Imágenes de páginas
PDF
EPUB

are many factors to be considered,- differences in the articles transported, the care required, the risk assumed, the value of the service, and it is obviously important that there should be reasonable adjustments and classifications. Nor is its authority hampered by the necessity of establishing such minute distinctions that the effective exercise of the rate-making power becomes impossible. It is not bound to prescribe separate rates for every individual service performed, but it may group services by fixing rates for classes of traffic. As repeatedly observed, we do not sit as a revisory board to substitute our judgment for that of the legislature, or its administrative agent, as to matters within its province. San Diego Land & Town Co. v. Jasper, 189 U. S. 439; Louisville & N. R. Co. v. Garrett, 231 U. S. 298, 313. The court, therefore, is not called upon to concern itself with mere details of a schedule; or to review a particular tariff or schedule which yields substantial compensation for the services it embraces, when the profitableness of the intrastate business as a whole is not involved.

But a different question arises when the state has segregated a commodity, or a class of traffic, and has attempted to compel the carriers to transport it at a loss or without substantial compensation, even though the entire traffic to which the rate is applied is taken into account. On that fact being satisfactorily established, the presumption of reasonableness is rebutted. If in such a case there exists any practice, or what may be taken to be (broadly speaking) a standard of rates with respect to that traffic, in the light of which it is insisted that the rate should still be regarded as reasonable, that should be made to appear. As has been said, it does not appear here. Frequently, attacks upon state rates have raised the question as to the profitableness of the entire intrastate business under the state's requirements. But the decisions in this class of cases (which we have cited in the margin 2) furnish no ground for saying that the state may set apart a commodity or a special class of traffic and impose upon it any rate it pleases, provided only that the return from the entire intrastate business is

2 Stone v. Farmers' Loan & T. Co., 116 U. S. 307; Dow v. Beidelman, 125 U. S. 680, 690; Chicago & G. T. R. Co. v. Wellman, 143 U. S. 339, 341; Reagan v. Farmers' Loan & T. Co., 154 U. S. 362; Covington & L. Turnp. Road Co. v. Sandford, 164 U. S. 578; Smyth v. Ames, 169 U. S. 466; San Diego Land & Town Co. v. National City, 174 U. S. 739; Chicago, M. & St. P. R. Co. v. Tompkins, 176 U. S. 167; San Diego Land & Town Co. v. Jasper, supra; Stanislaus County v. San Joaquin & K. River Canal & Irrig. Co., 192 Ú. S. 201; Knoxville v. Knoxville Water Co., 212 U. S. 1; Wilcox v. Consolidated Gas Co., 212 U. S. 19; Cedar Rapids Gaslight Co. v. Cedar Rapids, 223 U. S. 665; Louisville v. Cumberland Teleph. & Teleg. Co., 225 U. S. 430; Minnesota Rate Cases (Simpson v. Shepard), 230 U. S. 352, 433; Missouri Rate Cases (Knott v. Chicago, B. & Q. R. Co.), 230 U. S. 474, 497; Southern P. Co. v. Campbell, 230 U. S. 537; Allen v. St. Louis, I. M. & S. R. Co., 230 U. S. 553, 556.

adequate. In St. Louis & S. F. R. Co. v. Gill, 156 U. S. 649, a statute fixing a maximum rate for passengers in the state of Arkansas was challenged, but the allegation and offer of proof that the rate would compel the carriage of passengers at a loss related only to a portion, or division, of the railroad, and not to the result of all the traffic to which the rate in question applied. The holding that this was insufficient was in entire accord with the above-stated principle,- that the rate-making power may be exercised in a practical way, and that the legislature is not bound to assure a net profit from "every mile, section, or other part into which the road might be divided." Id. p. 665. A passenger rate may apply generally throughout the state, and the effect of the rate must be considered with respect to the whole business governed by the rate. In Smyth v. Ames, 169 U. S. 466, a schedule of freight rates was involved, and, while the entire schedule was under consideration, it was recognized that in order to determine its adequacy the intrastate freight business might be segregated. Id. pp. 535, 550. The case of Minneapolis & St. L. R. Co. v. Minnesota, 186 U. S. 257, involved a rate fixed by the Railroad and Warehouse Commission of the State of Minnesota for the intrastate transportation of hard coal in carload lots. There was no proof that the carrier was compelled to transport the coal at a loss or without substantial compensation. The principal testimony, as the court observed, was intended to show that "if the rate fixed by the commission for coal in carload lots were applied to all freight, the road would not pay its operating expenses, although in making this showing the interest upon the bonded debt and the dividends were included as part of the operating expenses." It was said that it was "quite evident" that this testimony had "but a slight, if any, tendency to show that even at the rates fixed by the commission there would not still be a reasonable profit upon coal so carried" (id. p. 266); and this conclusion effectually distinguishes the case from the one at bar.

