton Moore were on the brief, for the intervening carriers. Before Knapp, Presiding Judge, and Archbald, Hunt, Garland, and Mack, Judges. 47202-12 [June 7, 1912.] Garland, Judge: Petitioners are corporations engaged respectively at Anaconda and Black Eagle, in the State of Mon- tana, in smelting ores containing copper, silver, and gold. On April 21, and March 11, 1909, they filed with the Interstate Commerce Commission nine sep- arate petitions against certain carriers by railroad wherein it was prayed that the Commission grant an order compelling said carriers to cease and desist from charging petitioners and other shippers of coke over their lines of road from points in the State of West Virginia to Chicago and South Chicago, in the State of Illinois, 30 cents per hundred pounds in excess of the amount charged to other persons and corporations shipping coke contemporaneously be- tween the same points, intended for use in smelting iron from the ores, and also that the petitioners be awarded reparation. Such proceedings were there- after had in the matter of said petitions that on De- cember 12, 1910, the Commission made its report and order dismissing the same. The Commission found that the carriers had tariffs in accordance with which they charged, from the ovens in West Virginia and Pennsylvania to Chicago and certain Chicago points, a rate of $2.35 per net ton on coke when used for smelting iron from the ores; that said carriers in their tariffs charged for the transportation of coke between the points named, when used for other purposes than the smelting of iron from the ores, a rate of $2.65 per net ton; that the rates assessed upon the shipments shown to have been made by the petitioners were the separately estabUshed or joint through rates from the West Vir- ginia-Pennsylvania ovens to Chicago, plus the rates beyond to Anaconda and Black Eagle, Montana. At no time during the period that said shipments were made was there a joint through rate on coke by way of Chicago from the West Virginia-Pennsyl- vania ovens to either of these destinations; that, while some shipments were made to Montana direct, most of the coke moved from the ovens to Chicago, where it was reconsigned to the complainants. In either case the method of assessing and paying the freight charges was identical; that is, the coke rate from the ovens to Chicago was carried forward and paid at destination as advanced charges, and that it was improper for carriers to base their charges upon the use to which a commodity may be put. The Commission further found, upon the question of reparation, as follows : "The question remains to be determined whether the complainants are entitled to reparation, regard- less of whether the $2.65 rate was or is unjust or un- reasonable in and of itself. The complainants con- tend that it is illegal, unlawful, and contrary to the act for said defendants to charge a different or greater rate for transporting coke based upon its use, and that the $2.65 rate was unjust, unreasonable, and dis- criminatory. They offered no evidence whatever to show or prove that the $2.65 rate was in and of itself unjust, unreasonable, or discriminatory, save what appeared on the face of the tariffs, and left the unjust- ness, the unreasonableness, and discrimination to be deduced or inferred as a matter of law. The freight- traffic managers of the defendants testified that the $2.35 rate was a very low rate, and that the $2.65 rate was a just and reasonable rate for the service performed and was not in any manner excessive. The average distance from the ovens to Chicago by the lines of the defendants is about 575 miles, and the $2.65 rate yields an average revenue of 4.6 mills per ton-mile. "Since July, 1903, the open rate on coke over all lines from the ovens in Pennsylvania and West Vir- ginia to Chicago has been $2.65 per net ton. This rate has been, and is, the basing rate from said points of origin to Chicago, and for all territory, both east and west thereof, and has been paid by all consumers of foundry and other than furnace coke continuously during the past seven years, and no complaint has ever been made against it until these proceedings were instituted for reparation. The lower rate of $2.35 per net ton for use in blast furnaces for smelting iron from the ores was a tariff reduction, effective not earlier than July, 1905, and has been applied only to Chicago and vicinity, and is a very low rate for the service performed, and in and of itself is not deemed conclusive evidence of the unjustness or unreason- ableness of the $2.65 rate. "Copper and iron can not fairly be said to compete with each other in view of the fact that iron sells for less than $20 per ton and copper for anything between $200 and $500 per ton. There is no pretense in this 5 i^ 4^y case that the complainants were engaged in smelting iron from its ores. The allegation in some of the petitions, that the complainants were engaged in smelting ores containing copper, silver, gold, and iron, does not place them under the terms of the tariffs providing for the rate on blast-furnace coke, and no effort was made on the part of the complainants to show that they ever actually smelted iron from its ores. "In view of aU the facts and circumstances in these cases, we are not convinced that the rate of $2.65 per net ton charged the complainants was either unjust or unreasonable for the services rendered by the defendants." Petitioners have brought this case for the pur- pose of having annulled and set aside the order of the Commission dismissing the petitions in the above- mentioned cases. A motion to dismiss the petition in this case has been filed by respondent and by each of the intervening respondents. The grounds upon which said motion to dismiss is based, speaking gen- erally, are: Want of jurisdiction of the Commerce Court in the premises, and the failure of the peti- tion herein to state a cause of action. Counsel for petitioners claim in this court, as they did before the Commission, that when it appears that there was one rate of $2.35 per net ton on coke from West Virginia -Pennsylvania ovens to Chicago when the coke was to be used in smelting iron from the ores, and another rate of $2.65 per net ton between the same points on coke to be used for other purposes 6 than the smelting of iron from the ores, it clearly fol- lows as a matter of law that the $2.65 rate is unlawful, unreasonable, and unjust, and that petitioners were entitled before the Commission to have an award based upon their shipments of the difference between the two rates, the petitioners having paid the higher rate. The Commission having refused to sustain this claim of the petitioners, they now urge that the order of the Commission dismissing their petitions was illegal by reason of a mistake in law, and that this court may correct the same by setting aside the order of dismissal. We do not think that we are called upon to decide what the law would be if applied to a case where there was no finding by the Commission as to the unrea- sonableness of either rate, for the reason that as ap- pears from the report of the Commission there was evidence introduced by the carriers and otherwise appearing in the case as to the reasonableness of the $2.65 rate, and the Commission in the exercise of a power clearly vested in it by law, having found that the $2.65 rate was not unreasonable and unjust, we are of the opinion that we have no authority nor juris- diction upon the present record to disturb that find- ing, and that the Commission having found that said rate of $2.65 was not unjust and unreasonable in and of itself, we can not say as a matter of law that be- cause there was a lower rate charged on coke used in smelting iron from the ores that the petitioners were injured within the meaning of section 8 of the act to 7 , .' '"*'/ ' I./ vi f regulate commerce. (Knudson- Ferguson Fruit Co. v. M. C. R. Co., 148 Fed., 968; Parsons v. C. & N. W. Ry. Co., 167 U. S., 447; E. Lauer & Son v. Southern Pacific Co., 18 I. C. C, 109; Bash Fertilizer Co. v. Wabash R. Co., 18 I. C. C, 522; Copper Queen Con- solidated Mining Co. v. B. & 0. R. R., 18 I. C. C, 154; Anaconda Copper Mining Co. v. Chicago & Erie R. R. et al., 19 I. C.'C, 592; International Salt Co. V. Penn. R. Co., 20 I. C. C, 539; CaHer White Lead Co. v. Norfolk & Western R. Co., 21 I. C. C, 41; M. A. Kennedy & Co. v. St. L. & S. W. Ry. Co., 22 I. C. C, 277.) It further aflfirmatively appears in the record that petitioners as to shipments of coke were not in com- petition with persons or corporations to whom the lower rate was charged, and this fact was considered a bar to a recovery in the following cases: Mitchell Coal & Coke Co. v. Pennsylvania R. Co. (181 Fed., 403), Charles H. Lilly Co. v. N. P. R. (117 Pac. Rep., 401). Upon the question of jurisdiction we see no reason for departing from our ruling in the cases of Thompson Lumber Co. v. Interstate Commerce Commission et al. (193 Fed., 682), and Russe & Burgess v. Interstate Commerce Commission et al. (193 Fed., 678). Upon the facts in the record we think we must dismiss the petition of the petitioners filed in this court, and it is so ordered. O United States Commerce Court. No. 55. — April Session, 1912, Crane Iron Works, petitioner, V. United States, respondent, Interstate Com- merce Commission et al., interveners. - - ON MOTIGITS TO DISMISS. For opinions of Interstate Commerce Commission see 15 I. C. C. Rep., 248, and 17 I. C. C. Rep., 514. Mr. William A. Glasgow, jr., and Mr. Cyrus G. Derr, with whom Mr. Charles F. Diggs was on the brief, for the petitioner. Mr. Winfred T. Denison, Assistant Attorney General, with whom Mr. Thurlow M. Gordon, special assistant to the Attorney General, was on the brief, for the United States. Mr. P. J. Farrell for the Interstate Commerce Com- mission. Mr. Jackson E. Reynolds for the Central Railroad Company of New Jersey, intervener. Before Knapp, Presiding Judge, and Archbald, Garland, and Mack, Judges. 46776—12 [June 7, 1912.] Knapp, Presiding Judge : The petitioner in this case, the Crane Iron Works, instituted proceedings before the Interstate Com- merce Commission against the Central Raih-oad Com- pany of New Jersey and the Crane Raih-oad Company to procure an order requiring the defendant rail- roads to establish through routes and joint rates on certain commodities between points on the Crane Railroad and points in the State of New Jersey on the lines of the Central Railroad ; and also for repara- tion on account of previous shipments. After fuU hearing the Commission made a report (17 I. C. C. Rep., 514) to the effect that petitioner was not entitled to the relief sought, and thereupon entered a.n order dismissing the proceedings. Thereafter this suit was brought to set aside and annul the Commission's order of dismissal on grounds which will be hereafter stated. The United States filed a motion to dismiss on the ground that the peti- tion did not state a cause of action, and a like motion to dismiss was filed by the Commission which had intervened. On these motions the case has been argued and submitted. There had been a previous application to the Com- mission for the same purpose by the Crane Railroad Company, which the Commission also dismissed, as appears by its report and order therein (15 I. C. C. Rep., 248). Both reports are attached to and made a part of the petition now before us, and from these 3 t/S'"J^ reports and the petition itseK the following facts appear: The petitioner is a corporation organized under the laws of Pennsylvania and located in the borough of Catasauqua, in that State. It was incorporated about the year 1895 for the purpose of acquiring the plant and property of the Crane Iron Company, which had for many years carried on the business denoted by its name. At that time the plant con- sisted of three blast furnaces, together with appurte- nant buildings, storage bins, etc., and a private railroad connected with the works. It does not appear when this railroad was constructed or when it was extended to connect with exchange tracks of the Central Railroad and other long-line carriers; but it does appear to have been in use for the purposes of the iron plant for more than thirty years. In the operation of this plant it is necessary to transport loaded cars received by rail to various points within the hmits of the plant for unloading, to trans- port cars which have been loaded with its product from various points within the plant to the hne of railway by which they are taken to destination, and also to some extent necessary to move cars from point to point within the plant itself. For these pur- poses the iron works long ago laid down rails ex- tending from a connection with the Central Railroad to the various points within its plant where cars were to be placed. The line of the Central Railroad ex- tends through the premises of the iron works and the point where the two raiboads connect is now and always has been upon the iron works' land. The iron works also provided the necessary locomotives for operating the various tracks which it had buUt to accommodate the needs of its plant. In actual operation loaded cars destined for the iron works were placed by the Central Railroad upon a track known as the exchange track, from which they were taken by the locomotives of the iron works and hauled to the required point within its plant. When cars were loaded for movement out they were taken by the same locomotives and placed upon the ex- change track, where the Central Railroad received and transported them to destination. These loco- motives were also used for moving cars from point to point within the plant as might be desired. For this service the petitioner has never received and, until the organization of the Crane Raihoad, had never claimed that it should receive compensa- tion from the Central Raih-oad. Indeed, it seems to have been assumed that these tracks and engines were a necessary part of the plant of the iron works whose business could not be properly carried on without them. In process of time a few other industries, perhaps half a dozen, were located in close proximity to the premises of the iron works, though not upon its land, and these industries were so situated that loaded cars could be transported between the tracks of the Central Railroad and the industry only over the rails of the Crane Iron Works. For the purpose 5 US'^ of serving these industries, the Crane Iron Works extended its rails beyond its own land to these sev- eral plants. Cars for these industries were placed upon the same track with those intended for the iron works and taken by the locomotives of the iron works over the rails of that company to the several industries. For this service the iron works made a charge to the industry which seems to have been usually two doUars a car. The different railroads bringing these cars to Catasauqua, including the Central Railroad, paid to the iron works towards defraying this charge at first five cents and subse- quently six cents per ton. This condition seems to have continued for many years, during which time, as above stated, the iron works neither claimed nor received any compensation for handling its own freight. Under the statutes of Pennsylvania a private railroad cannot connect with a public railroad except for handling the business of the owners of the private railroad, and the iron works was advised that it had no lawful right to perform this switching service for the other industries. Accordingly, in 1905, the Crane Railroad Company was incorporated, and the tracks and other property used by the iron works in connection with its railroad were conveyed to the Crane Railroad Company, together with a strip of land ten feet wide wherever its rails were laid upon the land of the iron works and also what- ever rights of way it might have in reaching the other industries in question. The capital stock of both the Crane Iron Works and the Crane Railroad Com- pany is owned by the Empire Iron & Steel Company, and the management of the Crane Railroad Company after the incorporation continued in the same manner as before, although the operating accounts of the two companies were kept entirely separate. Although the Crane Railroad Company was organ- ized in 1905 it did not begin business on its own account until the following year, since which time it has charged both to the other industries and to the Crane Iron Works two dollars per car for this switching service, and it is insisted that the various railroads entering Catasauqua should absorb this switching charge. The Central Railroad has de- clined to make any allowance on account of cars handled for the Crane Iron Works, but has made an allowance of six cents per ton on traffic consigned to or from the other industries. The principal contention of petitioner appears to be that the Crane Railroad Company is a common car- rier subject to the provisions of the act to regulate commerce and the jurisdiction of the Commission; that this was conclusively established by the evidence before the Commission ; that the Commission, in failing to find the fact accordingly and leaving it undeter- mined, committed an error of law ; that as such com- mon carrier the Crane Railroad Company is legally entitled to compensation for the transportation serv- ice which it is alleged to perform for petitioner; and that therefore it was error of law for the, Commission to refuse the relief which the petitioner sought to 7 ^^7 secure. Incidentally, and in support of the main con- tention, it is further claimed that the dismissal order was erroneous because the undisputed evidence established as matter of law unjust discrimination on the part of the Central Railroad of New Jersey, in that it pays the Crane Railroad, out of the tariff charge which it collects, for transporting cars to and from the other industries located on the tracks of the Crane Railroad, but refuses to pay anything for transporting cars to or from the Crane Iron Works. The Crane Railroad Company is organized under the railroad law of Pennsylvania; which, among other things, declares that all railroads so organized shall be common carriers. In that State it has undoubtedly the legal status of a common carrier, with such privi- leges and obligations as pertain to railroad cor- porations in Pennsylvania. It is not necessary to discuss whether the Crane Railroad is in fact a common carrier within the meaning of that term as used in the act to regulate commerce, because we shall assume for the purposes of this case that it is a com- mon carrier subject to the act, and the matters in dispute will be decided on that assumption. But granting all that is claimed in this regard, it does not foUow, as we think, that petitioner is there- fore entitled to have joint rates estabUshed, or that the dismissal order of the Commission is for any rea- son unlawful. The substantive basis of petitioner's contention is the following provision in the first sec- tion of the act: "And it shall be the duty of every carrier subject to the provisions of this act * * * to establish through routes and just and reasonable rates appUcable thereto." It will be observed that the obhgation to establish "joint rates" is not im- posed, but only the obhgation to establish ''through routes," with just and reasonable rates apphcable thereto. Undoubtedly, connecting carriers are re- quired to facilitate the movement of traffic by pro- viding through routes, but the apphcation of joint rates to such routes is not obUgatory except as required by the Commission after notice and hearing. If through routes are voluntarily estabhshed the rates fixed for transportation over such routes are subject to the regulating power of the Commission; and the Commission may require joint rates to be provided, fixing the amount thereof and the divisions between the several carriers when they are unable to agree among themselves. If the Crane Railroad be regarded as performing the service of a public carrier, a service which the shipper is not required to provide, and not a private service which the shipper must furnish at its own expense, we see no reason to doubt upon the facts now disclosed that through routes in this case have been provided and are in full operation. All the facilities of interchange and through movement are in current use, and traffic in fact moves freely from points on one road to points on the other. Indeed, we do not perceive that anything more or different could be done by either road to bring about the phys- ical conditions and incidents which constitute through routes. ' ^6/ The authority of the Commission to require joint rates is found in a paragraph in the fifteenth section of the act, which reads as follows: "The Commission may also, after hearing, on a complaint or upon its own initiative without com- plaint, establish through routes and joint classifica- tions, and may establish joint rates as the maximum to be charged and may prescribe the division of such rates as hereinbefore provided and the terms and conditions under which such through routes shall be operated whenever the carriers themselves shall have refused or neglected to establish voluntarily such through routes or joint classifications or joint rates; and this provision shall apply when one of the connecting carriers is a water line." That this invests the Commission with discre- tionary power, and was so intended, can not be seri- ously doubted. Not only is the grant of authority permissive in form but the entire paragraph con- templates the exercise of judgment upon the facts disclosed, and implies the right and duty of the Commission to order or decline to order joint rates, as the circumstances and conditions developed in each inquiry may seem to require. The provision for a hearing upon complaint, or the equivalent initiative of the Commission, involves the hberty and obligation of the administrative tribunal to decide a controversy of this nature upon its merits with due regard to the interests of both shippers and carriers. In short, it seems clear to us that the question of estabUshing joint rates or declining to do so rests in the discretion of the Commission, and it is equally clear that the refusal of the Commission 10 in this case was a lawful and proper exercise of that discretion. But the dismissal order in question rests upon an- other basis, which wiU be briefly considered. Upon aU the circumstances connected with the location, construction, and operation of the Crane RaUroad, the Commission found as an ultimate fact that, as to the Crane Iron Works, it was a mere plant facUity, performing services which the iron works should perform for itself if it desired such services, and that the Central RaUroad was under no obligation to pay the Crane Railroad for the switching service which it performs for the iron works and, indeed, could not lawfully do so. We see no reason to doubt the cor- rectness of this conclusion. The Commission had previously pointed out the distinction between those operations which constitute a plant facility and the legitimate services of a common carrier {General Electric Company v. A^. Y. C. & H. R. R. R. Co. et al., 14 I. C. C. Rep., 237; Solvay Process Company v. D., L. & W. R. R. Co., 14 I. C. C. Rep., 246), and the observations made in these illustrative cases seem to us to express a sound and wholesome principle. That there was substantial evidence to sustain the finding of the Commission as to the character of the services rendered is not open to reasonajDle question, and, this being so, the conclusion must be accepted accordingly. But the argument is earnestly pressed that such a relation can not as matter of law be predicated of an incorporated railroad which is declared to be a common carrier by the fundamental law of the State 11 Lf(^ ^ of its creation. In other words, it is insisted that the Crane Railroad, being in law a common carrier and performing the functions of a common carrier, can not be a plant facility of the Crane Iron Works, but must be regarded as a common carrier for the Crane Iron Works, and entitled as a matter of legal right to a just share of the transportation charge which the Central Railroad makes and collects for carrying the traffic of the iron works; and on this theory it is argued that the finding and conclusion of the Commission involve an error of law which this com-t should correct. We are constrained to reject this contention. Whether the Crane Railroad is a plant facility as to the Crane Iron Works or a common carrier of the traffic of that concern must be held to be a question of fact which is not affected by the circumstance of incorporation. We understand it to be admitted that the operations of this railroad when it was owned and operated by the iron works were the operations of a plant facility. It is contended, however, when the railroad was separately incorporated and passed from the ownership of the iron works, that its rela- tion to the latter and the legal character of its serv- ices became immediately changed. That is to say, the mere fact of the separation of ownership and the transfer of the title and control of the railroad prop- erty to a new corporation, although there was not the slightest change in what was actually done, operated in legal effect to transform a plant facility into a common carrier and to impose obligations on 12 the Central Railroad, as to the traffic of the iron works, which it could not theretofore have been required to assume. We can not believe that any- such result was accomplished. The rights and duties of the Central Railroad respecting the iron works could not thus be altered. If its obligations as a common carrier were fuUy discharged and its tariff rate earned by delivering cars to and taking them from the exchange tracks before the iron works parted with its railroad, its rights and duties respect- ing that concern were neither increased nor dimin- ished by the creation of the Crane Railroad. The services rendered to the iron works continuing to be precisely the same in point of fact, this railroad con- tinued to be utilized as the facility of the iron works' plant in the same way after as before incorporation. Nor do we perceive any serious objection to regard- ing a given agency as a plant facility of a particular shipper, although a common carrier as to other ship- pers. Whether considered from the standpoint of law or of practical administration, it seems reason- able to hold, as the Commission virtually held in this case, that a railroad of the kind in question may have this dual character and perform services for one con- cern which are not the services of a common carrier, but which that concern is bound to provide for itself, notwithstanding it occupies the relation of a common carrier to other concerns and the pubhc generally. Concededly, the work which the Crane Railroad does in moving cars between different points in the iron works' plant has none of the inci- 13 l4^ S' dents of common carriage, and why may not the same thing be affirmed of the work it does in switch- ing cars for the iron works to and from the ex- change track with the Central Railroad, even if the work it does for the other industries makes it as to them or the shippers of Catasauqua a common carrier? It is unnecessary to discuss the charge of discrimi- nation except to say that the Commission has found, upon evidence which is clearly substantial, that the refusal of the Central Railroad to pay switching charges on traffic handled for the Iron Works, while at the same time paying switching charges on traffic handled for the other industries, is not an undue prejudice to the one or an undue preference to the others. In the concluding paragraph of the report upon which the dismissal order is based the Commission summarizes the situation as foUows: " The complaint attacks certain rates as unreason- able and asks for the establishment of certain joint rates between definite points. The complainant [petitioner] does not contend that these rates are unreasonable except by the amount of this switching charge, nor does it ask for the establishment of joint rates except for the purpose of compelling the de- fendant [Central Railroad] to pay the Crane Rail- road for the perfol-mance of this switching service. Since we hold that the delivery by the defendant [Central Railroad] is completed when cars are placed upon the interchange track and that defendant [Central Railroad] owes no duty to the complainant [petitioner] to receive loaded cars from it until they are put upon that track, there is no occasion to exam- ine in detail the rates referred to." //-^ ^ * 14 Upon the whole case we are of opinion that no error of law was committed by the Commission in denying the petitioner's application. It follows that the motions to dismiss the petition should be granted, and it will he so ordered. O United States Commerce Court. No. 59. — April Session, 1912. Southern Pacific Company et al., petitioners, V. United States of America, respondent, Interstate Commerce Commission and Oregon & Washington Lumber Manufacturers' Association, interveners. ON FINAL HEARING. For opinion of Interstate Commerce Commission, see 21 I. C. C. Rep., 309. Mr. F. C. Dillard, with whom Mr. W. W. Cotton, Mr. C. W. Durbrow, and Mr. H. A. Scandrett were on the brief, for the petitioners. Mr. Blackburn Esterline, Special Assistant to the Attorney General, with whom Mr. Winfred T. Denir son. Assistant Attorney General, was on the brief, for the United States. Mr. P. J. Farrell for the Interstate Commerce Com- mission. Mr. Joseph N. Teal, with whom Mr. Wirt Minor was on the brief, for the intervening shippers. Before Knapp, Presiding Judge, and Archbald, Garland, and Mack, Judges. 46621—12 [June 4, 1912.] Archbald, Judge: The rate involved in this case was fixed by the Com- mission on rough green fir lumber and lath from the Willamette Valley, Oreg., over the Southern Pacific Raih'oad to San Francisco city and bay points. The rate published by the carrier was $5 per ton, which applied to lumber of all kinds; and this on complaint the Commission sustained as to everything but the cheap grade named. This character of lumber, how- ever, it classified and gave a reduced rate of $3.50 per ton from points on the east side of the Willamette River, with 25 cents added from points on the west side. The same question was before the Commission in a previous proceeding, where rates of $3.40 and $3.65, respectively, were fixed. (14 Inter. Com. Com. Rep., 61.) But upon being litigated, in the courts it was finally decided by the Supreme Court on appeal that, according to the report of the Commission and the course of the proceedings before it, the rate had not been determined by a consideration of what was intrinsically just and reasonable for the service per- formed, but was reduced upon the theory that the lumbermen having been induced to enter the Willa- mette Valley on assurances of a low rate were entitled, on the ground of equitable estoppel, to be protected against an advance. {Southern Pacific Company v. (2) 3 V^,f Interstate Commerce Commission, 219 U. S., 433.) The contention now is that in disregard of that deci- sion, with admittedly no new facts before it, the Com- mission allowed the same views to prevail, merely raising the rate a fraction, so as to have the sem- blance of compliance, without really undertaking to determine what was a just and reasonable rate. It is declared by the Commission in the present report that, " while a large amount of additional testi- ' mony was introduced" at the second hearing, bearing upon the issues involved, " no new facts were devel- oped," and that consequently no further discussion of the testimony was required. But this statement is not to be carried too far. And above all it affords no basis for the argument which is made that, taking the same view of the facts, the Commission allowed the same ideas to prevail, making the same disposition of the case as the result. The new evidence undoubt- edly was cumulative, and simply carried the case down to the time of the last hearing, thus presenting nothing new or different in kind from what had been previously shown, and that is evidently all that the Commission meant. But the consideration given to these facts by the Commission, as bearing on what was a just and reasonable rate, is clear, and ' sufficiently sustains the conclusion reached. As pointed out by the Commission the net earnings per mile of the Oregon & California Railroad while the $3.40 rate was in force were much in excess of those of many other strong roads; while the ratio of operating expenses to operating revenues was materially less; this going to show that no serious consequences to the road would result from this supposedly low rate. Nor, as it is said, having regard to the average haul of this Imnber, was the rate per ton per mile unjust, there being many instances where for corresponding distances lower rates were voluntarily put in force. Going on to discuss certain cases reUed on by the carrier, in which it was charged that the Commission had allowed rates for the transportation of lumber with which the rate in question unfavorably compared, it was further pointed out that, in all but one of these, the conditions were not analogous, and in that one, aU things considered, the rate of 14 cents per hundred pounds, while perhaps yielding more by reason of the low cost of transportation, was dis- tinctly lower in effect than the rate here prescribed. A recent instance investigated by the Commission is also alluded .to, where the transportation of lumber for about the same distance as here involved was sohcited by a prominent carrier, although its divi- sion amounted to but $1.40 per ton. And finally, having regard to the average load per car of rough green fir lumber and the average haul over the Oregon & California road, it was shown that the car mile earnings were 16 cents, while the average car mile earnings for all the roads of the United States for the year ending June 30, 1910, were but 14.9; and that while the exact car mile earnings on all traffic of this road did not appear by the figures furnished by the company, yet an examination of t-y ! -J those figures indicated that the earnings on the lumber in question were nearly, if not quite, equal to the average, although considering the longer average haul they might well be less, from which there could be no doubt that the business at the rate prescribed yielded the carrier a handsome profit above the cost of transporting it. It is upon these and other considerations which are stated that the order of the Commission is expressly based. It is said, however, that the Commission does not stop with this, but goes on to reassert the right to consider the agreement made by the carrier by which the original $3.10 rate was put into effect, on which the lumber industry of the Willamette Valley was built up, in the face of the decision of the Supreme Court that it had no right to do this; and that, enter- ing into the action of the Commission as it so did, the order is void. This contention is based on the follow- ing observations in the report. Referring to the original agreement by the Southern Pacific that rates should be made to San Francisco which would fairly meet the water competition from Portland, it is there said: "The Supreme Court seems to have understood that the Commission was controlled largely by this consideration and that its real purpose was not to establish a rate just and reasonable, but rather to compel a performance of this agreement and prevent the inequity which would result from its viola- tion. * * * This Commission has never under- stood that it could dictate the policy of a carrier in the making of its rates, in so far as there was just room for the exercise of a policy. It has several times explicitly so declared. We have, however, be- lieved that we might consider what the policy of a carrier had been in determining whether the rates resulting from a change in that policy were just and reasonable. It often happens that the very existence of an industry depends upon the rate accorded to it. If, now, a carrier has established a particular rate for the express purpose of enabling an industry to exist, and if, upon the strength of that rate, money has been invested which must be destroyed if the rate is with- drawn, it has been our understanding that this fact might properly be considered in passing upon the reasonableness of the proposed change in the rate. Such fact is not controlling, but is one of the circum- stances which may properly be kept in view. It has been our opinion that we might in a proper case order the continued maintenance of a rate upon which the investment of money had been induced, even though we would not in the first instance, as an original propo- sition, have directed the establishment of that rate. ' ' The policy of a railroad can not be dictated entirely by its own interest. It can not arbitrarily change that policy from day to day when those changes result in undue hardship to its patrons. The welfare of the public, as well as its own welfare, must be consid- ered. To that extent this Commission has believed that it might control the policy of carriers, and to that extent alone. It is still of the opinion that this must be so unless the property rights of shippers are to rest in the arbitrary whim of the carrier without the right of appeal to any tribunal. We do not under- stand that the Supreme Coiirt in its decision has held the contrary. But in the present case, to avoid all possibility of question, it has seemed proper to lay entirely out of view everything which transpired between these parties in the nature of contract, agreement, or assurance. " After full hearing and upon full consideration of the whole matter we are of the opinion that the rate of $5 per ton, in so far as it applies to rough green fir lum- ber and lath, is unjust and unreasonable, and that 7 y 7 3 for the future the rate upon these commodities to San Francisco and bay points, as defined in the tariffs of the defendants, should not exceed $3.50 per net ton of 2,000 pounds from points upon the line of the defendant east of the Willamette River, except from the Wendling branch, so called; and that rates from the Wendling branch and from stations upon the west bank of the Willamette River should not exceed $3.75 per net ton." The Commission is entitled to have this taken exactly as it reads, and there can be no reasonable controversy as to what is so said. There is no sug- gestion, as before, that by reason of assurances held out to the lumber men the carrier was to be regarded as estopped, and, on the contrary, there is an ex- press repudiation of any such idea. The attempted, vindication of the former ruling of the Commission was not necessary to the present decision and might appropriately have been omitted. But it is of no consequence unless it betrayed a contumacious pur- pose on the part of the Commission, which influenced its decision, and this it is plain could not be reason- ably asserted. Not only is there the explicit decla- ration that everything in the way of agreement or assurance had been put out of view, followed by the statement that upon full consideration the rate of $5 a ton as applied to rough green fir lumber and lath in the opinion of the Commission was unjust and un- reasonable, and for the future should not exceed the lower amount named; but the inducing reasons for this are given, as shown above, and sufl&ciently sus- tain the conclusion reached. The action of the Com- mission is thus put upon unexceptionable grounds. 8 which the observations and criticisms indulged in are ineffective to disturb. It is further said that there is no justification for classifying rough green fir lumber and lath from the Willamette Valley, all lumber as a rule, regardless of condition or value, taking the same rate between the same points, this being true also on shipments by rail from Portland, with which the Willamette Valley competes. There is no occasion for classifica- tion at Portland, as the Commission points out, the cheaper grades of lumber from there uniformly going by water, and the matter thus taking care of itself. It is said again, however, that this discloses the real purpose of the reduction on this grade of lumber, which is to bring the rate down to the level of water transpor- tation from Portland, with which it is thrown in com- petition, making the rate thus on its face unjust. It may be that the Commission had the necessities in this respect of the lumber industry of the Willamette Valley somewhat in mind, and that this to a certain extent influenced the result reached. But, as is pointed out by the Commission, rough green fir lumber and lath is the cheapest kind of lumber manufactured, the value per car load not exceeding one-half that of the better grades of dried and dressed. It can not move to market therefore from the Willamette Valley unless it gets an encouraging rate, without which, regardless of competition, it will be left in the woods, or be sent to the scrap heap and burned. It also loads heavier than dry lumber, the average of the one being 60,000 and the other 50,000 pounds to the car, 9 v'7^' the discrepancy in the yield of freight per car being thus in part made up. Nor is a classification of lumber based on condition and value altogether unknown in transportation circles, exceptions, accord- ing to the exigencies of particular cases, being intro- duced at times by the carriers themselves. A lower rate than for the higher grades of lumber was thus apparently justified in the present instance by these considerations, if not indeed required, and the only question therefore is whether the reduction was unjust. In fixing the rate of $3.40 per ton on the former complaint, the Commission was no doubt guided in part by the Portland competitive water rate. This rate was met in the early stages of lumbering in the Willamette Valley by the $3.10 rate, given by the railroad, which at one time prevailed. Taking this as a basis, the Commission found that in later years water charters from Portland ranged from twenty- five to fifty cents per thousand more, and it was therefore considered that $3.40 by rail in comparison might reasonably be charged. On the present hear- ing this was raised to $3.50, the rate now fixed, a slight advance realizing about $3 additional per car. It may be that in this analysis water competition is given a somewhat prominent part. But not in our judgment to the extent of making the rate thereby reached per se unreasonable and unjust. It is in evidence that, regardless of competition, this cheap grade of lumber, as already stated, could not get to market from the Willamette Valley without a favor- 10 ing rate, and whether traffic will move at a given rate is always some evidence as to whether the rate responds to the value of the service performed. The Commission had this and the other matters to which reference is made to guide in the conclusion reached. The rate was thus not fixed arbitrarily or without considerations which justified it; and above all not for the purpose of enforcing a policy inaugurated by the carrier, which it was held could not equitably be abandoned; but in the exercise of due judgment, after full consideration of the entire subject, as shown by the reasons given for it; and this being so the order was lawfully made. The 'petition will therefore be dismissed with costs. Q United States Commerce Court. No. 65. — ^JuNE Session, 1912. Chamber of Commerce of City of Augusta, Georgia, petitioner, V. United States of America and the Interstate Commerce Commission, respondents. ON MOTIOITS TO DISMISS. For opinion of the Interstate Coromerce Commis- sion, see 22 I. C. C, 223. Mr. John B. Daish, with whom Mr. E. G. Kalb- fleisch was on the brief, for the petitioner. Mr. Winfred T. Denison, with whom Mr. Thurlow M. Gordon was on the brief, for the United States. Mr. Chas. W. Needham for the Interstate Commerce Commission. Before Knapp, Presiding Judge, and Hunt, Car- land, and Mack, Judges. [June 7, 1912.] Mack, Judge: Petitioner seeks the annulment of the action of the Interstate Commerce Commission in dismissing a complaint alleging that the rate of $2.10 per ton on 47249—12 coal from Coal Creek mines in Tennessee to Augusta, Georgia, in force since October 1, 1907, was unjust and unreasonable in itself and subjected the manu- facturers of Georgia to undue prejudice as compared with other designated points in the same general territory. In dismissing the complaint the Commis- sion denied reparation. That the Commission proceeded in all respects according to law in the hearing of the case, and that there was substantial evidence in support of its conclusions is not denied. The petitioner, however, alleges that the Commission erred in matters of law apparent on the face of the report in dismissing the complaint and in denying the relief prayed. On oral argument it was conceded that no one of the alleged errors of law would, of itself, be a sufficient basis to annul the order of the Commission, but it was urged that in some way this court could amalga- mate all the charges of alleged error and deduce therefrom some sufficient new ground not specified which would require it to set aside the order of dismissal. In view of the admissions of counsel, we deem it xmnecessary to discuss the alleged errors in detail. In our judgment, neither any one of them nor all of them combined confer upon this court either the right or the duty to annul the Commission's order. The motions of the respondents to dismiss the peti- tion will therefore be sustained, and the petition will he dismissed at the petitioner's cost. Petition dismissed. O United States Commerce Court. No. 58. — June Session, 1912. Florida East Coast Railwat Company, petitioner, V. United States, respondent ; Interstate Commerce Commission, Railroad Commissioners of Flor- ida, Florida Fruit & Vegetable Shippers' Pro- tective Association et al., interveners. ON MOTION TO STRIKE OUT EVIDENCE AND ON FINAL HEARING. (For opinion of Intei:state Commerce Commis- sion, see 22 I. C. C. Rep., 11.) Mr. Winfred T. Denison, Assistant Attorney General, with whom Mr. TJmrlow M. Gordon, spe- cial assistant to the Attorney General, was on the brief, in support of the motion to strike out evi- dence. Mr. Alexander St. Clair-Abrams and Mr. Fred 0. Bryan, for the petitioners. Mr. BlacJchurn Esterline, special assistant to the Attorney General, with whom Mr. Winfred T. Denison, Assistant Attorney General, was on the brief, for the United States. 