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    PENNSYLVANIA R. CO. v. TOWERS , 245 U.S. 6 (1917)

    U.S. Supreme Court

    PENNSYLVANIA R. CO. v. TOWERS , 245 U.S. 6 (1917)

    245 U.S. 6

    PENNSYLVANIA R. CO.
    v.
    TOWERS et al., Public Service Commission of Maryland.
    No. 31

    Argued April 25 and 26, 1917.
    Decided Oct. 15, 1917.

    Mr. F. D. McKenney, of Washington, D. C., for plaintiff in error. [245 U.S. 6, 7]   Mr. W. Cabell Bruce, of Baltimore, Md., for defendant in error.

    Mr. Justice DAY delivered the opinion of the Court.

    This was an action in the circuit court No. 2 of Baltimore City, Maryland, to enjoin the Public Service Commission of Maryland from enforcing an order to sell commutation tickets at certain rates specified. The injunction was refused, and on appeal the Court of Appeals of Maryland affirmed the decree and held that although the order fixing the rates declared the same to be [245 U.S. 6, 8]   in force for ten years, there should be reserved to the railroad company the right to apply to the Commission after the lapse of a reasonable time for a rescission or modification of its order if experience demonstrated that the revenue derived under the tariff as established by the Commission was not properly compensatory for the services performed. 126 Md. 59, 94 Atl. 330, Ann. Cas. 1917B, 1144

    The order of the Commission required the Pennsylvania Railroad Company, lessee of the Northern Central Railway, to sell tickets for the transportation of passengers between Baltimore and Parkton within the state of Maryland on the line of the Northern Central Railway.

    A table appearing in the opinion of the Court of Appeals shows the relative rates under the former schedules and the new order of the Public Service Commission to be as follows:

    Rates Prior to Rates as per schedule Rates under Order Nov. 25, 1914. Filed Nov. 25, 1914. P. S. Com. Dec. 23, 1914.

    1. Round trip, 10 day, Round trip, no limit, Round trip, 2 1/4 2 1/4 per M. 2 1/2 per M. per M.

    2. Exc. 2-10 days, 2 1/4 Discontinued. No ruling made. per M.

    3. 10-trip ticket, 1 10-trip, 3 mos., 2 1/4 10-trip, 3 mos. yr., 1 8/10 per M. per M. 2 per M.

    4. 60-trip 1 mo., 2 for 60-trip, 1 mo. former 60-trip, 1 mo. former first 3 M., 1/4 for rate plus 25 flat. rate plus 25. ea. addl. 1/2 M.

    5. 100-trip 1 yr. at Discontinued. 100-trip, 4 mos., double 60-trip. former rate, plus $1.

    6. 180-trip 3 mos. same 180-trip, 3 mos. at 3 180-trip, 3 mos., as 4, less 10%. times 60-trip. former rate plus 75.

    7. 46-trip School, 1 mo., 46-trip School, 1 mo., 46-trip School, 1 mo., 46/60 of 60-trip. 46/60 of 60-trip. 46/60 of 60-trip.

    The attack upon the order of the Commission in this court, is based upon the contention that its effect is to take the property of the railroad company without due process of law, contrary to the Fourteenth Amendment to [245 U.S. 6, 9]   the Constitution of the United States. It is also averred in the bill that the order, if enforced, will work a discrimination against interstate travel in favor of travel within the state, and is otherwise unreasonable and void.

    The Court of Appeals of Maryland stated the question to be whether it is within the power of the Public Service Commission to require the establishment of a schedule of commutation rates by the railroad company, not where no such rates had therefore been established, but where a new system of commutation rates had been proposed by the railroad company and submitted to the Commission. Whether commutation rates should be established was declared to be a question of policy to be decided by the company. The court found authority in the Commission under the statutes of Maryland to revise commutation rates where such rates had already been established by the action of the company. We must accept this definition of authority in the Commission, so far as the state law is concerned, and direct our inquiry to the federal question presented.

    The question, as counsel for plaintiff in error states it, is whether a state Legislature, either directly or through the medium of a Public Service Commission, under the guise of regulating commerce, may compel carriers engaged in both interstate and intrastate commerce to establish and maintain intrastate rates at less than both the interstate and intrastate standard and legally established maxima. It is asserted that there is no constitutional authority to compel railroad companies to continue the sale of commutation or special class tickets at rates less than the legally established standard or normal one-way single passenger fare upon terms more favorable than those extended to the single one-way traveler.

    To maintain this proposition plaintiff in error relies upon and quotes largely from the opinion of this court in Lake Shore & Michigan Southern Ry. Co. v. Smith, 173 [245 U.S. 6, 10]   U. S. 684, 19 Sup. Ct. 565. In that case a majority of this court held a statute of the state of Michigan to be invalid. A previous statute of the state had fixed a maximum passenger rate of three cents per mile. The statute in controversy required the issuing of mileage books for a thousand miles, good for two years, at a less rate. This court held that a maximum rate for passengers having been established, that rate was to be regarded as the reasonable compensation for the service, and that the fixing of the less rate to particular individuals was an arbitrary exercise of legislative power and an unconstitutional interference with the business of the carrier, the effect of which was to violate the provisions of the Fourteenth Amendment to the federal Constitution by depriving the railroad company of its property without due process of law and denying to it the equal protection of the law.

