rate for the longer haul may result in a violation of the fourth section, where the local rate for the shorter haul is higher. That such might be the result is true. If there are no reasons why there should be a reshipping rate lower than a local rate, the reshipping rate by whatever name called may be in substance but a local rate. Properly considered, the opinion of the Supreme Court applies the well-known principle that substance and not form should be the determining factor. Rebilling or reshipping rates are not illegal per se, and such rates become unlawful only when they produce a discrimination prohibited by Section 3 or when they are, in substance, local rates and violate Section 4. The final opinion of the Commission in the Duncan case accords with this conclusion.138 § 178. Payment of Elevator Allowances. Formerly carriers bringing grain from producing territory paid elevators, even warehouses and stores, allowances for elevating, sacking, grading and weighing grain. Such payments were first held to be lawful and later unlawful. The Supreme Court found them lawful when reasonable and free from discrimination.139 The decision of the Supreme Court did not exclude the Commission from exercising its administrative functions nor from deciding that such allowances might be withdrawn by the carriers. After these decisions of the Supreme Court, in a case sustaining the right of the carriers to withdraw such elevator allowances as are not necessary incidents to the transportation, the Commission gave a history of the decisions, and reached the conclusion that where elevation is a necessary part of the transportation, the carriers cannot 138 For a discussion of transit privileges, see Central R. R. of N. J. et al. v. U. S., 257 U. S. 247, 66 L. Ed. 217, 42 Sup. Ct. 80; A., T. & S. F. Ry. Co. v. U. S., 49 Sup. Ct. 494, and Alldredge on Rate-Making for Common Carriers, Sec. 47. 139 Re Allowance to Elevators by Union Pac. R. Co., 14 I. C. C. 315; Traffic Bureau Merchants Exchange of St. Louis v. Chicago, B. & Q. R. Co., 14 I. C. C. 317, 331; See Sec. 500, post; Int. Com. Com. v. Diffenbaugh, 222 U. S. 42, 56 L. Ed. 83, 32 Sup. Ct. 22, modifying decree in Peavey & Co. v. Union Pac. R. Co., 176 Fed. 409; Union Pac. R. Co. v. Updike Grain Co., 222 U. S. 215, 56 L. Ed. 171, 32 Sup. Ct. 39, affirming same-styled case, 178 Fed. 223, 101 C. C. A. 583. escape the obligation to perform or pay for the service, otherwise the service or payment therefor, may be withdrawn.140 Discrimination, when it exists, violates both Sections 2 and 3 of the Interstate Commerce Act. There is a provision of Section 15 of the Interstate Commerce Act under which the owner of property transported who renders any service connected with the transportation, or who furnishes any instrumentalities used therein, may be compensated therefor by the carriers. Applying this section, the Supreme Court has held that carriers may and must pay the owners of grain transported for elevating such grain. Of course, the provisions of Sections 1, 2 and 3 apply and the payments must be reasonable and free from undue or unreasonable preference or advantage. the §179. Transit Privileges Generally.-Ordinarily, through rate from point of origin to point of destination is less than the aggregate of the intermediate rates. The result of this generally-applied rule is that jobbers and manufacturers at cities intermediate between the points of production and of consumption cannot compete with those located at the cities at or near to the points of consumption. That such competition may be made possible, transit rates have been accorded under which the commodity may be stopped at the intermediate point for cleaning, milling, sorting, manufacturing or otherwise treating. After such stoppage, the same commodity, or the same kind of commodity, or the product of the commodity, may be transported to the farther destination at a rate less than the local rate, this difference between the remainder of the through rate, or the transit rate, being accorded because the commodity had paid a charge up to the intermediate point. The justification for this practice is commercial, and not based upon cost of service, because it costs no more to move a commodity originating at a particular place than it costs to transport the same commodity which has received a prior transportation service. In speaking of 140 Grain Elevation Allowances at Kansas City, 34 I. C. C. 442. Note also Omaha Elevator Co. v. Union Pac. R. Co., 249 Fed. 827, 162 C. C. the practice, the Commission said:141 "Transit in many cases is beneficial in its application. When it can be applied without discrimination it results in the diffusion of business, in giving to rival communities the relative advantages to which they are entitled, and which can be accorded them in no other way, and, generally speaking, in the application of lower transportation charges. The commercial operations of this country have in many instances grown upon the exercise of transit privileges and could have been developed in no other way. This Commission has never held that transit was to be condemned in so far as it was beneficial and could properly be applied." There are possibilities of misusing the transit rates; these the Commission has sought to guard against. Rules have been announced and principles stated for the government of carriers in respect to transit. On this subject, the Commission has said:142 The business man who employs the transit privilege looks upon it as a useful and in many cases as an exceedingly profitable practice. Indeed, we recognize that in most instances transit is now a commercial necessity, because of its almost universal application and on account of the development which certain lines of business have taken entailing heavy investments. There is only one way to minimize violations of the law at transit points and that is by the adoption of unambiguous rules and the proper policing thereof to reduce the opportunity for such violations." After shipments have moved to the point where later transit is permitted, the transit allowance cannot, in the absence of unlawful discrimination, be made retroactive.143 It is the general custom of the carriers to permit, where transit is effective, only one privilege on the same shipment. 