66573—12 1 Mr. Charles W. Needham for the Interstate Com- merce Commission. Mr. F. M. Hudson for the Railroad Commission- ers of Florida. Mr. A. A. Boggs for the Intervening shippers. Before Knapp^ Presiding Judge, and Hunt, Cae- LAND^ and Mack, Judges. (November 13, 1912.) Mack, Judge: This suit was brought to set aside an order of the Interstate Commerce Commission, entered Novem- ber 6th, 1911, in two cases heard and considered together. Commission's Nos. 1168 and 3808, in so far as the Florida East Coast Railway Company is thereby affected. The other railroad companies have complied with the order of the Commission. The original complaint in case No. 1168, filed in 1907, involved the rates upon fruits and vegetables from producing points in Florida to consuming markets in aU parts of the United States east of the Rocky Mountains. Those rates were consid- ered at the first hearing under two divisions, viz: (1) A gathering charge from the points of origin in Florida to what were known as Florida base points, of which Jacksonville was the principal one, when destined to interstate points; and (2_) rates from such base points to points of final desti- nation in. other States. The sum of the two rates constituted the through charge. On June 25, 1908 (14 I. C. C. Rep., 476), the Commission held that at that time the rates on 3 y t/ citrus fruits and pineapples from the base points to certain points of destination named in the order were unreasonable, and fixed reasonable rates, es- tablishing carload and less-than-carload all-rail rates to eastern points, to which theretofore only any-quantity rates had prevailed, reducing the rates for carload shipments much below the any-quan- tity rates, and making the less-than-carload rates ten cents per crate higher than the carload, with the proviso that they should not, however, exceed to any point the then any-quantity rate to such point. The Commission declined to order in carload and less-than-carload rates on vegetables to these points, although it suggested to the railroads that they con- sider the advisability of doing so. It refused to condemn as unreasonable the any- quantity gathering rates from points of production to the base points. In justification of this refusal the Commission said: " From an examination of the elaborate figures which were introduced upon the trial showing the character of the traffic handled by these Florida roads, the conditions under which it is handled, their earnings, and the cost of operation running through a series of years, it is difficult to see how these railroads can be expected to transport in a suitable way this fruit and vegetable traffic from points of production to these basing points for a less sum than they now receive. It is difficult to see how, even upon the present tariff, those lines can in the immediate future expect to pay any considerable return upon their investment. We feel that these local rates, although they are high in comparison with other local rates, are as low as should be established under all the circumstances." The carriers complied with the order of the Com- mission, in so far as definite rates were fixed, but did not accept the suggestions which were made in the report. Subsequently a complaint was filed with the Com- mission to obtain the benefit of the suggestions of the Commission in the former case and to secure the establishment of rates on fruits and vegetables from Florida base points to those portions of the United States not embraced in the previous order. As No. 1168 had been retained for further proceed- ings, and as shippers on the Florida East Coast Line complained of the rates on pineapples, citrus fruits, and vegetables, this case was again set down for hearing with No. 2566, and it was stated by the Commission that the previous record in No. 1168 should be treated as a part of the record in No. 2566. The order in No, 2566 affected and changed the rates on citrus fruits, pineapples, and vegetables, including carload and less-than-carload rates, from Jacksonville, Florida, and other Florida base points to points particularly named in other States. The order against the Florida East Coast Rail- way, in No. 1168, entered February 8, 1910 (17 I. C. C. Rep., 552), found the existing any-quantity rates on pineapples unreasonable from points on the Florida East Coast Railway to Jacksonville, Florida, when applied to interstate traffic, and fixed 5 ^ f'-^ certain maximmn rates for the transportation of pineapples in carload and less-than-carload quanti- ties. In support of this order the Commission said in its report : '' The growers of pineapples suggest that we might properly establish a lower rate on pineapples than upon oranges. All the incidents of the trans- portation are the same ; the value of the two com- modities is practically the same. The only reason put forward for a lower rate upon pineapples is that the condition of the industry demands it ; but testimony already taken in this case shows that in the past the condition of the orange industry in Florida has been and now is critical, and if we were to adopt the theory urged upon us by the growers of pineapples it is almost certain that we should be met by the same argument, with equal force, in case of other citrus fruits and vegetables in Florida and elsewhere. We repeat that the freight rate can not be established upon that basis. * * * 4^ * '' The evidence produced upon the present hear- ing suggests no change in what was said (in the former report) so far as that applies to the Florida East Coast Railway. * * * ' ' While, however, we adhere to what was said in the previous case, we do think, upon more care- ful examination, that these rates of the Florida East Coast Railway on pineapples ought to be somewhat revised. They are not consistent with one another, and in our opinion those from the more distant points are too high as compared with rates from nearby points. " The present rates are in any quantity. About 60 per cent of these pineapples move from the point of origin in carloads, 40 per cent in less than car- loads. Carload shipments are stripped and loaded by the shipper and are not unloaded at Jackson- ville, which probably saves the carrier not far from 2 cents per box. The less-than-carload shipment is loaded by the railway and usually unloaded at the station in South Jacksonville or Jacksonville. In our opinion carload rates should be established which are less than the present any-quantity rates by 3 cents per box. " The establishment of such carload rates will not of a certainty work a decrease in the net earnings of the carriers. It is a false theory of transporta- tion which seeks to force the shipper to avail him- self of a less-than-carload service, which is more expensive to render, for the purpose of increasing the gross revenues of the carrier. The true object should be to perform the service in the most eco- nomical manner and to charge for that service rea- sonable compensation. In the end this makes to the advantage of both the carrier and its patron. The vice president of the Florida Bast Coast Rail- way stated that he had always thought that carload rates should be established and that, in his opinion to establish carload rates 3 cents per box less than the present any-quantity rates would not prejudice the net revenues of his company, since he would make up by saving in operating expenses what he lost in gross income." The orders of February 8, 1910, were complied with. Thereafter and effective July 15, 1910, the Florida East Coast Railway Company voluntarily 7 L/iS- established in place of its any-quantity rates carload and less-than-carload rates on citrus fruits and vegetables from points of production to Jackson- ville. The carload rates were, from most points, less than the former any-quantity rates; the less- than-carload rates were higher than the former any-quantity rates from points 230 miles or less south of Jacksonville and lower from points farther south, but both the carload and less-than-carload rates so established were considerably higher than the pineapple rates established under the order of February 8, 1910. While the new rates were ap- proved by the Railroad Commission of Florida for intrastate traffic, they were considered by it to be too high as proportional rates on interstate traffic. Pursuant, therefore, to a Florida statute, the State commission, having on January 28, 1911, com- plained in case No. 3808 against the other railroads, intervened in case No. 1168. At the hearing on these complaints each party complainant and defendant in cases Nos. 1168 and 3808 was present, testimony was taken and on November 6, 1911, the order now complained of was made. (22 I. C. C. Rep., 11.) This order deals exclusively with the rates on pineapples, citrus fruits, and vegetables from points on the railroads within the State of Florida to Jackson-.- ville, Fla., when destined for points beyond in other States. It finds the existing rates unjust and unreasonable to the extent that they exceed the 8 maximum rates prescribed by tbe Commission in its order and prescribes distance rates upon car- load and less-than-carload quantities of pineapples, citrus fruits, and vegetables, together with a mini- mum carload to be applied to each kind of traffic named, the rates so fixed to be maintained for a period of not less than two years from January 2, 1912. By this order a slight increase was made in the pineapple rate from some points more than 320 miles south of Jacksonville ; the rates per crate for citrus fruits, in both carload and less-than-carload lots, were reduced to the pineapple rates, and the rate for vegetables, which in crates weigh 62J per cent of citrus fruits, was fiixed at 70 per cent of the citrus-fruit rate. In the report on which this order was based the Commission says : '' The original case was heard in the spring of 1908 and was disposed of upon the basis of conditions then existing. This Commission states in its report that the rates in force had been approved by the Florida commission, and that circumstance may have somewhat influenced us in our approval of the gathering schedules at that time; * * * we • concluded that while these gathering rates were higher than would perhaps be reasonable upon rail- roads where the volume of business was greater and the net financial result more favorable, still they could not be deemed excessive in view of the cir- cumstances under which the service was rendered, " This conclusion was reached less than three years ago. No material change has taken place 9 A/^7 since then so far as this record discloses which would lead to a different conclusion if the same sub- ject were before us to-day. * * * There is nothing in this record which would call for a recon- sideration of our former conclusion if exactly the same question were now before us. " There is, however, a material difference in one respect between now and then. When we decided the original case, rates up to the gathering point were in all cases any quantity and in most in- stances this was also true from the base point to destination. * * * * 4f- " There are * * * in effect to-day by the order of this Commission carload rates upon both fruits and vegetables from base points. * * * Since then that company (the Florida East Coast Railway Company) has filed carload and less-than- carload rates upon citrus fruits and vegetables, but these rates are higher than those named by us for pineapples. ' ' It appeared in the original case that citrus fruits to some extent, and vegetables to a much greater extent, were shipped in small lots to Jacksonville and there reloaded for movement beyond. It was our impression in establishing carload rates from the base point that this would permit the movement in small lots up to the base point and the consolida- tion at such point, and that the carload movement would in fact be mainly beyond the base point. Such has not been the result. In order to obtain the carload rate beyond the base point it seems to be necessary for the shipper, in actual practice, to present a fuU carload at the point of origin, and from this it follows that the movement up to the 65573—12 2 10 base point at the present time is entirely different from what it was when we approved these any- quantity rates. At that time the loading was by the carrier ; now it is mainly by the shipper. The load- ing of the cars from the point of origin to the base points is much heavier now than formerly. * * * The number of cars now required to transport the same amount of this traffic from points of origin to base points would be materially less than in 1908. Otherwise stated, it costs the shipper more to handle his business to-day and it costs the railroad less. ***** "It is earnestly contended in behalf of the Florida East Coast Railway Company that to apply these rates to that line would be confiscatory, and considerable testimony has been introduced and much discussion had upon both sides touching the financial condition of that company. ***** '' The financial condition of the Florida East Coast Railway has been referred to at considerable length in our pre^aous opinions in No. 1168, and it would not be profitable to discuss that subject further here. " Taking that into account together with aU the other facts and circumstances bearing upon the matter we are of the opinion that the rates sug- gested for the Seaboard Air Line and the Atlantic Coast Line in the State of Florida would be just and reasonable to apply upon the railroad of the Florida East Coast Railway Company. Those rates are already in effect upon pineapples and do not involve any extraordinary reductions from the rates on vegetables and citrus fruits which that company has voluntarily established." 11 , ,.' •<; ,; Petitioner seeks to set aside the order of the CoTmnission on the following grounds : First. That there was no evidence to support the conclusion that the rates voluntarily made by the company were unreasonable and therefore the Com- mission had no power to proceed further and to fix what it might deem reasonable rates. Second. That the rates are confiscatory. First. It can not be denied that the Commission, both at the last hearing and at the earlier hearing in the same case, had a great mass of evidence be- fore it touching the many questions of cost and value of the properties, cost and value of the serv- ices rendered, the history of the road and of the development of the industries involved, the methods of transportation and numerous other matters relevant to the determination of the unreasonable- ness of existing rates and the fixing of reasonable rates for the future. It is unnecessary to detail the testimony. Clearly, there can be found therein substantial support for the conclusions reached even though the Commission, if it had given weight to other parts thereof, might have reached a dif- ferent conclusion. This court, however, is hot authorized to review the Commission's determina- tion of disputed questions of fact, made after a fuU and fair hearing, on proper notice, unless its power has been exercised in an arbitrary or unreasonable manner or in violation of petitioner's constitutional rights. 12 If the opinion of the Conunission that present rates are unreasonable is based upon substantial, though conflicting evidence, the power can not be said to have been exercised in an unreasonable man- ner, even in a case wherein this court, if it had been charged with the duty of making the finding from the whole evidence, would have held the rates reasonable. It is, however, urged that the report shows con- clusively, in the passages above cited, that the Commission could not have deemed and did not deem the former rates unreasonable, because it ex- pressly states that if the "same subject" or "exactly the same question" that was considered in the original proceeding were then before it, it would again refuse to hold the rates unreasonable, and it i^ urged that the "same subject" and "exactly the same question" were again before the Commission, viz, the reasonableness of the rates from the pro- ducing points to the base points. To adopt this argument would be to give a much too literal interpretation to the quoted phrases, and would require us to disregard the entire context. A consideration of the whole report clearly shows that the Commission intended thereby to state that if the situation and conditions in 1911 were the same as in 1908 it would adhere to its former views. It thereupon proceeds, however, to indicate that the situation as to citrus fruits and vegetables had changed since 1908, exactly as it had indicated in 13 U9:l 1910, the change in the pineapple situation since 1908, thereby demonstrating that the question be- fore it was not ** exactly the same," but materially different from that submitted to it in 1908. The orders of 1908 and 1910, establishing carload and less-than-carload rates from base points in place of any-quantity rates, changed the transportation methods not only from but to the base points ; and as the Commission points out, they caused a great increase in the carload movement to base points, involving large savings to the railroad and in- creased expense to the shippers in the handling of the goods. Moreover, on full consideration, the any-quantity pineapple rates had been found to be unreasonably high when applied to the transporta- tion after carload and less-than-carload rates were established, and from the evidence then taken together with that taken on the last hearing, the Commission found, as it well might, that there was no substantial difference in the transportation con- ditions between pineapples and citrus fruits. "While the voluntary act of the railroad in reducing its rates in July, 1910, would not of itself justify the Commission in reducing them still further and especially in making the less-than-carload rates lower than the former any-quantity rates, it was in effect an admission that the old any-quantity rates in force since 1902 would be unreasonable. More- over, inasmuch as these new rates were put in after January 1, 1910, the burden was on the carrier 14 under section 15 of tlie act as amended June 18, 1910, to establisli their reasonableness in so far as they exceeded the former rates. If the change from any-quantity rates to car- load and less-than-carload rates involved! nothing more than a division of the existing business into two kinds, merely for bookkeeping purposes, a re- duction not only of the carload but also of the less- than-carload rates might well be termed an arbi- trary act. But, as the Commission points out, it involves much more than this. The effect of car- load rates is ordinarily greatly to increase the car- load business, both absolutely and relatively to the less than carload, to bring about heavier loading, to Kghten the handling operations of the railroad, and thereby to reduce the operating expenses. The net revenues might remain the same so far as the mere effect of this change is concerned, for the rea- sons stated in the testimony of petitioner's vice president, as quoted above from the Commission's report on the pineapple rate. But even if the net revenues would be decreased about ten per cent, as petitioner contends, the Commission's action could not therefore be said to be unreasonable or arbi- trarj^^. And in this case it is to be noted that the railroad itself in its voluntary change had made many less-than-carload rates lower than the former any-quantity rates. Considering the new rates, not in their effect on the general revenues of the company, but in rela- tion to the cost of the service to the carrier, exclu- 15 t/^/3 sive of return on investment, the evidence is clear that they are not only greatly in excess of any out- of-pocket expense for this service, but that they give the carrier a considerable margin over the proportionate operating expense, as their contribu- tion toward the return on the investment. In view of all the foregoing considerations, the Commission can not be charged with having exercised in an arbi- trary or unreasonable manner its power of deter- mining the reasonable rate, even if such a charge, presented in petitioner's argument and briefs, can fairly be said to have been made in the petition in this case. Second. The basis for the contention that the order is confiscatory is the claim that the entire property has a present value in excess of the bonded indebtedness of $31,000,000 and the capital stock of $5,000,000 ; that the net revenues for the year end- ing June 30, 1911, were less than four per cent of this value; and that if the line, not from Home- stead, but from Miami, north, be considered as the main line, the entire net revenues therefrom, after deducting that part thereof derived from passenger and freight traffic originating at or destined to points south of Miami, would yield but little over four per cent of its present value, whereas the legal rate of interest in Florida is eight per cent. This claim is based on two assumptions : (a) that the main line ends at Miami and not at Homestead j (6) that the value of the company's entire prop- erty, including the so-called over-sea extension, and 16 not merely of the main line itself, must be consid- ered in determining whether rates from points on the main line are confiscatory. "Without at this time considering under what cir- cumstances, if any, the reduction of particular rates can be held to violate the constitutional rights of a carrier, because thereby the total revenues become inadequate, even though the particular reduced rates yield some contribution to the general net revenues over and above the pro rata cost of serv- ice, we are of the opinion that in the present case there can be no basis for a charge of confiscation, because neither of the assumptions above stated and upon which it is based is sound. (a) Originally the road ended at Miami ; later on, however, and before the act of 1905 in reference to the over-sea extension hereinajfter referred to was adopted, it was extended to Homestead. In its plant or construction account, the company itself, in its own bookkeeping, deals with the line from Miami to Homestead as part of the main line and not of the over-sea extension. The increased production in the territory between Miami and Homstead since 1908 demonstrates the wisdom of the construction of this branch as part of the main line, independently of the over-sea extension. We are clearly of the opinion that thermain line must be considered as ending at Homestead. Without discussing the evidence in detail, we are further of the opinion that the net revenues on this main line are in excess of eight per cent on the present fair 17 ij ^^r \Z. value of the property, and not merely something over six per cent, as conceded by the petitioner. No possible question of confiscation can arise under these circumstances, even if the effect of the order will be to reduce the gross, or even the net revenues, of the company for the next two years by the full amount of the difference in rates, amount- ing, as applied to the tonnage for the year ending June 30, 1911, to $131,000, and being about 3 per cent of the gross, and 10 per cent of the net operating revenue of the main line. (&) Whatever the powers of the company may be under its amended charter, it was not until after the Legislature of Florida passed an act in May, 1905, entitled "An act to encourage and secure the construction of a line of railway from the mainland of Florida to Key West ; to provide for a fair and equitable assessment of taxes of the corporation constructing it; and to grant right of way over the submerged and other lands belonging to the State, and over the waters of the State, and to authorize the filling of the submerged lands and to construct buildings, docks, and depots thereon," that the com- pany, at a stockholders' meeting, decided to con- struct the over-sea extension. The tremendous cost of the line from Homestead to Key West, over $175,000 a mile, the scarcity of population along the route, the natural impossi- bility of ever making much of the territory produc- tive, either agriculturally or industrially, confirm 18 the recital in the act of 1905 that the purpose of thcs extension was to share in the traffic expected to pass through the Panama Canal, unless, indeed, this marvel of engineering skill was constructed as a monument to the man, who from the early days to the present was and is the sole owner of the peti- tioner's stock and to whose indomitable energy and supreme confidence in the future prospects of this section of the country the road primarily owes its construction. At the present time the operating expenses of this extension are naturally in excess of its revenues. Its entire gross revenues — freight and passenger — for the year ending June 30, IQll, were less than $100,000. The contention that the earnings of the main line on passengers who traveled over the extension is to be attributed to the exten- sion, can not be sustained. There is no evidence that would justify this court in holding that the ex- tension produced any considerable increase of travel on the main line or that most of the passen- gers to Cuba via Key West would not have gone to or via Miami or Homestead if the extension had not been built. To what extent shippers on an original or main line should bear increased burdens due to the con- struction of additional or branch lines must depend upon the particular circumstances of each case. No general rule can be formulated. In our opinion, the Conmiission was fully justified in disregarding the value of this extension, and this court, in deter- mining whether or not the order of the Commission 19 /„/' V' 7 operates to confiscate petitioner's property, must likewise at this time and at this stage in the develop- ment of the business on the extension and on the main line, reach its conclusions irrespective of the value of the over-sea extension. At the final hearing a motion was made on behalf of the United States to strike out all evidence which did not form a part of the proceedings and testi- mony before the Interstate Commerce Commission. In view, however, of the conclusions reached by us after a consideration of the entire evidence, it be- comes unnecessary to pass upon this motion. The preliminary injunction will therefore he vacated and the petition dismissed for want of equity, and it is so ordered. O WASHINGTON : GOTBENMENT FEINTING OmCE : 1912 United States Commerce Court. No. 38, — OcTOBEE Session, 1912. Baltimore & Ohio Railroad Company et al., pe- titioners; Brooklyn Eastern District Termi- nal, John Aebuckle and William A. Jamison, INTERVENING PETITIONEES, V. United States, respondent; Interstate Com- merce Commission, Federal Sugar Repining Company, intervening respondents. ON FINAL HEARING ON MOTIONS TO DISMISS. (For opinion of Interstate Commerce Commis- sion see 20 I. 0. C. Rep., 200.) Mr. George F. Brownell, v^ith whom Mr. H. A. Taylor was on the brief, for the petitioners. Mr. Henry B. Glosson and Mr. Willia/m N. Byh- man, for the intervening petitioners. Mr. Winfred T. Benison, Assistant Attorney- General, and Mr. Blackhurn Esterline, special as- sistant to the Attorney General, for the United States. Mr. P. J. Farrell for the Interstate Commerce Commission. 65873—12 1 • : Mr. Ernest A. Bigelow for the Federal Sugar Refining Company, Before Knapp, Presiding Judge, and Hunt, Oakland, and Mack, Judges. [November , 1912.] Garland, Judge: The petition in this case was filed April 12, 1911, and seeks to have annulled and set aside an order of the Interstate Commerce Commission, dated March 6, 1911, the provisions of which are herein- after stated. On April 19, 1911, upon its own peti- tion, the Federal Sugar Refining Company was made a party defendant, with leave to appear and be represented by counsel. On May 11, 1911, the Interstate Commerce Commission and the Federal Sugar Refining Company filed a motion to dismiss the petition for the reason that the facts set forth therein did not constitute a cause of action, and on the same day the Brooklyn Eastern District Ter- minal Company, upon leave granted, filed its inter- vening petition. On May 12, 1911, the United States filed a motion to dismiss for the reason, among others therein stated, that the petition did not show there was any equity therein upon which to grant the relief prayed or any part of the same. On the same day the Jay Street Terminal and Arbuckle Brothers, upon leave granted, filed their intervening petition. On May 17, 1911, upon motion of Mr. Blackburn Bsterline, assistant to the Attorney General, it was ordered that the motion to dismiss the petition filed by the United states be extended and considered as a motion to dismiss the intervening petition of Arbuckle Brothers and Brooklyn Eastern District Terminal, and upon motion of Mr. P. J. Farrell, counsel for the Interstate Commerce Commission, it was ordered that the motion to dismiss the petition filed by the Interstate Commerce Commission and the Federal Sugar Refining Company be extended to and considered as a motion to dismiss the inter- vening petition of Arbuckle Brothers and the Brooklyn Eastern District Terminal. On May 17, 1911, the motions for a temporary injunction made by the petitioners and intervening petitioners, and the motions to dismiss, came on for hearing before the court; and thereafter, on May 22, 1911, the motions to dismiss were by the unani- mous decision of this court denied, with leave to the respondents making said motions to answer the petition of the petitioners within 20 days from said date if they should be so advised ; and on the same day the motions made for a temporary in- junction were granted and an order entered sus- pending the order of the Interstate Commerce Commission complained of until the further order of the court. On June 12, 1911, the Federal Sugar Refining Company and the Interstate Commerce Commis- sion prayed an appeal to the Supreme Court of the United States from the order or decree of the Com- merce Court rendered on May 22, 1911, and as- signed as one of the errors committed by this court 4 that it erred in not dismissing tlie petition for want of equity. The appeal prayed for was allowed by this court on June 13, 1911. On June 16, 1911, the United States prayed an appeal to the Supreme Court of the United States from the order or de- cree of this court entered May 22, 1911, and as- signed as error, among others, that the Commerce Court erred in not sustaining the motion of the United States to dismiss the petition and the inter- vening petitions. The appeal prayed for was granted by this court on the same day. On June 10, 1912, the Supreme Court of the United States affirmed the decree of this court entered May 22, 1911. On June 9, 1911, the Federal Sugar Refining Company filed its answer to the original petition; and on the same day the United States filed its answer to the original petition and also to the inter- vening petitions of Arbuckle Brothers and Brook- lyn Eastern District Terminal. The Interstate Commerce Commission has never answered either of the petitions. The mandate of the Supreme Court was filed in this court on June 24, 1912. On October 10, 1912, the United States and the Federal Sugar Refining Company, upon leave granted by the court, with- drew their several answers, and on the same day filed their motion to dismiss the petition of the peti- tioners for the reason that the facts set forth in said- petition did not constitute a cause of action or entitle said petitioners to the relief or any of the relief ./"'^ *■'> asked for by them in and by said petition. This action of the United States and the Federal teugar Refining Company left the ease standing upon the petitions of the petitioners and the intervening petitioners and the motions to dismiss of the respon- dent, and intervening respondents Federal Sugar Refining Company and Interstate Commerce Com- mission. In this condition of the case the parties, by their counsel, appeared in open court and stipu- lated that the case be submitted to the court for final decision upon the merits on the petitions and motions to dismiss. The material facts as they appear in the petitions are as follows: The petitioning railroads are engaged in the transportation of passengers and property by rail- road from one State to another, and all have rail termini upon the New Jersey shore of the harbor of New York, except the Baltimore and Ohio Rail- road Company, whose rail terminus is at St, George, Staten Island, and the Pennsylvania Rail- road Company, whose rail termius for passenger traffic only is in the Borough of Manhattan. In order to reach the shipping territory of Greater New York across the Hudson and East Rivers and other waters, petitioners have been compelled to serve the vast shipping interests of Greater New York by means of floats, lighters, and barges. Petitioners have established a lighterage zone, known as the lighterage limits, which has been in effect for several years, and during that time has 6 been and is now described in the tariffs of each of said petitioners, which tariffs have been and are duly filed with the Interstate Commerce Commis- sion, as follows: North River: New York side, Battery to 135th Street ; New Jersey side, Jersey City, N. J., to and including Fort Lee, N. J. East River and Harlem River: New York side, Battery to Jerome Avenue bridge, including Har- lem River side of Wards and Randalls Islands; Brooklyn side, from Pot Cove, Astoria, to and in- cluding Newtown and Dutch Kills Creeks, and points in Wallabout Canal west of Washington Avenue bridge, and to Hamilton Avenue bridge, Gowanus Canal, to and including 69th Street, South Brooklyn (Bay Ridge) . New York Bay : Points on north and east shore of Staten Island between Bridge Creek (Arling- ton) and Clifton, both inclusive, and include Shooter Island ; points on the New Jersey shore of New York Bay and on the Kill von KuU, between Constable Hook and Avenue C, Bayonne City, opposite Port Richmond, Staten Island. Within said lighterage limits petitioners per- form, without additional charge, a lighterage serv- ice on east-bound shipments from their rail ter- minals upon the western shore of New York Harbor to points within those limits, and on west- bound shipments from points within those limits to their rail terminals upon the western shore of New York Harbor. 7 f";/ ',"" Within said lighterage limits and at various points within the Boroughs of Manhattan and Brooklyn, city of New York, each petitioner has established and for several years has maintained, and still maintains, freight terminal stations, at which it delivers eastbound freight and receives westbound freight for transportation over its lines. Each petitioner has some freight terminal stations, as aforesaid, which it owns and directly operates, and others which are operated for it un- der and pursuant to the provisions of certain con- tracts between it and the owners of said terminal stations. In some instances a single terminal sta- tion is operated for and on behalf of two or more of said petitioners under and pursuant to certain contracts between them and the ow^ner of said sta- tion, and in such instances said terminal station is a union terminal for two or more of said petition- ers. It is impossible for petitioners to deliver and receive all freight, especially carload freight, at said terminals. A large part of it must of neces- sity be delivered and received at public and private docks within the said lighterage limits. Accord- ingly, petitioners have for several years received and delivered freight at all steamship piers, docks, and landings, and private piers or landings when shippers or consignees arrange for the receipt or delivery of freight within the lighterage limits, and have lightered it without additional charge from and to said points, and still do so receive, deliver, and lighter it. Petitioners transport between said 8 terminal stations, piers, docks, and landings and their rail terminals on the western shore of New York Harbor, as a part of the transportation serv- ice from the points of shipment to the point of des- tination, and for the flat New York rate, by means of lighters, floats, and barges owned and directly operated by them, or operated for them under con- tracts between them and the owners of such equip- ment, freight received at or destined to said termi- nal stations, piers, docks, and landings. Petitioners for several years past have held and now hold themselves out as common carriers to and from all said points within the lighterage limits, both by their practice of receiving and delivering freight at said points and by their tariffs, which are now and for several years past have been duly pub- lished and filed with the Interstate Conmierce Com- mission. The liability under their respective bills of lading attaches to petitioners on west-bound shipments from the time the freight is received at such terminal station, dock, pier, or landing and ends on east-bound shipments when delivered into the hands of the consignee at such terminal station, dock, pier, or landing. The bill of lading issiied by petitioners for freight so received or delivered by them by its terms covers and includes the lighter- age movement. Among other terminal freight stations estab- lished by petitioners within the said lighterage limits is the Jay Street Terminal. This terminal ,■1 "i is located at the foot of Bridge Street, Brooklyn, on the East River, having a water frontage of 1,200 feet and a depth of 600 feet. Its equipment con- sists of a large freight house, two Baldwin locomo- tives, three tug boats, two steam lighters, eleven barges, and nine car floats. The capacity of the yard is about 235 cars. The Jay Street Terminal is a union freight terminal for all of said petition- ers and is designated as a regular public freight terminal of petitioners in their tariffs filed with the Interstate Commerce Commission. It is owned by a copartnership composed of William A. Jamison and John Arbuckle, conducting such freight terminal as a separate business under the name and style of Jay Street Terminal, under certificate filed with the clerk of New York County in accordance with the law of the State of New York, and is operated as a freight station for petitioners under and pursu- ant to several contracts between petitioners and the Jay Street Terminal, which contracts are substan- tially identical in their terms and provisions. The material parts of one of said contracts and repre- sentative of them all, appears in the margin.* * This agreement, made the fifth day of February, A. D. one thou- sand nine hundred and six, by and between Jay Street Terminal (hereinafter called Terminal Company), party of the first part, and Erie Railroad Company, party of the second part, witnesseth : Whereas the Terminal Company is the owner of premises in the Borough of Brooklyn, city of New York, lying along and contiguous to the East Elver at a point east of Catherine Perry, so called, and west of the United States navy yard, upon which there are now erected, or in process of erection, certain warehouses, bulkheads, docks and piers, railway tracks, and sidings, equipped or about to be equipped with suitable float bridges and approaches, and the usual appurtenances for 65873— 12— —2 10 The Jay Street Terminal serves the shippers of a large and important manufacturing and shipping territory, including about one-third of the densely populated part of Brooklyn. It is the only con- venient and accessible freight station of petitioners for the shippers of that territory. When it became necessary several years ago for petitioners to estab- lish and operate public freight terminals for the service of said territory, they had no choice but to enter into a contractual arrangement with the receiving, handling, and delivering freights and for transporting same between said premises and the freight station of said Railroad Com- pany located at Jersey City, N. J. ; and Whereas the said Terminal Company is engaged in and will continue in the business of receiving freights at its said premises and carrying the same in both directions between its said premises and the said station of said Railroad Company and other carriers ; and Whereas the said Railroad Company desires to avail itself of the facilities, conveniences, and services of the said Terminal Company in the transportation of freights, in both directions, between the said premises of said Terminal Company and the aforesaid freight station of the said Railroad Company; Now, therefore, in consideration of the mutual covenants, promises, and agreements herein contained, the said parties do hereby covenant, promise, and agree to and with each other as follows : First. The said Terminal Company wlU put and maintain its prem- ises in good order and condition for the reception and delivery of such freights, and will provide tugboats, car floats, docks, piers, float bridges, and approaches adequate at all times to receive, discharge, transfer, and deliver such freights loaded or to be loaded In cars under this contract, and sufliclent to accommodate the amount of busi- ness hereunder contemplated. Second. Said Terminal Company will receive at the said float bridges of said Railroad Company at Its aforesaid freight station, in cars to be placed upon Its floats by said Railroad Company, all freights intended for delivery aj; the aforesaid premises of the said Terminal Company, and will safely carry the same to its said premises, and there make delivery thereof to the consignees. It will also receive and load into cars all freights which may be delivered to It at its said premises for transportation over the lines of said Railroad Company and carry and deliver the same to said Railroad Company upon said 11 .'" owner of the Jay Street Terminal for the operation of saixi terminal as a public freight station of peti- tioners. The price of the water front property in that section was so high as to be prohibitive. No independent terminals other than the Jay Street Terminal were conveniently accessible to the ship- pers of that territory. In no other practicable way could petitioners in the past, nor can they at pres- ent, serve the large and important shipping inter- ests of this section of Brooklyn than by the main- Terminal Company's floats at the float bridges of said Railroad Com- pany at Its aforesaid freight station. Third. The responsibility of said Terminal Company for east- wardly bound cars and the freights therein shall begin when the cars are placed upon its floats at the said float bridges at the aforesaid station of said Railroad Company, and shall continue as respects the cars until they have been returned by It, loaded or empty ; and as re- spects the freights contained in eastwardly bound cars, its responsi- bility shall continue until the actual delivery thereof to and accept- ance by the consignees at Brooklyn. As respects the freights to be transported west bound, said Terminal Company's responsibility shall commence at the time the same is received from the consignor at its aforesaid premises, and shall continue until said freights, loaded into cars, have been brought to the float bridge of said Railroad Com- pany at its aforesaid freight station and until the floats have been attached to the float bridge, and the cars are in complete readiness for removal from the car floats by said Railroad Company. Fifth. The Railroad Company agrees to construct and maintain all necessary tracks, float bridges, approaches, and appurtenances at its said freight station to adequately carry out the purpose of this agreement. Sixth. Said Railroad Company will pay said Terminal Company in full for all its services under this contract, as well as in full compensation for all responsibility to be undertaken by it in respect to cars and freight, as follows : (a) For all freights transported over said Railroad Company's railroad which shall have been received from its connecting lines west of Trunk Line western termini, on through rates, or for freight received by the said Terminal Company at its aforesaid premises and destined for transportation by said Railroad Company to points west of said western termini, on through rates, excepting grain in bulk, 12 tenance of tlie Jay Street Terminal as a public freight station of petitioners under and pursuant to said contracts. Arbuckle and Jamison operate a sugar refinery in the Borough of Brooklyn, located upwards of a block from the Jay Street Terminal. Shipments are carted from and to the terminal by Arbuckle and Jamison and handled at the terminal in the same way as the freight of hundreds of other ship- pers, and the freight charges thereon are collected at the rate of four and one-fifth (4i) cents per hundred pounds. It is agreed, however, that whenever the allowance to Palmers Dock on east bound or west bound rall-and-lake traffic or both is reduced from four and one-flfth (ii) cents to three (3) cents per hundred pounds, the same reduction shall be made in the allowance to Jay Street Terminal on rail-and-lake traffic. And it is also agreed that whenever the allowance for like service on such traffic to said Palmers Dock or any other Brooklyn terminal is increased above the rates herein specified, the same increase shall be made in the allowance to said Jay Street Terminal on such traffic. (&) For freight originating at or destined to any of the said western termini or points east thereof, or billed to or from said western termini at local rates, the allowance to said Terminal Com- pany shall be three (3) cents per hundred pounds, whether or not the traffic reaches the terminal point through any other of said termini, It being understood that the western terminal points referred to are as follows: Suspension Bridge, Niagara Falls, Tonawanda, Black Eock, Buffalo, East Buffalo, Buffalo Junction, Salamanca, Erie, Pitts- burgh, Allegheny, Bellaire, Wheeling, Parkersburg, Dunkirk. (c) For "not to be graded" grain in bulk, for track delivery in the borough of Brooklyn, the rate shall be three cents per hundred pounds. (d) For freight which is rated per gross ton, either in official classification or in commodity tariffs, the allowance shall be three cents, or four and one-fifth cents per hundred pounds, regardless of the gross-ton rating. ***** Eleventh. Said Railroad Company agrees that during the continu- ance of this agreement the same rates of freight shall prevail from and to the premises of said Terminal Company that prevail from and to the regular freight stations of said Railroad Company in the borouah of Manhattan, city of New Tork, excepting when coming 13 ' r// from said Arbuckle and Jamison by the Jay Street Terminal in accordance with the regularly pub- lished tariffs of petitioners. Approximately four- fifths of the shipments of sugar made by Arbuckle and Jamison through said Jay Street Terminal are sold by said Arbuckle and Jamison f . o. b. Brooklyn and become the property of the consignees immedi- ately upon delivery to the terminal. During the first six months of 1907 the bills of lading issued by the Jay Street Terminal for shipments of general from or going to points east of Susquehanna, In which case floatage shall be added in both directions, to which the Railroad Company shall be entitled. Twelfth. Said Terminal Company will be responsible for and pay to said Railroad Company all freight moneys and charges as set forth In freight bills rendered by said Railroad Company for the transpor- tation of eastbound freights delivered to it, and in like manner shall be responsible for and pay to said Railroad Company all moneys and charges which have been made payable in advance on westbound freights, all of which payments shall be turned over to said Railroad Company in accordance with the latter's customary rules; and, if so required, the customary guaranteed bond shall be furnished by the said Terminal Company. Thirteenth. Said Railroad Company will provide sufficient cars at all times for receiving and taking away the freights hereunder con- templated (unavoidable delay excepted), and to supply all the railway books and blanks necessary for the purpose of the business to be carried on under this contract, and with all reasonable dispatch to receive and take away from the said float bridges at Its aforesaid station all the westbound freights intended for transportation over Its own lines and its connections. Fourteenth. Said Terminal Company will insure and keep Insured against loss by fire and marine risks all freights, cars, and property received by it upon its floats or its said premises under this contract so long as said freights, cars, or property shall remain in its posses- sion, and until delivered to the consignees or to said Railroad Com- pany as hereinbefore provided. Including the time such freights, cars, or property shall be upon its lighterage line ; and such Insurance shall be for the benefit of said Railroad Company and others as their respective interests shall appear, and to an amount and In such manner as shall be satisfactory to said Railroad Company. 