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INTERSTATE COMMERCE COMMISSION v. CHICAGO GREAT WESTERN R CO., 209 U.S. 108 (1908)

U.S. Supreme Court

INTERSTATE COMMERCE COMMISSION v. CHICAGO GREAT WESTERN R CO., 209 U.S. 108 (1908)

209 U.S. 108

INTERSTATE COMMERCE COMMISSION, Appt.,
v.
CHICAGO GREAT WESTERN RAILWAY COMPANY et al., Appellees.
No. 73.

Argued April 16, 17, 1907.
Decided March 23, 1908.

Certain proceedings were had before the Interstate Commerce Commission. They were commenced by the filing of a petition by the Chicago Live Stock Exchange in April, 1902, charging the defendants, who are now the appellees, with the violation of 1 and 3 of the interstate commerce act of February 4, 1887. [24 Stat. at L. 379, chap. 104, U. S. Comp. Stat. 1901, p. 3154.] The specific offense stated was that the defendants were charging higher rates of freight upon live stock shipped from Missouri river points, and other points [209 U.S. 108, 109]   similarly situated, to Chicago, than upon dressed meats and the prepared products known as packing-house products. It was contended that this higher rate of freight was an unlawful discrimination against shippers of live stock to Chicago, and gave to shippers of packing-house products an undue and unreasonable preference and advantage over the former; that it subjected the Chicago Live Stock Exchage and its members, who were engaged in the business of selling live stock on commission, as well as the owners of live stock and the shippers thereof, to an unreasonable prejudice and disadvantage. The several defendants, with one or two exceptions, answered, denying the allegations of the complaint. After a hearing, the Interstate Commerce Commission, on January 7, 1905, filed its report and opinion, including findings of fact, and made an order, which is the foundation of this suit. The order is in these words:

Order of Commission.

This case being at issue upon complaint and answers on file, and having been duly heard and submitted by the parties, and full investigation of the matters and things involved having been had, and the Commission having, on the date hereof, made and filed a report and opinion containing its findings of fact and conclusions thereon, which said report and opinion is hereby referred to and made a part of this order:

It is ordered that, in accordance with said report and opinion, the present relation of rates maintained and enforced by defendants [naming them all, eighteen in number], whereby their rates for transportation are higher upon live cattle and live hogs than upon the dressed or prepared products of cattle and hogs on shipments thereof to Chicago, in the state of Illinois, from points on the Missouri river, Sioux City, in the state of Iowa, to Kansas City, in the state of Missouri, inclusive, and from South St. Paul, in the state of Minnesota, or from points in the territory between the Missouri river or South St. Paul and Chicago, constitutes wrongful prejudice [209 U.S. 108, 110]   and discrimination, in violation of the provisions of the act to regulate commerce; and that said defendants be, and each of them is hereby, notified and required to cease and desist, on or before the 15th day of February, 1905, from maintaining or enforcing the said unlawful relation of rates, and from further continuing said unlawful prejudice and discrimination.

And it is further ordered that a notice embodying this order be forthwith sent to each of the defendant corporations, together with a copy of the report and opinion of the Commission herein, in conformity with the provisions of 15 of the act to regulate commerce.

The defendants not complying with this order, the Interstate Commerce Commission caused this suit to be commenced in the circuit court of the United States for the northern district of Illinois, seeking to compel compliance. The defendants answered, admitting service of the order and refusal to comply therewith, denying that it was legal or binding, but, on the contrary, claiming that it was in violation of their rights. After the filing of the petition to enforce the order of the Commission, and the answers thereto, and in August, 1905, the Commission also commenced an original proceeding under and by virtue of the act of February 19, 1903 ( 32 Stat. at L. 847, chap. 708, U. S. Comp. Stat. Supp. 1907, p. 880), known as the Elkins act, charging substantially the same discrimination. These case were consolidated and heard before the circuit court, an enormous volume of additional testimony being taken, and on November 20, 1905, that court announced its opinion, stated its findings of fact and conclusions of law, and ordered that the bill should be dismissed. A decree accordingly was so entered. 141 Fed. 1003. The findings of fact were as follows:

Section 3 of the interstate commerce act, so far as it is material for this case, is as follows:

And 3 of the Elkins act provides:

[209 U.S. 108, 116]   Cordenio A. Severance, Frank B. Kellogg, Robert E. Olds for appellee, Chicago Great Western Railway Company.

[209 U.S. 108, 117]   Mr. Ed. Baxter, for appellees as of record.

S. A. Lynde for appellees.

Mr. Charles A. Clark for intervener T. M. Sinclair & Company, Limited.

Mr. Frank T. Ransom for intervener the Union Stock Yards Company of Omaha, Limited.

