the construction of its own road, or in additions thereto, a railroad does not act as a common carrier and arrangements made in good faith with such contractors for carrying such supplies or employees either free or at reduced rates do not amount to rebates or discriminations in violation of the Act to regulate commerce.18

A difference in rates between contract coal and free coal is discriminatory unless properly filed and published.1o

The bona fide ownership and operation of tap line railroads as common carriers with equality of treatment for proprietary and non-proprietary traffic is not open to exception. However such tap lines are under the control and supervision of the Interstate

18 Sante Fe, Prescott and Phoenix Railway Co. v. Grant Brothers, 228 U. S. 177, 57 L. Ed. 787, 33 Sup. Ct. 474. The court here said: "It is clear that in dealing with transportation of this character over its own road, in connection with construction or improvement, a railroad company is not acting in the performance of its duty as a common carrier, and the arrangement for free or reduced-rate carriage for the necessary materials and men used in the work, when it is a part of the contract, entered into in good faith and not as a subterfuge, is not obnoxious to the provisions of law prohibiting departures from the published tariffs, for the reason that such an agreement lies outside the policy of these provisions. See Matter of Railroad-Telegraph Contracts, 12 I. C. C. Rep. 10, 11.”

19 Pennsylvania Railroad Co. v. International Coal Mining Co., 230 U. S. 184, 57 L. Ed. 1446, 33 Sup. Ct. 893, where the court said: "For even if a difference in rates could be made between free and contract coal, none was made in the only way in which it could have been lawfully done. The published tariffs made no distinction between contract coal and free coal, but named one rate for all alike. That being true, only that single rate could be charged. When collected, it was unlawful, under any pretense or for any cause, however equitable or liberal, to pay a part back to one shipper or to every shipper. The statute required the carrier to abide absolutely by the tariff. It did not permit the company to decide that it had charged too much and then make a corresponding rebate; nor could it claim that it had charged too little and insist upon a larger sum being paid by the shipper. (24 Stat. 379, Sec. 2; 25 Stat. 855, Sec. 6. Armour Company v. United States, 209 U. S. 56, 83, 52 L. Ed. 681, 28 Sup. Ct. 428.) The tariff, so long as it was of force, was, in this respect, to be treated as though it had been a statute, binding as such upon railroad and shipper alike. If, as a fact, the rates were unreasonable the shipper was nevertheless bound to pay and the carrier to retain what had been paid, leaving, however, to the former the right to apply to the Commission for reparation."

See also Mitchell Coal and Coke Co. v. Pennsylvania Railroad Co., 230 U. S. 247, 57 L. Ed. 1472, 33 Sup. Ct. 916.

Commerce Commission by the terms of the Act to regulate commerce and any practices by these lines resulting in rebating or preferences, no matter what their form or in what guise they may appear, are illegal and will be nullified by the Commission.20

20 United States v. Louisiana and Pacific Railway Co., (The Tap Line Cases), 234 U. S. 1, 58 L. Ed. 1185, 34 Sup. Ct. 741. The court here said: "As we have said, the Commission by its order herein required the trunk lines to re-establish through routes and joint rates as to property to be transported by others than the proprietary owners over the tap lines. This order would of itself create a discrimination against proprietary owners, for lumber products are carried from this territory upon blanket rates applicable to all within its limits. It follows that independent owners would get this blanket rate for the entire haul of their products while proprietary owners would pay the same rate plus the cost of getting to the trunk line over the tap line. The Commission, by the effect of its order, recognizes that railroads organized and operated as these tap lines are, if owned by others than those who own the timber and mills, would be entitled to be treated as common carriers and to participate in joint rates with other carriers. We think the Commission exceeded its authority when it condemned these roads as a mere attempt to evade the law and to secure rebates and preferences for themselves.

"It is doubtless true, as the Commission amply shows in its full report and supplemental report in these cases, that abuses exist in the conduct and practice of these lines and in their dealings with other carriers which have resulted in unfair advantages to the owners of some tap lines and to discriminations against the owners of others. Because we reach the conclusion that the tap lines involved in these appeals are common carriers, as well of proprietary as nonproprietary traffic, and as such entitled to participate in joint rates with other common carriers that determination falls far short of deciding, indeed does not at all decide, that the division of such joint rates may be made at the will of the carriers involved and without any power of the Commission to control. That body has the authority and it is its duty to reach all unlawful discriminatory practices resulting in favoritism and unfair advantages to particular shippers or carriers. It is not only within its power, but the law makes it the duty of the Commission to make orders which shall nullify such practices resulting in rebating or preferences, whatever form they take and in whatsoever guise they may appear. If the divisions of joint rates are such as to amount to rebates or discriminations in favor of the owners of the tap lines because of their disproportionate amount in view of the service rendered, it is within the province of the Commission to reduce the amount so that a tap line shall receive just compensation only for what it actually does."

United States v. Butler County Railroad, 234 U. S. 29, 58 L. Ed. 1196, 34 Sup. Ct. 748.

The prohibitions against unjust discrimination include not only inequality of charges and inequality of facilities but also the giving of preferences by means of consent judgments or the waiver of defenses open to the carrier, such as a waiver in a suit of the statutory limitation within which actions must be brought for recoveries from a railroad.21

Discriminations created through transit, elevator and similar privileges are discussed under section 3.