14 merchandise numbered 92,622, of which 3,969 were for Arbuckle and Jamison sugar and 1,210 for Ar- buckle and Jamison cofEee, and the shipments and receipts of said Arbuckle and Jamison constituted less than one-third of the total tonnage moving through the terminal. During the same period the number of different consignees who received freight at the terminal was about 765, and the number of different shippers through the terminal about 560. The profits in the operation of the Jay Street Ter- Flfteenth. Said Railroad Company will not during the continuance of this agreement, unless legally compelled to do so, establish or main- tain any freight stations within the limits of said borough of Brooklyn between said Catherine Ferry and said United States navy yard. In case of any breach of this condition said Terminal Company may recover from said Railroad Company, and the latter shall pay to said Terminal Company damages at the rate of three dollars for each and every carload, averaged at twenty thousand pounds, received or delivered or transported contrary to this provision. Sixteenth. In case any eastbound freight consigned to stations of said Railroad Company in said city of New York other than the premises of said Terminal Company shall have its destination changed to the premises of the said Terminal Company and be delivered thereat, said Terminal Company will, at the request of said Railroad Company, collect from the consignee or forwarder the sum of three (3) cents per hundred pounds, and such three cents per hundred pounds shall be retained by said Terminal Company as full compensation for all services performed by It in such cases, and no other allowance shall be made under this contract in such case. Seventeenth. Said Terminal Company will furnish said Railroad Company with a complete and accurate copy of each and all contracts made by it with other railroad companies during the term of this con- tract, and the Brie Railroad Company shall have and enjoy during the life of this contract all rights and privileges granted to any other railroad by said Terminal Company upon as favorable terms, with respect to allowances or otherwise, as granted to any other railroad company, anything herein to the contrary notwithstanding. Eighteenth. This contract shall become operative and go into effect on the fifteenth day of February, 1906, and shall continue in force until March thirty-first, 1910; thereafter subject to termination upon ninety days' notice by either party. 15 r f ^ minal on all shipments during the same period amounted to less than 3 per cent on the investment, without making any allowances for depreciation or interest. The Federal Sugar Refining Company is a cor- poration of the State of New York, having its ex- ecutive offices at .138 Front Street, in the Borough of Manhattan, and having it refineries from which it ships all its outbound products, including sugar, and at which it receives all its inbound supplies for the manufacture of sugar and commodities allied thereto, on the east bank of the Hudson River, within the corporate limits of the city of Yonkers, and more than ten miles distant from the northernmost boundaries of the lighterage limits of petitioners. Said refineries are located on the line of the New York Central and Hudson River Rail- road Company, with which they have switch con- nections and over which the Federal Sugar Refin- ing Company ships the greater part of its output and receives a large part of its inbound shipments. Over this railroad, with few exceptions, the rates to points in the shipping territory of the Federal Sugar Refining Company are the same as the rates from the Jay Street Terminal over the lines of petitioners. In order to make shipments of itsi sugar from Yonkers via the lines of petitioners, at the New York rate, the Federal Sugar Refining Company must deliver such shipments to the New York' Central and Hudson River Railroad Com- 16 pany at Yonkers, thence to be transported by that railroad to New York, and there delivered to peti- tioners at points within the lighterage limits. Be- cause of alleged delay in the handling and trans- portation of such shipments via the route aforesaid, the Federal Sugar Refining Company prefers to deliver said shipments directly to petitioners by lighter within the lighterage limits. Prior to July, 1909, the Federal Sugar Refining Company of Yonkers, the predecessor of the Federal Sugar Re- fining Company, was accustomed to deliver its ship- ments at Yonkers to the Ben Franklin Transporta- tion Company, which transported the same direct to the terminals of petitioners on the west shore of E"ew York Harbor at a charge to the Federal Sugar Refining Company of Yonkers of three cents per hundred pounds. In the month of May, 1907, the Federal Sugar Refining Company of Yonkers filed a complaint with the Interstate Commerce Commission against petitioners, alleging that the complainant, through the Ben Franklin Transportation Company, per- formed the same service on its shipments of sugar as were said to be performed by the Brooklyn East- ern District Terminal on shipments of the American Sugar Refining Company and by the Jay Street Terminal on shipments of Arbuckle and Jamison; that the lighterage limits prescribed by petitioners were unduly discriminatory in that they did not extend to Yonkers and include the refinery of the 17 f/i- Federal Sugar Refining Company of Yonkers, and permitted allowances to be made on shipments of sugar from the refineries of Arbuckle and Jamison and the American Sugar Refining Company, while not so permitting on the complainant's shipments, because the latter was located outside the pre- scribed limits. This practice was said to result in unjust discrimination and to oblige complainant to pay unreasonable rates. Said complaint was answered by petitioners, and after due hearing and consideration, the Interstate Commerce Com- mission dismissed said complaint because the ex- tension of petitioners' lighterage limits in ISTew York Harbor was a matter of business discretion and said Commission had no authority to require such extension beyond the then prescribed bound- aries,^and complainant, being located outside of the prescribed lighterage limits, was not subjected to unlawful discrimination by reason of the practice of petitioners in affording free lighterage on ship- ments originating at or destined to points within said lighterage limits, while refusing to so afford on complainants' shipments. As a device to appear to ship from within the lighterage limits, within a month after the decision of the Interstate , Commerce Commission above mentioned, a new corporation known as the '* Fed- eral Sugar Refining Company," was organized, which established its principal office at 138 Front Street, New York City, and took over the refcieries 65873—12 3 18 heretofore mentioned, in the city of Yonkers, and adopted the following practice: Contracts of sale or orders for sugar were received at 138 Front Street, and-each of said orders was given a separate contract number, and said order bearing the con- tract number was forwarded to the refinery, where the order was filled and the barrels or bags were stamped with the contract number and placed on a lighter. The shipment bearing the contract num- ber remained intact until it reached the hands of the buyer. The refinery received shipping instruc- tions from 138 Front Street, and these shipping instructions showed the contract number, the ulti- mate destination, and the rail line over which the shipment was to be transported. The captain of the lighter of the Ben Franklin Transportation Company gave a receipt to the refinery and re- ceived from the refinery a so-called bill of lading, which was a form of railroad bill of lading filled in by the Federal Sugar Refining Company, and designating a consignment to the Federal Sugar Refining Company, 138 Front Street, New York City, to be transported by the Ben Franklin Trans- portation Company and showing the contract num- ber with which the shipment had been marked. This alleged bill of lading was not signed by the Ben Franklin Transportation Company through any of its oflicers or the captain of the lighter or by any other carrier. There was nothing in any of the documents which called for transportation 19 J-/.? to Pier 24, North River. The said shipping in- structions sent from 138 Front Street to Yonkers were to ship to " Federal Sugar Refining Company, 138 Front Street, City. B. F. T. Co. (B. & 0.)," or other initials representing the Ben Franklin Transportation Company and one of petitioners, as the case might be. None of the petitioners could or did perform any transportation service in con- nection with the Ben Franklin Transportation Company between Yonkers and 138 Front Street, and such shipping instructions were in fact direc- tions to deliver said shipments to the Ben Franklin Transportation Company to be lightered and de- livered to one of petitioners at its terminal on the west shore of New York Harbor. The practice was for the lighter of the Ben Franklin Trans- portation Company to go to Pier 24, North River, New York, part of which pier is leased to the Ben Franklin Transportation Company, where the captain of the lighter called up the office of the Federal Sugar Refining Company at 138 Front Street and reported the particular shipment then on his lighter. The captain of the lighter was then handed a form of bill of lading not signed by any of petitioners and showing the name and address of the consignor as the Federal Sugar Refining Company, 138 Front Street, New York, Franklin Street Pier 24, North River. The lighter then proceeded to the rail terminus of such petitioners as had been previously designated in the shipping 20 instructions sent to Yonkers, and there delivered the shipment to such petitioner and obtained the signature of petitioner's agent at said terminus upon the form of bill of lading theretofore pre- pared and delivered to said captain as aforesaid, and said bill of lading was stamped by said peti- tioner's agent to show the receipt of the shipment at said station on the west shore of New York Harbor. Such shipments were handled under contract between the Ben Franklin Transportation Com- pany and the Federal Sugar Refining Company for a compensation of three cents per hundred pounds, although the contract provides for a compensation of four cents per hundred pounds on sugar light- ered from Yonkers to Pier 24, North River, pay- ments for said service being made to the Ben Franklin Transportation Company under that pro- vision of said contract which provides for a com- pensation of three cents per hundred pounds for sugar lightered from Yonkers to petitioners' rail termini. Having established the practice above described, the said Federal Sugar Refining Company filed a complaint in October, 1909, with the Interstate Commerce Commission against petitioners. Said complaint alleged, in substance, that the interstate transportation of the product of the said Federal Sugar Refining Company began at Pier 24, North River, Borough of Manhattan, a point within the 21 j-/^ lighterage limits as aforesaid, and that said Jay Street Terminal is owned and conducted by copart- ners, named John Arbuckle and William A. Jami- son, which said copartners owned, maintained, and operated in connection therewith a sugar refinery at the foot of Jay Street, Borough of Brooklyn; that said amounts of three cents per hundred pounds and four and one-fifth cents per hundred pounds were paid to said copartners for the lighter- ing of their sugar from Jay Street, Brooklyn, to the rail termini of petitioners on the west bank of N"ew York Harbor, and that inasmuch as the said Federal Sugar Refining Company was a competitor of the said Arbuckle and Jamison in the sugar business, it constituted an undue and unreasonable prejudice and disadvantage against said Federal Sugar Refining Company to pay said amounts of three cents and four and one-fifth cents per hun- dred pounds for the handling of sugar to said Arbuckle and Jamison, and not to pay similarly to the said Federal Sugar Refining Company. Hear- ings were had before the Interstate Commerce Commission upon the last mentioned complaint, and subsequently the Commission issued its order against petitioners in the following language : It is ordered that the above-named defendants be, and they are hereby, notified and required to cease and desist, on or before the 15th day of April, 1911, and for a period of not less than two years there- after abstain, from paying such allowances to Ar- 22 buckle Brothers on their sugar while at the same time paying no such allowances to said complainant on its sugar, which said allowances so paid to said Arbuckle Brothers by said defendants are found by the Commission in said report to be unduly discrim- inatory and in violation of the act to regulate com- merce. The leave granted by this court allowing the United States and the Federal Sugar Refining Company to withdraw their answers and file mo- tion to dismiss undoubtedly entitles them to be again heard as to whether the petition states a cause of action, although the record thus presented is a novel one. We certainly are in no position, after having denied the motions to dismiss and after the Supreme Court has afi&rmed our action so far as the granting of the temporary injunction is concerned, to now hold upon the same facts that the petitions do not state facts sufficient to consti- tute a cause of action, merely because the case is now submitted for final decision. We are of the same opinion, however, as when we denied the mo- tions to dismiss on May 22, 1911, but as we did not at that time give the reasons which impelled us to make the decision then rendered, we can now with propriety state them. The Interstate Commerce Commission in its re- port and order did not specify whether it found a violation of section 2 or section 3 of the act to regulate commerce. These sections read as fol- lows: 28 J-^/ Sec. 2. That if any common carrier subject to the provisions of this act shall, directly or indi- rectly, by any special rate, rebate, drawback, or other device, charge, demand, collect, or receive from any person or persons a greater or less com- pensation for any service rendered or to be ren- dered, in the transportation of passengers or prop- erty, 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 trans- portation of a like kind of traffic under substan- tially similar circxmistances and conditions, such common carrier shall be deemed guilty of unjust discrimination, which is hereby prohibited and de- clared to be unlawful. Sec. 3. That it shall be unlawful for any com- mon carrier subject to the proAdsions of this act to make or give any undue or unreasonable preference or advantage to any particular person, company, firm, corporation, or locality, or any particular description of traffic, in any respect whatsoever, or to subject any particular person, company, firm, corporation, or locality, oj any par- ticular description of traffic, to any undue or un- reasonable prejudice or disadvantage in any re- spect whatsoever. * *" * The language used by the Commission would lead to the inference that it found a violation of section 3, If the facts pleaded, however, show a violation of either of the above sections, the order must be sustained, and it must also be sustained if based upon a finding of fact, which we are not at liberty 24 to review. In the first place, the case must be freed from matters which cloud the real issue. It is con- tinually suggested that the arrangement between petitioners and the Jay Street Terminal may be a scheme to cover a rebate. We are not permitted to base our judgment on suspicion, but upon facts pleaded and proven. Respondents have been given ample opportunity to produce all evidence within their power for the purpose of showing that the payments made by petitioners to the Jay Street Terminal constitute unlawful rebates, but no such evidence has been produced. On the contrary, re- spondents withdrew their answers and now ask the court to decide the case upon the facts stated in the petition. Surely upon this record the court ought to be relieved of presuming that the contracts made by petitioners with the Jay Street Terminal are a cover for the payment of unlawful rebates. Again, the performance of the Ben Franklin Transportation Company at Pier 24, North River, is a play in which the episode is lost in the denoue- ment. It is a plain device and subterfuge indulged in on behalf of the Federal Sugar Refining Com- pany for the purpose of making it seem that sugar which is being lightered from Yonkers, New York, ten miles north of the lighterage limits established by petitioners, was in fact shipped from Pier 24 by a delivery of the same at that point to the petition- ers, when the uncontradicted record, as admitted by the motions to dismiss, shows that the petitioners 25 ^"2. have nothing to do with the sugar of the Federal Sugar Refining Company until it reaches the New Jersey shore and is there delivered to petitioners. Courts of equity looking through mere forms to the substance of things can not, nor ought they be asked to, found their judgment upon a plain subterfuge. No sugar is tendered by the Federal Sugar Refin- ing Company to petitioners at Pier 24. On the con- trary, the Ben Franklin Transportation Company, acting for the Federal Sugar Refining Company, refuses to tender it there and allow it to be taken by petitioners, but insists upon transporting it itself to the rail termini. The statement of facts makes it plain that the Federal Sugar Refining Company transports its sugar direct from Yonkers to the Jersey shore, and we must find as a matter of law that the transportation of Federal sugar by peti- tioners does not commence until it is delivered to them at their rail termini. The facts do not bring the case within the ruling of the Supreme Court in Gulf, Colorado and Santa Fe Railway Company v. Texas (204 U. S., 403). We must indulge in the presumption that the Commission found nothing unlawful in the pay- ments made by petitioners to the Jay Street Ter- minal under the facts appearing in the record, or it would not have framed its order in the alter- native. Penn Refindng Co. v. W. N. Y. & P. R. R. Co., 208 U. S., 208. 26 East Tenn., etc., B. B. Go. v. Interstate Commerce Commission, 181 U. S., 1. Interstate Commerce Commission v. Louis- ville & Nashville B. B. Co., 190 U. S., 273. Louisville & Nashville B. B. Co. v. United States, 197 Fed., 58-60. There can Tdc no doubt as a matter of law under tlie facts admitted that transportation by peti- tioners of freight delivered to them at the Jay Street Terminal commences at said terminal, and that the services performed by the Jay Street Ter- minal are transportation services. In our disposi- tion of the case we make no distinction between the Jay Street Terminal and Arbuckle Brothers but treat them as the same entity in legal effect. It then appears that petitioners under their respec- tive contracts are paying the Jay Street Terminal for a terminal service and also for the transporta- tion of freight from the terminal to the Jersey shore. Providing this charge is reasonable, and there is no suggestion that it is not, we understand the law to permit such payment. Central Stock Yards Co. v. L. & N. Bail- way Co., 192 U. S., 568. B. B. Com. of Ky. v. L. & N. Bailway Co., 10 I. C. C. Rep., 173. Cattle Baisers Ass'n. v. C. B. & Q. B. B. Co., 11 1. C. C. Rep., 277. Sec. 15, act to regulate conmierce, as amended. Central Stock Yards Co. v. L. & N. By. Co., 118 Fed., 113 ; afBrmed, 193 U. S., 568. 27 ,ri^' Covington Stock Yds. Co. v. Keith, 139 U. S., 128. Butchers & G. Stock Yds. Co. v, L. d; N. B. B. Co., 66 Fed., 35. United States v. Delaware, L. & W. Co., 40 Fed., 101. Consolidating Fordg. Co. v. Southern T. Co. et al., 9 1. C. C. Rep., 182. Excursion Gar Co. v. Penn. B. Co., 3 I. C. C. Rep., 577. In re Transportation of Fruit, 10 I. C. 0. Rep., 360. F. E. Peavey Co. v. Union Pac. B. Co., 176 Fed., 409; affirmed, 222 U. S., 42. Interstate Commerce Commission v. Dif- fenbaugh, 222 U. S., 42. This case is in no way parallel to the case of Union Pacific Bailway Company v. Updyke (222 U. S., 15). The Jay Street Terminal is one of the pub- lic terminals of petitioners, and it is owned by Arbuckle Brothers. The payments made by peti- tioners to the Jay Street Terminal are for the ter- minal and transportation services performed by it in connection with all freight shipped from or de- livered to said Jay Street Terminal. It so happens that Arbuckle Brothers, who own and operate the terminal, also are shippers, and only in this way can it be said that they receive payment for trans- porting their own sugar. In order to make the case parallel to the Updyke case, it would have to appear that the Federal Sugar Refining Company also owned and operated for petitioners a public 28 terminal for the receipt and deKvery of freight within the lighterage limits, and that the Fed-eral Sugar Refining Company had sugar of its own which it transported to the rails of petitioners to- gether with other freight. If the case stood in such position, under the TJpdyke ease it might be necessary to hold that the petitioners must make the same payments to the Federal Sugar Refining Company as to Jay Street Terminal. But the always-present fact is that the Federal Sugar Re- fining Company does not own and operate any pub- lic terminal for petitioners, nor 'does it transport a pound of sugar from any terminal within the lighterage limits to the rail termini of petitioners. There is no room for the court to enforce equality between Arbuckle Brothers and the Federal Sugar Refining Company as to payments for the trans- portation of their sugar, for the reason that the position in which the court flmds the respective parties to the controversy will not permit. We find Arbuckle Brothers owning the Jay Street Termi- nal, used as a public terminal of petitioners within the lighterage limits. We find the Federal Sugar Refining Company, with its refinery at Yonkers, ten miles north of the lighterage limits, owning and operating no public terminal for petitioners and tendering petitioners no freight at any of their public terminals. So that we can not see how any violation of either section 2 or section 3 can be predicated of the facts stated in the record. 29 . S' i- 7 But it is claimed that tMs is true : That it costs the Federal Sugar Refining Company three cents per hundred pounds more to get its sugar to the Jersey shore than it does Arbuckle Brothers. This could be avoided in part if the Federal Sugar Re- fining Company would tender its sugar for ship- ment over the rails of petitioners at any of the ter- minals of petitioners within the lighterage limits, many of which are much nearer Yonkers than the Jay Street Terminal or even Pier 24, North River. And we must not forget in this connection that the Federal Sugar Refining Company voluntarily lo- cated its refimery at Yonkers, and if it thereby has subjected itself to some natural disadvantage it can not call upon the courts to remedy it. The C«mmission recognized this fact when it refused to compel petitioners to extend their lighterage limits so as to include the Federal sugar refinery. It is apparent from the record that the sole disadvantage of the Federal Sugar Refining Company results from its location outside the lighterage limits, and that it is in no way injured or prejudiced by the fact that Arbuckle Brothers own the Jay Street Terminal. For the reasons above stated we are of the opin- ion that the order of the Commission was in excess of its power, and that it ought to he permanently suspended and enjoined. And it is so ordered. 30 Mace, Judge, dissenting : The Commission in its report does not clearly in- dicate whether it deems the transportation of the Arbuckle sugar to begin in New York or in Jersey City. It is conceded by counsel that this is a ques- tion of law to be determined by this court. As to goods shipped by Arbuckle Brothers to others than themselves as consignees, there would seem to be no room for doubt, for whatever may be the liability of the Jay Street Terminal toward such consignees, clearly the railroad companies are liable to them as common carriers at the latest from the time of the delivery of the goods into the cars and the issu- ance of the bill of lading in their name by their authorized agents in New York. I concur in the conclusion of the majority of the court that this transportation begins in New York. As to the comparatively small percentage of ship- ments of which Arbuckle Brothers are the con- signees as well as the consignors, this would seem to be equally true. The title thereto could be trans- ferred by them immediately after the bills of lad- ing are issued, and in that event the railroad com- panies would again clearly be liable as carriers to the assignees, even though the goods had not yet actually moved from New York. And the reten- tion of title thereto by Arbuckle Brothers during the time that they, acting as agents for the railroad companies, are transporting them to Jersey City under the contract by which they agree to indem- 31 ,./' X ^ nify the railroad companies against their own acts, and thereby to release them, in a sense, from the obligations which they would ordinarily incur as common carriers toward the owners of goods car- ried, would not of itself change the transaction from a transportation service performed by the railroads through their agents, the shippers, into an accessorial service performed by the shippers solely on their own account, payment for which would be illegal, irrespective of any unjust dis- crimination that might result therefrom. I concur, too, in the opinion of the majority of the court that Arbuckle Brothers and the Jay Street Terminal are to be treated as identical. When two individuals form two firms in which each is inter- ested in the same proportions, the one to refine sugar, the other to operate a terminal station and to transport goods for railroads, the two firms do not thereby become so distinct and separate for every purpose as to legalize a payment to the latter firm for carrying the former's product, if such payment would- be illegal as unjustly discrimina- tory when made directly to the former firm. The Commission was therefore fully justified in this case in dealing' with the two firms as one. The question before this court then is, Could the Commission reasonably find that payment to Arbuckle Brothers for getting sugar manufac- tured by them from a point within the lighterage limits to Jersey City; that is, for performing a 32 part of the railroad companies' transportation service (a payment permitted by section 15 of the act, subject to regulation by the Commission as to its reasonableness), would operate as an unjust dis- crimination against the Federal Sugar Refining Co. unless a similar payment were made to the latter company for getting sugar manufactured by it from another point within the lighterage limits to Jersey City? If the Federal Company had its refinery at Pier 24, and if Arbuckle Brothers operated their wharf only as a private and not as a public station, and if the allowance made to them for carrying their sugar to Jersey City were no more than the bare cost of the service, the Commission would be justi- fied in finding that a refusal to make a similar allowance to the Federal Company and. the offer to give it in lieu thereof free lighterage of its sugar would result in an unjust discrimination against the Federal Company. (Union Pacific Railroad Company v. Updike Grain Company, 222 U. S,, 215.) Do the facts, first, that the Federal Company's refinery is at Yonkers, that it brings its goods to Pier 24 primarily or solely to get them within the lighterage limits, that it has never demanded and does not want free lighterage from Pier 24, and that as a result thereof the transportation of its goods by the railroads begins in Jersey City; or, second, that Arbuckle Brothers are employed by 33 ^-^( the carriers to operate their wharf as a public ter- minal station, and to transport therefrom to Jer- sey City not only their own but others' goods, necessarily render the circumstances such that the Commission in the reasonable exercise of its pow- " ers could not fbad them to be substantially similar ? (1) If this case were based on the grant of free lighterage to Arbuckle Brothers and the failure to grant it to the Federal Company, the latter would, of course, have no ground for complaint unless it really wanted and offered to avail itself of such free lighterage. But when, as here, the complaint is based on the grant to the one and the denial to the other of the privilege, not of free lighterage, but of itself performing for compensation the transportation service from within the lighterage limits to Jersey City, it is no answer to assert that at present the situation of the two parties is not similar, transportation for the one beginning at New York and for the other at Jersey City. The charge is that this dissimilarity is due not to the voluntary act of the parties but to the very dis- crimination sought to be removed as unjust, and that if the same privilege were granted the Federal Company as is granted Arbuckle Brothers — that is, to transport its goods from a point in the lighterage limits to Jersey City in its own or hired lighters, not at its cost, but as the compensated agent of the railroads, it would be ready, willing, and able so to do. 34 If this court must find that there is no substan- tial basis for the Conunission's view that the Fed- eral Company was shipping, and, on a grant of nke privileges to those accorded Arbuckle Brothers, would be ready to ship from Pier 24 if the facts stated in the petition necessarily lead to the conclusion that the shipment is and would be direct from Yonkers, a point without, and not from Pier 24, a point within the lighterage limits, to Jersey City, there would an end of the case. I am of the opinion, however, that this court should not so hold. The railroads ate not concerned with the history of goods offered for transportation. {Interstate Commerce Commission v. B., L. d; W. R. Co., 220 TJ. S., 235.) If parties are ready to perform for compensation that part of the service which the railroad companies, by their offer to begin the car- riage in ISTew York instead of in New Jersey, have made transportation service, it can not be material to the railroads how the goods get to the point where this service is to begin — whether it be by rail, barge, or wagon. The goods are to be tendered to them at that point. The only transportation with which we are here concerned, that by the railroads, is to begin there. The barge that brings the Federal Company's sugar from Yonkers is tied up to the dock at Pier 24. The sugar is then just as much within the light- erage limits as if it were dumped out on the pier. 35 ■ (-A \ When the barge is so tied up, a shipper who wants to avail himself of the free-lighterage offer could assuredly do so. The railroads make this offer to the Federal Company now, an offer which would be illegal if the goods could not be considered to be within the lighterage limits and if the interstate transportation necessarily began at Yonkers. If the refinery were situated in New York City, a few blocks off the water front on a small canal or creek large enough only for rowboats, the company clearly could bring its goods by such a boat to the dock and put them on lighters, without first dump- ing them onto the dock. Of course, at the present time, the Federal Com- pany can not offer the goods to the railroads at Pier 24. As it does not want free lighterage, and as the railroads will not accept them at Pier 24 by issuing, through regular agents, or the Federal Company itself, acting as their agent, the necessary bills of lading, and permitting the Federal Com- pany as their paid agent thence to transport them to Jersey City under covenants similar to those found in the Jay Street Terminal contracts, it would seem to be utterly useless for the Federal Company to do anything more than it is doing. It says : " Our sugar is at Pier 24 ; it is already loaded in lighters ; we want bills of lading for the through transportation from this point, and we demand, for similar compensation, the privilege of performing a part of the transportation service, that between 36 the lighterage point, Pier 24, and Jersey City, a privilege substantially similar to that which you grant Arbuckle Brothers. ' ' In the opinion filed by the Commission in the original ease brought by the Federal Company, in- volving only the extension of the lighterage limits and based primarily on an alleged violation of sec- tion 3 of the act, importance was attached to the concession of counsel that the Federal Company would not be any better off if the Jay Street Ter- minal were owned by the railroad companies with the implication that in that event the allowance would be cut off and only free lighterage granted. The refinery at Yonkers would, of course, always be under the disadvantage of having to bring its goods to Pier 24. The present proceeding, however, was brought by the Federal Company not in the capacity of a Yonkers refinery, primarily to prevent, as between localities, the undue prejudice forbidden by section 3, but in its capacity of a vendor and shipper of sugar from Pier 24, primarily to prevent as against it the unjust discrimination forbidden by section 2 of the act. Only in that capacity is it to be dealt with in this case, and therefore it is immaterial how, whence, or at what cost it gets it sugar to that pier. (2) Can parties guUty of what would otherwise be an unjust discrimination escape the consequences of their act by combining the payment for the 37 r^^ transportation service with payment for other work that in and of itself has no necessary connection therewith ? That Arbuckle Brothers run a public wharf as agents of the railroad companies, that their com- pensation is a combination of rent and wages as terminal managers and transporters, that the amount paid per 100 pounds for sugar may be far beyond a fair payment for that particular service, and may be made so because a, similar payment per 100 pounds may be far below a fair payment for similar services as to other goods, do not, in my judgment, necessarily render the circumstances surrounding the transportation of the sugar to Jersey City so dissimilar from those at Pier 24 as to justify this court in holding that the Commis- sion, in the reasonable exercise of its powers, could not find that an unjust discrimination resulted from the payment to Arbuckle Brothers and the refusal to make a similar payment to the Federal Company. If the Commission could reasonably so find, its order can not be annulled merely because the members of this court might have reached a different conclusion had they been acting as com- missioners. The fact that the contracts between the Jay Street Terminal and the railroads, by which the Arbuckle private docks were made public terminal stations and these allowances were definitely fixed, were made during the session of Congress which :> 38 enacted the Hepburn Act, a law wMcli aimed more effectively to prevent certain illegal practices theretofore secretly indulged in for the benefit of large and favored shippers, and the further fact that the ultimate destination of the goods deter- mined the rate of payment, although the services in each case were absolutely identical, lends sup- port to the conclusions of the Commission that the allowances are a mere disguise to conceal unjustly discriminatory and therefore illegal payments. In my judgment, the petition should be dis- missed for want of equity. O United States Commerce Court. No. 61. — June Session, 1912. The Atchison, Topeka & Santa Fe Railway Company bt al.^ petitioners, V. United States of America, respondent; Inter- state Commerce Commission and Arlington Heights Fruit Co. et al., intervening re- spondents. ON MOTION TO STRIKE OUT EVIDENCE AND ON FINAL HEARING. (For opinion of Interstate Conunerce Commission, see 22 I. C. C. Rep., 149.) Mr. Winfred T. Denison, Assistant Attorney Gen- eral, with whom Mr.\ Thurlow M. Gordon, special assistant to the Attorney General, was on the brief, in support of the motion to strike out evidence. Mr. Robert Dunlap, Mr. T. J. Norton, Mr. H. A. Scandrett, and Mr. C. W. Durbrow, with whom Mr. Gardiner Lathrop, Mr. F. C. Dillard, Mr. W. F. Herrin, and Mr. A. S. Hoisted were on the brief, for the petitioners. 79615—13 Mr. Blackburn Esterline, special assistant to the Attorney General, with whom Mr. Wirifred T. Deni- son, Assistant Attorney General, was on the brief, for the United States. Mr. P. J. Farrell for the Interstate Commerce Commission. Mr. Asa F. Call and Mr. Wm. E. Lamb for inter- vening shippers. Before Knapp, Presiding Judge, and Hunt, Car- land, and Mack, Judges. (February 26, 1913.) Mack, Judge: The facts in this case are fully stated in the opin- ion of this court rendered in Atchison, Topeka & Santa Fe Railway Co. et al. v. /. C. C, 190 Fed., 591, in which the original order of the Commission reduc- ing the carload blanket rate on lemons from Califor- nia to the eastern territory from $1.15 to $1 per hun- dred pounds was annulled, because in the judgment of this court it was not based upon a determination by the Commission that the $1.15 rate was unrea- sonable, but upon other considerations. While there had been a full hearing granted by the Commission and while a great mass of conflicting testimony bearing upon this question had been pre- sented to it and was preserved in the record, it was beyond the province of this court to consider this testimony for the purpose of determining in the first instance whether the $1.15 rate was inherently un- reasonable. Such a determination by the Commis- sion itself is a statutory condition precedent to the exercise of its power to fix reasonable rates for the future. Atl. Coast Line R. Co. v. /. C. C, 194 Fed., 449; L. & N. Ry. Co. v. /, C. C, 195 Fed., 541; /. C. C. & U. S. V. L. & N. Ry. Co., 227 U. S., 88. In annulling the order, this court stated that it was without prejudice to a reopening and reconsid- eration of the original proceedings before the Com- mission. Thereupon the Commission reopened the proceed- ings, took some additional testimony, and again re- duced the rate to $1. In the report accompanying the order, it is expressly stated that the $1.15 rate was inherently unreasonable on transportation con- siderations alone, irrespective of any question of tariff protection. The present petition aims to have this order an- nulled, first, on the ground that the finding of the Commission that the $1.15 rate was unreasonable is a mere subterfuge and without evidence to support it; second, that the Commission acted arbitrarily and in disregard of the evidence in fixing the $1 rate; third, that this rate is confiscatory. First. The original order was annulled, not because in ovir judgment the Commission could not have found the $1.15 rate inherently unreasonable on the evi- dence before it but because it had not done so. In- asmuch as there was a very considerable mass of tes- timony which, if believed by the Commission, would have justified such a finding in the first instance, the condition precedent to the exercise of the power to fix reasonable rates has been met. Second. The same testimony which in the judg- ment of the Commission demonstrated the unrea- sonableness of the $1.15 rate was amply sufficient to relieve the Commission from any charge of having fixed the $1 rate arbitrarily in the sense that there was no substantial evidence before it in support of its conclusion. The very history of the lemon rate, the shippers' version of the causes that kept the $1 rate in force for nearly six years just preceding the change, the relation between it and the orange rate during most of this time, the shorter average haul of lemons as against oranges in the past, which, to some extent at least, would probably continue in the futxu'e, were all facts bearing upon the intrinsic rea- sonableness of the rate and the reasonableness of fixing the lemon lower than the orange rate, especially under an order permitting a higher minimum loading to be enforced for lemons than for oranges, when shipped under ventilation. The weight to be ac- corded this evidence as against evidence offered by the carriers tending to the conclusion that a $1 rate would not afford the carrier all the revenue which this particiolar traffic ought justly to yield and the determination of what would be a reasonable rate were within the exclusive jurisdiction of the Commis- sion and are not subject to our review, unless the Commission, in fixing the rate at $1, acted arbi- trarily or in such an unreasonable manner as to give 5 J'V. the petitioners the shadow but not the substance of a conclusion based upon the evidence before it. If the Commission had professed to fix a rate at not exceeding the bare out-of-pocket expense, it would be the duty of this court in this case, where no such extraordinary circumstances and conditions are shown as might otherwise justify such action, to annul the order, as evidencing an arbitrary and un- reasonable exercise of the Commission's power. {Southern Ry. Co. v. St. Louis Hay Co., 214 U. S., 297; Interstate Commerce Commission v. Stickney, 215 U. S., 98.) Here, however, it is not only clear that the $1 rate is very considerably in excess of the mere out-of-pocket expense, but, in the judgment of the Commission, based upon the evidence before it, it even exceeded that part of the entire operating costs fairly to be apportioned to this particular traffic, and thus, in its judgment, contributed, to some extent, to the payment of interest charges and dividends. That the Commission, in reaching this conclusion, faUed to follow the expert evidence offered by the - railroads in the matter of proportionate operating cost would not justify this court in annulling the order, especially as it is concededly impossible to determine with accuracy the fair proportionate cost of transporting any single kind of merchandise. Indeed, only the clearest evidence that the Com- mission had completely misconceived the testimony or had wilfully disregarded it could sustain the charge of an arbitrary or unreasonable discharge of the Statutory and constitutional duties imposed upon it. No such evidence is to be found in this case. Third. While it is alleged that even under the $1.15 rate the entire revenues of some of the com- panies do not reach the minimum to which they are constitutionally entitled, the proof was not directed toward and is entirely inadequate to sustain this charge. The charge of confiscation, however, is based pri- marily upon a claim of constitutional right to a rate for each distinct service — that is, for the carriage of each class of articles — ^which shall not be less than the fair proportionate cost of the service and some profit in addition thereto. The constitutional protection is afforded by the fifth amendment, in the clause reading "nor shall any person ... be deprived of . . . property without due process of law; nor shall private prop- erty be taken for public use, without just compensa- tion." It is unnecessary to determine in this case whether a public-service corporation is constitution- ally entitled under all circumstances to a rate equal to its out-of-pocket expense (see St. L. & San Fran- cisco Ry. V. Gill, 156 U. S. 649; Atlantic Coast Line v. N. Car. Corp. Com'n, 206 U. S. 1), inasmuch as the $1 lemon rate is clearly far in excess of such a return. That relative freight rates have not been based upon the fair proportionate cost or the value of the service alone or in combination is demonstrated by the entire history of freight classification. The car- rier can not complain of a violation of its constitu- tional rights if, not to favor some person or class, but for the general welfare, it is compelled to make a rate for some particular service which, though in excess of the out-of-pocket expense, would never- theless be confiscatory if it were applied to all of its freight — that is, the carrier has no constitutional right to a rate for each distinct kind of service which wUl equal its proportionate share of the entire oper- ating expenses. {Minneapolis & St. Louis R'd Co. V. Minnesota, 186 U. S. 257; St. L. & S. F. R. Co. v. Gill, supra; Ail. C. L. v. N. C. Corp-Comn., supra) Even, therefore, if it had been clearly proven that the $1 rate on lemons, though in excess of the out-of- pocket cost, did not yield its full proportion of the entire operating expenses of the road, no claim of confiscation in the sense of a violation of constitu- tional right could be based thereon. In view of the conclusions reached, it is unneces- sary to consider the motion of the United States to strike out certain testimony offered in this court. The petition will be dismissed. O United States Commerce Court. October Session, 1912. The Prairie Oil and Gas Company, peti- tioner, V. The United States of America, respond- ent; Interstate Commerce Commission, intervener. The Uncle Sam Oil Company, petitioner, V. Same. Robert D. Benson et al., petitioners, V. Same. The Ohio Oil Company, petitioner, V. Same. Standard Oil Company, petitioner, V. Same. Standard Oil Company of Louisiana, petitioner, V. Same. 74150-13 1 mo. 75. No. 76. No. 77. •No. 78. No. 79. No. 80. 