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"Equality Clause. ''33 That section is given in the foot-note.34 The essential difference between the English and American acts lies in the fact that in the English act the words "passing only over the same line of railway under the same circumstances" occur, while in the Interstate Commerce Act a very much broader scope is given by the words "under substantially similar circumstances and conditions." This section of the Interstate Commerce Act has been materially strengthened by the act of February 19, 1903, as amended June 29, 1906, known as the Elkins bill, which has been given in full in the notes of a preceding section.35

Sec. 536. Purpose of second section.-The purpose of the second section is to enforce equality between shippers over the same line, and to prohibit any rebate or other device by which two shippers, shipping over the same line, the same distance, under the came circumstances of carriage, are compelled to pay different prices therefor. The phrase "under substantially similar circumstances and conditions," as used in the

33. Texas & Pacific Ry. Co. v. Interstate Commerce Commission, 162 U. S. 197, 16 Sup. Ct. R. 666, 40 L. Ed. 940, reversing 57 Fed. 948, 20 U. S. App. 6, 6 C. C. A. 653, and 52 Fed. 187.

34. Railway Clauses Consolidation Act of 1845, 8 & 9 Vict. ch. 20. "Sec. 90. And whereas it is expedient that the company should be enabled to vary the tolls upon the railways so as to accommodate them to the circumstances of the traffic, but that such power of varying should not be used for the purpose of prejudicing or favoring particular parties, or for the purpose of collusively or unfairly creating a monopoly, either in the hands of the company or of particular parties; it shall be lawful therefore, for the company, subject to the provisions and limitations herein and in the special act

contained,, from time to time to alter or vary the tolls by the special act authorized to be taken, either upon the whole or upon any particular portions of the railway, as they shall think fit; provided that all such tolls be at all times charged equally to all persons, and after the same rate, whether per ton, per mile, or otherwise, in respect to all passengers, and of all goods or carriages of the same description, and conveyed or propelled by a like carriage or engine, passing only over the same portion of the line of railway under the same circumstances; and no reduction or advance in any such tolls shall be made either directly or indirectly in favor of or against any particular company or person traveling upon or using the railway."

35. See ante, § 523.

second section, refers to the matter of carriage, and does not include competition between rival routes. This view is not open to the criticism that different meanings are attributed to the same words when found in different sections of the act; for, as the purposes of the several sections are different, the phrase under consideration must be read, in the second section, as restricted to the case of shippers over the same road, thus leaving no room for the operation of competition, but in the other sections, which cover the entire tract of interstate and foreign commerce, a meaning must be given to the phrase wide enough to include all the facts that have a legitimate bearing on the situation-among which is the fact of competition when it affects rates.36

Sec. 537. Effect of second section on discriminative interstate contracts.-The Interstate Commerce Act when it took effect abrogated all existing interstate contracts discriminating either for or against a shipper.37 All such contracts entered into since the passage of the Interstate Commerce Act are unlawful and render the railroad company making the same liable to punishment. Being unlawful, a provision in one for a discriminative rate is utterly void between the immediate parties, and neither is permitted to go into a court of justice and enforce a demand founded thereon.38 The courts have enforced this rule even where the rate has been given by mistake to the shipper, and he has been induced to ship solely on the basis of such mistaken rate.39

36. Wight v. United States, 167 U. S. 512, 17 Sup. Ct. R. 822, 42 L. Ed. 258; Interstate Commerce Commission v. Alabama Midland Ry. Co., 168 U. S. 144, 18 Sup. Ct. R. 45, affirming 74 Fed. 715, 21 C. C. A. 51, 41 U. S. App. 453, and 69 Fed. 227.

37. Fitzgerald . Fitzgerald & Mallory Const. Co., 41 Neb. 374, 59 N. W. Rep. 838. Overcharges for freight on an interstate shipment, involving unjust discrimi

nation, made prior to the passage of the act cannot be recovered. Gatton v. Railway, 95 Iowa, 112, 63 N. W. Rep. 589, 28 L. R. A. 556. Prior contracts as to rebates were rendered void. Fitzgerald v. Railroad Co., 63 Vt. 169, 22 Atl. Rep. 76, 13 L. R. A. 70; Bullard v. Railroad Co., 10 Mont. 168, 25 Pac. 120, 11 L. R. A. 246.

38. Church v. Railway Co., 14 S. Dak. 443, 85 N. W. Rep. 1001.

39. In Railway Co. v. Hubbell,

Sec. 538.-Discrimination must be unjust-Milling in transit agreements-Compressing cotton en route. All special contracts or traffic arrangements between carrier and shipper are not forbidden or condemned, but only such as operate unfairly and evidence undue favoritism toward one, or de

54 Kan. 232, 38 Pac. Rep. 266, a joint tariff rate of $2.70 per ton on shipments of coal between Richmond, Mo., and Mankato, Kas., had been agreed on and was in force and in use by the St. Joseph, St. Louis & Santa Fe Railroad Company which operated a line from Richmond, Mo., to St. Joseph, Mo., and the Chicago, Rock Island & Pacific Railway Company which operated a connecting line from St. Joseph, Mo., to Mankato, Kas. The agent of the first named company by mistake quoted the plaintiff a rate of $1.70 per ton on carload shipments of coal from Richmond to Mankato. The plaintiff thereupon shipped ten car loads. The court held that a contract made by mistake can have no greater validity than one intentionally entered into, and that the Rock Island company was entitled to collect the full customary rate, there being no pretense that such rate was excessive or unreasonable.

In Railway Co. v. Bowles, 1 Ind. Ter. Rep. 250, 40 S. W. Rep. 899, the court held that where a rate lower than the interstate commerce rate was agreed on for a shipment from a territory to a state, but the regular rate was demanded and collected at its destination, the excess could not be recovered by the shipper, though he did not know his contract was illegal.

