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A treatise on the law of carriers (Volume 4) online

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Expenditures for permanent improve- 6- Atchison, etc., R. Co. v. United

ments and equipment should not be States, 203 Fed. 56.

charged to the current or operating ex- Profit in addition to operating expenses.

penses of a single year for the purpose — A freight rate on a particular commod-

of testing the reasonableness of an in- ity fixed by the Interstate Commerce

creased freight rate. Illinois Cent. R. Co. Commission is not necessarily objection-

V. Interstate Commerce Comm., 200 U. able as confiscatory on the theory that it

S. 441, 51 L. ICd. 1128, 27 S. Ct. 700. was insufficient to pay its proportionate

2. Industries dependent upon rates. — share of the carrier's entire operating ex-
Interstate Commerce Comm. v. Chicago, penses and a profit in addition. Atchi-
ctc, R. Co., 218 U. S. 88, 54 L. Ed. 946, son, etc., R. Co. v. United States, 203
30 S. Ct. 651. P'ed. 50.

§ 4070 CARRIERS. 3678

the right to exact a fair return for the pubhc utihties it affords, the pubHc is
entitled to exact that no more be required of it for the use of such utihties than
the services rendered are reasonably worth, and where there is a plain and irre-
concilable conflict between the interest of the public and the interest of the car-
rier the former^iiust prevail." • In determining the reasonableness of a freight
rate between specified points, the interstate commerce commission is not limited
to the recjuirements of a particular carrier or to the question whether a lesser rate
would be remunerative to a particular carrier, but should, in addition, consider the
rates in the particular territory to be affected by a change of a rate or rates in

Dividends. — The public can not properly be subjected to unreasonable rates
in order simply that the stockholders may earn dividends. If a corporation can
not maintain such a highway and earn dividends for stockholders, it is a mis-
fortune for it, and one which the constitution does not require to be remedied
by imposing unjust burdens upon the public.^

Injury to Certain Shippers. — That advances in rates on certain goods would
be severely felt by certain shippers is not a sufficient reason for holding that they
were not properly made.^"

Personal Interests of Traveling Public. — If a reasonable and satisfac-
tory through route and joint rates exist, the commission can not establish a
second such route and rates partly over the same road and partly over different
and competing roads, merely because the public would prefer such second route,,
where the result of this establishment would be to place the competing lines on
an equal footing with the other company as to the use of a portion of its route
and at the same time divert from its route a large portion of its existing patron-



Extent of Single Person's Shipment. — The fact that there is a large amount

of a commodity in the hands of a few persons under almost one control, which
is offered for shipment as stated periods in fixed quantities, may be considered in
rate making. ^^

Competition. — Competition may be a controlling factor in determining the
reasonableness of freight rates. ^^ Among the circumstances and conditions to be

7. Remuneration to particular carrier. through rates and joint rates between

— Interstate Commerce Comm. v. Louis- those points via the Union Pacific Rail-

ville, etc., R. Co., 118 Fed. 613. way, so as to put the latter road on an

8. ' Hooker v. Interstate Commerce equal footing with the Northern Pacific

Comm., 188 Fed. 242; Eagle White Lead Railway Company in the use for through

Co. V. Interstate Commerce Comm., 188 travel of the road belonging to the lat-

Fed. 256. ter between Portland and Seattle. Inter-

9. Dividends. — Covington, etc., Road state Commerce Comm. v. Northern Pac.
Co. V. Sandford, 164 U. S. 578, 41 L. Ed. R. Co., 216 U. S. 538, 54 L. Ed. 608, 30-
560, 17 S. Ct. 198; Interstate Commerce S. Ct. 417.

Comm. V. Louisville, etc., R. Co., 118 12. Extent of single person's shipment.