141 Transportation of Wool, Hides and Pelts, 23 I. C. C. 151. 142 Transit Case, 24 I. C. C. 340, 349. See also Fabrication-in-Transit Charges, 29 I. C. C. 70; Re Substitution of Tonnage at Transit Points, 18 I. C. C. 280; Transit Case 25 I. C. C. 130, 26 I. C. C. 204; National Casket Co. v. Sou. Ry. Co., 31 I. C. C. 678. 143 Meeds Lumber Co. v. A. C. R. Co., 39 I. C. C. 337; Swift & Co. v. Reshipping rates, transit rates and proportional rates, all rest upon the same principle and are not illegal merely because local rates may be higher. When these special rates are accorded to one market they cannot lawfully be withheld from another.144 Import and export rates are made on proportionals, and "a carrier may lawfully make an import rate from a port in the United States to an interior destination less than its domestic rate from the same port to the same destination," but different rates cannot be made on the proportional in the United States based upon the foreign port from which the traffic starts.145 § 180. Allowances to Tap-Line Railroads. What are called tap lines were described by the Commission as follows:146"While these logging roads are almost or quite without exception mill propositions at the outset, built exclusively for the purpose of transporting logs to the mill, they soon reach a point where they engage in other business to a greater or less extent. As the length of the road increases, as the lumber is taken off and other operations obtain a foothold along the line, various commodities besides lumber are transported, and this business gradually develops until in several cases what was at first a logging road pure and simple has become a common carrier of miscellaneous freight and passengers. Almost all these lines, even where they are run as private enterprises, do more or less outside transportation, and it would be difficult to draw any line of demarkation between the logging road as such and the logging road which has become a general carrier of freight." In many instances, carriers paid divisions of the through rates to these tap lines, which allowances or divisions were usually for the benefit of the lumber-manufacturing plant generally the owner of the tap line. This practice was de 144 See Note 138, ante, for additional citations of authorities dealing with the subject of transit. 145 Texas & P. Ry. Co. v. Int. Com. Com., 162 U. S. 197, 40 L. Ed. 940, 16 Sup. Ct. 666; New Orleans Board of Trade v. Illinois C. R. Co., 23 I. C. C. 465; Import and Domestic Rates -Clay, 39 I. C. C. 132. 146 Central Yellow Pine Assn. v. V. S. & P. Ry. Co., 10 I. C. C. 193, 199. ** * scribed by the Supreme Court as follows:147 "The railroads west of the Mississippi make a certain allowance to the mills which have 'logging roads'-that is, roads by which logs are hauled from the timber to the mills. This is called 'tap-line allowance or division.' The mills east of the river have logging roads also, but appellants make no allowance to them. There does not appear to be any reason for such allowance west of the Mississippi which does not apply east of that river, and it amounts to a rebate or reduction from the regularly published rate, and gives an advantage to the mills west of the Mississippi over those east, although the published rates from both are the same. ** * The Commission entered into a general investigation as to the character of tap lines and the legality of allowances thereto, after which it was determined that most of such allowances were unlawful, amounting in effect, when paid to a tap line owned by the manufacturing plant, to a departure from the lawful rate.148 The Supreme Court, referring to the fact that the transportation of lumber was excepted from the commodities clause149 of the Interstate Commerce Act, reversed the Commission and held that if the tap line, although owned by the manufacturing plant, was a common carrier the payment of a division thereto was not illegal. The court also held that not the extent to which a railroad is used, but the right of the public to demand service of it, determined its character as a common carrier.150 The holding of the Supreme Court does not deprive the Commission of the power to regulate tap lines participating in interstate commerce. As to rates, rules and practices, the Commission has power over these short lines to the same extent as over other common carriers subject to its jurisdiction.151 147 Illinois C. R. Co. v. I. C. C., 206 U. S. 441, 444, 51 L. Ed. 1128, 27 Sup. Ct. 700. 148 Tap Line Cases, 23 I. C. C. 277, 549; Kaul Lumber Co. v. C. of Ga. Ry. Co., 20 I. C. C. 450. 149 Sec. 410, post. 150 Tap Line Cases, 234 U. S. 1, 58 L. Ed. 1185, 34 Sup. Ct. 741. 151 Tap Line Case, 31 I. C. C. 490; Joint Rates with Birmingham Southern R. Co., 32 I. C. C. 110; Davis Bros. Lumber Co. v. C. R. I. & P. R. Co., 46 I. C. C. 501; Wasteful Service |