[ocr errors]

To repeat and conclude: It is presumed - but the presumption is a rebuttable one that the rates which the state fixes for intrastate traffic are reasonable and just. When the question is as to the profitableness of the intrastate business as a whole under a general scheme of rates, the carrier must satisfactorily prove the fair value of the property employed in its intrastate business, and show that it has been denied a fair return upon that value. With respect to particular rates, it is recognized that there is a wide field of legislative discretion, permitting variety and classification, and hence the mere details of what appears to be a reasonable scheme of rates, or a tariff or schedule affording substantial com

pensation, are not subject to judicial review. But this legislative power cannot be regarded as being without limit. The constitutional guaranty protects the carrier from arbitrary action and from the appropriation of its property to public purposes outside the undertaking assumed; and where it is established that a commodity, or a class of traffic, has been segregated and a rate imposed which would compel the carrier to transport it for less than the proper cost of transportation, or virtually at cost, and thus the carrier would be denied a reasonable reward for its service after taking into account the entire traffic to which the rate applies, it must be concluded that the state has exceeded its authority.

The judgments, respectively, are reversed, and the cases are remanded for further proceedings not inconsistent with this opinion. It is so ordered."

Mr. Justice Pitney dissents.

3 In accord Norfolk & W. Ry. Co. v. West Virginia (1915), 236 U. S. 605; Vandalia R. Co. v. Schnull (1921), 255 U. S. 113 (JUSTICES DAY, PITNEY, BRANDEIS and CLARKE dissenting without opinion); Pennsylvania R. R. Co. v. Philadelphia County (1908), 220 Pa. St. 100. See the earlier suggestions in East Tenn. &c. Ry. Co. v. Interstate Comm. Comm. (1901), 181 U. S. 1, 20; and in the opinion of MR. JUSTICE BREWER in Cotting v. Kansas City S. Y. Co. (1901), 83 U. S. 79. But compare the suggestion in Chicago & G. T. Ry. Co. v. Wellman (1892), 143 U. S. 339, 342, that the legislative decrease in passenger rates might be offset by increases in freight rates. See Notes, 13 Michigan L. Rev. 676; 28 Harvard L. Rev. 683. Cf. Interstate Ry. Co. v. Massachusetts (1907), 207 U. S. 79, 86-88.

After the decision in the principal case the railroad sued the coal company for the difference between the confiscatory statutory rate which had been paid and a reasonable rate. Recovery was not allowed. Minneapolis, St. P. & S. S. M. Ry. Co. v. Washburn Lignite Coal Co. (1918), 40 N. D. 69. See Note. 17 Michigan L. Rev. 191.

In Puget Sound Traction Co. v. Reynolds (1917), 244 U. S. 574, one of the contentions was that the legislative passenger rates were unremunerative on certain lines of its system, though the company did not show that the rates were not remunerative for the system as a whole. The court said on this point (pp. 580 and 581): "Plaintiff relies upon Northern P. R. Co. v North Dakota, 236 U. S. 585, 604, where this court held that a statute which segregated a single commodity, and imposed upon it a rate that would compel the carrier to transport it for less than the proper cost of transportation, was in excess of the power of the state. In our opinion. that decision is inapplicable, the present case being controlled rather by St. Louis & S. F. R. Co. v. Gill, 156 U. S. 649, 665, where the state of Arkansas had prescribed a maximum rate of three cents per mile for each passenger, under a penalty payable to the passenger from whom an overcharge was exacted, and in an action to recover such a penalty the company defended on the ground that the portion of its road over which plaintiff was carried was highly expensive to construct and maintain, and that the cost of maintaining it and transporting passengers over it exceeded the maximum rate fixed by law. But this court held that the correct test was as to the effect of the act on the defendant's entire line, and not upon that part which was formerly a part of one of the consolidating roads; that the company cannot claim the right to earn a net profit from every mile, section, or other part into which the road might be divided, nor attack as unjust a regulation which fixed 8 rate at which some part would be unremunerative: .. and, finally, that to the extent that the question of injustice is to be determined by the effects of the act upon the earnings of the company, the earnings of the entire line must be estimated as against

[ocr errors]

THE NEW ENGLAND DIVISIONS CASE.