Fed. 613. — -Interstate Commerce Comm. v. Chi-

10. Injury to certain shippers. — Louis- cago, etc., R. Co., 141 Fed. 1003, affirmed
ville, etc., Railroad v. Interstate Com- in 28 S. Ct. 493, 209 U. S. 108, 52 L. Ed.
merce Comm., 195 Fed. 541. 705.

11. Personal interests of traveling pub- 13. Competition. — Interstate Commerce
lie. — The personal preferences of many Comm. v. Chicago, etc., R. Co., 141 Fed.
travelers for a southern route between 1003, affirmed in 209 U. S. 108, 52 L. Ed.
eastern points and points on the Northern 705, 28 S. Ct. 493; Southern Pac. Co. v.
Pacific Railway between Portland and Se- Redding, 17 Tex. Civ. App. 440, 43 S.
attle do not make the through route via W. 1061, affirmed in 93 Tex. 650, no op.
the Northern Pacific Railway unreasona- Where competition genuine. — Railway
ble or unsatisfactory, so as to justify the companies, in fixing their rates, may take
Interstate Commerce Commission in the into account competition with other car-
exercise of its power under the Act of riers, provided that such competition is
June 29, 1906, § 4, to establish through genuine. Judgment, 141 Fed. 1003, af-
routes and joint rates where "no reason- firmed in Interstate Commerce Comm. v.
able or satisfactory through route ex- Chicago, etc., R. Co., 209 U. S. 108, 52
ists," in ordering the establishment of L. Ed. 705, 28 S. Ct. 493.



§ 4070

considered, as well in the case of traffic originating in foreign ports as in the case
of traffic originating within the hmits 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, and fair interests of the car-
rier companies, and the welfare of the community, which is to receive and con-
sume the commodities, are to be considered. i-* Where there is a competition
between carriers at a given point, so as to result in a reduction of rates for cer-
tain descriptions of property, the fact that the competition had originated with
defendant carriers can not be considered in determining whether the rates are
unreasonable. 15 That in fixing rates on lumber from Willamette Valley points
in Oregon to San Francisco and bay points the Interstate Commerce Commission
made a classification based somewhat on condition and value, and in fixing a
lower rate on rough fir lumber and lath than was permitted on better grades
took into consideration the fact that without such rate the lower grades could
not be slipped at all in competition with the same grades from points having
water transportation, did not invalidate the order, where the rate fixed was
just and reasonable in itself. ^^ But a rate voluntarily established by a railroad
company to meet competition is not to be taken as the measure of what is rea-
sonable. ^^ The Interstate Commerce Commission itself has in a large number of
cases recognized competition, and especially water competition, as influential
upon the establishment of reasonable rates. ^^ The payment of an elevator charge
by a railroad company which is compelled by competition is lawful. i''*

Nature and Size of Goods Shipped. — The weight and bulk of the article
to be transported and the convenience to the carrier in transporting it may be
considered in rate making.-'^

Value of Services to Shipper. — In determining whether charges for the
transportation of property are reasonable, within the Interstate Commerce Act,
the value of the services to the shipper, including the value of the goods and the
profits which the shipper can make, are to be considered. -^

14. Interstate Commerce Comm. v.
Southern R. Co., 105 Fed. 703.

15. Interstate Commerce Comm. v.
Chicago, etc., R. Co., 141 Fed. 1003, af-
firmed in 209 U. S. 108, 52 L. Ed. 705, 28
S. Ct. 493.

16. Southern Pac. Co. v. United States,
197 Fed. 167.

17. Where competition voluntary. —
Louisville, etc., Railroad v. Interstate
Commerce Comm., 195 Fed. 541.

That defendant railroad companies
miglit, if they chose, bring about as se-
vere a competition in live stock as in its
products, is immaterial in determining
whether the rates charged were unrea-
sonable within the Interstate Commerce
Act. Interstate Commerce Comm. v. Chi-
cago, etc., R. Co., 141 Fed. 1003, affirmed
in 28 S. Ct. 493, 209 U. S. 108, 52 L. Ed.