    The Lake Shore Case did not involve, as does the present one, the power of a state commission to fix intrastate rates for commutation tickets where such rates had already been put in force by the railroad company of its own volition, and we confine ourselves to the precise question presented in this case, which involves the supervision of commutation rates when rates of that character have been voluntarily established by the carrier. The rates here involved are wholly intrastate. The power of the states to fix reasonable intrastate rates is too well settled at this time to need further discussion or a citation of authority to support it.

    In Interstate Commerce Commission v. B. & O. R. R., 145 U.S. 263 , 12 Sup. Ct. 844, this court held that a 'party rate ticket' for the transportation of ten or more persons at a less rate than that charged a single individual did not make a discrimination against an individual charged more for the same service or amount to an unjust or unreasonabel discrimination within the meaning of the act to regulate commerce. In the course of the opinion the [245 U.S. 6, 11]   right to issue tickets at reduced rates good for limited periods upon the principle of commutation was fully recognized. See 145 U.S. 277, 278 , 279 S., 280, 12 Sup. Ct. 844.

    Having the conceded authority to regulate intrastate rates, we perceive no reason why such power may not be exercised through duly authorized commissions and rates fixed with reference to the particular character of the service to be rendered.

    In Norfolk & Western Ry. v. West Virginia, 236 U.S. 605, 608 , 35 S. Sup. Ct. 437 (59 L. Ed. 745), after making reference to Northern Pacific Ry. v. North Dakota, 236 U.S. 585 , 35 Sup. Ct. 429, Ann. Cas. 1916A, 1, this court said:

    That the state may fix maximum rates governing one-way passenger travel is conceded. Having the general authority to fix rates of a reasonable nature, we can see no good reason for denying to the state the power to exercise this authority in such manner as to fix rates for special services different from those charged for the general service. In our opinion the rate for a single fare for passengers generally may be varied so as to fit the particular and different service which involves, as do commutation rates, the disposition of tickets to passengers who have a peculiar relation to the service. The service rendered in selling a ticket for one continuous trip is quite different from that involved in disposing of commutation tickets where a single ticket may cover 100 rides or more within a limited period. The labor and cost of making such tickets as well as the cost of selling them is less than [245 U.S. 6, 12]   is involved in making and selling single tickets for single journeys to one-way passengers.

    The service rendered the commuter, carrying little baggage and riding many times on a single ticket for short distances, is of a special character and differs from that given the single-way passenger.

    It is well known that there have grown up near to all the large cities of this country suburban communities which require this peculiar service, and as to which the railroads have themselves, as in this instance, established commutation rates. After such recognition of the propriety and necessity of such service, we see no reason why a state may not regulate the matter, keeping within the limitation of reasonableness.

    On the strength of these commutation tariffs, it is a fact of public history that thousands of persons have acquired homes in city suburbs and nearby towns in reliance upon this action of the carriers in fixing special rates and furnishing particular accommodations suitable to the traffic. This fact has been recognized by the courts of the country, by the Interstate Commerce Commission, and quite generally by the Railroad Commissions of the states. 1  

    The question of the power of the Public Service Commission of the State of New York in this respect was before the Appellate Division of the Supreme Court of [245 U.S. 6, 13]   that state in People ex rel. New York, New Haven & Hartford Railroad Co. v. Public Service Commission, 159 App. Div. 546, 145 N. Y. Supp. 513. In that case it was said:

    That decision was affirmed by the Court of Appeals of New York on the opinion of the Appellate Division. 215 N. Y. 689, 109 N. E. 1089.

    The subject was elaborately considered by the Interstate Commerce Commission in the Commutation Rate Case, 21 Interst. Com. Com'n R. 428, in which the authority of the Commission to fix reasonable rates was sustained. In the course of the opinion, Commissioner Harlan, speaking for a unanimous Commission, said:

    The reasoning of these decisions is soud

    The reasoning of these decisions is sound Constitution. True it is that it may not be possible to reconcile these views with all that is said in the opinion delivered for the majority of the court in the case of Lake Shore & Michigan Southern Ry. Co. v. Smith, supra. The views therein expressed which are inconsistent with the right of the states to fix reasonable commutation fares when the carrier has itself established fares for such service, must be regarded as overruled by the decision in this case.

    We find no error in the decree of the Court of Appeals of Maryland, and the same is

    AFFIRMED.

    The CHIEF JUSTICE, Mr. Justice McKENNA, and Mr. Justice McREYNOLDS dissent.

    Footnotes

    [ Footnote 1 ] Forty-Fourth Annual Report of the Railroad Commission for the year 1912 (Massachusetts) pp. 67, 107, 113; Public Utilities Reports, 1915B ( Massachusetts) p. 362; Public Utilities Reports, 1915E (Rhode Island) p. 269; Public Service Commission Reports, Second District of N. Y. (New York) vol. III, pp. 212, 461; Idem, vol. IV, p. 11; Public Utilities Reports, 1915B (New Jersey) p. 161; Public Utilities Commission Reports, 1914 ( Illinois) vol. I, pp. 553, 590; Public Utilities Commission Reports, 1913- 1914 (Colorado) p. 131; Public Utilities Reports, 1915D (Idaho) p. 742; Opinions and Orders of the Railroad Commission (California) vol. I, pp. 451, 855; Idem, vol. II, p. 910; Idem, vol. III pp. 5, 30, 32, 749, 800, 807, 973; Idem, vol. V. p. 555; Idem, vol. VI, pp. 853, 1008; Idem, vol. VII, pp. 179, 894; The Commutation Rate Case, 21 Interest. Com. Com'n R. 428.

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