261 U. S. 184. 1923.1

Mr. Justice BRANDEIS delivered the opinion of the Court. Transportation Act 1920, c. 91, § 418, 41 Stat. 456, 486, amending Interstate Commerce Act, § 15 (6), authorizes the Commission, upon complaint or upon its own initiative, to prescribe, after full hearing, the divisions of joint rates among carriers parties to the rate. In determining the divisions, the Commission is directed to give due consideration, among other things, to the importance to the public of the transportation service rendered by the several carriers; to their revenues, taxes, and operating expenses; to the efficiency with which the carriers concerned are operated; to the amount required to pay a fair return on their railway property; to the fact whether a particular carrier is an original, intermediate, or delivering line; and to any other fact which would, ordinarily, without regard to the mileage haul, entitle one carrier to a greater or less proportion than another of the joint rate.

b

Invoking this power of the Commission, the railroads of New England instituted, in August, 1920, proceedings to secure for themselves larger divisions from the freight moving between that section and the rest of the United States, the joint rates on which had just been increased pursuant to the order entered in Ex parte 74, Increased Rates, 1920, 58 I. C. C. 220. More than 600 carriers of the United States, mostly railroads, were made respondents. The case was submitted on voluminous evidence. On July 6, 1921, a report was filed. The relief sought was not then granted; but no order was entered. Instead, the parties were directed by

all its legitimate expenses under the operation of the act within the limits of the state of Arkansas.'"

As to right to discontinue service performed at a loss see Chap. VII.

a The docket title of this case is: Akron, Canton & Youngstown Railway Company v. United States, Interstate Commerce Commission, Boston & Maine Railroad, et al.

1 Part of the opinion is omitted. The lettered footnotes appear in the report of the case.-ED.

Except the Boston & Albany, which is leased to the New York Central, one of the trunk lines which was a respondent before the Commission, and branches of two Canadian systems, the Grand Trunk and the Canadian Pacific.

the report to proceed individually to readjust their divisional arrangements, and the record was held open for submission of the readjustment. New England Divisions, 62 I. C. C. 513. This direction was not acted on. Five months later the case was reargued upon the same evidence. On January 30, 1922, the Commission modified its findings and made an order (amended March 28, 1922) which directed, in substance, that the divisions, or shares, of the several New England railroads in the joint through freight rates be increased 15 per cent. New England Divisions, 66 I. C. C. 196. Since it did not increase any rate, it necessarily reduced the aggregate amounts receivable from each rate by carriers operating west of Hudson river. The order was limited to joint class rates and those joint commodity rates which are divided on the same basis as the class rates. It related only to transportation wholly within the United States. It was to continue in force only until further order of the Commission, and it left the door open for eorrection upon application of any carrier in respect to any rate.

Prior to the effective date of that order, there was in force between each of the New England carriers and substantially each of the railroads operating west of the Hudson, a series of contracts providing for the division of all joint class rates upon the basis of stated percentages. These agreements were in the form of express contracts. Section 208 (b) of Transportation Act of 1920 provided that all divisions of joint rates in effect at the time of its passage should continue in force until thereafter changed either by mutual agreement between the interested carriers or by state or federal authorities. The second report enjoined upon all parties the necessity for proceeding, as expeditiously as possible, with a revision of divisions upon a more logical and systematic basis, made specific suggestions as to the character of the study to be pursued, and invited carriers to present to the Commission any cases of inability to agree upon such revision. No further application was, however, made to the Commission.

In March, 1922, this suit was commenced in the federal court for the Southern District of New York to enjoin enforcement of the order and to have it set aside as void. The Akron, Canton

Other than the Bangor & Aroostook, which had been a complainant before the Commission, and the Boston & Albany, which had not.

d Thus the order does not include traffic passing through Canada. Nor does it apply to rates on coal (which constitutes about two-fifths of the total interchanged tonnage), nor to those on certain other commodities. e Compare St. Louis Southwestern Ry. Co. v. United States, 245 U. S. 136, 139, note 2; Central R. R. Co. of New Jersey v. United States, 257 U. S. 247.

« AnteriorContinuar »