But where a competition was going on
between different railroads, and each
company was striving to get what busi-
ness it could, and defendant railroad com-
pany reduced the rates to get its share
of the traffic, the reduction of the rates
made was forced upon it by the competi-
tion, and the reduction was not voluntary
within the meaning of the Interstate
Commerce Act. Interstate Commerce
C(jmm. V. Chicago, etc., R. Co., 141 Fed.

1003, affirmed in 28 S. Ct. 493, 209 U. S.
108, 52 L. Ed. 705.

18. Louisville, etc., R. Co. v. United
States, 197 Fed. 58; Commercial Club of
Omaha v. Chicago R. Co., 7 Interst. Com.
R. 404; Raworth v. Northern Pacific R.
Co., 3 Interst. Com. R. 862; Chattanooga
Board of Trade v. Southern R. Co., 10
Interst. Com. R. 133; E. Sondheimer Co.
V. Illinois Cent. R. Co., 17 Interst. Com.
Com'n R. 60; Bulte Milling Co. v. Chi-
cago, etc., R. R., 15 Interst. Com. Com'n
R. 351; Monroe Progressive League v.
St. L., etc., Ry., 15 Interst. Com. Com'n
R. 534; Indianapolis Freight Bureau v.
P. R. Co., 15 Interst. Com. Com'n R.
567; Columbia Grocery Co. v. L. & N. R.,
18 Interst. Com. Com'n R. 502.

19. Interstate Commerce Comm. v. Dif-
fenbaugh, 222 U. S. 42, 56 L. Ed. 83, 32
S. Ct. 22, and Peavey & Co. v. Union
Pac. R. Co., 176 Fed. 409.

20. Nature and size of goods shipped.
■ — Interstate Commerce Comm. v. Chi-
cago, etc., R. Co., 141 hV-d. 1003, affirmed
in 209 U. S. 108, 52 L. Ed. 705, 28 S. Ct.

21. Value of services to shipper. — In-
terstate Commerce Conim. v. Chicago,
etc., R. Co., 141 Fed. 1003, affirmed in
209 U. S. 108, 52 L. Ed. 705, 28 S. Ct.

§ 4070



Necessary to Sustain Other Rate. — An unreasonably high rate on the
traffic and between the points to which an order of the Interstate Commerce Com-
mission relates, which reduced such rate, can not be justified on the ground that
it is necessary to sustain some other rate.^-

Comparison in General. — The question whether rates are just and reason-
able in themselves is in some measure a relative one, and may be tested by a
comparison of the particular rates with those accepted elsewhere for a similar
service.-^ The rates from a certain point, not being alleged to be unjust or
unreasonable in themselves, could not become so by comparison with other joint
rates from an opposite direction, and from a different and competing point on a
different line of road.24 In rate cases, the Interstate Commerce Commission may
receive evidence of comparison without proof of similarity of conditions. ^s

Comparison of Local and Joint Rates. — A carrier's rates on through busi-
ness do not prove that a local rate is unreasonable, nor can the local rate throw
light on the justice or injustice of discrimination between nonlocal shipments -of
the same origin and destination.-'^ The fact that a shipper under a joint sched-
ule of rates over two connecting railroads is charged a smaller rate on through
shipments over the entire length of the joint line than to intermediate points
does not establish a claim that the latter rates are unjust or unreasonable, nor
does it entitle him to claim that such rates are discriminative. -'''■ Where two car-
riers owning connecting lines of road unite in a joint through tariff, they form
for the connected roads practically a new and independent line. Neither carrier
is bound to adjust its own local tariff to suit the other, nor compelled to make a
joint tariff with it. It may insist upon charging its local rates for all transpor-
tation over its line. If, therefore, the two carriers by agreement make a joint
tariff over their lines, or any parts of their lines, such joint tariff is not the
basis by which the reasonableness of the local tariff of either line is deter-

22. Necessary to sustain other rate. —

Norfolk, etc., R. Co. v. United States, 195
Fed. 953.