2 ON MOTIONS FOR PREIIMINAEY INJUNCTIONS. (For opinion of the Interstate Commerce Commis- sion see 24 I. C. C. Rep., — .) Mr. W. S. Fitzpatrick, with whom Mr, J. B. F. Gates, Mr. L. W. Keplinger, and Mr. C. W. Trickett were on the brief, for the Prairie Oil and Gas Company. Mr. Albert L. Wilson for the Uncle Sam Oil Com- pany. Mr. W. I. Lewis, with whom Mr. Arch. F. Jones, Mr. R. R. Lewis, and Mr. Clarence A. Farnum were on the brief, for the Tide-Water Pipe Company, Lim- ited. Mr. John G. Milhurn, with whom Mr. Frank L. Cravqford and Mr. Walter F. Taylor were on the brief, for the Ohio Oil Company. Mr. John G. Milhurn, with whom Mr. M. F. Elliott and Mr. Chester 0. Swain were on the brief, for Stand- ard Oil Company and Standard Oil Company of Louisiana. Mr. Winfred T. Denison, Assistant Attorney Gen- eral, with whom Mr. Thurlow M. Gordon, special assistant to the Attorney General, was on the brief, and Mr. Blackburn Esterline, special assistant to the Attorney General, for the United States. Mr. Charles W. Needham for the Interstate Com- merce Commission. Before Knapp, presiding judge, and Hunt, Garland, and Mack, judges. March 11, 1913. Knapp, Presiding Judge: By an amendment approved June 29, 1906, which took effect sixty days thereafter, the provisions of the act to regulate commerce were extended and made to apply "to any corporation or any person or persons engaged in the transportation of oil or other commodity, except water and except natural or artificial gas, by means of pipe lines, or partly hy pipe lines arid partly by rail- road, or partly by pipe lines and partly by water, * * * who shall be considered and held to be common carriers within the meaning and purpose of this act * * *. " Subsequently, in June, 1911, the Interstate Com- merce Commission on its own motion instituted a proceeding, " In the Matter of Pipe Lines," No. 4199, to which numerous companies using pipe lines for the transportation of oil, including the several petitioners above named, were made parties respond- ent. The stated purpose of this inquiry was to deter- mine whether any of the rates, regulations, or prac- tices of the respondents, or either of them, were unreasonable or discriminatory, or otherwise in violation of the act, and to ascertain the manner and method in which their business was carried On, matters respecting which, as the order recites, com- plaint had been made to the Commission. During the following months an extended investi- gation appears to have been conducted, which pre- sumably disclosed, among other things, the principal facts relating to the location, extent, ownership, and activities of the various pipe lines of the respond- ent companies. After the taking of testimony was concluded, and in the order or notice fixing May 10, 1912, as the date for final hearing, certain questions of law were propounded by the Commission, and it is assumed that these questions were discussed when the matter was argued and submitted. After- wards, and on June 3, 1912, the Commission made and filed its report of the proceeding, as required by law, and thereupon entered an order in and by which 13 of the respondents therein specified, includ- ing the above-named petitioners, were notified and required " to file with this Commission, on or before the 1st day of September, 1912, schedules of their rates and charges for the transportation of oil, in compliance with the provisions of the act to regulate commerce." (The effective date was sub- sequently postponed for a period which has not yet expired.) Shortly thereafter the above-entitled suits were brought to set aside and annul this order, the several petitioners basing their right to such relief upon grounds which will presently be stated. The United States filed an answer to each suit, but later with- drew its answer in No. 75, The Prairie Oil and Gas Company case, and substituted a motion to dismiss for want of equity. In No. 77 theWellsville Refining Com- pany intervened by leave of the court and prayed that the petition be dismissed, and in No. 78 there was a like intervention by the Cornplanter Refining Company. The Interstate Commerce Commission answered at length in each of the cases. Upon the verified petitions filed by them, respectively, and supporting affidavits the petitioners applied for injunctions pendente lite, and the cases have been argued and submitted on such applications. Whilst each case differs from the others in various particulars, and perhaps in respects which would be important in other connections, the fundamental questions here involved are conomon to them all and arise out of facts which are practically undisputed. The crude or natural oil produced in the United States is found in various sections of the country, described as "fields," which are of comparatively hmited area and located at considerable distances from each other. The most important of these ap- pear to be the Appalachian field, covering parts of the States of New York, Pennsylvania, West Vir- ginia, southeastern Ohio, Kentucky, and Tennessee; the Lima-Indiana and Illinois fields, covering parts of northwestern Ohio, Indiana, and Illinois; the mid- continent field, covering parts of the States of Kan- sas and Oklahoma; the Gulf field, covering parts of the States of Louisiana and Texas; the Caddo field in Louisiana and Texas, and other fields in the States of California, Colorado, Wyoming, Michigan, and Mis- souri. In each of these fields there are hundreds and perhaps thousands of wells from which the crude oil is obtained, and the aggregate output amounts to upward of two hundred millions of barrels per annum. The oil in its natural state is not well suited to domes- tic use, and therefore requires a process of refining to prepare it for the needs of consumers. It is infer- able from the record that the business of refining crude oil can be profitably conducted only on a large scale and by means of somewhat costly plants, and therefore the number of refineries is comparatively small. These refineries are located for the most part at considerable distances, and sometimes at great distances, from the fields of production, and the cus- tomary method of transporting the crude oil to the refinery is by means of pipe lines. The cost of transporting by this method is said to be not more than 25 to 35 per cent of the cost by any other agency, and it results that practically all the crude oil pro- duced is moved by pipe lines to the various refineries. There are many thousands of miles of pipe lines now in use, and their operations are correspondingly ex- tensive. Some of these pipe lines, aggregating a large mileage, are admittedly subject to public regu- lation, because their owners are public service corpo- rations engaged in the business of common carriers; but many of them belong to private companies, which use them only in the conduct of their private business. The private lines in most instances are owned or controlled by the refineries to which they transport crude oil and which they exclusively serve. The construction of pipe lines, such as are owned by these petitioners, involves a large outlay of capital, and few producers of the crude article are able to provide themselves with such a facility for marketing their output. Consequently, and because the cost of railroad transportation is prohibitive, the great majority of oil producers find it to their interest to sell at the wells to the owners of pipe lines, and, as a practical matter, may have no other alternative. For this reason it comes to pass that these private pipe-line companies transport not only the oil sup- plied by their own weUs, but also the much greater amount purchased by them from other producers. In the view we take of the questions involved in this controversy, and the grounds upon which we rest our decision, it is deemed unnecessary to describe the pipe-line industry in greater detail or to add anything more in this connection than a brief statement re- specting the several petitioners. The Prairie Oil and Gas Company is a corporation organized in 1900 under the laws of the State of Kan- sas. It owns and operates a system of pipe lines consisting of gathering lines in the mid-continent field, in the States of Kansas and Oklahoma, a trunk line from that field to Griffith in the State of Indiana, where it connects with the Indiana pipe line, and a trunk line in the State of Arkansas, connecting the Oklahoma pipe line with the pipe line of the Standard Oil Company of Louisiana. This company has no refinery, and its business is confined to producing, piorchasing, and selling crude oil, which it delivers to its customers by means of the pipe lines described. Its own wells yield only about 12,000 barrels per day and it purchases approximately 70,000 barrels per day on the average. Its trunk lines are about 860 miles in length, of which some 300 miles are located on the right of way of the Atchison, Topeka & Santa Fe Railway Company under contract arrange- ment with that company. The Uncle Sam Oil Company is a corporation or- ganized in 1905 under the laws of the State (then Territory) of Arizona. It owns and operates a pipe line from its wells in the State of Oklahoma to its refinery at Cherryvale, Kans. The extent to which this company purchases oil from other producers, if it engages in that business at all, does not appear from the record. Robert D. Benson et al. are the members of a partnership, organized in 1878 for the term of 20 years and reorganized in 1898 for a fm^^her term of 20 years, in compliance with the laws of the State of Pennsylvania, and doing business under the name of the Tide-Water Pipe Co. (Ltd.). This company transports oil from the Appalachian field in the western part of Pennsylvania, and also oil received through connecting lines from other fields, to the Tide-Water Oil Co. refinery at Bayonne, in the State of New Jersey. It also owns and operates branch lines in New York and Pennsylvania, and a fine extending from Stoy, 111., through the States of Illinois, Indiana, Ohio, and Pennsylvania. The greater part of the crude oil transported by this company is purchased from other producers. The lines which it owns and the Bayonne refinery which it serves are under common or unified control. The Ohio Oil Co. is a corporation organized in 1887 under the laws of the State of Ohio. It owns and operates pipe lines in the States of Ohio, Indiana, and Illinois, and also leases and operates a line from Negley, Ohio, to Centerbridge, in the State of Penn- sylvania. It is an extensive purchaser of crude oil from other producers. Standard Oil Company, designated, for conven- ience, " Standard Oil Company of New Jersey," is a corporation organized in 1882 under the laws of the State of New Jersey, and its principal pipe lines are the following: (a) A line extending from Union ville, in the State of New York, near the boundary line of New Jersey, through the latter State to its refineries at Bayonne; (b) a line from Centerbridge, in the State of Pennsylvania, near the boundary of New Jersey, through the latter State to its refineries at Bayonne and Bay way; and (c) a line from Fawn Grove, in the State of Pennsylvania, near the bound- ary of Maryland, through the latter State to its re- finery at Baltimore. The record indicates that much the greater part of the oil transported through these lines, and perhaps all of it, is oil which this company has purchased. The Standard Oil Company of Louisiana is a cor- poration organized in 1909 under the laws of that State. It owns and operates a refinery at Baton Rouge and a trunk line extending thereto from the town of Ida, near the northern line of Louisiana, and also gathering lines in the Caddo field, in the States of Louisiana and Texas. It purchases a consider- able part of the crude oil which its lines transport.. None of the petitioning corporations is organized or derives any of its corporate powers from laws, of 74160—13- 10 the State of its creation under which common car- rier or other public service corporations are organized, but each of them was formed and has always con- ducted its operations under and in compliance with State laws which relate to private as distinguished from public business. With certain alleged excep- tions, which wiU be hereafter noticed, it is not claimed that either of the petitioners is under any statutory or legal obligation, other than the amendment in question, to perform the duties or otherwise act in the capacity of a common carrier. None of the petitioners possesses the right of eminent domain or has acquired any part of its property or rights of way by condemnation; nor has either of them re- ceived a franchise from any State, municipal, or local government, though each of them has in many instances laid its pipe Unes across or along public streets and highways by permission or consent of the local authorities. None of them has ever held itself out as a common carrier or in fact carried oU for others, but each of them has carried only such oil as it produced from its own weUs or purchased from other producers, and which it owned when the transportation took place. The pipe lines of peti- tioners are laid on private rights of way secured by purchase or lease, except that some of them for short distances, and one of them for a distance of some 300 miles, are laid upon and along the rights of way of certain railroads under some contract arrangement with such railroads. In short, so far as their legal status is fixed by the laws of the States 11 J-J-vf of their creation, and so far as their acts and atti- tude could make them such, all the petitioners carry on a private business, at least in the sense that they transport only their own oil and have always refused to transport for others; and aU of them have evidently sought and claimed to so con- duct their operations as to avoid any public activity which might subject them to public regulation. Some other facts relating to certain of the petitioners will be referred to in the following discussion of the legal questions to be decided. The petitioners rely upon two propositions: 1. That the amendment of 1906 applies only to such pipe-line companies as were common carriers when the amendment was adopted or should there- after become such by voluntary action or be so declared in some judicial proceeding; and, conse- quently, that as to these petitioners the order in question should be set aside because they are not and never have been common carriers and therefore are not subject to the provisions of the act or the authority of the Commission. 2. That if the amendment applies literally to all persons and corporations using pipe lines for the interstate transportation of oil, and Congress has thereby undertaken to bring within the scope of the act persons and corporations owning private pipe lin6s used solely for transporting their own oil in the conduct of their private business, the amendment is unconstitutional because it deprives such persons and corporations of their property without due 12 process of law and takes their property for public use without just compensation, and the order should be set aside for that reason. ' We shall not attempt to review at length the argument by which the first proposition is supported but merely outline the reasons advanced for giving to the amendment a restricted application. Among other things it is said that the entire scope and aim of the act is the regulation of the charges and prac- tices of common carriers; that its provisions are designed and adapted to that purpose and are not suited to a different purpose; that the intention to bring within such a law persons and corporations carrying on a private business should not be im- puted to Congress if the amendment is reasonably - susceptible of a construction in harmony with the other provisions of the regulating statute; and that the language of the amendment justifies such a construction. In this connection it is argued that the words " en- gaged in transportation" are equivalent to and mean "engaged in the business of transportation"; that this indicates a calling or occupation which is fol- lowed for hire, implying transactions and relations between two or more persons, and does not embrace that which one does for himself and by himself alone. It would seem to follow from this interpretation, and the petitioners so contend, that the concluding phrase of the amendment, " who shall be considered and held to be common carriers within the meaning and pm*- pose of this act," limits the preceding declaration 13 J" J 7 respecting the users of pipe lines, and operates to confine the amendment to such persons and corpo- rations as are in fact common carriers or may be adjudged to be such by a court of competent juris- diction. Stress is also laid upon the word "trans- portation," which later in the first section is given a broad definition, including " all instrumentalities and facilities of shipment or carriage, * * * and aU services in connection with the receipt, delivery, * * * storage, and handling of property trans- ported," terms which are claimed to relate exclu-^ sively to the functions of common carriers and to have no application to those who transport only their own property in the conduct of their private business. These considerations are sought to be fortified by in- voking the familiar principle that where a statute permits of two constructions, one of which involves serious questions of constitutional power and right, while the other would be free from constitutional objection, the latter should be adopted. Numerous cases illustrating and enforcing this principle are brought to our attention, of which one of the latest is the well known "Commodities Case," United States V. Delaware & Hudson Company (213 U. S., 366). Upon these authorities the contention is earnestly pressed that the amendment should be held to apply to only such pipe-line companies as are or may be adjudged to be common carriers, because the broader construction upon which the Government insists, and which would in effect extend the amendment without limitation or qualification to all persons and corpora- 14 tions engaged in the interstate transportation of oil by means of pipe lines, including those who use this means solely for transporting their own oil over their privately acquired rights of way, necessarily gives rise to ''grave and doubtful constitutional questions" (213 U. S., supra), and perhaps to "a succession of constitutional doubts," as was suggested in the Harriman case (211 U. S., 422). That the argument thus summarized is not without force may be conceded. The objection to its accept- ance does not arise from any doubt concerning the rule of interpretation invoked, for that rule is well settled, but rather from the lack of any substantial basis for its application. It is only when a statute is ambiguous or obscure, or wanting in definiteness, so that its real intent and meaning are uncertain because the language permits differing interpretations, that the rule in question may be applied. If the legislation is clearly expressed and of unmistakable import, so that there is no room for reasonable doubt as to what the lawmaking body intended to accom- plish, the courts are not at liberty to frustrate or modify the legislative intention, but must accept and deal with the statute in accordance with the manifest purpose which it expresses. To our apprehension the meaning of this amend- ment is not open to serious question. It is a clear and comprehensive declaration, in no respect indefi- nite or incomplete. The concluding phrase is not a Umitation or restriction, but on the contrary was plainly inserted for the purpose of fixing the legal 15 j "S' '; status of the persons and corporations included in precise terms in the preceding description, to the end that they should be regarded and treated as common carriers subject to the act by all officials who are or may be charged with the administration and enforcement of the regulating statute. In our judgment the amendment permits of no other or different construction, and we must therefore accept it as a plain and unambiguous measure, designed to effect a complete and definite purpose. In support of this view we need cite only the first "Employers' Liability cases" (207 U. S., 463, 500). It seems evident to us that the statute then under consideration was not clearer or plainer than is the amendment in question, nor were its terms any more comprehensive and unqualified. To uphold the constitutionality of that enactment the Gov- ernment stoutly contended that it should not be construed as applying to all the employees of any common carrier engaged in interstate commerce, although all were included in the language defining its scope, but should be held to embrace only such employees as were, or when they were, themselves engaged in interstate commerce; and this view is reflected in the dissenting opinion of Mr. Justice Moody. But a majority of the court, speaking through Mr. Justice (now Chief Justice) White, rejected the argument in an opinion from which the following is quoted : "So far as the face of the statute is concerned, the argument is this: That because the statute 16 says carriers engaged in commerce between the States, etc., therefore the act should be interpreted as being exclusively applicable to the interstate commerce business and none other of such carriers, and that the words "any employee," as found in the statute, should be held to mean any employee when such employee is engaged only in interstate commerce; but this would require us to write into the statute words of limitation and restriction not found in it. * * * To write into the act the qualifying words, therefore, would be but adding to its provisions in order to save it in one aspect, and thereby to destroy it in another; * * * "The principles of construction invoked are un- doubted, but are inapplicable. Of course, if it can be lawfully done, our duty is to construe the statute so as to render it constitutional; but this does not imply, if the text of an act is unambiguous, that it may be rewritten to accomplish that purpose." So far as the debates in Congress when this amend- ment was pending may be resorted to for any pur- pose, they tend strongly to confirm the conclusion above expressed. We are convinced from an ex- amination of what was then said, particularly in the Senate, that Congress undertook and intended by this amendment to make common carriers of and to subject to the provisions of the act as such the own- ers of private pipe lines who were not common car- riers and who used their respective pipe lines, and had always used them, solely for the transportation of their own oil, in carrying on their private business; and it is equally clear that Congress enacted the amendment with full knowledge that the question of its consti- 17 J% / tutiohality was involved. In short, we agree with the Commission in what is said in the following excerpts from its report in the pipe-line proceeding: "This seems to be the plain meaning of the act, that all pipe lines carrying oil from one State to another State, no matter what their previous status, should be thenceforward considered and deemed to be common carriers. And, to uphold this con- struction, reference may be made to the history of this provision. "Throughout the discussion there is abundant evidence that Congress passed this act for the pur- pose of subjecting all interstate pipe lines carrying oil to Federal regulation, and took this action con- sciously, in the presence of the very constitutional question now raised as to its power." Rejecting, therefore, the first proposition above stated, and holding that the amendment in question applies to the petitioners in these cases, in common with other pipe-line companies of like character and business, we come to consider the second proposition. Does this amendment, construed in accordance with the Government's contention, which we uphold, exceed the constitutional power of Congress? "Would its enforcement invade or take away rights secured to the petitioners by the fifth amendment? Of the plenary power of Congress to regulate inter- state commerce nothing need be said beyond giving it full and complete recognition. That this power may be exercised to the utmost extent, and acknowl- edges no limitations other than those prescribed in 74150—13 3 18 the Constitution itself, is established beyond ques- tion by a notable line of cases from Gibbons v. Ogden, decided in 1824, to the latest utterance of the Supreme Court upon the subject. But it is equally well estab- lished by numerous decisions that the limitations prescribed are positive and controlling. The same authority that grants the power fixes also the limits within which the exertion of that power must be confined. If, therefore. Congress passes a law which disregards those limits, as by depriving the owners of property of rights which the Constitution protects against invasion, the legislation can not be upheld, and it becomes the duty of the courts to stay its enforcement. As was said by Mr. Justice Brewer in Monongahela Navigation Company v. United States (148 U. S., 336) : "But like the other powers granted to Congress by the Constitution, the power to regulate commerce is subject to all the limitations imposed by such instru- ment, and among them is that of the fifth amend- ment * * *. Congress has supreme control over the regulation of comnferce, fcut if, in exercising that supreme control, it deems it necessary to take private property, then it must proceed subject to the limita- tions imposed by this fifth amendment, and can take only on payment of just compensation." And in Adair v. United States (208 U. S., 180) the Supreme Court, speaking by Mr. Justice Harlan, used the following language : t "We need scarcely repeat what this court has more than once said, that the power to regulate interstate commerce, great and paramount as that power is, can 19 j-Y. h not be exerted in violation of any fundamental right secured by other provisions of the Constitution. {Gibbons v. Ogden, 9 Wheat., 1, 196; Lottery Case, 188 U. S., 321, 353.)" In attempting to apply these basic principles to the question now presented, we are led to observe at the outset the real significance of this amendment as disclosed by the intention with which it was enacted and the purpose which it seeks to accomplish. It does not undertake to regulate the business in which these private pipe-line companies are and always have been engaged. Indeed, it assumes that the legal status of such companies, under the laws of the States of their creation and tested by the nature of their activities, was that of persons pursuing a private occupation; and it attempts by a legislative" declara- tion to make that private occupation a public calling and to impose upon those who pursue it the duties and obligations of common carriers. Before the law was enacted their business was private; by force of the law itself that business is made public. Nothing which they were then doing is subjected to regula- tion, but they are in effect commanded to do some- thing else which would be of public concern; and by simply declaring them to be common carriers they are made to devote their property to public use against their v^ill and under the regulations prescribed by the act. Thus the owner of a private pipe line which was built upon private rights of way, and which has been used solely for the transportation of his own oil, is required to open and extend its use to 20 whomsoever may desire its enjoyment, no matter with what resulting inconvenience and injury to himself. And this is concededly the intent and purpose of the amendment. It is not designed to regulate some public use to which private property has been vol- untarily devoted, but it attempts by an act of legis- lation to transmute the agencies of private business into instrumentalities of public service. In aim and necessary effect it compels these private pipe- line companies to relinquish the exclusive use for which their pipe lines were provided, and in which they have always been employed, and to place them at the disposal, for a compensation which public authority would have the right to determine, of all such persons as might tender oil for transportation. When the principle involved in this amendment is apprehended, when its far-reaching scope and power are perceived, does not the reflecting mind almost instinctively reject it as unsound and unjust? Is it not at variance with any reasonable conception of the rights and immunities of private property and the conditions under which it may be taken for public use? How can the conclusion be avoided that it operates and must operate to deprive the peti- tioners of their property without due process of law and to take that property without just compensation? Upon principle and authority it is not to be doubted, and counsel for the Government do not con- tend otherwise, that to effect an invasion of the rights protected by the fifth amendment it is not 21 . c-"""*-' necessary that the actual physical possession of property should be taken. It is suflScient if the owner be deprived of its exclusive use and enjoyment. This proposition is broadly stated by the Court of Appeals of New York in Forster v. Scott (136 N. Y., 577), in the following language : " What the legislature can not do directly it can not do indirectly, as the Constitution guards as effectually against insidious approaches as an open and direct attack. Whenever a law deprives the owner of the beneficial use and free enjoyment of his property, or imposes restraints upon such use and enjoyment that materially affect its value without legal process or compensation, it deprives him of his property within the meaning of the Constitution. All that is bene- ficial in property arises from its use and the fruits of that use, and wha-tever deprives a person of them deprives him of all that is desirable or valuable in the title and possession. It is not necessary, in order to render a statute obnoxious to the restraints of the Constitution, that it must in terms or in effect author- ize an actual physical taking of the property or the thing itself, so long as it affects its free use and enjoy- ment, or the power of disposition at the will of the owner." And in Weems Steamboat Co. v. People's Co. (214 U. S., 345, 355) the Supreme Com-t gives the principle concrete application, as follows: "A private wharf on a navigable stream is thus held to be property which can not be destroyed or its value impaired, and it is property the exclusive use of which the owner can only be deprived in accordance with established law, and if necessary that it or any part 22 of it be taken for the public use due compensation must be made. The owner of a private wharf on a navigable stream does not, on that account only, hold it by a different title from the owner of any other property which he may use himself or permit others whom he may select to use, while at the same time denying its use by anyone else." And this suggests the clear distinction between the question here presented and the questions decided in a number of well-known cases, all of kindred char- acter, such as Munn v. Illinois (94 U. S., 113), Budd V. New York (143 U. S., 517), Brass v. North Dakota (153 U. S., 391), and Catting v. Kansas City Stock Yards ( 183 U. S., 79) . Nor did the earliest of these, Munn V. Illinois, establish any new principle of law but only gave effect to an old one, as the Supreme Court said in Dow v. Biedelman (125 U. S., 680). Indeed, it had long been held by the courts of Eng- land as well as the United States that when one devotes his property to a use in which the public has an interest he in effect grants to the public an interest in that use and must submit to be controlled by the public for the common good to the extent of the interest he has thus created. He may withdraw his grant by discontinuing the use; but as long as he maintains the use he must submit to the control. But this legislation is not of that character. None of these petitioners has at any time transported oil for others or used its pipe hues for any other purpose than the transportation of its own oil which it had produced or purchased prior to the transportation. 23 r% ] Nor has anything been done by them which can be claimed to effect a devotion of their property to a pubUc use or to give the public an interest in its use, since they have always refused to carry oil for the public or to permit the use of their lines except for the transportation of their own property. The effect of the amendment is to change the nature and quality of their business from private to public, by requiring them to share with others the facilities which they have provided for themselves alone and to employ those facilities in the service of the public. In our judgment, this is something essentially different from and quite beyond the power delegated to Congress to regulate commerce among the States ; and we are per- suaded that a law which in intention and result de- prives the owners of private property of its exclusive enjoyment and compels the devotion of that property to public use, in the manner attempted by this amend- ment, involves an exercise of legislative power in plain contravention of the fifth amendment. No Federal statute of like aim" and import has been brought to our attention and no authority has been cited which sustains the validity of such legislation. Among the cases referred to in argument, aside from those before mentioned, is Cargill v. Minnesota (180 U. S., 452), which is of the same class as Brass v. North Dakota, supra, and others involving various aspects of the same general question. Without re- citing the facts of that case or quoting at length from the opinion, it is sufficient to say that the Supreme 24 Court upheld a Minnesota statute which in effect re- quired the CargUl Company to take out a hcense for carrjdng on the business in which it had voluntarily engaged. It is true this company had never received into its warehouse any grain except its own, but the State court held that the warehouse in question could be fairly regarded as "a sort of public market place, where the farmers come with their grain for the purpose of selhng the same, and where the pur- chaser, a party in interest, acts as market master, weighmaster, inspector, and grader of the grain"; and this was deemed to be of sufficient pubUc concern to Justify the State in supervising the business actuully conducted. The Minnesota law made no attempt to change the character of that business, nor did it seek to compel such concerns as the Cargill Company to store or handle grain for the public or to otherwise act in the capacity of pubhc warehousemen. Had such a re- quirement been imposed a very different question would have been presented. This is indicated ia Brass v. North Dakota, supra, where the Supreme Court said respecting a law of that State which de- clared certain classes of buildings in which a ware- house business was conducted to be public ware- houses : "We do not understand this law to require the owner of the warehouse, built and used by him only to store his own grain, to receive and store the grain of others. Such a duty only arises when he chooses to enter upon the business of elevating and storing the grain of other persons for profit." 25 . 't f It is not necessary in these cases to consider the circumstances under which or the extent to which business activities, whether public or private, may be regulated by public authority. That is not the point in dispute. That the business of these petitioners, as it is and has been carried on, may be subjected to regulation need not be in any wise questioned. But it is one thing to exercise public control of a private business which as such should be placed under public supervision; it is quite another thing to require that business to be changed from private to public and compel those who are engaged in it to assume the responsibilities of a public calling. The distinction we are here pointing out, and which seems to us controlling, is indicated in Weems Steam- boat Co. V. People's Co., supra. For that reason, and because of its general bearing upon the controversy in these cases, we quote from the opinion at some length as follows : "The case of Munn v. Illinois (94 U. S., 113, 127) has, in our judgment, no bearing upon the question before us. In that case and in those cited therein the discussion was in regard to the right of owners of property of the nature described to charge what they pleased for the doing of the business in which they were engaged. Their property was being used with their consent by and its use devoted to the public to any extent desired, and the only question was in regard to the compensation which they were entitled to ask for the business thus done. The complaint was that the charges were too great and were a viola- tion of a law of the State and were not reasonable, 74150—13 i 26 and the answer made by the owners of the property was that it was their private property, and they had the right to charge what they pleased. The court said, as you have devoted your property to a use in which the public has an interest, you have granted to the public an interest in that use and the right, on the part of the State, to regulate charges which you shall make to the end that they shall be just and reasonable. If the owner of one of these wharves had devoted it to the public use and permitted the public to use it as it desired and demanded com- pensation for such use, the question as to the amount of such compensation might be raised as in the Munn class of cases, to be determined with reference to the reasonableness of the charge. But this is no such case. The legislature has passed no law regarding rates, if that were material, and the reasonableness of the charge is not under consideration. The right to use the property has been withdrawn by the owner as to the public in general, including defendant. The only question is whether a third person has the right to use a private wharf on tendering reasonable compensation therefor, because there is no other wharf at the place, or because it would be more con- venient to such third person to so use it or because the former owner of the wharf had permitted the public to use it, although the present owner refused to consent to such use. There is no more reason why such property should be held subject to the right of others to use it against the will of its owner than there is for any other kind of property to be so held." Without referring to other authorities in this con- nection, we proceed to examine the particular grounds upon which the Government relies to sustain the validity of this legislation. 