206 U.S. 441 (1907), 88, Illinois Central Railroad Company v. Interstate Commerce Commission

Docket Nº:No. 88
Citation:206 U.S. 441, 27 S.Ct. 700, 51 L.Ed. 1128
Party Name:Illinois Central Railroad Company v. Interstate Commerce Commission
Case Date:May 27, 1907
Court:United States Supreme Court

Page 441

206 U.S. 441 (1907)

27 S.Ct. 700, 51 L.Ed. 1128

Illinois Central Railroad Company


Interstate Commerce Commission

No. 88

United States Supreme Court

May 27, 1907

Argued April 22, 23, 1907




The findings of the Interstate Commerce Commission are made by the law prima facie true, and this Court has ascribed to them the strength due to the judgments of a tribunal appointed by law and informed by experience.

The reasonableness of a rate is a question of fact, and while the conclusions of the commission are subject to review if that body excludes facts and circumstances that ought to have been considered, they will not, after having been affirmed by the circuit court and circuit court of appeals, be reversed because the commission did not adopt the presumptions of mixed law and fact put forward by appellants as elements for determining the reasonableness of a rate.

A presumption is the expression of a process of reasoning, and of inferring one fact from another, and most if not all the rules of indirect evidence may be expressed as such, but the fact on which the inference is based must first be established before the law can draw its inference.

Where the inquiry before the Interstate Commerce Commission is essentially one of fact, the existence of competition cannot in this Court be made an inference of law dominating against the actual findings of the commission and their affirmance by the circuit court.

In determining the reasonableness of a railroad rate, expenditures for additions to construction and equipment to handle the traffic should be distributed over the period of the duration of those additions, and not charged entirely against the revenue of the year in which they are made. Union Pacific Railway Co. v. United States, 99 U.S. 402, distinguished.

This case involves the validity of an order of the Interstate Commerce Commission requiring the appellants

to cease and desist on or before the first day of April, 1905, from further maintaining or enforcing the unlawful advance of two cents per one hundred pounds, or the said unlawful rates resulting therefrom, for the transportation of lumber from shipping points

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on defendants' respective lines in the State of Louisiana east of the Mississippi River, and in the States of Mississippi and Alabama to Cincinnati, Louisville, Evansville, Cairo, and other points on the Ohio River commonly called and known as Ohio River points.

The order was made in the matter of the complaint filed with the Commission by the Central Yellow Pine Association, an incorporated association composed of persons, firms. and corporations engaged in the business [27 S.Ct. 701] of manufacturing yellow pine lumber in the States of Mississippi, Alabama, and that part of Louisiana east of the Mississippi River.

The complaint charged that the appellants were common carriers by rail, engaged in interstate commerce, and as such were engaged in the transportation of yellow pine lumber from the mills and lumber plants of the members of the Yellow Pine Lumber Association to the territory known as the "Central Freight Association territory," which lies on the north of the Ohio River and on and between the Mississippi River on the west and a line running through Buffalo and Pittsburgh on the east, and that the members of the association are dependent upon appellants for the transportation of their lumber to the markets of the country; that the appellants and the railways carrying yellow pine lumber to the same markets from the territory west of the Mississippi River, embracing the states of Texas, Arkansas, and that part of Louisiana west of the river, by agreement or concert of action advanced the rate on yellow pine lumber from the territories both east and west of the Mississippi River on and beyond the Ohio River in Central Freight Association territory two cents per one hundred pounds. The advance was made applicable south of the Ohio River and effective on and from April 15, 1903, except as to the Louisville & Nashville road, as to which it became effective June 22, 1903. And it was alleged that such advance was "unjust, unreasonable, as well as discriminative, in violation of the Act to Regulate Commerce." The answer of the railways admitted the advance, but denied that it had the

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character and effect charged, but alleged that, on the contrary, it was reasonable and just, and not in violation of law. The answers also specifically justified the advance by the conditions of the market and the traffic, including competition, and the costs of operating the roads. Testimony was taken on the issues thus formed.