23. Comparison in general. — Interstate
Commerce Comm. v. East Tennessee, etc.,
R. Co., 85 Fed. 107.

24. Allen v. Oregon R., etc., Co., 98
Fed. 16.

The rate charged on first-class goods
in less than car-load lots from Cincin-
nati to Atlanta, in 1879, was $1.39 per 100
pounds. Afterwards it was $1.10, and
subsequently $1.07, except for a short
time, when it was $1.01. The only testi-
mony heard by the commission as to the
reasonableness of the rate was that of
an officer of a railway company, that he
considered a rate of $1.01 unreasonable.
Upon that testimony, and upon the fact
that the rate from Cincinnati to Birming-
ham is 89 cents, as compared with $1.07
to Atlanta, the distances being substan-
tially the same, the commission ordered
that the defendants should not charge
more than $1 from Cincinnati to Atlanta.
In this court, a number of railroad ex-
perts testified that the present rate of
$1.07 is reasonable. As to the rate to
Birmingham, there was evidence before
the court which was not before the com-
mission, viz. that the rate from Cincin-
nati to Birmingham, which was previously
$1.08, was forced down to 89 cents by the
building of a new road known as the

Kansas City, Memphis & Birmingham
Railroad. Held, that the existence of a
lower rate from Cincinnati to Birming-
ham furnished no sufficient reason to de-
termine that the rate from Cincinnati to-
Atlanta is unreasonable, when such lower
rate is caused by conditions at Birming-
ham which do not exist at Atlanta. In-
terstate Commerce Comm. v. Cincinnati,
etc., R. Co., 56 Fed. 925.

25. Louisville, etc.. Railroad v. Inter-
state Commerce Comm., 195 Fed. 541.

26. Comparison of local and joint rates..
— Southern R. Co. v. St. Louis, etc., Grain
Co., 153 Fed. 728, 82 C. C. A. 614; Par-
sons V. Chicago, etc., R. Co., 11 C. C. A.
489, 63 Fed. 903.

"The rates on through business do not
prove that the local rate is unreasonable;
and, on the other hand, the local rate can
throw no light on the justice or injustice
of discriminations between shipments of
northwestern hay of the same origin and
destination The local rate has nothing to-
do with the case as we view it. The
comparison is between the through rate
without the reconsigning privilege and
the through rate with the reconsigning-
privilege." Southern R. Co. v. St. Louis,
etc., Grain Co., 153 Fed. 728, 82 C. C. A.

27. Allen v. Oregon R., etc., Co., 9S
Fed. 16.



§ 4070

mined. 2^ The fact that the cost of carriage of all coal upon an entire railroad
system, from all points of shipment to all destinations, is a certain per cent of
the gross receipts from all coal, is no reason for concluding that upon a particu-
lar line or part of the system the cost of carriage bears the same ratio to the
coal receipts of that particular line or part.^^ But the fact that a local rate is
made part of a through rate does not render the through rate illegal, provided
neither the local nor the through rate be unjust or unreasonable, and provided
neither of them unjustly discriminates, or gives an undue preference or disad-
vantage to persons or traffic similarly situated.^*^

Comparison to Rates Affecting- Another City. — In determining the effect
of the rates charged upon the growth and prosperity of the city, as affecting the
question of the reasonableness of such rates, comparison can not be made alone
w^ith another city, where competition has produced unusually low rates, but
should be made with other cities where the circumstances and conditions are

Main Line and Extension. — The oversea extension of the Florida East
Coast Railway from Homestead to Key West can not properly be considered a
part of the main line, for the purpose of determining whether rates established
by the Interstate Commerce Commission from points east of Homestead are re-
munerative or confiscatory. "-

Different Rate for Shipment in Opposite Direction. — The fact that a rate
over a road or line in one direction is materially higher than the rate on the same
road or line, and between the same points, in the opposite direction, does not, as
in the case of a haul over the same line in the same direction, establish prima facie
the unreasonableness of the higher rate.^^