27 J 1 1 It is argued, in the first place, that the amendment should be construed as in effect prohibiting these peti- tioners and other private pipe-line owners from trans- porting their own oil from one State to another by means of pipe lines except upon condition that they transport oil for the public and become common car- riers of that commodity. This appears to have been the view of the Commission, as disclosed by the fol- lowing paragraph in its report: "So far as we are informed, the Supreme Court of the United States has never been called upon to pass upon a question of this character, and while it may be conceded that Congress could not impose upon a private pipe line the duties and responsibilities of a common carrier, it is not clear but that the pro- visions of this act could be upheld upon the ground that Congress was establishing a condition to which any pipe-line company must conform which trans- ported oil across a State border." Putting aside the suggestion that neither the form nor apparent intent of the amendment sup- ports such a construction, since in terms it prohibits nothing and does not pm-port to establish a condition, and granting for argument's sake that it may and should receive the interpretation here claimed for it, we are led to reject the contention because it involves an erroneous assumption. It assumes that one who engages in the dealings or activities which constitute interstate commerce is not exercising an inherent right that springs from the nature and necessities of social order, but is merely enjoying a privilege which 28 Congress can take away if it chooses or permit on such conditions as it sees fit to prescribe. But this view, so far as we are aware, has never received judicial sanction. The contrary was held in the first case involving the meaning and scope of the com- merce clause which reached the Supreme Court, Gibbons v. Ogden, supra, when Chief Justice Marshall included the foUowing in his oft-quoted opinion, page 211: "In pursuing this inquiry at the bar it has been said that the Constitution does not confer the right of inter- course between State and State. That right derives its source from those laws whose authority is acknowl- edged by civihzed man throughout the world. This is true. The Constitution found it an existing right, and gave to Congress the power to regulate it." Without citing other authorities it is sufficient to quote the forcible statement of the principle by Chief Justice White, at page 502, in the Employers' Liabil- ity cases, supra (207 U. S., 463) : "It remains only to consider the contention which we have previously quoted, that the act is consti- tutional, although it embraces subjects not within the power of Congress to regulate comjnerce, because one who engages in interstate commerce thereby submits aU his business concerns to the regulating power of Congress. To state the proposition is to refute it. It assumes that because one engages in interstate commerce he thereby endows Congress with power not delegated to it by the Constitution; in other words, with the right to legislate concerning matters of purely State concern. It rests upon the conception that the Constitution destroyed the freedom of commerce 29 J' 7 t which it was its purpose to preserve, since it treats the right to engage in interstate commerce as a privilege which can not be availed of except upon such condi- tions as Congress may prescribe, even although the conditions would be otherwise beyond the power of Congress. It is apparent that if the contention were well founded it would extend the power of Congress to every conceivable subject, however inherently local; would obhterate all the limitations of power imposed by the Constitution, and would destroy the authority of the States as to all conceivable matters which from the beginning have been, and must continue to be, un- der their control so long as the Constitution endures." In the light of these decisions nothing further need be said in this connection in answer to the argument here considered. In the second place it is urged, and this appears to be the ground upon which the Government chiefly relies, that the amendment should be upheld as a valid regulation of interstate conimerce to prevent monopoly, or, as it is said, to prevent a tendency to monopolize, and therefore any incidental injury which results must be regarded as inmiaterial. This posi- tion is indicated by the following paragraph in the reply brief of the learned Assistant Attorney General : "The argument that these pipe lines are not them- selves monopolies within the meaning of the Sher- man Act is wholly irrelevant. That act applies only to concerns that are already monopolies, or are attempting {intentionally) to monopolize. The pres- ent act is designed to go heyond the Sherman Act. The Sherman Act cuts down the full-grown plant. The pipe-line amendment pulls up the roots from 30 which it grew. It does not prohibit the private operation of these pipe Unes because they are mo- nopolies, but because such private ownership has proved itself to be the source of monopolies, because it contains an inevitable tendency toward monopoly." This contention also appears to involve the assump- tion that the amendment prohibits these petitioners, and other companies of like character, from trans- porting their own oil by means of pipe lines, unless they also transport for others and become common carriers of that article. We have already en- deavored to show that the legislation can not be sustained even if this construction be accepted; but since such a construction seems to be suggested in support of the monopoly argument now considered, it may be suitable to add some observations to what has already been said. As heretofore stated, the amendment in terms applies to all persons and cor- porations engaged in the interstate transportation of oil by means of pipe lines, whether their business be extensive or insignificant, " who shall be considered and held to be common carriers within the meaning and purpose of this act." When this amendment was adopted in 1906 there were quite a large number of persons and corporations owning private pipe lines which they used in carrying on the business in which they were severally engaged, and the amendment operated upon all of them when it went into effect. They were thereby subjected to all the applicable provisions of the act and declared to be common carriers within its meaning and purpose. The ex- 31 s"!^' elusive use of their pipe-line properties, which they had theretofore enjoyed, was brought to an end and those properties in effect appropriated for the use and benefit of others and required to be thereafter operated as public facilities in accordance with the provisions of the regulating statute. The proper- ties whose status was thus attempted to be changed had been acquired by the respective companies under the laws of the States of their creation and without violation or evasion of any Federal enactment. Each of these concerns was carrying on a legitimate busi- ness, whether producing oil in the crude state of a natural deposit, buying and selling it in that condi- tion, or manufacturing an article better adapted to the needs of consumers by the process of refining; and the traiisfer of the crude oil by pipes from wells to tanks, from tanks to points where delivery was made to customers, or by refiners from points of production or purchase to their refineries, were in every sense legitimate business operations. Equipped with these valuable aids to their private pursuits, the pipe-line owners all at once find themselves subject to a law which obliges them to become common carriers of oil under stringent regulations. It is idle to say that they can avoid the obligations which this amendnient imposes by going out of the pipe-line business. Practically speaking, they have no such election, because the discontinuance of pipe-line transporta- tion involves the virtual destruction and loss of their pipe-line properties. Nor is this alternative contem- plated by the enactment. On the contrary, the only 32 rational view of its intent and purpose assumes that these pipe Unes would be kept i,n operation under the law which devoted them to public use. It is the "necessary or natural" effect of a statute which must be taken into account, as the Supreme Court said in Minnesota v. Barber (136 U. S., 320) ; and it is beyond question that the persons and corporations brought within the reach of this amendment were not ex- pected to abandon the pipe lines which they had con- structed, but rather and beyond doubt to continue their use as public facilities under public regulation. The amendment was plainly designed to subject to public use these private pipe lines as they were then in operation and because in the nature of the case they must continue to be operated. The alternative of abandonment was not in contemplation, and there is no basis for the assumption here considered. Can the amendment be sustained as a valid regu- lation to prevent monopoly or a tendency to monop- oly? It is not open to doubt that Congress has power to legislate, within constitutional limits, for the prevention or suppression of monopoly; and the exercise of that power is manifested in the enact- ment of the potent and far-reaching antitrust law of 1890, It is quite evident, however, and the Govern- ment makes no claim to the contrary, that nothing which these petitioners are doing or have done amounts to a violation of the antitrust law, for here there is no combination, no absorption or control of one by another, no concerted action of any sort, not even a common understanding. This being so, it 33 ,s ' 7 7 must result that the amendment in question, upon the theory now considered, is of broader scope and much more drastic character than the enactment of 1890, and that, as above stated, is the Government's contention. It will be observed that the amendment makes no mention of monopoly and therefore does not purport on its face to be a measure for breaking up an alleged monopoly and preventing its continuance. But dis- regarding the absence of any declared purpose, and taking into account the circumstances under which the amendment was adopted, we may properly con- sider its. validity upon the assumption that the real though undisclosed purpose was to destroy that de- gree of control of the oil business which is claimed to result from the private ownership of pipe lines and which is asserted to be monopolistic. The province of the courts in such an inquiry is defined in Minne- sota V. Barber, supra (136 U. S. 320), as follows: "Upon the authority of those cases, and others that could be cited, it is our duty to inquire, in respect to the statute before us, not only whether there is a real or substantial relation between its avowed objects and the means devised for attaining those objects, but whether by its necessary or natural operation it impairs or destroys rights secured by the Constitution of the United States." And in C. B. & Q. Ry. v. Drainage Commrs. (200 U. S., 593) it was said : "If the means employed have no real, substantia] relation to pubhc objects which government may 34 legally accomplish, if they are arbitrary and unrea- sonable beyond the necessities of the case, the judi- ciary will disregard mere forms and interfere for the protection of rights injuriously affected by such illegal action. The authority of the courts to interfere in such cases is beyond all doubt." We are therefore to determine whether there is any real and substantial relation between the assumed purpose of the amendment, which is the prevention of monopoly, and the means adopted to accomplish that result, namely, depriving petitioners of the ex- clusive use of their private pipe lines and requiring such lines to be operated for the benefit of the public; and whether the means so employed are arbitrary, unreasonable, and beyond the necessities of the case. It is quite impossible for us to perceive any such relation unless the operation of a private pipe line tends necessarily by its nature and the function it performs to produce a monopoly. The Government asserts that this is the case and bases its argument upon that proposition; but neither in brief nor oral argument is there any statement of the grounds or reasons upon which the assertion is predicated. Ex- planation is wanting of how it happens, or why it fol- lows, or from what facts it is deduced, that the private operation of a pipe line in the private business of its owner produces, or has any tendency to produce, the conditions and results which the law denounces as a monopoly. Much is said about the debates in the Senate when the amendment was pending, and refer- ence is made to the report of the Commissioner of 35 r 7 CI o / I Corporations submitted shortly before, which gives a full account of the investigation that Congress had previously ordered. But we find nothing either in the debates or the report which has any appreciable bearing upon the question now considered. The dis- cussions in the Senate and in the report of the com- missioner deal with the conditions of unified ownership or control by the Standard Oil Company of a great portion of the pipe lines of the country, including the common carrier pipe lines, and the resulting advantage and power of that company, which were alleged to con- stitute an unlawful monopoly. But this comes quite short of disclosing how or why a private pipe line used solely in its owner's private business becomes of ne- cessity, or can become while so employed, a facility which he may be forbidden to use, or the use of which he may be compelled to give to the public, because it is claimed to be a monopoly or to have a monopolistic tendency. We are therefore unable to see that the Standard Oil case has any application to the present contro- versy. That case involved the monopolization or tendency to monopoly which was alleged to result from the combined control by the Standard Oil Company of New Jersey, through its dominant ownership of the stocks of numerous companies, of the greater part of all the pipe lines of importance throughout the country, both public and private, together with numerous refineries and facilities for marketing which were potentially competitive. (Standard Oil Company v. United States, 221 U. S., 3u pp. 70-77.) The Supreme Court held that this vast combination and the methods of dealing which its power enabled it to enforce constituted a monopoly forbidden by law. But that is far from saying that private pipe lines separately owned by dealers in oil or refiners, and used by them in the private business in which each is separately engaged, are or can be a monopolistic possession. In short, there is no proc- ess of reasoning which sustains the contention that the ownership and operation of private pipe lines, such as are here involved, tends in the natiire of things to or results in monopoly. We have searched the decisions in vain for any definition of monopoly, any statement of its elements or description of its characteristics, which would include or apply to the activities of these petitioners and similar pipe-line owners. In the absence of some contract or combination between competitors, some mutual agreement or understanding which has in view or actually results in restricting competitive freedom, aU of which are here wanting, it would seem that monopoly by a single individual must consist of or be effected by some acts or series of acts or con- tinued course of dealing which operates to deprive others of privileges or opportunities which rightfully belong to them and which they would otherwise enjoy. But how does the possession of a private pipe line by one of many oil producers or dealers take from the others any privilege or opportunity which is rightfully theirs or which they are justly entitled to share with the more fortunate owner? 37 iT/ Of what right can they be said to be deprived, or in what respect are they subjected to any injury or disability which is illegal? True, the possession of a pipe line enables its owner to transport his oil to the refinery or other market at very small cost compared with any other means of conveyance. The practical result may be, and in most instances doubtless would be, that other producers find it to their interest to sell the output of their wells to the owner of the pipe line, and in this sense it may be said that they are obliged to sell to him. Granted that his pipe line gives him such command that he is able to control or even fix the selling price of the crude article in that particular field or territory, upon what sustainable theory can it be claimed that other producers are deprived of anything which rightfully belongs to them because they do not or can not provide themselves with the same means of reaching the market ? And upon what conception of constitutional rights can it be contended that Congress has the power to transform this private pipe line into a public facility and require its owner to become a common carrier? If this can be done, if a mere act of legislation can change the legal status of his property from private to public and compel him against his will to devote that property to public use, with all the biu-dens and obligations which he must thereby assume, is not the fifth amendment as to him shornx)f its vitality and its protective power reduced to a shadow? 38 In the nature of things one who owns private prop- erty of substantial value has an advantage over those not fortunate enough to have similar possessions, and this advantage ranges through all degrees. It fre- quently results in comnaercial dominance of precisely the same sort and quite as complete as the alleged monopoly here considered. But the advantage so acquired, whatever its degree, is not monopolistic, nor are we able to see that it has any tendency, much less an inevitable tendency, to bring about the con- ditions which constitute an unlawful monopoly, except upon the socialistic theory that all private ownership is indefensible and that everything should be held in common. The simplest conception of private property implies possession which is exclusive and enjoyment from which others may be debarred; it can not otherwise be private. The advantage which comes from its legitimate use is a necessary incident of private ownership, and it is a misuse of terms to say that this advantage tends to monopoly. Although the private use of private property excludes others from the benefits and opportunities which the owner enjoys, and which might accrue to others if they shared in that use, yet this is not monopolization, whatever its indirect consequences, because those who are excluded have no rightful claim to that which belongs to the owner himself. It is only repeating to say that the private use by petitioners of the pipe lines in question has no relation to monopoly, and in no correct sense of the word tends to monopoly, since such use does not exclude others from any privilege 39 r-^ I, which is rightfully theirs and involves only that exclu- sion which is inseparable from the possession and enjoynient of private property. It may be that the greater number of oil producers are virtually com- pelled to sell their output to the owners of private pipe lines, because they are unable or unwilling to build pipe lines of their own, or because there are no cornmon carrier pipe lines to which they have access, but we are quite unable to see how the situation in which such producers are placed gives them the right, or what constitutional power Congress can exert to endow them Avith the right, to use the private lines of petitioners and other private companies, or how the denial of such use is a monopolistic exclusion or indicates a tendency to monopoly which deprives these private owners of the protection guaranteed by the fifth amendment. In our judgment there is no basis for the contention that the pipe-line amendment has any real or substantial relation to the monopoly alleged to result from the nature and methods of pipe- line transportation. This conclusion in effect disposes of the kindred contention that any injury to private pipe-line own- ers resulting from the amendment is not a taking of their property but is merely incidental to the le- gitimate exertion of governmental power. The para- graph already quoted from Minnesota v. Barber (136 U. S. 320) declares it to be the duty of the court, in considering legislation of this character, to inquire "whether by its necessary or natural operation it 40 impairs or destroys rights secured by the Consti- tution of the United States." Keeping in mind the unmistakable intent and meaning of this amendment, it seems to us quite obvious that its "necessary or natural operation" must impair and measurably destroy rights of own- ership and use which the Constitution protects from invasion, and accomplish inevitably a taking of property within the meaning and intent of the fifth amendment. As already pointed out, the amend- ment does not in terms or contemplation prohibit the continued use of these private pipe Unes by their respective owners, nor does it attempt to regulate in any way their use and operation as private lines. It does neither of these things. It goes much fur- ther and aims at something essentially different, since it undertakes to deprive the owners of private pipe lines of the exclusive use of their property, devotes that property to the service of the public, and compels them to become common carriers against their will. Does not this of necessity amount to a taking of private property for pubhc use, and how can it be reasonably claimed that the resulting injury is only incidental? We have examined all the cases cited by counsel and many others which deal with the police powers of the States and the exercise of analogous powers by Congress, but none of them reaches the question here presented or gives support to the Government's contention. It seems to us too plain for argument that these private pipe lines can not be legislated into public faciUties, and 41 o ^''' that the amendment necessarily deprives the owners of such hnes of their property rights without just compensation. "The constitutional requirement of due process of law, which embraces compensation for private prop- erty taken for public use, applies in every case of the exertion of governmental power. If in the exe- cution of any power, no matter what it is, the Gov- ernment, Federal or State, finds it necessary to take private property for public use, it must obey the constitutional injunction to make or secure just compensation to the owner." (C, B. & Q. Ry. v. Drainage Commissioners, supra, 200 U. S., 593.) So much was said in argument about the Com- modities case that we refer to it briefly for the pur- pose of pointing out the fundamental difference, as we conceive, between the question there decided and the question involved in the cases at bar. In that case the Supreme Court was dealing with .a law prohibiting railroad companies, which are com- mon carriers in a complete and peculiar sense, from transporting their own property, with certain excep- tions. It is unquestionably a valid regulation of interstate commerce to require the public carriers of that commerce to charge like rates for like service and to make no unjust discrimination between persons or places. To give full effect to such a fundamental principle of regulation, Congress has ample power to prevent anything which impairs its full operation. It may therefore prohibit any use of an interstate railroad which is inconsistent with or antagonistic to the equal public use which such a railroad is 42 bound to afford, or whick is liable to defeat in any respect or degree the public purpose for which it is chartered. But it is an altogether different propo- sition to say that Congress, under the guise of regu- lating interstate commerce, may by a legislative decree convert these private pipe lines into public utilities and force their unwilling owners to take upon themselves the obligations of common carriers. We find nothing in the Commodities case which is at all at variance with the views herein expressed or which tends to support the validity of this amendment. It is hardly necessary to observe that the legisla,- tion under review involves no question of public morals, or health, or safety, and therefore it seems plain that the doctrine of the Lottery case and simi- lar decisions has no application to the present controversy. It remains to consider briefly some minor con- tentions which appear to be more or less relied upon by the Government and which perhaps should not be left unnoticed. One of these contentions is based upon facts which are common to all private pipe-line companies, the others arise out of facts which are peculiar to one or more of these petitioners. 1. The pipe hnes of each company are in numerous instances laid across, and sometimes along, public streets and highways, usually below the surface, under permission of the local authorities. From this circumstance or condition it is suggested that the petitioners bring their pipe hnes within the regulat- 43 ..' >i , ing power of Congress, as they might not if there were no use or occupancy of lands dedicated to the public for highway purposes. Upon this point we concur in the opinion expressed by the Commission in its report, as follows : "* * * It appears that the usual policy of the lines is to deal with the owner of the abutting prop- erty in acquiring such highway rights upon the theory that such abutting owners own also the fee in the highway, and that the pubUc right therein is a mere easement of passage. That this is the gen- eral rule of law there can be no doubt, and the few exceptions occur in States where the question here at issue is unlikely to arise. "We are of the opinion that a pipe line is not impressed with the obligations of a common car- rier merely because, by arrangement with the abutting owner, it uses a public highway for right- of-way purposes." Accepting this as a correct statement of the law, it foUows that Congress has no power to compel a private pipe-line owner to become a common carrier of oil merely because his pipe line crosses or is laid along public highways. 2. We also agree with the Commission that the validity of this amendment is not sustained by the fact that the pipe lines of some of the petitioners, for shorter or longer distances, are laid upon the rights of way of certain interstate railroads under contract arrangements between the pipe-line owners and such railroads. Whatever may be the right of a railway company to permit such use of its property or the 44 authority of Congress to prohibit it, we are clearly of opinion that the power to compel these petitioners to become common carriers of oil, if that power be other- wise wanting, is not brought into existence as to them by the circumstance that portions of their lines are constructed and operated on railroad rights of way. Whether or not a given pipe-line company is a com- mon carrier depends upon the business in which it engages and for which its pipe lines were provided, and not upon the character of the route upon which those lines are located. 3. As above stated, the Prairie Oil and Gas Com- pany was organized in 1900 under the laws of the State of Kansas. Subsequently, in 1905, the legis- lature of that State passed a law containing this pro- vision : "All pipe lines laid, built, or maintained for the conveyance of crude oil within the State of Kansas are hereby declared to be common carriers, and said conveyance of said oil shall be in the manner and under the restrictions in this act provided." We are of the opinion, without reviewing the argu- ment, that this law was passed in disregard of the constitution of the State of Kansas and is therefore invalid; and it appears not to have been enforced in that State. Moreover, it seems sufficient to say, as the Commission in substance says, that Federal power in such a case is not derived from a State enactment, and that if Congress is without power to compel private pipe-line companies to become common car- riers of oil in interstate commerce, a State statute 45 is not less ineffectual. In this connection it is rather interesting to observe that the Uncle Sam Oil Com- pany claims to be prohibited by the laws of the State of its creation from engaging in the business or acting in the capacity of a conmaon carrier. 4. It appears that portions of the Ihies of the Prairie Oil and Gas Company and of the Uncle Sam Oil Company were laid through Indian lands under a permit granted by the Secretary of the Interior. Among the rules and regulations for granting rights of way to pipe-line companies prescribed by the Sec- tary of the Interior on December 2, 1906, was the fol- lowing : "And no application for the construction oi a pipe line will be approved unless the applicant agrees that such pipe Une shaU be held to be a common carrier and agrees to all the provisions hereof." We are satisfied from the record that the permit to the Prairie Oil and Gas Company was granted prior to the date mentioned and under regulations which did not contain the quoted condition. This being so, there is no basis for contending that this company assumed any public obligation by reason of the fact that it was permitted to lay its lines across the lands in question. Moreover, we incline to the opinion, from examination of the law under which the Secre- tary acted, that he had no authority to impose such a condition (United States v. McMurray, 181 Fed. 723) ; and this perhaps accounts for the circumstance that the condition was eliminated in 1909, as we un- derstand the matter, and has not since been required. 46 It is also to be noted with reference to this conten- tion that no part of the hnes of these companies, in- cluding those laid across Indian lands, has ever been used as a common-carrier line or for any other pur- pose than to transport the property of its owner. 5. The remaining contention relates to the pipe lines of the Standard Oil Company of New Jersey and is based upon facts which, so far as deemed material, may be summarized as follows: The line from Unionville across the State of New Jersey to the Bayonne refinery was built upon private rights of way and put into operation in 1882 by the Na- tional Transit Company, which, under the terms of its charter, is a common carrier in the State of Penn- sylvania. About May 1, 1894, this line was trans- ferred to the New York Transit Company, which was incorporated under a law of the State of New York, by virtue of which it became a common carrier within that State. The line from Centerbridge to the Bay- way and Bayonne refineries was built upon private rights of way and put into operation in 1897 by the National Transit Company. The line from Fawn Grove to the Baltimore refinery was likewise built upon private rights of way and put into operation about 1885 by the National Transit Company. The New York Transit Company was never re- incorporated in the State of New Jersey nor was the National Transit Company ever reincorporated in the State of New Jersey or the State of Maryland. In neither of these States is there any law providing for the organization of common-carrier pipe-line com- 47 ,19 panies, and neither of the corporations mentioned has ever possessed or attempted to exercise the right of eminent domain in New Jersey or Mary- land. Nor has either of them, under the laws of those States or by virtue of any agreement con- nected with its acquisition of rights of way or other- wise, ever assumed the obligations of a common car- rier or at any time acted in that capacity in the States in which the lines in question are located. Subsequently these three lines were sold and trans- ferred to the Standard Oil Company of New Jersey, one of the petitioners herein. The preliminary steps appear to have been taken in November, 1905, and the sale consummated by delivery of deeds of conveyance in July, 1906. Shortly afterwards the purchaser took over the entire operation of the lines, and has since used them exclusively for trans- porting its own oil to the refineries mentioned; and we assume for present purposes that this trans- fer was made in anticipation of the passage of this amendment or some similar law, and to avoid any undesired consequences which might follow from such legislation if the lines remained in the posses- sion of their former owners. Nevertheless we are unable to see that the facts here referred to place the owner of these particular lines on any different footing from other private pipe-line companies as respects the validity of the pipe-line amendment. The former owners were never under obligation by their charters or otherwise to perform the duties of a common carrier in New 48 Jersey or Maryland; they never had held themselves out as common carriers in those States; nor had either of them in fact carried oil therein except for a single customer. The fact that the transit com- panies were organized as common carriers in New York and Pennsylvania did not make them common carriers in New Jersey or Maryland, nor, in our opinion, would it prevent them, even if they had been carrying for the public, from discontinuing such service in the latter States and becoming therein purely private pipe-line companies. (Weems Steam- boat Co. V. People's Co., supra.) We think it also clear that they had the right to sell these New Jersey and Maryland lines to the Standard Oil Company, that the purchaser had a right to acquire and use them exclusively in its private business, and that no public obligation was thereby assumed or public duty imposed {Oman v. Bedford-Bowling Green Stone Co., 134 Fed., 64); and it is equally clear that neither the right of the transit companies to sell nor the right of petitioner to buy was affected by the as- sumed motive for the transaction. Without ampli- fying the argument we have no hesitation in holding that if the amendment in question is invalid as to the other private pipe-line companies, for the reasons above stated, it is equally invalid as to this petitioner and the particular lines here considered. This discussion might be prolonged almost in- definitely, for the underlying question is full of sug- gestions, but enough has. been said to indicate the general reasons upon which we base our conclusion. 49 rf3 We are impressed with the serious and unwelcome responsibility of invalidating in any respect an act of Congress, because it manifests an exertion of power in excess of constitutional limitations. But we can not escape the conviction that this pipe-line amend- ment, which we must construe according to its un- doubted meaning, is an act of legislation which plainly invades the rights secured to these petitioners by the fifth amendment, and we can not, therefore, do otherwise than stay the enforcement against them of the Commission's order. Without reference to other considerations which might justify preliminary injunctions in these cases, we have purposely placed our decision upon grounds which in effect determine the controversy, and we have / done so to avoid occasion for protracted trials and to aid an early review by the court of last resort. A preliminary injunction will he granted as prayed for in each of the above-entitled cases, and it is so ordered. Mack, Judge, dissenting: I concur with the majority of the court in their construction of the statute. Because of the conclusions reached on the consti- tutional question, it is unnecessary for me to differ- entiate the several petitioners or to express any opinion on the so-called minor contentions. On the fundamental question of the constitution- ality of this legislation, under which, in effect, inter- state transportation of oil by pipe lines is prohibited 74150 — No. 75—13 7 50 unless the transporter will act as a common carrier subject to the provisions of the interstate commerce act, I am compelled to dissent. It is conceded in the majority opinion that an act of Congress is constitutional if its object is within the realm of Federal authority and if the means employed for its accomplishment have a real and substantial relation thereto and are not arbitrary, unreasonable, and beyond the necessities of the case. A doubt, however, is not to be resolved against but in favor of the validity of legislation; coiirts should not declare a statute unconstitutional until they are satisfied thereof beyond a reasonable doubt. Whether consistently carried out in practice or not, this has ever been a fundamental rule in our juris- prudence. {Ogden v. Saunders, 12 Wheat., 213.) While its application alone would compel me to dissent in this case, I do not rest my conclusions upon the existence of a reasonable doubt. In my judg- ment, the act is within the power of Congress to regulate interstate commerce. This power may be exerted for many purposes: directly, to remove restraints thereon or obstructions thereto; indirectly, to conserve the public health or morals or to promote the general welfare. The means to be adopted for the accomplishment of a legitimate purpose rest in the sound discretion of Congress sub- ject only to the limitation hereinbefore stated. As the Supreme Court in its most recent decision bearing on this question says (Hoke v. U. S., Feb. 24, 51 jir 1913) : " Congress may adopt not only means neces- sary but convenient to its exercise and the means may have the quality of police regulations." What, then, is the object of this act? Its aim is neither completely to take from the owner or abso- lutely to prohibit his use of pipe lines theretofore within his exclusive control; it does, however, con- dition that use in interstate commerce upon his per- mitting a like use by the general public on payment of reasonable compensation therefor; the alternative is to cease to operate them or to dispose of them. Clearly, therefore, the general purpose is to regu- late interstate commerce in oil ; the immediate specific object is to remove a serious obstruction to the free play of competitive forces in the industry, to prevent a monopolization of a part of such commerce. It is immaterial that this purpose is not proclaimed in the act itself; the history of the legislation and the de- bates, particularly in the Senate, leave no room for doubt as to the evils which Congress and the public generally believed to exist. In 1905 the House of Representatives had directed an investigation of the oil industry by the Bureau of Corporations. In 1906 a first report (59th Congr., 1st sess., H. R. Doc. 812) was made, primarily on the operations of the Standard Oil Company. (This was followed in 1907 by two more elaborate reports as well as by a report of the Interstate Commerce Commission, 59th Congr., 2d sess., H. R. Doc. 606.) The relation of pipe lines and pipe line transportation 52 to the development of the industry was fully detailed; it was therein demonstrated not merely that the unification of many of these lines under the Standard Oil Co. was the keystone of its practical monopoly in the refined products, but also that the possession of the only pipe line in any field necessarily gave the owner thereof control in the distribution of oil there produced. He was for all practical purposes the sole available customer for the greater part of crude oil and could thus ordinarily fix the price to be paid therefor. This was due to the utter practical impos- sibility of competition between one dependent upon railroad transportation and one who could transport his crude product through pipe lines. The important customer of the crude-oil producer is the refiner. But as refineries are generally and more advantageously located in the great markets and near the seaports and not in the oil fields, most of the crude oil must be transported. Physically, this could be done in bar- rels or tank cars by railroad; economically, railroads can not compete with pipe lines because the actual cost of railroad transportation is three or four times that of pipe line transportation. A pipe line, however, is not a transportation facility readily available to the producer as is a horse and wagon, or to-day even an automobile, to the average farmer. In the developed stage of the oil industry it is, in its very nature, analogous to the instrumen- talities used by common carriers and other public- service corporations. Ordinarily these lines are hun- dreds of miles in length. Like railroads, there are 53 ril trunk and branch lines; to construct them requu-es large capital; to duplicate them between an oil field and its natural market would usually involve eco- nomic waste similar to that caused by paralleling railroad lines. An individual or corporation controlling the pipe line transportation in any field would thus have the same opportunity of monopolizing the distribution of the crude oil from that field as the owner of the only raihoad in any section would have to monopo- Uze the distribution of most articles produced or manufactured along the line. His ownership gives him the practical power of monopolizing the pur- chase of the goods and of fixing the price thereof and thereby of monopolizing interstate commerce therein, at least, in certain territories. In the one case as in the other governmental regulation is essential to check this evil. The actual situation in 1906 as reported to Con- gress was that most pipe lines, both common carrier and private, were under the domination of the Stand- ard Oil Co. The Commissioner of Corporations had said that it had "all but a monopoly of the pipe lines in the U. S." and that "its control of them was one of the chief sources of its power." (59th Congr., 1st sess., H. R. Doc. 812, pp. 36 and 37.) In Purity Extract & Tonic Co. v. Lynch, 226 U. S., 192, the Supreme Court says, "The existence of power is not to be denied simply because some inno- cent articles or transactions may be found within the proscribed class. The inquiry must be whether. 54 considering the end in view, the statute passes the bounds of reason and assumes the character of a merely arbitrary fiat." And so it may well be that even if the primary purpose of the act were to prevent the use of the pipe lines as an essential element in and for the purpose of buUding up the Standard Oil Co.'s monopoly in the refined products, the power of Congress is not be denied merely because some other lines are brought within the terms of the act. To determine then whether the means adopted to secure these legitimate ends are reasonable or not, we must consider what remedies were available by which the channels and instrumentalities of inter- state commerce could be kept open so that aU pro- ducers on payment of a reasonable compensation might be enabled to compete freely in their natural markets. Government ownership either through condemna- tion by eminent domain or through the construction of new lines wotild be possible, but at this time and until every other available measure of relief shall have proved ineffective, such a radical departure from the previous policy of regulation entailing, in the judgment of many, evils far greater than those attempted to be cured can not be deemed so feasible an alternative as to necessitate its adoption. Subjection of common carrier pipe lines to the stricter supervision and regulation prescribed by the interstate commerce act would afford only partial relief; many, if not most, of the important lines were not operated by common carriers. 55 !"'!'•? Disintegration of the Standard Oil Co. under the Sherman Act would probably result 'in freer com- petition, but it would not give the necessary relief to independent producers who would still have to sell to the private pipe-line owner or stimulate effec- tively the construction of independent refineries which, under a regime of private pipe lines, would have difficulty in securing the crude product. The only feasible remedy was the one adopted by Congress, to make the existing facilities available to the public generally by prohibiting their use except on this condition. That thereby the exclusiveness of private ownership was invaded does not render the act unconstitutional. The case of Weems Steam- boat Co. V. Peoples Co., 214 U. S., 344, held only that at common law and without statutory grant no one could compel another to permit the use of his property for just and reasonable compensation merely because the property, a private wharf, was a desir- able or even an essential facility of commerce. The court, however, expressed no opinion on the validity of legislation compelling such permission. Congress, like the State legislatures, can authorize the actual destruction of private property if such destruction be reasonably essential to the accom- plishment of a legitimate legislative purpose. ( Hipo- lite Egg Co. v. U. S., 220 U. S., 45.) It may and it has absolutely prohibited certain forms of interstate commerce. (Hoke et al. v. U. S., supra; The Lottery Cases, 188 U. S., 321.) 56 Under the Sherman Act, disintegration of vast combinations of capital has been decreed irrespective of the depreciation therein produced in the value of property. ( U. S. v. Standard Oil Co., 221 U. S., 1.) Under the commodities clause common carriers are prohibited from transporting certain of their own property and are thus compelled to part with the ownership before transportation regardless of the loss suffered thereby. (U. S. v. D. & H. Co., 213 U. S., 366.) By the Carmack amendment the burden of respond- ing in damages to a shipper for losses occasioned by the acts of independent but connecting carriers is im- posed upon the initial carrier " as a condition of con- tinuing in that traffic." (A. C. L. v. Riverside Mills, 219 U. S., 186.) And in cases not involving common carriers, pro- hibition acts adopted under a State power no more extensive than that granted to Congress by the com- merce clause as limited by the fifth amendment, have been held constitutional despite the practical destruc- tion thereby of most of the value of brewery and distilling plants. (Mugler v. Kansas, 123 U. S., 625.) And if a State, in the regulation of private business, such as banking, in order to promote the public wel- fare, may "go from regulation to prohibition except upon such conditions as it may prescribe" (Noble State Bank v. Haskell, 219 U. S., 104, see Engle v. O'Malley, 219 U. S., 128), is the Federal Government to be denied the use of like means'? 57 '^ V tr The power to regulate can not, of course, be used either directly or by the imposition of conditions prece- dent to the exercise of the right to engage in interstate commerce, as a subterfuge to extend the jurisdiction of the Federal Government to those matters over which the States have exclusive control. (Em- ployers' LiabUity Cases, 207 U. S., 463.) The amendment in question, however, makes no such at- tempt. The condition thereby imposed is not in any sense a regulation of domestic commerce: it is di- rectly and essentially a regulation of interstate com- merce alone. The remedy prescribed by this amendment is far less drastic than that adopted to abate other re- straints on interstate commerce; that it is feasible is demonstrated by the fact that many pipe lines are operated by conomon carriers and that in at least two States, Kansas and West Virginia, all pipe line car- riers are declared by statute to be common carriers. Therefore, in my judgment, it can not be deemed an unreasonable or arbitrary exercise of legislative power. But if, as is contended, the act can not be sustained as a legitimate regulation of commerce, if it amounts to a taking of private property for public use, does it afford the owner the just compensation to which he is constitutionally entitled? To deprive one of the entire or partial use of prop- erty is a taking thereof; a distinction, however, may well be made in the method of compensation depend- ent upon whether the owner is deprived of his title. "i- 58 of the possession, or only of the exclusive use. Otis Co. V. Ludlow Co., 201 U. S., 140, and Clark v. Nash, 198 U. S., 361, are cases in which only the exclusive- ness of the owner's use of his property was invaded; his title and possession were undisturbed. In the former, only a right of action in tort was given to the upper riparian land owner for the damages that would be caused from time to time by overflowing his land pursuant to a statutory right granted to the builder of a dam. In the latter, while payment for the easement of bringing water through a neighbor's private irrigation ditch was required under a statute granting individual owners of arid land the right so to use the private property of others, no security was provided for the share of maintenance expense to be paid from time to time. Each of the statutes was held to be constitutional. In the present case, just and reasonable com- pensation for the use to be made from time to time of these pipe lines is secured, and it may well be doubted whether any other or additional compen- sation can constitutionally be demanded merely because of the change in the status of the pipe line owner to that of a common carrier and the conse- quent subjection of the line itself and of the owner to the regulatory supervision of the Interstate Commerce Commission; • O United Stati&T!ommerce Court. No. 82. — February Session, 1913. Southern Railway Company, Atlantic Coast Line Railroad Company, Seaboard Air Line Railway, Norfolk and Western Railway Company, and Norfolk Southern Railroad Company, petitioners, V. United States of America, respondent, Interstate Commerce Commission, Chamber of Commerce of Newport News, Va., interveners. ON FINAL HEARING. Mr. R. Walton Moore, Mr. Frank W. Gwathmey, Mr. M. Carter Hall, and Mr. W. B. Rodman for the petitioners. Mr. Blackhum Esterline, Special Assistant to the Attorney General, with whom Mr. Thurlow M. Gor- don, Special Assistant to the Attorney General, was on the brief, for the United States. Mr. Charles W. Needham for the Interstate Com- merce Commission. Mr. R. G. Bickford, Mr. S. 0. Bland, and Mr. Charles C. Berkeley for the Chamber of Commerce of Newport News. Before Knapp, Presiding Judge, and Hunt, Car- land, and Mack, Judges. 