Messrs. Stephen S. Brown and John E. Dolman on behalf of intervener the St. Joseph Stock Yards Company.

Mr. Justice Brewer delivered the opinion of the court:

It is unnecessary to define the full scope and meaning of the prohibition found in 3 of the interstate commerce act, or even to determine whether the language is sufficiently definite to make the duties cast on the Interstate Commerce Commission ministerial, and therefore such as may legally be imposed [209 U.S. 108, 118]   upon a ministerial body, or legislative, and therefore, under the Federal Constitution, a matter for congressional action, for, within any fair construction of the terms 'undue or unreasonable,' the findings of the circuit court place the action of the railroads outside the reach of condemnation.

The complainant, before the interstate commerce action, was an incorporated association. The purposes for which it was organized were, as stated in its charter, 'to establish and maintain a commercial exchange; to promote uniformity in the customs and usages of merchants; to provide for the speedy adjustment of all business disputes between its members; to facilitate the receiving and distributing of live stock, as well as to provide for and maintain a rigid inspection thereof, thereby guarding against the sale or use of unsound or unhealthy meats; and generally to secure to its members the benefits of co-operation in the furtherance of their legitimate pursuits.' Its members were, as found by the Commerce Commission, 'engaged in the purchase, shipment, and sale of live stock for themselves and upon commission.' It was such an association, with members engaged in the business named, that initiated these proceedings and in whose behalf they were primarily prosecuted. While it may be that the proceedings are not to be narrowly limited to an inquiry whether this particular complainant has been in any way injured by the action of the railroad companies, yet that question must be regarded as the one which was the special object of inquiry and consideration. It is true that the Commission subsequently commenced, under the Elkins act, an independent suit in its own name, but it was practically to enforce the award made by the Commission after its inquiry into the controversy between the live- stock exchange and the railroad companies.

It must be remembered that railroads are the private property of their owners; that while, from the public character of the work in which they are engaged, the public has the power to prescribe rules for securing faithful and efficient service and equality between shippers and communities, yet, in no [209 U.S. 108, 119]   proper sense, is the public a general manager. As said in Interstate Commerce Commission v. Alabama Midland R. Co. 168 U.S. 144, 172 , 42 S. L. ed. 414, 425, 18 Sup. Ct. Rep. 45, 51, quoting from the opinion in 5 Inters. Com. Rep. 697, 21 C. C. A. 59, 41 U. S. App. 466, 74 Fed. 723:

It follows that railroad companies may contract with shippers for a single transportation or for successive transportations, subject though it may be to a change of rates in the manner provided in the interstate commerce act (Armour Packing Co. v. United States, 209 U.S. 56 , 52 L. ed . --, 28 Sup. Ct. Rep. 428), and also that, in fixing their own rates, they may take into account competition with other carriers, provided only that the competition is genuine, and not a pretense (Interstate Commerce Commission v. Baltimore & O. R. Co. 145 U.S. 263 , 36 L. ed. 699, 4 Inters. Com. Rep. 92, 12 Sup. Ct. Rep. 844; Texas & P. R. Co. v. Interstate Commerce Commission, 162 U.S. 197 , 40 L. ed. 940, 5 Inters. Com. Rep. 405, 16 Sup. Ct. Rep. 666; Interstate Commerce Commission v. Alabama Midland R. Co. supra; Louisville & N. R. Co. v. Behlmer, 175 U.S. 648 , 44 L. ed. 309, 20 Sup. Ct. Rep. 209; East Tennessee, V. & G. R. Co. v. Interstate Commerce Commission, 181 U.S. 1 , 45 L. ed. 719, 21 Sup. Ct. Rep. 516; Interstate Commerce Commission v. Louisville & N. R. Co. 190 U.S. 273 , 47 L. ed. 1047, 23 Sup. Ct. Rep. 687).

It must also be remembered that there is no presumption of wrong arising from a change of rate by a carrier. The presumption of honest intent and right conduct attends the action of carriers as well as it does the action of other corporations or individuals in their transactions in life. Undoubtedly, when rates are changed, the carrier making the change must, [209 U.S. 108, 120]   when properly called upon, be able to give a good reason therefor; but the mere fact that a rate has been raised carries with it no presumption that it was not rightfully done. Those presumptions of good faith and integrity which have been recognized for ages as attending human action have not been overthrown by any legislation in respect to common carriers.