Mode of Shipment. — An initial carrier of an interstate shipment, which fur-
nishes two small cars in lieu of a larger car ordered by the shipper, is, under a
rule of the interstate commerce commission, limited to the rate applicable to the
larger car.^^

28. Chicago, etc., R. Co. v. Osborne,
3 C. C. A. 347, 52 Fed. 912, 53 Am. &
Eng. R. Cas. 18; Coeur D'Alene, etc., R.
Co. V. Union Pac. R. Co., 49 Wash. 244,
95 Pac. 71.

29. Interstate Commerce Comm. v. Le-
high Valley R. Co., 74 Fed. 784.

30. Interstate Commerce Comm. v. Al-
abama Mid. R. Co., 21 C. C. A. 51, 74
Fed. 715.

31. Comparison to rates affecting an-
other city. — "A low freight rate is an im-
portant factor in the prosperity of cities.
But the prosperity enjoyed by Lynch-
burg as a result of low rates can not prop-
erly be used as a basis of comparison.
Before it can be said absolutely that Dan-
ville has not prospered as it should have
done, it must appear that comparisons
are made, not with points where compe-
tition has produced unusually low rates,
but with cities where the circumstances
are similar to those existing at Danville.
The evidence is that one or more indus-
tries were deterred from moving to Dan-
ville because of the liigli rates. But here
again we are confronted with the same
difficulty. Did not the prf)posing manu-
facturers contrast the Danville rates with
those prevailing at some place or places
where competition has brought about
very low rates? If this is true — and the

impression left on my mind that it is —
this evidence can not be treated as of
much weight. It is a further fact that
the very low rates given Lynchburg have
enabled her merchants to drive the Dan-
ville merchants out of territory nearer to
Danville than to Lynchburg. But does
this fact enable us to say that the Dan-
ville rates are inherently unreasonable?
If I correctly understand the purport of
the supreme court decisions, the rates
given Lynchburg — being the result of sub-
stantial competition, and affording the
defendant some profit — are not unlaw-
fully low. Therefore the necessary con-
sequence of the disparity in the rates
respectively given Lynchburg and Dan-
ville can not be conclusive of tlie ques-
tion before us." Interstate Commerce
Comm. V. vSotithcrn R. Co., 117 Fed. 741.

32. Main line and extension. — Florida,
etc., R. Co. V. United vStates, 200 Fed.

33. Different rate for shipment in op-
posite direction. — Duncan 7'. Railroad Co.,
Interst. Com. R. 10.'!; Interstate Com-
merce Comm. V. Louisville, etc., R. Co.,
118 Fed. 613; Louisville, etc., Railroad v.
Interstate Commerce Comm., 195 Fed.

34. Mode of shipment. — Yorke Furni-
ture Co. V. vSoutliern R. Co., 163 N. C.
138, 78 S. K. 67.

§§ 4071-4073 CARRIERS. 3682

§ 4071. Mode of Determination. — Zones. — A reduction in that part of
the through rates on Atlantic seaboard shipments to Missouri river cities which
appHes to the haul between the Mississippi and Missouri rivers is not beyond
the power of the interstate commerce commission, as introducing a new system
of rate making by artificially apportioning the country into zones tributary to
given trade centers, in order to build up or protect certain distributing centers
at the expense of others where the commission, by its order, intended only to
correct through rates which it found upon complaint were unreasonable in them-
selves, by substituting therefor reasonable rates. ^^

Distances. — Fixing rates under substantially similar traffic conditions so as
to allow a higher rate for a shorter route is not so palpably unjust and unrea-
sonable to the carriers as to be beyond the substance, if not beyond the form,
of the power of the interstate commerce commission, where the commission was
simply maintaining the same ratio of difference as that made by the carriers

The cost of service to the carrier is not a practical theory for rate making,
as such cost can not be reached accurately enough to make the factor con-