81300—13 1 [March 11, 1913.J Hunt, Judge: In 1911, the Chamber of Commerce of Newport News, Virginia, instituted a proceeding before the Interstate Commerce Commission against these peti- tioners, the Southern Railway Company, Atlantic Coast Line Railroad Company, Seaboard Air Line Railway, Norfolk & Western Railway Company, Norfolk Southern Railroad Company, and other car- riers, including the Chesapeake and Ohio Railway Company, which are not petitioners herein, for the purpose of requiring the establishment and observance of the same rates on all traffic between Newport News and points in the territory hereinafter described as between Norfolk and such points, upon the ground that the higher Newport News rates then in force were an undue discrimination against that city and the business interests thereof. After full hearing the Commission sustained this contention (Chamber of Commerce of Newport News v. Southern Railway Company et al., 23 I. C. C. R., 345), and by order made June 7, 1912, directed the defendant carriers to cease and desist on or before October 1, 1912, and for a period of not less than two years thereafter to. abstain from charging or collecting higher rates for the transportation of freight from all points on their respective lines, not within 150 miles of Norfolk, in the territory east of a line drawn from Chattanooga, Tennessee, than are contemporaneously charged for the transportation of freight from the same points in ,<, 6' 3 the described territory to Norfolk, Virginia, and also requiring said carriers to desist from charging or collecting higher rates for the transportation of freight from Newport News to all points on their respective lines in the territory, not within 150 miles of Norfolk, east of a line drawn from Chattanooga, Tennessee, as hereinbefore described, than are con- temporaneously maintained from Norfolk, Virginia, to the same points, and also requiring said carriers on or before October 1, 1912, to establish and main- tain, for a period of not less than two years, rates for the transportation of freight from Newport News, Virginia, to all points on their respective lines, except those within 150 miles of Norfolk, in the territory east of a line drawn from Chattanooga southward, as heretofore referred to, which rates should not be higher than rates which they contem- poraneously maintained for the transportation of freight from Norfolk, Virginia, to the same points; and also requiring said carriers to establish and maintain for a period of not less than two years, rates for the transportation of freight from all points on their respective lines in the territory, not within 150 miles of Norfolk, east of a line drawn from Chatta- nooga, Tennessee, southward, as already described, known as the Chattanooga-Birmingham line, to to Newport News, Virginia, which should not be higher than rates for the transportation of freight contemporaneously maintained by them from the same points to Norfolk, Virginia. By a supplemental order of the Commission, the order of June 7, 1912, was amended so as not to be effective until October 20,. 1912. To annul the order of June 7th, petitioners brought this suit. Answers. were filed by the United States and the Commission. Petitioners filed affidavits and moved for a temporary restraining order. This was denied. Thereafter, counsel for all parties filed a stipulation to the effect that certain copies (annexed to the stipulation) of the individual freight tariffs of the Southern Railway Company and the Norfolk and Western Railway Company showed the existing con- struction of rates and charges made by such carriers upon domestic and foreign freight originating and billed by them from the southeastern territory to Newport News, Virginia, and from Newport News to points in the southeastern territory, and that such tariffs were concurred in by the Atlantic Coast Line, Seaboard Air Line, and Norfolk Southern Railway Companies as intermediate carriers. The stipula- tion also included a copy of the individual tariff of the Chesapeake and Ohio Railway Company, show- ing the rates and charges in force charged by it upon domestic and foreign freight between Newport News and the southeastern territory, and that upon aU domestic and foreign freight originating at points in and billed from the southeastern territory by the Atlantic Coast, Seaboard Air Line, and Norfolk Southern there is charged the combination of the Virginia cities rates and the arbitraries on such freight charged by the Chesapeake and Ohio. Upon the pleadings and the stipulation just referred to the case has been submitted. A correct understanding of the situation calls for statement of the substance of the pleadings : Petitioners aver that the Southern Railway Com- pany, Seaboard Air Line Railway, Norfolk and Western Railway Company, and Norfolk Southern, with lines of railroad extending from Norfolk into the territory heretofore described, have been and are engaged in the transportation of interstate traffic between Norfolk and points in the territory referred to in the order of the Commission, and that with various other connecting common carriers they have participated and are now participating in the transportation of traffic between Newpbrt News and the said territory, in connection with the Chesapeake and Ohio Railway Company, serv- ing Newport News either by rail from Richmond or by water from Norfolk, the through transporta- tion charges between Newport News and points in the southeastern territory being in excess of the through transportation charges between Norfolk and points in said territory, to the extent of the charges, rates, or divisions of rates exacted and received by the carriers directly serving Newport News. Petitioners set up that the evidence before the Commission showed that the rates carried by petitioners to and from Norfolk were and are com- pelled by competitive circumstances and conditions beyond petitioners' control, existing at Norfolk and not at Newport News, and that the Commission had no power to compel application by petitioners of the Norfolk rates to or from Newport News and the territory defined, or to prescribe the Norfolk rates. Petitioners also plead that the traffic moving be- tween Newport News and this southeastern territory is handled by the Chesapeake and Ohio between New- port News and Richmond, which is the place of in- terchange by that company with the Southern Rail- way Company, Atlantic Coast Line Railroad Com- pany, Norfolk and Western Railway Company, and Seaboard Air Line Railway, or by barges of the Chesapeake and Ohio Railway Company between Newport News and Norfolk. The Chesapeake and Ohio does not enter Norfolk with its rails. Peti- tioners say that to give to Newport News the same rates of transportation on traffic between Newport News and the territory described, as between Norfolk and said territory, would necessitate a division of rates with the Chesapeake and Ohio on the all-rail traffic, and on traffic moving across Hampton Roads either a similar division of revenue with water carriers or the establishment and maintenance of a barge service at great expense to petitioners, and that the effect would be compel these petitioners, whose rails do not reach Newport News, on traffic between Newport News and points on petitioners' lines in the territory described, either to allow the Chesapeake and Ohio its charges to and from Newport News and points on petitioners' lines in said territory, and thus sacrifice 7 {f^ '■'! j petitioners' revenues and compel them to absorb the charges of the lines reaching Newport News, or them- selves to establish and maintaia facilities for trans^ porting such traffic from Norfolk to Newport News, in order to make delivery there. Petitioners admit that for a certain period they participated in rates to and from Newport News not higher than the Norfolk rates, but say that any such former adjustment can not be made the foun- dation for the order of the Commission in the prem- ises. It is alleged that the Commission has under- taken to hold petitioners severally responsible for transportation charges between Newport News and points in the defined territory, when the petitioners do not reach or serve Newport News with their own rails or facilities, and can not and do not con- trol the total transportation charges, and that the order deprives petitioners of their constitutional rights. The Commission denies that the facilities of peti- tioners do not reach or serve Newport News, and alleges that the petitioners are now participating in the transportation , of traffic between Newport News and the southeastern territory in connection with the Chesapeake and Ohio Railway Company to Newport News, either by rail from Richmond or by water from Norfolk. The answer avers that in December, 1894, the peti- tioners, by resolution of an association of railroads with which petitioners were associated, gave to New- port News the same rates from and to what is known 8 as the southeastern territory as were and are given to Norfolk, and that until August 1, 1899, all the peti- tioners by their lines served shippers to and from Newport News upon precisely the same rates that were charged to shippers to and from Norfolk; that after August 1, 1899, these petitioners refused longer to give to the shippers to and from Newport News the same rates as to shippers to and from Norfolk, and since then have charged shippers on all through busi- ness from or to the said southeastern territory, except pig iron and lumber and export and import traflfic, rates based on differentials from Norfolk. The Com- mission denies that compliance with the order means that petitioners will have to reduce their rates or furnish additional water equipment required to make deliveries at Newport News, for the reason that the order of the Commission only requires the removal of the undue discrimination found by the Commission to exist against Newport News, and in favor of Nor- folk, without specifying how such discrimination shall be removed. It is denied that as an incident to the removal of the discrimination shippers at Newport News would have any advantage by way of switching charges or otherwise over Norfolk shippers; and the Commission alleges that these petitioners, and each of them, hold themselves out to receive freight, and do receive freight, from points in the southeastern terri- tory destined to Newport News; that the traffic is billed through by petitioners from points of origin to Newport News, and a through rate is charged and col- lected therefor; and that they pursue a like course I? with respect to freight originating at Newport News for points in the southeastern territory; that they receive traffic originating at points in said territory for points in foreign countries billed and transported from the lines of petitioners and their connections via Newport News, and pursue a like course with respect to traffic originating in foreign countries and received at Newport News and destined to points in the south- eastern territory; that a considerable portion of the through traffic, such as has just been described, is transported over the lines of the petitioners through Norfolk to Newport News, and from Newport News through Norfolk to points in the southeastern terri- tory. All allegations of excess of authority or illegal action in the premises are denied. The United States, in its answer, alleges that the Southern Railway Company reaches Newport News with its own floating equipment, and the Norfolk and Western reaches Newport News by means of the floating equipment of the Southern Railway Com- pany, and that petitioners have through routes and joint rates and through billings to Newport News with the Chesapeake and Ohio. It sets up that the lines of the Chesapeake and Ohio, and those of two other companies not parties hereto, the Norfolk and Portsmouth Belt Line Railroad Company and the New York, Philadelphia and Norfolk Railroad Com- pany, do not extend to the southeastern territory, but that the Chesapeake and Ohio and the other companies just last mentioned have through routes, 81300— 1» 10 joint rates, and through billings with the peti- tioners; that the Chesapeake and Ohio is ready to transport and deliver freight to Newport News on such through routes and joint rates and through billings at the Norfolk rates, and to accept fair and reasonable divisions of the through rates. It is al- leged that the cities of Norfolk and Newport News sustain intimate commercial relations with the South and depend upon the South for materials used in the manufactories and markets of the two places; that the Southern Railway Company delivers import and export traffic at Newport News either by its own floating equipment or by the Chesapeake and Ohio; that the Atlantic Coast Line and Seaboard Air Line use for such service the floating equipment of the Chesapeake and Ohio; that the Norfolk and West- ern uses for such purpose the floating equipment of the Southern;, that as to all territory west of the Chattanooga-Birmingham line petitioners have kept Newport News and Norfolk on the same basis; that east of the Chattanooga-Birmingham line peti- tioners, in maintaining Newport News on the same basis as Norfolk, would not be obliged to handle the traffic in any manner different from that now used in handling the traffic originating west of the line, and that in maintaining Newport News on the same basis as Norfolk, on traffic originating east of said line, the differentials to be absorbed by the peti- tioners would be less than the differentials now ab- sorbed by them on traffic originating west of said line. All allegations to the effect that the rates 11 / ^ :b made by the petitioners to and from Norfolk were compelled by competition such as does not exist at Newport News are denied. Referring to the pre- vious increase of the Newport News rates, the United States avers that they grew solely out of differences of the petitioners with the Chesapeake and Ohio relating to divisions of the through rates, but that the Chesapeake and Ohio is now ready to receive, transport, and deliver freight to Newport News on through routes, joint rates, and through billings, and to accept fair and reasonable divisions of the through rates, and restore the previous adjustment, but that petitioners decline to do so. The report of the Commission, upon which the order under examination is made, is quite elaborate in its explanation of the situation of Newport News and Norfolk, and among other things sets forth these facts: That the Chesapeake and Ohio is the only railroad the tracks of which reach NeAvport News, and that it there maintains float bridges, wharves, piers, and other terminal facilities; that Norfolk is separated from Newport News by twelve miles of water; that the Norfolk and Western road reaches Norfolk by rail; that the Norfolk and Southern has a terminal at Berkley, which is a part of the city of Norfolk; that the Southern and Atlantic Coast Line, respectively, have terminals on the west side of the Elizabeth River, near Norfolk; that the Seaboard Air Line has a terminal at Portsmouth on the west side of the Elizabeth River, near Norfolk; that the New York, Philadelphia and Norfolk Railroad, which 12 is not a party to this proceeding, maintains tracks extending from connections with the Southern and Coast Line to Port Norfolk on the west side of the Elizabeth River, where it has complete terminal facilities; that the Norfolk and Portsmouth Belt Line Railroad maintains track connections with the other lines except the Chesapeake and Ohio; that at Port Norfolk and Portsmouth on the west side of the Elizabeth River, at Norfolk itself, at Lambert's Point, on the east side of the river, and at Berkley, on the west side of the eastern branch of the river, there are piers, float bridges, wharves, and warehouses belonging to the several railroad companies, which appeared as defendants before the Commission, among which were the petitioners herein. It ap- pears that the Chesapeake and Ohio has a terminal in Norfolk, and maintains piers, a float bridge, yards, and warehouses. The Commission explains how the interchange of traffic between certain of the companies is effected, that is, by means of the short line tracks of the New York, Philadelphia and Norfolk, or by the Belt Line or both, or by the floating equipment owned and operated by certain of the railroad companies and also by drayage service; that the Southern receives and delivers import and export traffic at Newport News, either by means of its own floating equipment or that of the Chesapeake and Ohio; that the Coast Line and Seaboard Line use the floating equipment of the Chesapeake and Ohio, and that the Norfolk and 13 ^ t/'^" Western uses the floating equipment of the Southern. It was found that both Newport News and Norfolk sustain intimate commercial relations with the south, that both are dependent largely upon the south and particularly upon the Associated Railways territory and Southeastern Freight Association territory, which sections are found to embrace all the territory east of a line drawn from Chattanooga, Tennessee, south- ward, through, but not including, Birmingham, Selma, and Montgomery, Alabama, to Pensacola, Florida, known as the Chattanooga-Birmingham line. These last named places are reached by the rails of the Southern, Coast Line, Seaboard, Norfolk and Southern, and their connections, and in part by the Norfolk and Western and its connections. The Commission then details an arrangement entered into between the Chesapeake and Ohio, the Southern, the Coast Line, the Seaboard, and their connections, by which for a number of years Newport News had the same rates as Norfolk to all common points in each of the Association territories. Joint rates were main- tained until July 31, 1899, and rates to and from local stations on the Southern are shown to have continued until July 28, 1900. Because of some dispute between the carriers which are parties to the joint rates as to divisions allowed the Chesapeake and Ohio on traffic to and from points east of the Chattanooga-Birmingham line, the Southern carriers withdrew from the arrangement, and thereafter the joint rates, except on import and export traffic, were 14 canceled as to all common points in the Association territories. It is pointed out that while through routes have remained open substantially as before via both Nor- folk and Richmond, the rates to and from Newport News have been maintained on a basis of differen- tials over Norfolk on a scale of fifteen cents for one hundred pounds first class, down to four cents class D, and that commodity rates have obtained on substantially the same basis. It is foimd that the Chesapeake and Ohio was dissatisfied merely with the divisions it received, but that that road now assumes an attitude whereby it would give to New- port News the same rates as Norfolk to and from the south, but that the southern lines have not been willing to reduce their rates in order to place New- port News on the Norfolk rate basis. It is shown that in the territory west of the Chattanooga-Bir- mingham line, reached by the southern carriers and their connections and by the Chesapeake and Ohio and its connections, the rates to and from Newport News have continued the same as rates to and from Norfolk, and that on Newport News traffic to or from points west of the Chattanooga-Birmingham line, which usually moves via Richmond, the divi- sions of the joint rates received by the Chesapeake and Ohio are measured by a scale of twenty-six cents per one hundred pounds first class, down to eight cents, with divisions of commodity rates on rela- tively the same basis. On certain classes of traffic the Commission finds that the Newport News rates 15 / "■' remained the same as Norfolk rates after July 31, 1899. This is true of pig iron from certain points in Tennessee and from iron-producing sections of Georgia and Alabama, and on lumber from various points in Alabama. Deliveries to Newport News are found to be by floating equipment of the carrier handling the traffic or the equipment of the Chesapeake and Ohio if it moves via Norfolk, Portsmouth, or Pinner's Point, or via the Chesapeake and Ohio rails, if the traffic moves through Richmond. It is shown by the Com- mission that between Baltimore and various impor- tant points in the association territories the southern lines and their connections maintain lower rates than to and from Newport News. An explanation is made of what is known as Virginia cities rates; that is, rates to certain points in Virginia, made because of competitive conditions existing at those points. The Commission then considers the question of Virginia cities rates to Newport News, and finds that there is no competition to compel the southern lines to main- tain Virginia cities rates from Roanoke to points be- yond the terminus of the Carolina extension of the Norfolk and Western, and that the argument made by the southern carriers before the Commission for not giving Virginia cities rates to Newport News was not persuasive. Explicit finding is made that New- port News is placed in a position of material disad- vantage as compared to Norfolk. Consideration is given to whether such disadvantage is the result of 16 unjust discrimination or undue or unreasonable preju- dice, due to the rate adjustment. In analyzing the situation, the Commission con- siders natural advantages, the relative merits of the harbors, and the dependencies of the two cities upon the south for the materials used in their manufacto- ries, and for markets for their manufactured products. Regard is had to the fact that while none of the rails of the Southern, Coast Line, Seaboard, and Norfolk and Western actually reach Newport News, never- theless each of these companies serves Newport News, carrying to and from the South by way of Norfolk or through connections with the Chesapeake and Ohio at Richmond. The Commission says that the southern carriers practically control the rates between Newport News and points within associa- tion territories. Reference is made to the accepted fact that the rates between Newport News and points west of the Chattanooga-Birmingham line are influ- enced by competition induced by the Chesapeake and Ohio and its connections the lines of which pene- trate their territory, and it is found that this accounts for the equal rates between those points and New- port News and Norfolk, as the Chesapeake and Ohio reaches both cities either by all rail or by rail and water. But as to the western situation, the Com- mission was of the opinion that the rate was the material matter, and not the reasons which induced it. Reference is also had by the Commission to the equal rates given on pig iron from points in Ten- 17 ^/f nessee, Alabama, and Georgia, east of the Chatta- , nooga-Birmingham line. While the fact that there is equality of rates on exports and imports is adverted to by the Commis- sion, emphasis is laid on the contention of the New- port News Chamber of Commerce, not that there was any discrimination in the export or import rates, as compared with the domestic rates from Newport News, but rather that the southern lines, by engaging in import and export business via New- port News, have made themselves common carriers as to that point, and thereby assume an obligation to transport domestic traffic also, and to maintain the necessary equipment for that purpose. After discussing the competition of certain lines of steamers between Baltimore and various southern cities which afifects rail and water rates between Baltimore and various southern points, it is held that in view of all the considerations stated by it, the situation at New- port News is not the result of competition or other conditions beyond the control of the carriers then before it, and that upon the record the former rate adjustments were shown to have been set aside solely because of the disagreement had with the Chesapeake and Ohio. It is also noted that through routes exist by which traffic is transported under through bills of lading between Newport News and the South, and it is held that joint rates should be established by way of such through routes between Newport News and all common points outside of 18 Virginia in Associated Railways and Southeastern Freight Association territories, and that such joint rates as to points not within 150 miles of Norfolk should not exceed the rates contemporaneously- applied by these petitioning carriers between Norfolk and the same points. Petitioners can not avoid the force and effect of these findings of the Commission. It was for that body to hear and ascertain what the actual condi- tions are, and whether rates or charges demanded or collected by the petitioning carriers for the trans- portation of freight are unjustly discriminatory or unduly preferential or prejudicial in favor of Norfolk as against Newport News, and to make an order that the carrier or carriers should desist from any violation found. Under the provisions of section 15 of the act to regulate commerce ample power is vested in the Commission in a proceeding before it to extend the scope of its examination far enough to arrive at the true situation with respect to all mat- ters which properly tend to show whether or not under section 3 undue preference or advantage is given to one city over the other. Involved in such an investigation appears to be inquiry into just such facts and circumstances as were ad- verted to by the Commission herein, namely, relative location, method of service, how interchange is made, whether rates are joint, whether both foreign and domestic business are affected, the relation of rates charged to other rates, whether or not there is com- petition of rail and water, natural advantages, mar- 19 ^ >.-/ kets for traffic, and the welfare of the communities affected. Presumably the evidence which was intro- duced bearing upon these points was competent and relevant to the issues of the pleadings. These are the matters, whether actual or circum- stantial, from which were drawn the inference that as a fact there was a disadvantage to Newport News, and that that city was unjustly discriminated against.; The Commission may have so far carried its inquiry as to have considered, among other things, evidence of rates into territory not so closely related to that directly involved as to have material bearing; or it may have given great weight to evidence introduced to show competition that affected rates, and little to that which showed the relative volume of traffic in and out of the two cities affected; or it may have failed to correlate well the evidence of natural ad- vantage with that of rates; but inasmuch as it did have before it substantial evidence proper to be looked at which supported the allegations of the complaint made by the Newport News Chamber of Commerce, together with such evidence as these pe- titioners as defendants in the proceeding referred to cared to introduce upon the issue of discrimination, which was the only issue presented, it is not for the courts to disturb the ultimate judgment of the Com- mission by saying that under the evidence there was no unjust disadvantage to Newport News. Inter- state Commerce Commission v. Union Pacific R. R. Co. et al., 222 U. S., 541. The Supreme Court, in Texas and Pacific Railway v. Interstate Commerce 20 Commission, 162 U. S., 197, after reviewing the English case of Denaby Main Colliery Company v. Manchester, etc.. Railway Company, 3 Railway and Canal Trafl&c Cases, 426, from which Justice Shiras quotes quite fully, states its own conclusions as to the act to regulate commerce as follows: "* * * That, in passing upon questions arising under the act, the tribunal appointed to enforce its provisions, whether the Commission or the courts, is empowered to consider fully all the circumstances and conditions that reasonably apply to the situation, and that, in the exercise of its jurisdiction, the tribunal may and should consider the legitimate interests as well of the carrying companies as of the traders and shippers, and in considering whether any particular locality is subjected to an undue preference or dis- advantage 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 con- sidered, as well in the case of traffic originating in foreign ports as in the case of trafl&c 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 would otherwise go by other competitive routes are or are not undue and unjust, the fair interests of the carrier companies and the welfare of the community which is to receive and consume the commodities are to be considered." The petitioners urge that section 3 of the act is not applicable to an instance where a common destina- 21 ^, X b tion is served from two different points of origin by- carriers wholly independent of each other in the sense that each carrier has its own rails from the point of origin which it serves to the destination, and that this section is inapplicable where a common destination is served from two different points of origin by carriers wholly independent of each other in the sense that between the destination and one of the points of origin one of the carriers alone operates, while between the destination and the other point of origin the two carriers operate in connection with each other. , These propositions are contended for upon the principle stated by Justice Jackson in Interstate Commerce Commission v. Baltimore and Ohio Rail- road Company, 43 Fed., 37, that "subject to the two leading prohibitions that their charges shall not be unjust and unreasonable, and that they shall not unjustly discriminate, so as to give undue preference or advantage, or subject to undue preference or dis- advantage, persons or traffic similarly circumstanced, the act to regulate commerce leaves common car- riers as they were at common law, free to make special contracts looking to the increase of their business, to classify their traffic, to adjust and appor- tion their rates so as to meet the necessities of com- merce, and generally to manage their important inter- ests upon the same principles which are recognized as sound and adopted in other trades and pursuits." It is argued that if the order of the Commission stands it means unwarranted interference with the manage- 22 merit of the business of the carriers, shrinking of revenues to one point served in order to allow another point not served to have a scale of -rates lower than it otherwise would have, and responsibility upon a carrier not alone for the rates to a point which it serves, but also for rates to another point to which it owes no duty. The necessary predicate for these suggestions is that each of the carriers situated as are these petitioners is to be regarded as independ- ent of the line of the Chesapeake and Ohio operating from Newport News via Richmond to the same desti- nation in connection with the same Norfolk carriers; that the Richmond rate is the same as the Norfolk rate and is reasonable; and that inasmuch as the rates from Newport News are reasonable and not assailed as unreasonable, to give Newport News the same rates as Norfolk would give to that city rates it can not lawfully ask. It may be that where a common destination is served from two different points of origin by carriers wholly independent of each other in the sense stated by petitioners, section 3 is inapplicable. Tozer v. United States, 52 Fed. 917, is cited by petitioners as holding to this view. That case, however, in- volved a criminal charge under section 3, based upon a mere disparity existing between a local and a joint through rate. But we need not decide that exact question, because we have here charges, not simply of a disparity between a local and a joint rate, but of acts of discrimination against Newport 23 <^ Ivi" News where there have been rates made by peti- tioners from the territory hereinbefore referred to to Newport News, and where freight is carried under through bills of lading from the territory described to Newport News. It is thus that a situation has arisen wherein Newport News is served by way of Norfolk or through connection with the Chesapeake and Ohio at Richmond, which makes a case calling for the exertion of the power of the Commission to ascertain whether the discrimination created was due or undue as comprehended by section 3 of the act. That the rails of the petitioners do not go to New- port News is not important. All actually serve Newport News. And although it would appear as if the Commission approved of the contention made before it by the representatives of Newport News, that inasmuch as these petitioners by engaging in the export and import business via Newport News made themselves common carriers generally as to that point, and thereby assumed obligations to transport domestic traffic also, still as it was of record before the Commission and is before us that these petitioners as shown by their tariffs engage in domestic as well as export and import traffic to Newport News via Norfolk, we may resolve the questions involved, holding that under the evidence of the service offered to be performed, the conclusion of the Commission that there was unjust discrimination against Newport News was justified and involved no excess of power. 24 It is not of moment to this inquiry that Norfolk shippers may have to payi^ switching charges on traffic originating or destined to that point, while Newport News shippers may not. If that should be the case, it would not necessarily constitute groimd for annulling the order of the Pommission. The order does not direct the carriers to carry to Newport Ne-vjs for less rates than they carry to Nor- folk, but does require that within the territory described they shall desist from charging more for transportation on their respective lines from and to Newport News than they contemporaneously charge from and to Norfolk. This was responsive to the issues before the Commission, and can not be dis- turbed by the courts. Decree for respondents. O United States Commerce Court. No. 41 — ^February Session, 1913. The Atchison, Topeka & Santa Fe Railway Com- pany. Southern Pacific Company, and San Pedro, Los Angeles & Salt Lake Railroad Company, peti- tioners, V. The United States of America, respondent, In- terstate Commerce Commission, Arlington Heights Fruit Company, et al., interveners. OST FINAL HEARING ON PLEADINGS AND PROOFS. For opinion of Interstate Commerce Commission see 20 I. C. C. Rep. 106, and 23 I. C. C. Rep. 267. Mr. T. J. Norton and Mr. H. A. Scandrett, with whom Mr. Robert Dunlap, Mr. C. W. Durhrow, and Mr. Gardner Lathrop were on the brief, for peti- tioners. Mr. Blackburn Esterline, Special Assistant to the Attorney General, for the United States. Mr. P. J. Farrell for the Interstate Commerce Com- mission. 8476S— 13 Mr. William E. Lamb, with whom Mr. Asa F. Pall was on the brief, for the intervening shippers. Before Knapp, Presiding Judge, and Hunt, Cae- LAJSTD, and Mack, Judges. (March 31, 1913.) Garland, J.: The questions to be decided in this case arise in this way: The petitioners, as well as other carriers, parties to the orders of the Interstate Commerce Commission hereinafter referred to, are and have been engaged in transporting from points in southern California to various points in the United States citrus fruits in carload lots under refrigeration as well as under ventilation. At certain times of the year, refrigeration is necessary to protect such shipments. Under standard refrigeration the oranges are loaded into a refrigerator car before either the fruit or the car has been artificially cooled, the boxes being so packed as to allow a free circulation of air between and around them. After being loaded, the car is taken to some gathering point, usually San Bernardino, upon the line of the Santa Fe and Colton upon the line of the Southern Pacific, when the shipments originate in southern California, and the bunkers are there filled with ice. As the car journeys eastward, the bunkers are opened from time to time and replenished with additional ice. The charges for refrigeration from California points in case of oranges and lemons are, per standard car, to the Missouri River, $60; to Chicago and similar points, $62.50; to Buffalo and Pittsburgh, $72.50; to New York, $75, and to Boston, $77.50. The Interstate Commerce Commission found that the cost of refrigeration to Chicago over the Santa Fe was $55 per car, and itemized said cost as follows: Cost of ice, $30; cost of repairs to bunkers, $5; hauling of ice, $20; and upon complaint of the Arlington Heights Fruit Exchange et al. v. Southern Pacific Company et al. (20 I. C. C. Rep., 106), found the charges for the transportation of oranges and lemons from California points under standard refrig- eration to the points hereinbefore mentioned were reasonable. On or about July 5, 1909, petitioners amended their refrigeration rules so as to provide as follows: " On all carloads of citrus fruit precooled and pre- iced, or preiced by shipper, offered for shipment with instructions 'Do not reice en route,' a charge of $30 per car of 32,000 pounds or less will be made, excess weight to be charged for at 9.375 cents per 100 pounds. On aU cars handled under this rule, shipper will sign the following release, which must in all cases appear on shipping ticket and bill of lading and be copied on waybill by agent : "The giving and acceptance of these special in- structions from the shipper releases the initial carrier and its connections from all liability for damages caused by nonicing in transit or at destination." In event any such car is reiced in transit, the above charge of $30 will be cancelled and the regular re- frigeration rate applicable frqm- San Bernardino or Los Angeles, Cal., to final destination, as shown in this tariff, will apply and must be added to the way- bill for collection in the usual manner." We take from the report of the Commission in the case above cited the following description of precool- ing and preicing, referred to in the above amended rule: "The system of refrigeration known as precooling, which is essentially different from the standard re- frigeration just considered, grew out of experiments conducted by the United States Department of Agri- culture into the handling of oranges. Those re- searches demonstrated that decay in oranges was due mainly to mechanical injury in the handling, and that if this could be avoided refrigeration was not neces- sary to prevent decay, but only to preserve the ap- pearance of the fruit. While the greatest care is now exercised in the handling of the orange from the tree to the car, abrasions of the skin can not be entirely avoided, and the experiments above referred to fur- ther demonstrated that in case of such injury the result was minimized by cooling the fruit at the earli- est possible moment and maintaining thereafter a low temperature. It was more difficult to arrest and control the process of decay when it had oiice fairly set in than it was to check it at its inception. "Precooling grew out of these investigations of Prof. Powell and was tried by him in the course of his experiments. In actual practice it takes two forms, which may be termed precooling by the shipper and precooling by the railroad. These two methods are essentially different and must be understood in order to intelligently appreciate the question presented. "In precooling by the shipper the basic idea is to bring the fruit under the influence of a low tern- perature at the earliest possible moment. The oranges are brought from the tree to the packing house and packed in a box which is immediately deposited in a cold room. Here the process of extracting the heat from the orange at once begins and gradually continues until at the end of from 24 to 48 hours all parts of the fruit in all parts of the box have been reduced to a uniform temperature of from 33° to 35-' F. The box remains in this cold room at this temperature until it is to be loaded. The car is then connected with the room by a col- lapsible passageway and the oranges are taken di- rectly from the cold storage to the car, where they are placed, not with air spaces between, as in case of ordinary refrigeration or ventilation, but close together. The bunkers of the car are filled with large blocks of ice especially intended for that pur- pose, and the bunkers and vents are now sealed up so as to make the car as nearly air-tight as possible. All this is done by the packer at the packing house, and the car is now delivered to the railroad with instructions to transport to destination without re- icing and without breaking the seals. "The cost of precooling and preicing a car in this manner, including interest on the investment and depreciation of the plant, is from $30 to $35, a fair average being, perhaps, $32.50." On January 14, 1911, the Commission found that a charge of $30 per car as provided in the above amended refrigeration rule, when the citrus fruit was precooled and preiced by the shipper, was ex- cessive and unreasonable, and ordered said charge to be reduced to $7.50 per car, and that no more than said la named amount should be charged for a period of two years from April 15, 1911. Whereupon peti- tioners, on May 4, 1911, filed their original petition in this court to annul said order reducing the charge of $30 on precooled and preiced citrus fruit. The case subsequently came on before this court on motion for a preliminary injunction, and the motion was denied, this court being of the opinion that the order of the Commission did not compel the carriers to permit shippers to precool and preice their fruit, and that the charge of $7.50 prescribed by the Com- mission was not unreasonable. Whereupon the Atchison, Topeka & Santa Fe Railway Company, the Southern Pacific Company, and the San Pedro, Los Angeles & Salt Lake Raihoad Company filed with the Commission amendments to their tariffs, whereby what the carriers denominated the privilege of permitting the shippers of citrus fruit to precool and preice carload shipments was withdrawn; the carriers asserting in said amended tariffs that they had the exclusive right and control of fiu-nishing and doing all icing and refrigeration of citrus fruits in all cases where shippers did not specifically request or instruct shipments to move solely under ventila- tion. Before said amendments became effective, however, the Commission entered orders from time to time suspending the operation and effect of said amendments, and a hearing upon said suspensions having been had, the Commission, on April 8, 1912 (23 I. C. C. Rep., 267), held that the amendments to petitioners' tariffs purporting to withdraw the right and privilege of precooling and preicing from the shipper were illegal and invalid, and ordered the petitioners to cancel said tariffs and supplements on or before May 20, 1912; and further ordered peti- tioners to continue in effect and maintain in force for a period of two years from April 8, 1912, a charge for precooling and preicing oranges transported in carloads from shipping and producing points in southern California to points in other States in the United States as designated in said above-mentioned tariffs, which should not exceed $7.50 per car. Whereupon, on June 4, 1912, petitioners filed an amended and supplemental petition, which is the one now being heard, wherein this court is asked to annul and set aside the orders of January 14, 1911, and April 8, 1912, so far as they compel petitioners to permit shippers of citrus fruit to precool and preice their shipments, and in so far as they reduce the charge from $30 per car to $7.50 per car. Criticism is made of the use of the words "pre- cooling" and "preicing" in the report and orders of the Commission complained of. We think the con- fusion, if any, of the different terms is fully explained when we appreciate the fact that the Commission treated and held that the precooling and preicing of citrus fruit for shipment, by the shippers, was all one act — that is, that precooling and preicing was in fact a precooling of the shipment — and when the Commission speaks of the charge for precooling oranges it is to be understood that the word "pre- cooling" includes the act of precooling as well as preicing. In order to free the case of undisputed questions, we quote from the brief of counsel for petitioners as