CHAPTER XXIII.

JUSTIFIABLE DIFFERENCES.

TOPIC AREASONABLE DIFFERENCES IN RATES.

§ 771. Modification of the rule forbidding different rates. 772. Rates should not be disproportionate.

773. Consideration of the cost of serving.

774. Shippers requiring less service.

TOPIC B-SHIPMENT IN MORE CONVENIENT UNITS.

§ 775. Differences in the character of the service recognized. 776. Shipment in car loads.

777. Advantages of car load traffic.

778. Permission to mix carloads.

779. Lower rates for shipments in bulk.

780. Shipments in train loads problematical.

781. Contracts for regular shipments.

TOPIC C-FACILITIES FURNISHED BY SHIPPER.

§ 782. Terminal facilities furnished by shippers. 783. Transportation expenses paid by shipper.

784. Rental paid on shippers cars.

785. Difference in rates unjustifiable unless both services are offered. 786. Various devices for giving concessions to shippers in bulk considered.

787. Railroads must provide adequate equipment for handling shipments in bulk.

TOPIC D-OTHER CONSIDERATIONS FOR REDUCTIONS.

§ 788. When consideration is given for reduction.

789. Whether indefinite considerations can be a basis. 790. Concessions to those who deal with the carrier.

791. Rates adopted to foster the interests of the carrier.

TOPIC A- REASONABLE DIFFERENCES IN RATES.

§ 771. Modification of the rule forbidding different rates. When the services asked of the carrier are essentially dissimilar the rule against discrimination is apparantly much modified. It is rightly held that different rates may be made when the cost of service is different; for to enforce equal rates under those circumstances, as has been said, would in reality be discriminatory under ordinary conditions. This is admitted even in the most extreme case against personal discrimination, Messenger v. Pennsylvania Railroad Company.

1

"It must not be inferred that a common carrier, in adjusting his price, cannot regard the peculiar circumstances of the particular transportation. Many considerations may properly enter into the agreement for carriage or the establishment of rates, such as the quantity carried, its nature, risks, the expense of carriage at different periods of time, and the like; but he has no right to give an exclusive advantage or preference, in that respect, to some over others, for carriage, in the course of his business. For a like service, the public are entitled to a like price. There may be isolated exceptions to this rule, where the interest of the immediate parties is alone involved, and not the rest of the public, but the rule must be applied whenever the service of the carrier is sought or agreed for in the range of business or trade."

§ 772. Rates should not be disproportionate.

It has already been explained at much length 2 that the railway company may classify freights and passengers and charge different rates for the different classes, if there are reasonable grounds for such discrimination in the difference of the cost of

17 Vroom (36 N. J. L.), 407, 13 Am. Rep. 457, 8 Vroom (37 N. J. L.), 531, 18 Am. Rep. 754, B. & W. 357 (1874).

2 See Chapter XVIII passim.

service, risk of carriage or in the accommodations furnished, or the like; but the rates must be the same for all persons and goods of the same class or else there will be personal discrimination, plainly enough.

But it will also constitute personal discrimination if different classification is given to like goods without justification. As a general rule a railway company is justified in carrying goods for one person at a less rate than that at which it carries goods for another, only where there are circumstances which make the cost of carrying the former less than the cost of carrying the latter. And moreover to be exact the difference in the rates between the different classifications of like articles must be proportionate to this difference in cost to the carrier of performing the service.

$773. Consideration of the cost of serving.

Upon the principles set forth in the preceding paragraph it will be plain why it is permissible to make differences in the rating of the same goods based on the nature and size of the package, large packages being given relatively lower rates than small packages.

3

And likewise if the shipment is in a form more convenient for handling, as in casks rather than in cases, or if the freight is tendered in a form permitting a greater car load, the difference between cotton in bulk and in tightly compressed bales for example, lower rates may be given proportionate to the difference in the cost of service. 4

"We are not unmindful of the rule which permits a common carrier to discriminate in favor of a shipper who transports large quantities of a given commodity in one parcel at a time, as against a shipper who transports the broken packages. Such discrimination is rendered necessary by the increased expense

3 See Chapter XVIII passim.

4 See 88 571-572.

of handling, storing, and caring for the smaller quantities, and is not unreasonable."

§ 774. Shippers requiring less service.

Upon similar principles it may be shown in any case that the conditions under which particular shipments are made produce such economies in handling the traffic as to justify the reductions made in the rates. An excellent case to illustrate this general doctrine is American Central Insurance Company v. Chicago & Alton Railway Company where the issue was raised whether a stipulation in a contract between a railroad company and its elevator lessee by which the former was to carry the latter's grain from the elevator in car-load lots at less rate than its regular tariff, was justifiable.

5

In holding that this did not constitute illegal discrimination Judge Smith said: "From the face of the lease it very clearly appears that the service for which the rebate was to be allowed the lessee, and those claiming under it, was not the same nor as great as the ordinary shipper. The transient shipper furnishes no warehouse for the storage nor any supervision of his grain nor the labor necessary to handle the same, but these are supplied wholly by the carrier. Not so of the lessee of the carrier who constructs his own storehouse and also supplies at his own expense the supervision and labor necessary for the care, storage and loading of his grain, the carrier thereby escaping much expense that it must incur in case of the transient shipper. The exact provisions of the lease complained of is that the defendant will carry for the lessee in quantities not less than one full car load at one time, to other stations upon its railroad, at a rate which shall be less by one per cent. per one hundred pounds for grain in bulk, than the regular tariff price of said

4 Louisville, E. & St. L. C. Ry. v. Wilson, 132 Ind. 517, 32 N. E. 211 (1892).

574 Mo. App. 89 (1898).

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first party, or than the charges made by said first party to transient shippers who deliver grain to said first party by wagons or otherwise. It is manifest from the provisions of the lease, that the lessee was to do a large business and be a regular and constant shipper over the road of the defendant. The rebate to be allowed was not one per cent per one hundred pounds' below what was charged like shippers who provided warehouses and labor at their own expense to care for and handle the shipments, but the rebate was one cent one hundred pounds below what the freight cost 'transient shippers,' a totally different kind and class of shippers, who saved the defendant none of the expense of caring for or handling their shipments. We cannot for these reasons think the contract should be held invalid on the grounds of unlawful discrimination.”

TOPIC B-SHIPMENT IN MORE CONVENIENT UNITS.

§ 775. Differences in the character of the service recognized. That there are differences in the cost of service by reason of ways in which traffic is handled must be recognized; and in so far as these economies in conducting the transportation are real a proportionate reduction may be made to the shipper in question. The various phases of this problem are well set forth in the opinion of Judge Baxter, elsewhere discussed more fully.1 For the same reason passengers may be divided into different classes, and the price regulated in accordance with the accommodations furnished to each, because it costs less to carry an emigrant, with the accommodations furnished to that class, than it does to carry an occupant of a palace car. And for a like reason an inferior class of freight may be carried at a less rate than first-class merchandise of greater value and requiring more labor, care, and responsibility in the handling. It has been held that 20 separate parcels done up in one package, and

1 Hays v. Pennsylvania Co., 12 Fed. 309, B. & W. 368 (1882).