The Commission sustained the complaint and made the order recited above. 10 I.C.C. 505. The railways refused to obey. The Commission then instituted this proceeding in the Circuit Court of the United States for the Eastern District of Louisiana, where further proof was taken and a decree rendered which affirmed the order of the Commission and made it the order of the court. The roads were also enjoined from further disobedience to the order. No opinion was filed. The testimony was voluminous, and the report and findings of the Commission are very long. They are reported in 10 I.C.C. 505, supra. The conclusions of the Commission are mingled somewhat with legal arguments, but the following may be selected as important and pertinent to the questions which the controversy presents:

The lumber-producing districts are divided in territory (1) west of the Mississippi River; (2) territory east of the river, and (3) southeastern territory, composed of the states of Georgia, Florida, and part of Alabama. The lumber of each of these districts competes in the sale of their products in "Central Freight Association territory."

The roads of the appellants are located in and serve the second of these territories.

The advance in rates was made as well in territory west of the Mississippi River, "and was made, in fact though not expressly, by agreement between the defendants (appellants) and the roads west of the river," after several meetings at a consultation between the representatives of the roads. The roads east of the river took the initiative.

At Cairo, traffic from a large portion of the lumber-producing districts meets or converges en route to destination. The

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rates on other Ohio River crossings are based on Cairo -- that is, they bear a fixed relation to the Cairo rate, being advanced or reduced as that rate is advanced or reduced. The through rates to points beyond the Ohio River in Central Freight Association territory are made up of the full local rates of the roads north of the Ohio as the proportions of those roads. Whatever is left of the through rates are the proportions of the roads south of the Ohio. The rates to interior points north of the Ohio are made on the lowest combination rates to the Ohio plus the rates beyond, and are blanket rates, being the same from all shipping points or points of production to the same destination. The rates to the Ohio are to the north bank, and include the bridge tolls.

There are divisions of rates south of the Ohio between what are termed the "originating" roads, on which the lumber is principally manufactured, and the roads intermediate between them and the river.

There had been, from time to time, changes or fluctuations in the rate. Prior to 1894, the roads west of the Mississippi claimed and were allowed a differential of two cents. This placed at a disadvantage the shippers east of the Mississippi, and a readjustment of rates was made, and on May 1, 1894, the rate to Cairo from east of the Mississippi was reduced to thirteen cents per one hundred pounds, the rate in force from west of the Mississippi. This rate remained until September 9, 1899, about five years, when it was advanced to fourteen cents, and so remained until April 15, 1903, nearly four years, when [27 S.Ct. 702] the advance of two cents complained of was made.

The railroads west of the Mississippi make a certain allowance to the mills which have "logging roads," that is, roads by which logs are hauled from the timber to the mills. This is called "tap line allowance or division." It ranges one to two cents per one hundred pounds, up to as high as six cents, and varies, to some extent, according to the destination of the traffic. The mills east of the river have logging roads also, but appellants make no allowance to them. The only exception

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is the Mobile & Ohio road, which grants allowances to about four mills on its line. The New Orleans & Northeastern road put in a tap line allowance of two cents, but other roads east of the river objected, and it was withdrawn. There does not appear to be any reason for such allowance west of the Mississippi which does not apply east of that river, and it amounts to a rebate or reduction from the regularly published rate, and gives an advantage to the mills west of the Mississippi over those east, although the published rates from both are the same.

The lumber business had grown from its inception, and was largely and possibly more prosperous than it had been before, but the proof does not show that, for two of three years preceding the advance, the prices of mill products had materially increased, or that the profits realized were unusual or excessively large.

As to the operating expense of the roads, the Commission said:

The proof shows increases in wages and in prices of material and equipment, but not in a marked degree for the two years, 1901 and 1902, immediately preceding the advance rate. These increases have doubtless added materially to operating expenses, but the...

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