follows : "The carriers never claimed that the shippers have not a right to precool their fruit in their own ware- houses. They have all along admitted that the shipper may do as he pleases with his fruit before offering it to the carrier for transportation, save only that it be tendered to the carrier in a condition not inherently unfit. "So also the carriers have always admitted that a shipper may preice a shipment so long as he does it in his own package, as where he ices a box of fish or a keg of oysters, in which case the rate of transporta- tion covers the entire package, including the ice as freight. "But the carriers deny that the shipper has any right in law to ice or refrigerate the cars of the car- riers and thus take out of the hands of the carriers a part of the transportation service which the first sec- tion of the interstate-commerce law requires them to provide, the 'refrigeration or icing' being spe- cifically named in the law as included within the 'transportation' which the carrier is required to furnish." Along the same line we may say that if the orders of the Commission do give rise to discriminations be- tween shippers, that is a matter concerning which petitioners may not complain. (I. C. C. v. C, R. I. & P. Ry., 218 U. S. 85.) We also have no doubt but that the withdrawal of the right to precool and preice upon payment of $30 per car, was a new practice which affected the rate upon citrus fruits, and that the Commission had full authority under section 15 9 to make the orders suspending such practice. We think it also clearly appears from the record that under the precooling and preicing rate established by the Commission, the carrier gets a greater revenue per car than under standard refrigeration, and also a greater revenue per ton of ice and load than under the standard refrigeration rate. The Conmiission found that in the case of a precooled and preiced shipment the average weight of ice carried from point of origin to destination was approximately 5,000 pounds; that under standard refrigeration, the aver- age weight of ice carried in the bunkers was approxi^ mately 8,000 pounds. This would make the gross weight of the precooled and preiced shipment, includ- ing ice and load, 38,000 pounds; while the gross weight of the refrigerated shipment, including ice and load, is about 35,200 pounds. For transporting the former weight, the carrier, under the Commission's order, gets $387 ; for transporting the latter, under standard refrigeration rates, it gets $345.30. These figures are based with reference to shipments from California to Chicago and upon the fact that a car under standard refrigeration will carry about 27,200 pounds of revenue-paying load, while a car of precooled and preiced fruit wUl load approximately 33,000 pounds. This difference is caused by the fact that where the fruit is precooled and preiced the boxes of fruit are placed close together in the car, whereas in shipments under standard refrigeration it is necessary that the boxes be not placed close together. In view of the foregoing, we do not think that the petitioners have 10 any valid complaint to make of the charge of $7.50 per care stablished by the Commission. The case is thus narrowed down to a single ques- tion, namely: Have the shippers who desire to pre- cool their own fruit, which it is conceded they have the right to do, the right to place ice in the bimkers of the car for the purpose of making their precooling effective and of preserving the fruit precooled until it reaches its destination; or, is the placing of the ice in the bunkers, where the fruit is precooled by the shipper, a transportation service which the car- rier has the right to perform to the exclusion of the shipper? The claim of petitioners that the placing of ice in the cars by shippers of precooled fruit is a transporta- tion service is based upon the language of section 1 of the act to regulate commerce, which reads as fol- lows: "'Transportation' shall include cars and other ve- hicles and all instrumentalities and facilities of ship- ment or carriage, irrespective of ownership or of any contract, express or implied, for the use thereof, and all services in connection with the receipt, delivery, elevation and transfer in transit, ventilation, re- frigeration or icing, storage, and handling of prop- erty transported." It must be observed that the language used with reference to icing is, "icing * * * of property transported." It is important, therefore, that we consider the findings of the Commission with refer- ence to the precooling of fruit as practiced by the 11 shipper and the exact conclusions reached by it as a result of such findings. In the report made in con- nection with the order of January 14, 1911, the Commission found as follows : "It was suggested upon the argument that inas- much as these bunkers were filled with ice in case of precooled shipments as well as in standard refrigera- tion, the carrier had the right to insist upon furnishing the ice even though the grower might precool his fruit, A moment's consideration will show that this con- tention is without merit, and would if sustained be without benefit to the carrier. The ice with which these bunkers are filled is not manufactured by the railroad at the point where it is used. It would be necessary to fill the bunkers with ice at San Ber- nardino or Colton and move the car when iced to the packing house. By the time it reached there the ice would have been partially exhausted, and this would render it necessary to open and refill the bunkers. "This service should be performed in the most economical maimer, and it is evident that the ice can be best supplied by the same parties who load the car and prepare it for shipment. The filling of the bunk- ers with ice is a part of the preparation of the car for shipment and is not a part of the transportation service which is rendered by the railroads. It should also be noted that great importance is attached to the filling of the bunker completely and with large cakes of ice which will melt slowly. "To allow the carrier to fill these bunkers would be a source of no profit to it and would introduce an element of discord into the transaction. If the car arrived in bad condition, the shipper would be apt to say that the bunkers had not been properly reiced or 12 that the car had not been properly sealed. That uncertainty is removed where the shipper makes the car ready for transportation and the service rendered by the carrier is purely one of transportation. It seems clear that the carrier itself would prefer that this icing should be done by the shipper rather than attempt to do it at anything like what would be the actual cost to the shipper plus a reasonable profit to the carrier. * * * "The matter, therefore, stands like this: The United States Government has suggested, and these shippers, acting upon the suggestion, have perfected a system of handling these oranges by which they can be carried during all heated months to destination at an expense of $32.50 per car, approximately. The carriers offer an alternative system at a charge of $62.50, or probably slightly more on the average, and this charge for that service has been found to be rea- sonable. May the carrier insist that the shipper shall pay this higher charge, or has the shipper the right to avail himself of the modern method?" (20 I. C. C. Rep., 106.) In the report made in connection with the order of April 8, 1912, the Commission found as follows; "But, while in our opinion the process of precool- ing as above defined is not a transportation service, since it is performed by the shipper and can not be performed by the carrier, it does nevertheless take the place of refrigeration, and if these defendants had provided and were prepared to furnish refrigeration which would answer the same purpose as precooling at substantially the same price, then it might perhaps be held that the shipper should avail himself of the refrigeration which the carrier was prepared to fur- 13 nish; but that situation is not here presented. This record shows that the cost to the shipper of refrigera- tion when furnished by the raUroad in any one of the several forms offered is upon the average from $30 to $35 a car greater than the cost of precoohng. The complainants urge that they have the legal right to precool and that this right can not be denied them by this Commission. Without expressing any opinion upon that proposition, we are clear that until the car- riers offer a substitute for precooling which is fairly its equivalent in cost and in efficiency, it is the right of the shipper to avail himself of this privilege. As stated in our former opinion, the difference in expense applied to all the carloads of citrus fruits which are now refrigerated in transit would equal $600,000 per year." (23 I. C. C. Rep., 267.) The result of the whole matter is that the Com- mission found that the precooling service performed by the shipper could not be performed by the peti- tioners for the reasons stated in the report, and that petitioners offer no substitute for such precooling which is fairly equivalent in cost and in efficiency. The Commission expressed no opinion upon the absolute legal right of the shipper to precool (includ- ing icing) his fruit, but decided only that until petitioners offer a substitute for precooling as prac- ticed by the shipper which is fairly its equivalent in cost and in efficiency, it was the right of the shipper to avail himself of this privilege. We think this was an administrative ruling clearly within the power and jurisdiction of the Commission and with which this court may not interfere. 14 As it is conceded by counsel for the petitioners that the shippers have the right to precool their fruit, with the exception of placing ice in the bunkers of the car in connection with such precooling, and that it is not necessary to furnish any different car than the one provided for standard refrigeration or precooling by the carrier, and that the ice placed in the car is furnished by the shipper prior to the time at which the car is delivered to the carrier for transportation, the matter of precooling by the shippers becomes a practice which the Commission could condemn or indorse without interference by the coiu-ts. The petition, therefore, will he dismissed, and it is so ordered. O United SfefcS uommerce Court. No. 56. — March Session, 1913. The Kansas City Southeen Railway Company, petitionee, V. The United States of Ameeica, eespondent; In- teestate commeece commission, inteevenee. ON FINAL HEABING UPON PLEADINGS AND PBOOF. Mr. Samuel Untermyer and Mr. Arthur M. Wickwire, with whom Mr. Samuel W. Moore was on the brief, for petitioner. Mr. Winfred T. Denison, Assistant Attorney Gen- eral, with whom Mr. Thurlow M. Gordon, Special Assistant to the Attorney General, was on the brief, for United States. Mr. Charles W. Needham for Interstate Commerce Commission. Before Knapp, Presiding Judge, and Hunt, Cae- LAND, and Mack, Judges. 87811—13 April 21, 1913. Garland, Jvdge. By orders of the Interstate Commerce Commission made June 3, 1907, June 1, 1908, June 21, 1909, and May 31, 1910, there was established and promulgated a uniform system of accounts for steam railroads, and a classification of expenditures for additions and betterments. These orders and classifications provide that in classifying expenditures for improve- ments properly chargeable to additions and better- ments, where parts of a railroad or a shop are aban- doned and replaced by a new railroad or shop upon a new right of way or site, but serving the same terri- tory, traffic, or purpose, the cost or estimated replace- ment value of the abandoned property, less salvage, shall be deducted from the cost of the new work and the balance only charged to the property account; and that the cost or value, less salvage, of the aban- doned property shall be charged to operating ex- penses, provided that if the amount of the charge to operating expenses warrants a distribution of the loss over a series of years in the future the total amount may be charged into an account designated "Prop- erty abandoned account" during a term of years previously approved by the Commission. Petitioner prays that the orders and classifications above mentioned be ann\illed in so far as the partic- ular provision above specified is concerned, for the reason that the classification of expenditures for ad- ditions and betterments is unreasonable and beyond the power of the Commission, and because the en- forcement thereof will deprive petitioner of its prop^. erty without due process of law. Petitioner bases its right to complain of said orders and classification upon the following facts : Petitioner is the owner of a railroad which it main- tains and operates, extending from Kansas City, Mo., to Port Arthur, Tex. The road was originally constructed with a ruling maximum grade of 1 per cent, though in the mountain district it ran as high as 1.35 per cent. It was a properly located well^ constructed road and ample for the needs of the country through which it ran. In the course of time, with the great development of the country and the resultant increase in traffic which approached the limit of the road's capacity, the conditions warranted and rendered highly desirable such additions or im- provements as woiild enlarge the road's capacity and permit traffic to be moved more rapidly and eco- nomically. Two methods of increasing the capacity of the road were possible — one by double-tracking the road, the other by lowering the grades and permitting traffic to be moved more cheaply. The road is in active competition with powerful rivals in the same general territory, among which are the Southern Pacific, the Missouri, Kansas and Texas, the Missouri Pacific, the St. Louis Southwestern, the Texas and Pacific, the St. Louis and San Francisco, the Atchison, Topeka and Santa Fe, and the Rock Island. The character of the road as a trunk line having a long average haul and the prevalence of low-grade traffic — timber, coal, oil, and like commodities — entailed a low average freight rate. Under these conditions the manage- ment decided that the most desirable plan was to lower the grades of the road and thus increase its capacity, promote economy, and render better service to the public. Two methods of reducing the grades at various points along the line were presented, one by raising or lowering the roadbed on the existing right of way, the other by the construction of short sections of new road in substitution for portions of the old road in instances where the desired result could be thus obtained at less cost. Petitioner determined to revise its grade to a maxi- mum of 0.5 of 1 per cent at six different points or portions of its line by the construction of short sec- tions of new road and the abandonment of road thus replaced. It was found that the cost of securing the desired gradient upon the original roadbed would be $1,230,318.99, but that the same result could be obtained by means of relocations for a net expendi- ture of $629,399.74. The actual expenditure on the six new locations, as ascertained on completion of the work and after the filing of the petition in this case, was $763,798. But this in no wise affects the pro- portion of expenditure between relocations and grade reduction upon the original roadbed. In order to meet the necessary expenditure caused by the reduc- tion of grade, and other improvements, in the manner determined upon, petitioner duly issued and sold $10,000,000 of bonds, dated July 1, 1909, secured by its refunding and improvement mortgage of the same date. Using the figures appearing in the petition for illustration, we have, as the cost of the grade reduc- tion by relocations, $629,399.74. The estimated cost of replacing the discontinued portions of the road is $482,953. The salvage amounted to $96,469, the difference being $386,484. The orders and classi- fication of the Commission complained of require that this sum of $386,484 must be deducted from the total cost, leaving a net amount of only $242,915.74 chargeable to additions and betterments, the said sum of $386,484 to be charged to the current expenses of operation. As a second ground upon which petitioner claims to have a right to attack the orders in question the following facts appear: Petitioner owns a shop and terminal plant at Shreveport, Louisiana. The shop with its equipment is not worn out or obsolete and is capable with ordinary running repairs of performing for an indefinite term the functions for which it was originally constructed. Petitioner has determined as an integral part of an extensive program of inter- related improvements to construct, and is now engaged in constructing, a new and enlarged shop and terminal plant at Shreveport on a new and different location from that of the shop and terminal plant now existing, which last-mentioned shop and terminal plant are incidentally to be abandoned. The value of the Shreveport shop and terminal plant so to be abandoned is approximately $100,000. The orders and classification complained of require that the estimated replacement value, less salvage, of said shop and terminal plant now existing shall be charged to petitioner's operating expense account in monthly- installments distributed over a period of time to be designated by the Commission, whereas petitioner insists that it has the right to charge the value of the shop and terminal plant when abandoned, less salvage, against its accumulated surplus as represented in its profit and loss account. It is evident that the object which the Conomission had in view in making the classification of expendi- tures for additions and betterments was to cause the property account of any railroad to show only the property it had in use and to eliminate therefrom all property which had been abandoned. It is also evi- dent that the underlying basis for the contention of petitioner is that it desires to retain in its property account the replacement value, less salvage, of the pieces of road abandoned. It sufficiently appears in the record that what are known as the strong roads financially do not object to the classification of the Commission, for they are quite willing to charge the replacement cost of property abandoned against cur- rent operating expenses, as they have the right to earn operating expenses without question. On the other hand, roads that are less strong financially, among which petitioner classes itself, desire to keep the property account as large as possible because it is a material asset upon which to maintain credit. In order to clear the case of matters which might lead to confusion, it is proper to say that as to mere bookkeeping this court has no power or authority to interfere with the orders of the Interstate Commerce Commission; and bookkeeping includes all matters relating to the manner or form in which an entry shall be made. In order that this court may interfere, a classification prescribed by the Commission must be such as unlawfully interferes with petitioner's prop- erty rights. As to the power of Congress to vest in the Commission, in the manner set forth in section 20 of the Act to Regulate Commerce, authority to estab- lish a uniform system of accounts, and to require annual reports with a uniform balance sheet, and to determine the classification and form of such accounts we have no doubt. The decisions of the Supreme Court have settled this proposition beyond contro- versy. (St. Louis and Iron Mt. Ry. v. Taylor, 210 U. S., 287; Union Bridge Company v. United States, 204 U. S., 364; The Danl. BaU, 77 U. S., 557; Em- ployers' Liability Cases, 207 U. S., 497; United States V. Goodrich Transit Co., 224 U. S., 194.) The real questions for decision are clearly stated in the brief of counsel for the Commission, as follows : 1. Did the Commission act in an unreasonable and arbitrary way in requiring the carriers, when making improvements and betterments chargeable to prop- erty account, to deduct from the cost of these im- provements and charge to operating expense account 8 the value or estimated value, less salvage, of the property abandoned ? 2. Is the requirement that the value or estimated value, less salvage, of abandoned property be charged to the operating expense account a violation of any right guaranteed to the petitioner by the Constitution of the United States ? The orders in controversy were made in pursuance of the command of the statute. The complaint of the petitioner that the orders are an arbitrary exer- cise of power by the Commission does not relate to the manner of its procedure, but relates to the inher- ent effect which the orders and classification may have upon petitioner's property rights. The Com- mission in making the orders complained of was es- tablishing a uniform system of accounts and classifi- cation for all railroads subject to the provisions of the act. It was impossible to establish separate systems for each raih-oad if the system for all of them was to be uniform; hence it is not surprising that the sys- tem of accounts established does not operate upon all roads alike. The object which the Commission had in mind, however, was the same in all cases. The charge that the making of the orders was an arbitrary exercise of power is based upon the claim that upon no theory of correct accounting can the Commission require petitioner to deduct from the cost of addi- tions and betterments the value or estimated value, less salvage, of property abandoned and to charge the value or estimated value, less salvage, of the prop- erty abandoned to operating expenses. We are not at liberty to invalidate the orders of the Commission on this ground, for there is abundant evidence in the record that the method required by the orders of the Commission is a correct and proper one. The testimony is conflicting, but Messrs. Far- rington, Bailey, and Adams, gentlemen of high repute in the profession of accounting, testified unqualifiedly that the method adopted by the Commission was a correct and proper one. In addition to this expert testimony is the authority of Mr. Robert H. Mont^ gomery, author of the work Auditing — Theory and Practice, page 319; also Whitten on Valuation of Public Service Corporations, chap. 19, sec. 450 et seq. Do the orders complained of deprive petitioner of its property without due process of law? To compel petitioner for the purpose of regulation by the Inter- state Commerce Commission to charge out of its^ property account property abandoned in improve- ments for additions and betterments, certainly does not deprive it of any property. Property abandoned ought not to appear in any account unless in an abandoned property account. Petitioner insists, however, that in the case under consideration there is no abandonment of property. It appears to us like abandonment, and we think it so appeared when counsel for petitioner framed the paragraph of the petition, which reads : " The said six sections of your petitioner's line were well located at the time the road was constructed, and were, at the time of the abandonment thereof, rea- sonably well adapted to the needs of your petitioner." 10 We further think that the effect of charging the replacement value or cost of abandoned property, less salvage, in connection with additions and better- ments, in the operating expense account, is over- estimated. We, of course, can not pass upon the wis- dom of the requirement complained of. Whether or not the matter might have been handled through the profit and loss account with better results is not for us to decide. If the requirement does not affect the property rights of petitioner, this court can afford no relief. The charge in the operating expense account is accompanied by the explanatory statement, " Prop- erty abandoned because of additions and better- ments." It does not pretend to be an expenditure of money and, therefore, might properly be found in some other account; but its entry in the operating expense account deprives petitioner of no property, and if the effect of the entry will be to reduce the net revenue from which dividends are to be paid, still the preferred stockholders can not com- plain as, the reduction being lawful, they receive as much as they are lawfully entitled to receive. The improvements which caused the abandonment were made with money derived from the sale of bonds, and as the improvements were in fact thus made the mortgage bondholders have no reason to complain and no person, with the proper explanatory notes in con- nection with the entries required to be made, would be in any way deceived. In view of the foregoing we are clearly of the opin- ion that with such statements upon the records of 11 the corporation in connection with the entry required by the orders of the Commission as petitioner has the right to make it will riot be deprived of any property or illegally injured in any way. la regard to the provision contained in the "Classifi- cation of expenditures for additions and better- ments," which allows a distribution of the loss over a series of years in the future, the total amount to be charged into an account designated " Property aban- doned account," with the approval of the Commis- sion, we must assume that the Commission would grant such privilege in any case where it was reason- able to do so. We can not in advance of any appli- cation by petitioner for this privilege assume that it would be denied. Following the course of the discussion at bar, prin- cipal attention has been given to the matter of grade reduction, but what we have said is intended to apply as well to the matter of the shop and terminal plant at Shreveport. At the time the testimony in this case was taken before a judge of this court, certain letters written to the Commission approving the manner in which the Commission by its orders has required the cost of abandoned property, less salvage, to be entered, as hereinbefore stated, were offered in evidence by counsel for the United States, and the same were excluded as hearsay. The same matter has been again presented to this court, and after due con- sideration we are of the opinion that the letters were properly excluded. Counsel for the United States 12 claim that the letters were admissible for the purpose of showing that the Commission did not act arbi- trarily. As we have before stated in this opinion, there is no claim in this case that the procedure in connection with the making of the orders complained of was irregular or arbitrary, but that the inherent effect of the orders themselves demonstrated that the orders were an arbitrary exercise of power. The orders were made pursuant to the command of the statute. The Commission could have made them without consulting any one, and the fact that the Commission received such letters as were offered in evidence was immaterial, and the letters themselves, if material, were mere hearsay. It is claimed that the orders and classifications complained of are arbitrary for the reason that if the ^ade reductions had been made on the original right of way no deduction from capital account of property abandoned would have been required, and that there is no reason for making any distinction between the two methods of grade reduction. We do not think peti- tioner is in a position to urge this contention, as it voluntarily adopted the method of relocation for grade improvements and it is with reference to that method that the orders and classifications must be tested. In other words, if they are valid as to grade reductions made by relocations, they may not be avoided because of their effect on other methods of grade reduction not followed by petitioner. The petition will he dismissed, and it is so ordered. O United States Commerce Court. No. 67~-JuNE Session, 1912. Houston East & West Texas Railway Company ET AL., petitioners, V. United States op America, respondent; Inter- state Commerce Commission, Railroad Commis- sion OF Louisiana, and St. Louis Southwestern Railway Company et al., interveners. ON FINAL HEARmG. (For opinion of Interstate Commerce Commission see 23 I. C. C. Rep., 31.) Mr. H. A. Scandrett and Mr. H. M. Garwood for the petitioners. Mr. Winfred T. Denison, Assistant Attorney General, with whom Mr. Thurlow M. Gordon, special assistant to the Attorney General, was on the brief, for the United States. Mr. P. J. Farrell for the Interstate Commerce Commission. Mr. Luther M. Walter, with whom Mr. R. G. Pleasant, attorney general of Louisiana, and Mr. W. M. Barrow, assistant attorney general of Louisiana, were on the brief, for the RaUroad Commission of Louisiana. Mr, E. B. PerUns, Mr. S. E. West, Mr. Roy F. Britton, Mr. Daniel U'pthegrove, Mr. Joseph M. Bry- son, Mr. Alex. S. Coke, and Mr. A. H. McKnight for the intervening carriers. Before Knapp, Presiding Judge, and Hunt, Car- land, and Mack, Judges. [April 25, 1913.] Knapp, Presiding Judge: This case involves the same question as Texas & Pacific Ry. Co. v. United States et al., just decided. For the reasons stated in the opinion in that case the petition will be dismissed. O WABHINQTON : QOVERNMENT PRINTINQ OPFIOB I ISK United States Commerce Court. No. 68.— June Session, 1912. The Texas & Pacific Railway Company, peti- tioner V. United States of America, respondent; Inter- state Commerce Commission, Railroad Com- mission OF Louisiana, and St. Louis Southwest- ern Railway Company et al., interveners. OH Tm&L HEABING. (For opinion of Interstate Commerce Commission, see 23 I. C. C. Rep., 31.) Mr. Henry G. Herbel, with whom Mr. Fred G. Wright was on the brief, for the petitioner. Mr. Wirvfred T. Denison, Assistant Attorney Gen- eral, with whom Mr. Thurlow M. Gordon, Special As- sistant to the Attorney General, was on the brief, for the United States. Mr. P. J. Farrell for the Interstate Commerce Com- mission. Mr. Ldither M. Walter, with whom Mr. R. G. Pleasant, attorney general of Louisiana, and Mr. 88895—13 1 W. M. Barrow, assistant attorney general of Louisi- ana, were on the brief, for the Raihoad Commission of Louisiana. Before Knapp, Presiding Judge, and Hunt, Car- land, and Mack, Judges. [April 25, 1913.J Knapp, Presiding Judge: The question to be decided in this case has been so thoroughly discussed by the Commission, and kindred questions have been so fully considered in various cases recently decided or now pending in other courts, that little can be profitably said beyond a statement of our conclusions. There is no dispute about the material facts, and they are easily comprehended. The interstate rates of petitioner from Shreveport, La., to Dallas, Tex., and intermediate points on its line, are very much higher in proportion to distance than the State rates of petitioner from Dallas to the same intermediate points in the State of Texas. For example, the rate on farm wagons from Shreveport to Marshall, a dis- tance of 42 miles, is 66 cents per hundred pounds, while the rate from Dallas to Marshall, a distance of 147 miles, is only 36.8 cents. Under such an adjust- ment of freight charges it is obvious that Shreveport is severely if not fatally handicapped in its compe- tition with Dallas for the trade of the intervening territory, most of which is situated in the State of Texas. It appears that operating conditions are substantially the same throughout the entire line and in both directions between these two cities, and peti- tioner makes no claim that the disparity in rates can be justified by differences in the cost of transporta- tion. Indeed, it seems to be conceded — and cer- tainly no other inference is permissible — that the rate situation here in question would clearly constitute undue prejudice to Shreveport and undue preference to Dallas, within the meaning of the third section of the act, provided that section be applicable, if the intrastate rates from Dallas, like the interstate rates from Shreveport, were voluntarily established by the carrier. But while the discrimination in fact against Shreveport is admitted, the contention is made that as matter of law it is not and can not be undue, or otherwise in violation of the act, because the intra- state rates in question are made by authority of the State of Texas and the petitioner is under legal com- pulsion to observe them. In other words, it is insisted that a violation of the third section can not be predi- cated upon a rate relation, however unjust, which is brought about, not by the voluntary action of the carrier, but by the command of a State which the carrier is constrained to obey. In this suit the order of the Commission is sought to be set aside only so far as it affects commodity rates, and the Commission has found, in effect, that petitioner's interstate commodity rates from Shreve- port to these Texas destinations are reasonable rates for the service rendered; that is, rates which con- form to the requirements of the first section of the act, and which, therefore, petitioner may justly and lawfully charge. From this finding, in connection with other facts stated, it seems necessarily to follow that the intrastate commodity rates of petitioner from Dallas to the same destinations, which the Texas commission has prescribed, are materially less than petitioner is justly entitled to charge; and this involves the further consequence that the Texas commission, by imposing upon petitioner lower rates than it should rightfully receive, has, in point of fact, placed an undue burden upon interstate commerce, and thereby obstructed the freedom of its movement. If this is a correct analysis of the situation, as is virtually admitted, it can hardly be doubted that the action which produces such a result, whether intended or otherwise, is in deroga- tion of the power and authority of Congress under the commerce clause of the Constitution. The right of a State to control the movement of its internal commerce and the instrumentalities employed in such movement is not unlimited, as the Supreme Court has repeatedly declared. In the first case which involved the scope and meaning of the commerce clause. Gibbons v. Ogden (9 Wheat., 1), the line of demarkation between State and Federal power was defined by Chief Justice Marshall in the following language: " It is not intended to say that these words (com- merce among the States) comprehend that commerce which is completely internal, which is carried on between man and man in a State or between different parts of the same State, and which does not extend to or affect other States. Such a power would be inconvenient, and is certainly unnecessary. Compre- hensive as the word 'among' is, it may very properly be restricted to that commerce which concerns m/)re States than one. * * * The genius and character of the whole Government seem to be, that its action is to be applied 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 Government." (Italics ours.) This definition has been uniformly accepted and the language itself quoted with approval in a number of cases. The Daniel Ball (10 Wall, 557, 565) ; The Lottery Cases (188 U. S., 321, 346) ; The First Em- ployers' Liability Cases (207 U. S., 463, 493). And quite recently, in The Second Employers' Liability Cases (223 U. S., 1, 54), Mr. Justice Van Devanter, after quoting to the same effect from McCulloch v. Maryland (4 Wheat., 426), remarks that "particu- larly apposite is the repetition of that principle in Smith-Y. Alabama" (124 U. S., 465, 473), where it is stated as follows : " The grant of power to Congress in the Constitu- tion to regulate commerce with foreign nations and among the several States, it is conceded, is para- mount over all legislative powers which, in conse- quence of not having been granted to Congress, are reserved to the States. It follows that any legisla- tion of a State, although in pursuance of an acknow- ledged power reserved to it, which conflicts with the actual exercise of the power of Congress over the subject of commerce, must give way before the su- premacy of the national authority." In the light of these decisions, and many others of similar import, it seems clear to us that Congress is in- vested with ample power to prevent or remove such a discrimination as is here considered. This is not seri- ously disputed by petitioner, as we understand the po- sition of counsel, but the contention is pressed that Congress has not exerted its power, even if the power be possessed, to the extent necessary to reach this par- ticular kind of discrimination, and therefore the Com- mission's order should be set aside because in excess of its authority. The power which Congress has exercised in this regard finds expression in the third section of the act to regulate commerce, as follows : "That it shall be unlawful for any common carrier subject to the provisions of this act to make or give any undue or unreasonable preference or advantage to any particular person, company, firm, corporation, or locality, or any particular description of traffic, in any respect whatsoever, or to subject any particular person, company, firm, corporation, or locality, or any particular description of traffic, to any undue or un- reasonable prejudice or disadvantage in any respect whatsoever." It would be difficult to frame a more comprehensive and unqualified declaration. It applies to all inter- state railroads and makes unlawful every act which operates to the undue prejudice of any locality. Taken by itself, and giving to the language used its natural significance, the paragraph quoted brings within its condemnation the rate adjustment here involved, because that adjustment as a matter of fact is obviously prejudicial to the shipping interests of Shreveport. And it would foUow from this view of the section that the Commission had authority to correct the ascertained injustice by making the order sought to be enjoined. The opposing view is based upon two general grounds which present the real controversy in this case, and which wiU now be briefly examined. In the first place, it is said that the provisions of the third section, above quoted, are to be read in con- nection with the proviso in the first section, and that this proviso defines and limits the power which Congress intended to exercise by expressly excluding transportation "wholly within one State." In other words, the proviso is claimed to be an exception which exempts from regulation under the act the rates on intrastate traffic, and therefore deprives the Commission of authority to found a violation of the statute upon the relation between State and inter- state rates, no matter what may be the effect of that relation upon the movement of interstate traffic. The proviso reads as follows: "Provided, however, that the provisions of this Act shall not apply to the transportation of passen- gers or property, or to the receiving, delivering, storage, or handling of property wholly within one State and not shipped to or from a foreign country from or to any State or Territory as aforesaid." 