The carrier who has practiced the discrimination or granted the preference is liable therefor, and a connecting carrier will not be liable for such act of the initial carrier merely through its adoption of and participation in a joint through rate which is in itself reasonable.22

21 In Phillips Co. v. Grand Trunk Western Ry. Co., decided March 15, 1915, the court said: "The obligation of the carrier to adhere to the legal rate, to refund only what is permitted by law and to treat all shippers alike would have made it illegal for the carriers, either by silence or by express waiver, to preserve to the Phillips Company a right of action which the statute required should be asserted within a fixed period. To have one period of limitation where the complaint is filed before the Commission and the varying periods of limitation of the different states, where a suit was brought in a court of competent jurisdiction; or to permit a railroad company to plead the statute of limitations as against some and to waive it as against others would be to prefer some and discriminate against others in violation of the terms of the Commerce Act, which forbids all devices by which such results may be accomplished. The prohibitions of the statute against unjust discrimination relate not only to inequality of charges and inequality of facilities, but also to the giving of preferences by means of consent judgments or the waiver of defenses open to the carrier. The Railroad Company, therefore, was bound to claim the benefit of the statute here and could do so here by general demurrer. For when it appeared that the complaint had not been filed within the time required by the statute it was evident, as matter of law, that the plaintiff had no cause of action."

22 Penn Refining Co. v. Western New York and Pennsylvania Railroad Co., 208 U. S. 208, 52 L. Ed. 456, 28 Sup. Ct. 268.

SECTION 3. FORBIDDING UNDUE OR UNREASONABLE PREFERENCE OR ADVANTAGE.

reasonable pref

erence

vantage forbidden.

SEC. 3. That it shall be unlawful for any common carrier subject to the provisions of this Act to Undue or un make or give any undue or unreasonable preference orad 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 unreasonable prejudice or disadvantage in any respect whatsoever.

traffic.

of

Every common carrier subject to the provisions of this Act shall, according to their respective powFacilities for ers, afford all reasonable, proper, and equal facilities interchange for the interchange of traffic between their respective lines, and for the receiving, forwarding, and delivering of passengers and property to and from their several lines and those connecting thereDiscrimination with, and shall not discriminate in their rates and necting lines for charges between such connecting lines; but this shall not be construed as requiring any such common carrier to give the use of its tracks or terminal facilities to another carrier engaged in like business.

between con

bidden.

History of this Section.-Section three has not been amended but stands in the form in which it was first enacted in the original Act to regulate commerce of February 4, 1887. The Supreme Court has stated in its earlier decisions that this section of the Act was based upon the second section of the English Act to regulate railways of July 10, 1854, and the eleventh section of the Act amendatory thereof of July 21, 1873.1 This dis

I The relation between section 3 of the Act to Regulate Commerce and the English Acts for the same purpose are set forth in detail in Texas and Pacific Railway Company v. Interstate Commerce Commission, 162 U. S. 197, 40 L. Ed. 940, 16 Sup. Ct. 666, where several leading English cases are summarized and commented upon. See also Interstate Commerce Commission v. Baltimore and Ohio Railroad Co., 145 U. S. 263, 36 L. Ed.

tinction, however, is to be noted, that section 3 of the Act regulating commerce provides that no undue or unreasonable preference or advantage shall be given to any particular person, company, firm, corporation, or locality, or any particular description of traffic-the word locality not appearing in the English Act.

Relation of Section 3 to Sections 1 and 2.-First of all by section 3 only such discriminations and preferences are forbidden as are unjust and unreasonable, it being admitted thereby that some discriminations may be just and some preferences reasonable. Section 2 prohibits discriminations in rates. Section 3, however, includes any form of discrimination or advantage whereby any person, firm, locality or description of traffic is subjected "to any undue or unreasonable prejudice or disadvantage in any respect whatsoever." Under section I unreasonable rates are prohibited. The reasonableness or unreasonableness of a rate is naturally a relative question, and the existence of the latter must depend upon the determination of the former. The third section concerns those rates which subject a person, community or class of traffic to any undue or unreasonable prejudice or disadvantage, and which are thus unreasonable. Section 4, to a certain extent, also treats of the question of reasonable and unreasonable rates-in their relation to long and short hauls. Generally speaking, complaints under section 2 are based upon individual rate discriminations, and under section 3 upon discriminations by the carriers based upon other questions than mere rates,

699, 12 Sup. Ct. 844, and Cincinnati, New Orleans and Texas Pacific Railway Co. v. Interstate Commerce Commission, 162 U. S. 184, 40 L. Ed. 935, 16 Sup. Ct. 700.

2 In Cincinnati, New Orleans and Texas Pacific Railway Co. v. Interstate Commerce Commission, 162 U. S. 184, 40 L. Ed. 935, 16 Sup. Ct. 700, the court quoted with approval the following language of Justice Jackson, then circuit judge, in the case of Interstate Commerce Commission v. Baltimore and Ohio Railroad Co., 43 Fed. 37, affirmed 145 U. S. 263, 36 L. Ed. 699, 12 Sup. Ct. 844:-"Subject to the two leading prohibitions that their charges shall not be unjust or unreasonable, and that they shall not unjustly discriminate, so as to give undue preference or disadvantage to persons or traffic similarly circumstanced, the Act to Regulate Commerce leaves common carriers as they were at the common law, free to make special contracts looking to the increase of their business, to classify their traffic, to adjust and apportion their rates so as to meet the necessities of commerce, and generally to manage their important interests upon the same principles which are regarded as sound, and adopted in other trades and pursuits."