The Commerce Commission did not find whether the rates were reasonable or unreasonable per se. Its omission may have been owing, partly at least, to the decision in Interstate Commerce Commission v. Cincinnati, N. O. & T. P. R. Co. 167 U.S. 506 , 42 L. ed. 255, 17 Sup. Ct. Rep. 896, for this controversy arose before the amendment of June 29, 1906. 34 Stat. at L. 584, chap. 3591, U. S. Comp. Stat. Supp. 1907, p. 892. On the other hand, the circuit court found specifically that the live-stock rates were reasonable, and also that the rates for carrying packers' products and dressed meats were remunerative. See findings 1 and 7. Obviously, shippers had, in the rates considered separately, no ground of challenge. But the burden of complaint is not that any rates, taken by themselves, were too high, but that the difference between those on live stock and those on dressed meats and packers' products worked an unjust discrimination.

It is insisted that 'the making of the livestock rate higher than the product rate is violative of the almost universal rule that the rates on raw material shall not be higher than on the manufactured product.' This may be conceded, but that the rule is not universal the proposition itself recognizes, and the findings of the court give satisfactory reasons for the exception here shown. See findings 2, 3, and 9. The cost of carriage, the risk of injury, the larger amount which the companies are called upon to pay out in damages, make sufficient explanation. They do away with the idea that, in the relation established between the two kinds of charges, any undue or unreasonable preference was intended or secured.

Finding No. 6 is very persuasive. It reads:

If the rates complained of have not materially affected any of the markets, prices, or shipments; if they are reasonably fair to Chicago and the shippers; if the shipments of live stock from the West to Chicago are as great in proportion to the bulk of the business as before the present rates were made; and that lower rate given to the packers does not directly influence or injure the shippers of live stock,-it is difficult to see what foundation there can be for the claim of an undue and unreasonable preference. It would seem a fair inference from the findings that the real complaint was that the railroad companies did not so fix their rates as to help the Chicago packing industry; that they recognized the fact that along the Missouri river had been put up large packing houses, and, without any intent to injure Chicago, had fixed reasonable rates for the carrying of live stock to such packing houses and also to Chicago; that those packing houses, being nearer to the cattle fields, were able to engage in the packing industry as conveniently and successfully as the packing houses in Chicago. If we were at liberty to consider the mere question of sentiment, certainly to place packing houses close to the cattle fields, thus avoiding the necessity of long transportation of the living animals,-a transportation which cannot be accomplished without more or less suffering to them,-and to induce transportation to those nearer packing houses, would deserve to be commended rather than condemned.

With reference to competition, we have referred to the cases in this court in which that matter has been considered. Ac- [209 U.S. 108, 122]   cording to the 4th finding, the rates in question given to the packers at the Missouri river and St. Paul were the result of competition. Without recapitulating all the facts disclosed in that finding, it is enough to say that the Chicago Great Western Railway Company, which had the longest line from Chicago to Missouri river points, made a reduction in the rates, and did this, as its president testified, 'for the purpose of securing a greater proportion of the traffic in the products of live stock than it had been previously able to obtain.' That is one of the facts inducing competition, and one of the results expected to flow from a reduction of rates. It certainly of itself deserves no condemnation. In order to secure to themselves what was likely to be transferred to the Great Western by virtue of its reduction of rates, the other companies also made a reduction, and, as shown by the 5th finding, the competition was not the result of agreement, but was an 'actual, genuine competition.' It may be true, as contended by counsel for the appellant, that even a genuine competition which results in a change of rates does not necessarily determine the question whether the rates as fixed work an undue preference or create an unlawful discrimination. Those rates fixed may make a preference or discrimination irrespective of the motives which caused the railway companies to adopt them, and yet the fact of a genuine competition does not make against the contention that the rates were intended to work injustice. An honest and fair motive was the cause of the change in rates,- honest and fair on the part of the Great Western in its effort to secure more business, and equally honest and fair on the part of the other railway companies in the effort to retain as much of the business as was possible. In other words, this competition eliminates from the case an intent to do an unlawful act, and leaves for consideration only the question whether the rates as established do work an undue preference or discrimination; and, as the findings of the court show that the result of the new rates has not been to change the volume of traffic going to Chicago, or materially affect the business [209 U.S. 108, 123]   of the original complainant, it would seem necessarily to result that the charge of an unlawful discrimination is not proved. In short, there was no intent on the part of the railway companies to do a wrongful act, and the act itself did not work any substantial injury to the rights of the complainant.

We have not attempted to review in detail the great mass of testimony, amounting to two enormous printed volumes. It is enough to say that an examination of it clearly shows sufficient reasons for the findings of fact made by the circuit court.

In short, the findings of the circuit court were warranted by the testimony, and those findings make it clear that there was no unlawful discrimination.

The decree of the Circuit Court is affirmed.

Mr. Justice Moody did not hear the argument nor take part in the decision in this case.

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