8 The intent and meaning of this proviso has been quite fully discussed by this court in Denver & R. G. R. Co. V. Interstate Com. Com'n (195 Fed., 968), and a conclusion therein reached substantially adverse to the contention here considered. In that case we said : "Section 1 not only subjects to the act, first, certain carriers, but also, second, certain transporta- tion. The proviso relates, not to the carriers, but to the transportation, and is therefore to be read in connection with the second clause of the section, and not with the first. ***** "Then, out of abundant caution, as it seems, and by way of disclaimer of any authority over a carrier that confined its business to one State, and was not engaged in such interstate business as would bring it within the first clause, the proviso was added. ***** "The proviso, therefore, must be regarded as a dis- claimer, and not as an exception. It could not, of course, be an exception to the second grant of juris- diction over certain transportation, and it does not in any way refer to the first grant of jurisdiction over certain carriers, either by way of disclaimer or by way of exception. ^If ^t£ ^t£ ^ii sk "This construction gives consistent and appro- priate meaning to those provisions of the first sec- tion which define the scope and application of the entire enactment. It sustains the act as a compre- hensive scheme of regulation designed to include all interstate transportation wholly by railroad, or partly by railroad and partly by water when both are used under a common arrangement, and to exempt only that intrastate transportation which is not within the power of Congress to regulate." Adhering to the views then expressed, which are summed up in the last paragraph quoted, we hold that this proviso is a mere disclaimer of any intention on the part of Congress, in enacting the act to regulate commerce, to exceed its constitutional power, and that it was not designed to limit or confine the power which Congress could exercise — and, in our opinion, has exercised — in respect of such matters as are here in dispute. If this construction be correct, it follows that the proviso in no way prevents the application of the third section to the facts of this case, and there- fore it was within the authority of the Commission to make the order in question. It is arguedan the second place, as above stated, that the "undue preference" and "undue prejudice" which are declared unlawful by the third section of the act, as that section has been construed by the Supreme Court, can be predicated only upon the voluntary action of the carrier, and therefore the lower rates from Dallas than from Shreveport are not in vio- lation of the third section, whatever may be the re- sulting disadvantage to Shreveport shippers, because such lower rates are not voluntarily accorded but are imposed upon petitioner against its will by the Texas Commission. This contention is based upon several decisions of the Supreme Court, particularly East Tenn. &c. Ry. Co. V. Interstate Com. Com'n (181 U. S., 1, and cases there cited), and attention is called to a paragraph in 88S95— 13 2 10 the opinion in that case, page 18, in which the follow- ing language is used : "The prohibition of the third section, when that section is considered in its proper relation, is directed against unjust discrimination or undue preference arising from the voluntary and wrongful act of the carriers complained of as having given undue prefer- ence, and does not relate to acts the result of condi- tions wholly beyond the control of such carriers." It will be observed that this case arose under the long and short haul clause of the original fourth section of the act and involved the meaning of the phrase "under substantially similar circumstances and conditions," which was eliminated by the amend- ment of 1910. The real question at issue was whether competition at the longer distance point constituted, or could constitute, a dissimilarity of circumstances and conditions which relieved the road serving the shorter distance point from the obligation imposed by the fovirth section, and the Supreme Court answered that question in the affirma- tive. Examination of the opinion discloses clearly, as we think, that the convincing reason for this con- clusion was the fact that the carrier complained of had not caused and was in no way responsible for the discrimination against the shorter distance lo- cality. That discrimination, as was shown, resulted wholly from the lower rates accorded by independent carriers reaching the farther point by other and dif- ferent routes; and accordingly it was held that the carrier in question, if its rates to the nearer point 11 were reasonable, was not violating the act by meet- ing at a more remote point conditions there existing which it did not create and could not control. Mani- festly the factor deemed decisive in that case is wholly absent from the case at bar, and therefore the ruling then made, notwithstanding the statement above quoted from the opinion, can not be accepted as sustaining petitioner's contention. Moreover, the administrative authority of the Commission has been materially increased by the amendments of 1906 and 1910, as the Supreme Court observed in the recent Procter & Gamble case (225 U. S., 282, 297), and it may be open to doubt whether decisions under the former fourth section would be followed in cases arising under the amended statute. This of course does not meet the argument, based upon the different state of facts here presented, that petitioner is under compulsion as respects the State rates in question and therefore not chargeable with any violation of law because those rates are relatively much lower than its interstate rates from Shreveport. In the last analysis this claim of coercion would seem to beg the question to be decided, since it as- sumes that petitioner is bound at all events to ob- serve the rates fixed by the Texas commission, although the order sought to be enjoined justifies the application of higher charges. But if the action of the Texas commission regarding these intrastate rates is in derogation of the regulating power of Congress, the petitioner is not bound by that action, but has the right to readjust its schedules in con- 12 formity with the order of the Interstate Commerce Commission. In the report upon which that order is based the Commission has found, upon convincing proofs therein recited, that the local rates here involved were imposed by the Texas commission for the pur- pose of favoring the industries and communities of that State. Indeed, the evidence is said " to demon- strate that Texas has a policy of her own with respect to the protection of home industry, which has been made effective by consistent and vigorous action on the part of her commission." And in this policy, as is further found, the petitioner and other carriers in like situation have apparently acquiesced. This plainly means, nor is it seriously disputed, that these Texas rates were prescribed not with reference to their intrinsic reasonableness, or on the basis of just compensation for the service rendered, but with the undisguised intention of giving preference and ad- vantage to the dealers of that State as against their competitors in Louisiana and other States. As Com- missioner Lane puts it, "the Texas commission is acting in loco parentis to the jobbing interests of Texas." It also means, as the record indicates, that the rates so established have been accepted by petitioner without more, at most, than a perfunctory protest. In view of these uncontradicted facts we are con- strained to reject the plea of compulsion, not merely or mainly because petitioner has assented to the pro- tective policy of the Texas commission, but because 13 that policy directly affects other States and the flow of commerce from those States, and thereby en- croaches upon the field in which Federal authority is exclusive and supreme. To hold otherwise in this case is virtually to admit that the purpose of the Federal act may be thwarted and its operation made ineffective by the laws and administrative effort of the State of Texas. It is evident, as already stated, that these Texas rates were designed and have the necessary result of securing unjust and arbitrary ad- vantage to the shippers for whom they were provided by restricting the movement of commodities from other States and measurably excluding outside deal- ers from competing for trade in Texas territory. The effect of this action by the Texas commission is not merely incidental and unimportant, but direct, sub- stantial, and to an extent prohibitive. In our judg- ment it is a positive interference with interstate com- merce, which Congress alone has power to regulate, and constitutes a violation of the law which Congress, in the exercise of its power, has duly enacted. The pervading purpose of that law was to prevent car- riers subject to its provisions from indulging in unfair and burdensome discriminations against persons and localities engaged in interstate commerce. But if such a patent discrimination as this case discloses can not be reached because it is brought about by a State commission, the law fails in a most important respect to accomplish its wholesome purpose. Moreover, if one State commission may create and perpetuate such a discrimination, other State commissions may take 14 similar action for similar reasons, with results which would greatly impair and indeed largely defeat the effectiveness of Federal regulation. To say that con- ditions thus arising do not offend the Federal law and can not be corrected by the Commission appointed to administer that law is to say in effect that State authority is superior to Federal authority when they come in conflict, whereas the reverse proposition has been repeatedly and invariably affirmed by the Su- preme Court of the United States. It is not claimed that the precise question here presented has been passed upon by the Supreme Court, but in various decisions of that court prin- ciples have been laid down which seem to us clearly applicable if not controlling. For example, in the Eubank case (184 U. S., 36), Mr. Justice Peckham uses the following language : "We fully recognize the rule that the effect of a State constitutional provision or of any State legis- lation upon interstate commerce must be direct and not merely incidental and unimportant; but it seems to us that where the necessary result of enforcing the provision may be to limit or prohibit the trans- portation of articles from without the State to a point within it, or from a point within to a point without the state, interstate commerce is thereby affected, and may be thereby to a certain extent directly regulated, and in that event the effect of the provision is direct and important and not a mere incident." Later, mthe Pullman Company case (216 U. S., 65)^ Mr. Justice (now Chief Justice) White states certain 15 propositions which are said to be "so conclusively established by the previous decisions of this court as to be now beyond dispute." Among them are these: "A State may not exert its concededly lawful pow- ers in such a manner as to impose a direct burden on interstate commerce. * * * "Even though a power exerted by a State, when inherently considered, may not in and of itself ab- stractly impose a direct burden on interstate com- merce, nevertheless such exertion of authority will be a direct burden on such commerce if the power as exercised operates a discrimination against that com- merce, or, what is equivalent thereto, discriminates against the right to carry it on." And more recently, in Southern Ry Co. v. United States (222 U. S., 23), affirming the validity of the safety appliance acts, Mr. Justice Van Devanter states the principle governing the question there con- sidered, as follows : "And this is so, not because Congress possesses any power to regulate intrastate commerce as such, but because its power to regulate interstate commerce is plenary and competently may be exerted to secure the safety of the persons and property transported therein and of those who are employed in such trans- portation, no matter what may be the source of the dangers which threaten it. That is to say, it is no objection to such an exertion of this power that the dangers intended to be avoided arise, in whole or in part, out of matters connected with intrastate com- merce." This court also, in Penn. R. Co. v. Interstate Com. Com'n (193 Fed., 81), following the Illinois Central 16 case (215 U. S., 452), upheld orders of the Commission relating to the distribution of coal cars in times of shortage. And in reply to the argument that the carrier could not comply with the orders in question without violating a statute of the State, we said : ' ' It may also be true that the enforcement of regu- lations in conformity with these orders, if applied to cars for intrastate as well as interstate shipments, would result in some conflict with the duties of peti- tioner under the laws of Pennsylvania, * * * |-,nt if this is or proves to be the case, it furnishes no ground for our interference, since Federal authority to the full exent that it may be exerted supersedes and limits State authority." It is true that the laws and orders involved in these decisions pertain to the physical operation of interstate railroads and not to the relations between State and interstate rates; but in our opinion the underlying question is essentially the same in both classes of cases, and the doctrine of the supremacy of Federal authority should have the same con- trolling application in the latter as in the former. If State regulation under State laws, respecting such matters as safety appliances, car distribution and the like, must be subordinated to and may be vir- tually annulled by national regulation under the national laws now in force, there is even greater reason for asserting the sufficiency of the existing acts of Congress, and the authority of the tribunal by which they are administered, to remove such a palpably unjust and injurious discrimination in 17 freight charges as is here presented, although that discrimination is caused by the action of a State commission. This is not to interfere with any power of regulation which a State may rightfully exercise, which does not "affect other States," or materially impede the flow of commerce from one to another, but to give complete and adequate potency to the law which Congress has enacted in pursuance of its plenary and exclusive power to regulate com- merce "among the several States." As is said by Sanborn, judge, in Shepard v. Northern Pac. Ry. Co. (184 Fed., 795), after referring to the Eubank case, supra: " By the same mark, because it is a direct regulation of interstate commerce, the Nation may regulate and prohibit discriminations wrought by an undue differ- ence between interstate and intrastate rates, although such regulation or prohibition may also to some extent affect and regulate intrastate commerce. For to the extent necessary completely and effec- tually to regulate interstate commerce the Nation by the Congress and its courts may affect and regulate intrastate commerce." It is the duty of an interstate railroad so to adjust its schedules that all dependent shippers and com- munities, regardless of imaginary State lines which may divide them, shall be able to use its facilities on relatively equal terms; and the Interstate Commerce Commission, in our judgment, is empowered by the present law to enforce the performance of that duty as occasion may require. The necessity for uniform, comprehensive, and adequate regulation, especially 18 urgent in the vital matter of rate relations, compels assertion of the paramount authority of Congress and the appropriate exercise of that authority in those provisions of the act which are leveled against unjust discriminations, wherever existing or however caused. Indeed, we see no escape from multiplied difficulties arising under our dual form of government, except by broadly defining the constitutional power of Congress and its exertion as manifested in the enactment of the present law, and by upholding the full application of that law to such controversies as the one here consid- ered. We are therefore in accord with the views of Commissioner Lane, speaking for the majority of the Commission, as expressed in the following extracts from his report : "An interstate carrier must respect the Federal law, and if it is also subjected to State law it must respect that in so far as it can without doing violence to its obligations under the national authority. Be- fore us are carriers which undeniably discriminate directly against interstate traffic. To this charge they plead that all they have done was to obey the orders of a State commission, as against which they were helpless. They appealed to no court for relief, nor to this Commission. When the State of Louisi- ana after years of endurance makes complaint to this body these carriers make no showing of the rea- sonableness of their rates other than that heretofore dealt with — a traflSc ad j ustment equalizing gateways — and even in this defense all the carriers do not join. ***** "While the Texas Commission has evidenced a policy of home protection for its own State cities, 19 there is every evidence that the carriers moving into and within Texas accepted this policy as their own, claiming that not to have adopted it would have led to reprisal on the part of the State authorities. Such conditions may not continue under this act. The interstate carrier which adopts a policy, even under State direction, that makes against the interstate movement of commerce must do so with its eyes open and fully conscious of its responsibilities to the Fed- eral law which guards commerce 'among the States' against discrimination." The Interstate Commerce Commission investigated the complaint filed with that body on hehalf of the shippers and dealers of Shreveport. In its report of that investigation, and upon proofs that seem to permit no other conclusion, the Commission found the fact of unjust discrimination as alleged, and duly made an order requiring its removal. The Com- mission also found by necessary inference, as its order clearly indicates, that the interstate commodity rates in question were not unreasonable, and this in effect sanctioned the continuance of those rates. It is likewise a necessary inference from the report and order that the unlawful discrimination against Shreve- port, so far as commodity rates are concerned, was caused by the imposition of intrastate rates which are lower than petitioner is justly entitled to charge. This being so, it follows that petitioner is at liberty and has the right to comply with the Commission's order by making a proper increase of its Texas rates. Indeed, since its interstate rates are not excessive, such an increase appears to be the only method of 20 compliance which would be just to both shipper and carrier. When this order was made, upon the facts so ascer- tained and reported, it had the effect, in our judg- ment, of relieving petitioner from further obligation to observe the intrastate rates which the Texas authorities had prescribed. The petitioner was no longer under compulsion in respect of those rates, because the rate situation disclosed by the inquiry was subject in its entirety to the provisions of the Federal statute and the administrative control of the Commission. The order of the Commission therefore operated to release petitioner, as regards the intrastate rates in question, from the restraint imposed by the State of Texas; and thereupon petitioner became entitled, if it did not choose to re- duce its interstate rates, to comply with the order by advancing its Texas rates sufficiently to remove the for- bidden discrimination. Its obedience was due to the superior authority, and it ceased to be bound by any inconsistent obligations. Whether petitioner shoiild have applied to the courts for relief in the premises, basing its application upon the Commission's order and the rights of petitioner thereunder, or could ad- vance its Texas rates in the first instance, relying upon the order as a defense against any prosecution under Texas laws, is not for us to determine. It is sufficient to hold, as we do, that petitioner can not resist the order on the ground of involuntary action, because the effect of that order was an exemption of these intrastate rates from Texas authority. 21 As was suggested at the outset, the general ques- tion here involved has been presented in numerous cases, more or less closely allied, and is perhaps the most conspicuous and important subject of current litigation. In the course of that litigation every de- cision of possible bearing has been repeatedly cited and every opinion critically examined, whilst the ablest lawyers in briefs and at the bar have exhausted the resources of argument. We can add nothing to what has been so often said, and deem it unnecessary to extend the discussion. In our judgment the order in question was within the authority of the Commis^ sion and ought not to be set aside. The petition will therefore be dismissed. Mack, Judge, concurring: I agree that an intrastate rate voluntarily estab- lished by the railroads may be the basis for an order of the Interstate Commerce Commission declaring such a rate to involve an undue prejudice as against an interstate rate and requiring that the two rates be equalized. I fully agree also that Congress has the constitu- tional power and may by proper legislation grant to the Interstate Commerce Commission authority to prevent undue prejudice in interstate commerce resulting from a rate not in the true sense voluntary, and irrespective of whether it be interstate or intra- state. In view, however, of the passage cited from E. Ry. Co. vs. Interstate Commerce Commission, 181 U. S. 1, and of the decision of this Court in Atchison, T. & 22 S. F. Ry. Co. V. U. S., 191 Fed. 856, now pending on appeal in the Supreme Court, I am of the opinion that the Interstate Commerce Commission under the legislation now in force cannot base such an order upon a compelled rate, whether interstate or intra- state, and whether compelled by competition, by statute, by court decree or by the order of a com- mission. In my judgment, the Texas state rates cannot be treated by the Interstate Commerce Commission as if they were absolutely null and void, even though upon direct attack in the State or Federal Courts they would be nullified and their enforcement per- manently enjoined as infringing upon the exclusive power of the Federal government to regulate inter- state commerce. In the absence of a judicial decree, temporarily or permanently suspending the force and effect of the Texas rates, the railroads would be compelled to obey them, just as the railroads and the public are required to observe interstate rates duly made and published by the railroads, even though they be such as would be set aside for unrea- sonableness, unjust discrimination, or undue preju- dice on direct attack before the Interstate Coromerce Commission. The order of the Interstate Commerce Conunission therefore gives only an apparent but not a r^al alternative, either to rai^e the Texas rates or to lower the interstate rates; in effect it compels the reduc- tion of the interstate rates to a point far below what the Commission itself considers a reasonable rate, 23 at least until a court of competent jurisdiction shall have enjoined the enforcement of the Texas rates. If the Texas rates here in question must necessarily be held to be involuntary and compelled, I should be of the opinion that the order of the Interstate Commerce Commission must be set aside. Inasmuch however as there seems to be some basis, though slight, for the view that the failure of the railroads to attack the Texas rates was due to their voluntary or negligent acquiescence therein, and that therefore these rates may be said to have been not compelled but voluntary in the sense of having been voluntarily assented to instead of having been actively attacked, and inasmuch as the conclu- sions of my brethren are based in part at least upon this view, I concur for this reason only in upholding the Conmiission's order. O MAY 1-1913 X,AW LIBRAEI. United States Commerce Court. No. 70 — October Session, 1912. Lehigh Valley Railroad Company, petitioner, V. United States, respondent; Interstate Com- merce Commission, Henry E. Meeker, interveners. ON MOTIONS TO DISMISS. Mr. Frank H. Piatt and Mr. Everett Warren, with whom Mr. E. H. Boles and Mr. John G. Johnson were on the brief, for the petitioner. Mr. Blackburn Esterline, Special Assistant to the Attorney General, for the United States. Mr. Charles W. Needham for the Interstate Com- merce Commission. Mr. William A. Glasgow, jr., for Henry E. Meeker. Before Knapp, Presiding Judge, and Hunt, Car- land, and Mack, Judges. [April 25, 1913.] Hunt, Judge: The Lehigh Valley Railroad Company, petitioner herein, prays for a decree enjoining an order of the Interstate Commerce Commission. By the* bill it appears that the lines of petitioner's railroad system 88874—13 1 aggregate some 1,407 miles, operated as continuous transportation routes through Pennsylvania, New York, and New Jersey; that the anthracite coal fields of Pennsylvania are divided into three groups, known as the Wyoming, Lehigh, and Schuylkill regions, located in the eastern portion of Penn- sylvania; that the consumption of anthracite coal from the said coal fields is about 14,000,000 tons gross in Pennsylvania and 70,000,000 tons gross in other States; that petitioner assembles and carries annually from the above-mentioned Wyoming region about 11,000,000 gross tons of anthracite coal from collieries which are widely scattered; that it trans- ports about 2,000,000 gross tons to petitioner's tide- water terminal at Perth Amboy; that of the total freight tonnage of 25,000,000 gross tons transported annually by the petitioner, over 11,000,000 gross tons consists of anthracite coal, and that of peti- tioner's total annual freight revenue of $31,000,000, over $15,000,000 consists of revenue from transport- ing anthracite coal; and that petitioner's total revenue from the transportation of freight and pas- sengers is approximately $36,000,000; that peti- tioner's prosperity and existence have been always dependent upon the business of transporting anthra- cite coal; that prior to October 15, 1911, it charged for services between the Wyoming region and Perth Amboy and everything incidental $1.55 per gross ton on prepared sizes of coal; that is, on the larger or domestic sizes; $1.40 per gross ton for a some- what smaller size known as pea coal; $1.20 per gross ton for what is kaown as buckwheat coal, and $1.10 per gross ton for the finest sizes; that, as will be shown by the evidence to be offered at trial, the rates as fixed have been and will be, for more than two years hence, just and reasonable for the services performed. It appears that on July 17, 1907, Henry E. Meeker and Caroline H. Meeker complained that the rates on anthracite coal from the Wyoming region to tide- water at Perth Amboy were excessive and unrear sonable, and asked the Commission to compel a reduction and to grant reparation; that the railroad company answered the complaint; that testimony was taken, and thereafter, on May 17, 1910, argu- ment was had before the Commission; and that on June 8, 1911, the Commission made its report and order, requiring this petitioner to abstain from charging the aforesaid rates on anthracite coal from the Wyoming region to Perth Amboy, and to estab- lish for the transportation of anthracite coal in car- loads from the Wyoming to Perth Amboy rates not in excess of the following, to wit, $1.40 per gross ton on prepared sizes of said coal; $1.30 per gross ton on pea coal; and $1.15 per gross ton on buck- wheat coal; that the effective date of the order of the Commission was changed from August 15 to October 15, 1911. Petitioner says that it appears from the facts set forth, and as will be fully shown by the evidence to be offered by it at the trial, that the rates prescribed in the order of the Commission are and each of them is unjust to petitioner and un- reasonably low for the services performed. It is alleged that new circumstances have required a;n amendment to the petition first filed in this court, and that experts and engineers were put to work to appraise the value of the petitioner's railroad sys- tem, the value thereof being a fact of chief impor- tance in the evidence to be presented; that peti- tioner asked the Commission for a rehearing; but on May 28, 1912, the Commission denied such appli- cation. Petitioner says that the value of its raihoad plant as of January 1, 1912, measured by the cost of re- production, has been ascertained to be at least $312,500,000, and that there are many other ele- ments of value which will be shown at the trial; that a reasonable and fair return upon such value is at least 8 per cent; that the returns from the investment in times of relative prosperity must provide, in addi- tion to a reasonable per cent return, an amount suf- ficient to cover the deficits of less prosperous years; that provision must be made out of earnings for the loss of capital invested in the railroad plant result- ing from the exhaustion of the anthracite mines, which will within 10 years cause a decrease in the annual tonnage, and thereafter a gradual decrease until the coal is exhausted; that a minimum reason- able and fair annual return would be $25,000,000; that by charging the rates in effect prior to the effec- tive date of the order and by using skill and economy petitioner can not earn "an annual return equal to $12,500,000," which is but 4 per cent of the minimum value and constitutes far less than a reasonable and fair return; that if the order of the Commission is effective the earnings on the property will be reduced by more than $450,000 annually, in that many other rates on anthracite coal will have to be reduced to avoid inconsistencies and discriminations; that peti- tioner can not increase its earnings from other sources to offset reductions which would have to be niade; that anthracite rates eastbound and westbound are controlled by the competition of other lines; and that the rates fixed by the order of the Commission are relatively lower than other anthracite rates of petir tioner. Petitioner then sets forth that much of its other traffic is made up of the products of manufac- ture and other miscellaneous commodities for the most part carried under joint rates with connecting car- riers; that there can be no increase in the volume of traffic and earnings on petitioner's railroad within the two years' period covered by the order of the Commission that will not be far more than offset or absorbed by the great increase of expenses; that the petitioner's railroad was wisely and economically constructed, and that there is no excessive expense of operation; that the rates in force before the Com- mission made its order were so low that the traffic to which they applied moved freely and with reason- able profit to the shippers; and that the rates then in force were relatively lower than all other anthracite rates on petitioner's railroad ; that the order will cause reductions in the rates on about 4,000,000 tons of petitioner's anthracite traffic, or 37 per cent of its total anthracite traffic and 16 per cent of its total freight traffic; that it is possible with substantial accuracy to determine whether or not the assembling, transporting, storing, and transshipping of anthra- cite coal may be conducted without loss under the rates fixed by the order, and that the rates so fixed are not and will not be sufficient to pay the cost of conducting the assembling, transporting, storing, and transshipping aforesaid, and a just and fair retiirn on the value of that portion of petitioner's property used in said service ; that the average revenue per gross ton for all sizes of anthracite, under the rates prescribed, is approximately $1.35; that to assemble, transport, and transship petitioner has to expend for operating ex- penses at least ninety cents per gross ton; that the cost per gross ton for the depreciation of the facilities so employed is at least ten cents, leaving a balance of thirty-five cents, which is insufficient to pay an annual return of six per cent on the value of that portion of petitioner's facilities so employed. The bin then avers that the Commission issued its order without a full hearing as required by the act to regulate commerce; that the Commission neglected to follow the rules for judicial investigation, received improper testimony, gave undue and controlling weight to incompetent evidence, failed to consider established and undisputed testimony, and to apply the ordinary rules of a court to the competency of testimony and exhibits; that it based its decision upon certain alleged facts (which are specified in the petition under consideration) set forth in the petition filed before the Commission, which said allegations were not true; that it arbitrarily and unlawfully- ignored proof and reached its conclusion by wrong- fiilly confusing the value of petitioner's transporta- tion plant with the par value of petitioner's outstand- ing capital stock; that since the hearing was had before the Commission conditions have materially changed, wages have increased, and cost of operation has become greater; that the Commission excluded facts and circumstances that ought to have been con- sidered, in that the Commission refused to consider the investment as evidence of the cost of assembling, transporting, storing, and transshipping and depre- ciation, but based its conclusion solely upon a com- parison between the net earnings prior to June 30, 1908, and the par value of petitioner's outstanding capital stock. The United States and the Interstate Commerce Commission and the intervener have moved to dis- miss the petition for lack of equity. Two principal contentions are advanced by peti- tioner : First, confiscation ; second, lack of substantial evidence before the Commission on which to rest the conclusion reached. Petitioner argues that (a) the order of the Commission compels the carrier to oper- ate its entire plant for a return of less than four per cent upon its value, and (b) that the order deprives the carrier of its right to receive for transporting tidewater coal an amount sufficient to cover operat- ing expenses, depreciation and a reasonable compen- sation fox the use of that portion of the facilities used in handling tidewater coal. Reducing essential facts to a narrow compass, we find that the order of the Commission affects the traffic on 165 mUes out of a total of 1,407 miles of petitioner's raUroad, and about 2,000,000 tons of an- thracite coal out of a total anthracite coal tonnage of over 11,000,000 tons; that the anthracite tonnage in- volved is four fifty-sevenths of the entire freight traffic of the petitioning road ; and that the effect on the gross income of the road, which is $36,000,000, when measured by the traffic of the year prior to the making of the report of the Commission, was to make a reduction of $247,000. The argument is that the order reduces the annual return from $12,500,000 to $12,050,000, which is less than four per cent of the value of the petitioner's road, which, as stated by the petitioner, is $312,- 500,000, and that the loss of income brought about by carrying out the order can not be made up from rates on other traffic because such other rates, so far as applicable to anthracite, are a's low as they can consistently be put. The assumption is that the Commission can not and would not approve of any increases in other anthracite rates, while rates on commodities other than coal are for the most part joint rates covering competitive traffic, which are made under such circumstances that larger divisions can not be obtained and that it is beyond the peti- tioner's power to increase materially its revenue from those sources. Petitioner says that it should not be called upon to establish its inability to make up on other traffic the losses resulting from the order in question; that it is for the respondent to meet the showing of confiscation by the petitioner by proof that the tidewater rates are relatively high and that other rates are unreason- ably low and should be raised in order to equalize the schedule; that as anthracite tidewater rates constitute the "backbone" of petitioner's rate structure, the order is not incidental; and that its effect is not unsubstantial in its bearing upon the property rights of petitioner. As the Commission has not established a system of rates for the petitioning carrier, it can not be pre- sumed to have examined the tariffs of petitioner in their entirety for the purpose of ascertaining whether its rates upon all classes of traffic are reasonable. It is individual rates, or joint rates or charges, which may be investigated by the Commission in the exercise of its powers under the act to regulate commerce, and not primarily systems of rates. Naturally, to the end that justice shall be done in the consideration of the question whether a single or individual rate is reasonable, the Commission may, among other things, consider the reports of the finances of the carrier whose rates are the subject of investigation; may inquire into such reports and the items thereof, into circumstances of management, the carrier's present and prospective business, operating expenses, out- standing obligations and interest charges; whether the rate under examination appears to be dispro- 88874—13 2 10 portionately or unreasonably high, and whether all traffic appears to bear a proper share of expenses and profits. But the power of determination being confined to the matter of a single rate, when the complaint is as to the injustice of such rate, if it is found that such individual rate is unreasonable, the carrier which seeks to set aside the order of the Com- mission reducing such rate upon the ground that the effect of the order will be to confiscate its property by reducing its total revenues to a point where it can not earn more than a given per cent upon the alleged total value of its road, is not aided by a presumption in favor of the reasonableness of the many rates which are not under direct investigation which is strong enough to overthrow substantial evidence to the effect that the individual rate under investigation is unreasonable in itself. Let it be assumed that where a system of rates has been established by legislative authority and an attack is made upon such entire system in a manner to present the question whether such tariff as a whole operates to confiscate the property of the carrier, the courts are empowered to inquire whether all classes of traffic are charged relatively reasonable rates or are justly classified; whether the body of rates prescribed is such as "to work a practical destruction to rights of property," and, if it be found that such system is unjust and unreasonable to such extent, to restrain its operation. {Heagan v. Farmers' Loan and Trust Company, 154 U. S., 362.) Such cases have generally arisen where State authorities have fixed systems of rates. 11 (Smythe v. Ames, 169 U. S., 466; St. Louis & S. F. R. V. Gill, 156 U. S., 649; Minneapolis & St. Louis R. Co. V. Minnesota, 186 U. S., 257.) Let it be assumed, too, that where a carrier's business is such that the effect of a reduction of a single rate (for example, where 90 per cent of the business of the road is the carriage of a single commodity) will clearly operate to deprive the carrier of any com- pensation by way of profit the courts will interfere. But where the tariffs are constructed by the carrier and, after full hearing, an individual rate is found to be unreasonable and an order is made by the Com- mission which reduces such individual rate merely to a point where such reduction will reduce the total income of the carrier to 4 per cent approximately, the carrier has no case of confiscation prima facie, but must prove that its rates other than the one involved in the order are in fact reasonably high and can not be advanced above the point fixed by the tariffs it has filed. It is not for the courts to say under such circumstances what are reasonable rates be- tween two points upon a railroad line, for to do so would be to substitute our judgment for that of the tribunal to which the determination of such matters is committed. Nor can the courts lay down any general rule as to what shall constitute confiscation with reference to railroad rates where the facts, as in this case, show a profit of approximately 4 per cent. The just compensation secured by the Constitution does not mean a guarantee to a carrier as against 12 the public of any fixed percentage of profit upon an investment. Application of these views is very just when the carrier relies upon inadequacy and unreasonableness of individual rates on a particular traffic for a past time, alleging that the rates upon the whole system as affected by the single reduction will not yield a sufficient profit in the future. Illustration is afforded by the case at hand. Petitioner shows that the revenue from its coal traffic, or $15,000,000, is ap- proximately 47 per cent of the revenue from its total freight traffic, or $31,000,000. The total anthracite coal tonnage, or 11,000,000 tons, thus represents 47 per cent of the gross earnings of the road; and inas- much as but 2,000,000 tons of anthracite are affected by this order, it becomes evident that the order of the Commission affects only two-elevenths of 47 per cent of the total revenues of the road, or two-elevenths of $15,000,000, representing the revenue derived from coal traffic. At once the inquiry arises whether the rates upon the balance of the traffic of the road are reasonable, and whether the proportion of the petitioner's other earnings, the 53 per cent, is bearing its fair share of the expenses of the road? How can the court say that the reduction of the particular rate complained of to a point admittedly not below cost of service and some substantial profit is confiscatory merely because it will reduce the gross income? Investigation into the proportions borne by other rates would have to be made to arrive at a just conclusion. Surely if the 13 carrier is charging more than a reasonable rate on the particular traffic, coal, yet is not earning a sufficient amount on the balance of its traffic to yield an income, investigation should be had into the rates on other traffic to see if they are too low or based upon consid- erations not properly regarded. In Minneapolis & St. Louis R. Co. v. Minnesota (186 U. S., 257) the court recognized that in the general supervising of rates upon classes of freight the Commission is not bound to reduce the rates upon all classes which may perhaps be reasonable except as applied to a particular article, and said that if "upon examining the tariffs of a certain road the Commission is of opinion that the rate upon a particular article or class of freight is dispropor- tionately or unreasonably high, it may reduce such rate notwithstanding that it may be impossible for the company to determine with mathematical accu- racy the cost of ^ transportation of that particular article as distinguished from all others. Obviously, such a reduction could not be shown to be unreason- able simply by proving that if applied to all classes of freight it would result in an unreasonably low rate." The allegations that it is possible with substantial accuracy to determine whether or not the assembling, transporting, storing, and transshipping of anthracite coal may be conducted without loss under the rates fixed by the order of the Commission, that the rates as fixed by the order are not and will not be sufficient to pay the cost of conducting the assembling, trans- 14 porting, storing, and transshipping "and a just or fair return upon the value of that proportion of peti- tioner's property used in said service," fail to state grounds for equitable relief when they are put along- side of the. further allegation that the rates fixed by the Commission cover the cost of service in trans- porting coal from the Wyoming district to Perth Amboy, which is 90 cents per gross ton, and that the average of the rates allowed by the Commission as applied to the traffic for all sizes of anthracite coal affected is $1.35 per gross ton, with depreciation cost of 10 cents on the facilities. This is an admission that the profit left above the cost of service is sufficient to yield an annual return on the value of that por- tion of petitioner's facilities employed in that par- ticular traffic, which, though less than 6 per cent on the value — ^not specifically stated — of the facilities employed, is at least of such a substantial margin as to prevent a conclusion that petitioner's property is being taken without just compensation. Other averments of the bill to the effect that the Commission excluded and refused to consider facts and circumstances that ought to have been con- sidered, or that the rates prescribed were fixed arbitrarily and are not just and fair, fall when we examine the report of the Commission which is before us, disclosing that evidence relevant to the issues which the petitioner raised herein, except those matters which it is alleged accrued since the report was made, was considered. 15 Turning to the report, we find reference to the en- deavor on the part of the Lehigh Valley Railroad Company to show the actual cost of transporting coal from the Wyoming district to barges at Perth Amboy, with comment upon the character of testimony offered, which consisted of statements by engineers, estimates based upon operating expenses, interest, depreciation, and other facts and circumstances. The report refers to the basis used in apportioning expenses, to rates for transporting coal, to evidence concerning markets for anthracite on the lines of the Pennsylvania Railroad, and to the allowances made in connection with such transportation. The con- tentions of the carrier with respect to terminal ex- penses are adverted to, and reference is had to the privileges of stocking and storing and lifting accorded by the carrier at Perth Amboy. Nor did the Com- mission fail to consider the argument of the carrier that there is a limited life to railroads dependent upon anthracite coal carriage. The most careful at- tention appears to have been given to this point, the Commission quoting at length from the report of the Anthracite Coal Strike Commission rendered to the President of the United States on March 18, 1903, wherein the opinion was expressed that anthracite coal mining would continue for a period of over 200 years. The Commission also noticed the claim of the carrier with respect to its right to earn enough out of its coal rates to provide for a return of the principal of the investment in that part of the railroad devoted to the carriage of coal when and as the principal 16 would become reduced by exhaustion of the coal supply, and it was expressly found that the rates were more than sufficient to meet the contention that there should be an annual income sufficient to pro- vide for a return of the capital when that part of the railroad devoted to the carriage of anthracite would lose its earning capacity through the depletion of the supply of coal. The Commission, however, regarded that as " too speculative to be of much value in de- termining the reasonableness of present rates," inas- much as when anthracite coal would be exhausted other traffic might be so dense as not to impair the present earnings of the road. The report then ad- vances to the further arguments of the carrier that the rates on coal must be sufficient to produce (1) income enough to make up for past deficiencies in return upon investment; (2) a reasonable current annual return upon the investment in the railroad and transportation adjuncts; (3) an amount sufficient to provide for keeping up the property to modern standard; and (4) an amount sufficient to provide for a return of the principal of the investment when and as the principal becomes reduced and extinguished by the exhaustion of coal freight. Each of these several propositions was dwelt upon by the Com- mission, and with painstaking care the various aspects of the financial condition of the Lehigh Val- ley Railroad were presented and analyzed. The esti- mated cost of transporting a ton of coal from the Wyoming region to Perth Amboy as made by the 17 engineers of the Lehigh Valley Railroad was con- sidered, and the Commission said in part: "Turning again to the Wilgus exhibit, we find the estimated cost of transporting a ton of coal from the Wyoming region to Perth Amboy is $1.49. But we have shown that 10 cents of that amount, designed to cover past deficits, is an improper charge. There- fore $1.39 would be the cost if the exhibit were accurately and properly constructed oh the basis of the facts known to the witnesses. In considering this exhibit it must be remembered that the so-called cost does not mean operating expense. The item of $1.49 is designed to cover all proper, possible, and probable charges, including not only interest and depreciation charges, but other items, such as the 10-cent allowance above mentioned. Therefore, if the exhibit were not open to objection, it would be seen that, after eliminating the 10-cent charge above referred to, defendant's rates on the several sizes of anthracite coal ought to bring them revenue averaging $1.39 per gross ton. That is to say, upon defendant's own showing it is collecting rates which have been on the average 7 cents per ton in excess of a reasonable rate." In the light of all the facts and circumstances stated, the allegation in the bill that there was no "substantial evidence" to sustain the order of the Commission, and that the order was made by the Commission "without any substantial evidence to warrant- the conclusion reached," or the reasons assigned by the Commission for its conclusion, be- cornes a challenge not of the truth of the report to the effect that there was evidence introduced in sup- 18 port of those matters which were material to the inquiry had, and to which the evidence was given, but only states that the evidence heard was not sub- stantial or so substantial as to justify the conclusion reached. As such evidence, however, was proper to be considered, and bore directly on the issues, it was both relevant and pertinent to the essential featiures of the inquiry. • The averment that " the Comtoission in fixing said order acted arbitrarily and unjustly, contrary to the evidence, and without evidence to support its con- clusions" must be disregarded in the light of the history of the case as detailed by the bill itseK, show- ing that the Commission proceeded regularly to a hearing; that it acted after the introduction of much testimony, apparently properly introduced and com- petent in its bearing upon the questions involved at the hearing. That the Commission acted contrary to the evidence is negatived by those parts of the bill which set forth what evidence was before the Commission concerning its financial affairs, its rail- road system, rettirns, and other matters. The aver- ment that the Commission acted without evidence to support its conclusions falls when the bUl is con- sidered as a whole, for the reason that it appears therefrom that there was introduced before the Com- mission proof of the amount of money invested in petitioner's railroad plant, together with evidence concerning the returns on the investment, evidence in detail of petitioner's revenues and disbursements with respect to the cost of assembling, transporting, 19 storing, and transshipping of coal, difference be- tween net earnings prior to June 30, 1908, and the par value of petitioner's outstanding capital stock. Whether the Commission gave much or little weight to such evidence or regarded it as controlling in arriviag at a result is immaterial, provided the action of the Commission was not in disregard of law. These views dispose of the more important features of the case. We have given careful attention to the briefs and argxmients made by counsel, but do not find any weU-founded reason for interference with the action of the Commission. The motions to dismiss are granted. O KF 2170 U58 1913 Author^ Vol. U.S. Commerce Court, ^'"'Opinions of the U.S. Commerce^""'' CoTort. Date Borrower's Name ■ Sfi»M'