Income and Dividends. — If the carrier's total income enables it to declare a
dividend, that would not justify an order requiring it to haul one class of goods
for nothing, or for less than a reasonable rate. On the other hand, if the carrier
earned no dividend, it would not have warranted an order fixing an unreasonably
high rate on such article. ^^

§ 4072. Burden of Proof. — The mere fact that a carrier increases its rates
raises no presumption of unreasonableness, and persons complaining thereof
have the burden of proof of unreasonableness.^^

§ 4073. Evidence. — Comparisons are very commonly made in the inves-
tigation of rate cases, and they may often be quite persuasive. The competency
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.'* ° A finding that the rates charged by railroads for shipments to
a particular point are unreasonable in themselves, and in violation of Interstate
Commerce Act, can not properly be based on evidence which only tends to show
that they are too high as compared with the rates charged between the initial
points and one or two other points.'*^

35. Mode of determination.— Interstate 222 U. S. 541, 56 L. Ed. 308, 32 S. Ct. 108.
Commerce Comm. v. Chicago, etc., R. 39. Burden of proof. — Louisville, etc.,
Co., 218 U. S. 88, 54 L. Ed. 946, 30 S. Railroad v. Interstate Commerce Comm.,
Ct. 651; S. C, 218 U. S. 113, 54 L. Ed. 195 Fed. 541, citing Interstate Commerce
959, 30 S. Ct. 660, reversing decrees Chi- Comm. v. Chicago, etc., R. Co., 209 U.
cago, etc., R. Co. v. Interstate Commerce S. 108, 52 L. Ed. 705, 28 S. Ct. 493.
Comm., 171 Fed. 680. 40. Evidence. — Louisville, etc., Railroad

36. Distances. — When the commission z'. Interstate Commerce Comm., 195 Fed.
maintained the same ratio of difference 541.

between Omaha and St. Paul as that 41. Interstate Commerce Comm. v.

made by the carriers themselves, it can Nashville, etc., R. Co., 57 C. C. A. 224,

not be fairly said that such an order was 120 Fed. 934.

so arbitrary as to be palpably and gravely "But what we do hold is that the com-

unjust, and beyond the substance, if not parisons made by the commission in its

the form, of its power. Interstate Com- report in this case, taking into account

merce Comm. v. Union Pac. R. Co., 222 all the facts and circumstances disclosed

U. S. 541, 56 L. Ed. 308, 32 S. Ct. 108. at the hearing, had no evidentiary bearing

37. Interstate Commerce Comm. v. upon the reasonableness of the rates in
Chicago, etc., R. Co.,, 141 Fed. 1003, af- dispute, and therefore furnish no appreci-
firmed in 209 U. S. 108, 52 L. Ed. 705, able support of the commission's conclu-
28 S. Ct. 493. sion." Louisville, etc.. Railroad v. In-

38. Income and dividends. — Interstate terstate Commerce Comm., 195 Fed. 541.
Commerce Comm. t'. Union Pac. R. Co., "Having regard to the evidence, the

3683 INTERSTATE COMMERCE ACT. §§ 4074-4075

§ 4074. Review of Determination. — The action of the carriers, in fixing
and adjusting the rates, where a substantial dissimilarity of circumstances and
conditions has been made to appear, is subject to revision by the commission and
the courts, when it is charged that such action has resulted in rates unjust or
unreasonable.^- A finding by the Interstate Commerce Commission as to the
reasonableness or otherwise of a rate charged by a carrier in interstate commerce
is in administrative function, properly and constitutionally delegated by the leg-
islative power to the commission, and is, if lawfully made, conclusive.'*^

In Independent Action for Damages. — A finding by the Interstate Com-
merce Commission, on the hearing of a petition for reparation, that a given rate

Online LibraryThomas Johnson MichieA treatise on the law of carriers (Volume 4) → online text (page 109 of 214)