In Railroad Co. v. Ostrander, 66 Ark. 567, 52 S. W. Rep. 435, the agent of one of defendant company's connecting lines granted a rate other than the regular joint tariff rate through a mistake in classification. The court held that the regular joint tariff rate could be collected.

See also, following the same rule: Railway Co. v. Bundick, 94 Ga. 775, 21 S. E. Rep. 995; Railread Co. v. Harrison, 119 Ala. 539, 24 So. Rep. 552, 43 L. R. A. 385, 72 Am. St. Rep. 936; Railway Co. v. Clements (Tex. Civ. App.), 49 S W. Rep. 913; Bullard v. Railroad Co., 10 Mont. 168, 25 Pac. Rep. 120, 11 L. R. A. 246; Railroad Co. v. Hefley, 158 U. S. 99, 15 Sup. Ct. R. 802; Railroad Co. v. Wilcox, 99 Va. 394, 39 S. E. Rep. 144; Railway Co. v. Mugg & Dryden, U S. 26 Sup. Ct. R. 628. Overruled cases, contra: Railroad Co. v. Dismukes, 94 Ala. 131, 10 So. Rep. 289, 17 L. R. A. 113; Railway Co. v. Crowell Lumber & Grain Co., 51 Neb. 293, 70 N. W. Rep. 964.

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See also contra: Southern, etc., Ry. Co. v. Burgess & Co. (Tex. Civ. App.), 90 S. W. Rep. 189; Railway Co. v. Leatherwood, 29 Tex. Civ. App. 507, 69 S. W. Rep. 119.

Common carriers of freight, having adopted classification sheets fixing transportation charges, and having filed the same with the In

prive another of his just rights. So long, therefore, as there is no unjust discrimination and no stipulation in the contract forbidding the carrier extending similar rates to all other shippers similarly situated, there is no express provision of law and no sound reason arising out of public policy which prohibits a carrier entering into a fair and equitable milling in transit arrangement by which the carrier contracts to credit on the freight charges on manufactured goods any freight or raw material shipped to the factory.40 Nor is a railroad company guilty of unlawful discrimination by receiving cotton from one shipper at a particular place of shipment, shipping it to another point and having it compressed there at the company's expense, and then reshipped to its places of destination for a rate equal to its published through rate from the place of shipment to such places of destination, where such an arrangement is in compliance with a recognized custom, of which all other shippers can avail themselves, and where it does not appear that a party complaining desires to ship any cotton from that particular place of shipment to the points of destination or that he is compelled to pay a higher rate under similar circumstances, 41

Sec. 539. Shippers must be placed on an absolute equality. -The statute recognizes the fact that it is no proper business of a common carrier to foster particular enterprises or to build up new industries, but deriving its franchise from the legislature, and depending on the will of the people for its own existence, a carrier is bound to deal fairly with the publie and to put all its patrons upon an absolute equality.42 An agreement, therefore, by two railroads to use connecting spurs of each which terminated at docks jointly, each maintaining its own portion, makes such connecting spurs a part of the

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40. Laurel Cotton Mills v. Railroad (Miss.), 37 So. Rep. 134.

terstate Commerce Commission, way Co.,
are, as well as the shippers, N. W. Rep. 56.
bound thereby; and contracts be-
tween such carriers and shippers
are presumed to be governed by
the classification sheet in force at
date of shipment. Smith v. Rail-

41. Cowan v. Bond, 39 Fed. 54. 42. Railway Co. V. Goodridge, 149 U. S. 680, 13 Sup. Ct. R. 970,

entire track of each railroad, and an extra charge of $2.00 per car, made to one shipper from a point on the docks, in addition to the published schedule of rates from the city, where no extra charge is made to any other shipper is discriminative.43 So also a special rate to a shipper giving him a preference of from one to two cents a pounds on lumber over other shippers is void.44 And the court will go behind mere forms or theories of legal entities when such forms or theories are used as cloaks to hide secret rebates, as where a so-called "transit" company is formed of certain favored shippers and the carrier pays rebates under the guise of "commissions" to such "transit" company.45

Sec. 540. A lower through rate not necessarily discriminative. The Interstate Commerce Act, however, does not prevent railroads from contracting for a through rate at a lower rate than the combination of the locals would aggregate. In such case, if the agent of the connecting carrier, by mistake, gives the shipper an unusually low rate over connecting lines, and the initial carrier, without knowledge of such act, misroutes the goods so that the shipper is compelled to pay a much higher rate of freight than that agreed upon, the initial carrier cannot escape liability on the ground that the rate given was in violation of the Interstate Commerce Act.46

Sec. 541. Discrimination may be in passenger service, as well as property.-There may be unjust discrimination in passenger service, as well as property, and it is equally prohibited in both. Thus a contract entered into between a railroad company and a ticket broker whereby the latter was enabled to sell tickets to individuals over the company's lines leading from one state to another at less than the established

37 L. Ed. 896; Railway Co. v.
Taggart, 149 U. S. 698, 13 Sup. Ct.
R. 977, 37 L. Ed. 905; Ohio Coal
Co. v. Whitcomb, 123 Fed. 359, 59
C. C. A. 487.

Ark. 348, 50 S. W. Rep. 871.

45. United States v. Milwaukee, etc., Transit Co., 142 Fed. 247.

46. Pond-Decker Lumber Co. v. Spencer, 86 Fed. 846, 30 C. C. A.

43. Ohio Coal Co. v. Whitcomb, 430, reversing Central Trust Co. v. supra. Railway Co., 81. Fed. 277.

44. Kizer v. Railway Co., 66

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