Interstate Commerce Commission v. Louisville Nashville Railroad Company

• Decision Date: 20 January 1913
• Docket Number: No. 600,600
• Citation: 227 U.S. 88,57 L.Ed. 431,33 S.Ct. 185
• Parties: INTERSTATE COMMERCE COMMISSION and the United States, Appts., v. LOUISVILLE & NASHVILLE RAILROAD COMPANY
• Court: U.S. Supreme Court

227 U.S. 88

33 S.Ct. 185

57 L.Ed. 431

INTERSTATE COMMERCE COMMISSION and the United States, Appts.,

v LOUISVILLE & NASHVILLE RAILROAD COMPANY.

No. 600.

Argued October 17 and 18, 1912.

Decided January 20, 1913.

Assistant to the Attorney General Fowler and Mr. Blackburn Esterline, Special Assistant to the Attorney General, for the United States.

Mr. P. J. Farrell for the Interstate Commerce Commission.

Messrs. Helm Bruce, Albert S. Brandeis, and Henry L. Stone for appellee.

Mr. Justice Lamar delivered the opinion of the court:

The New Orleans Board of Trade, in October and November, 1907, brought three separate proceedings against the Louisville & Nashville Railroad, asking the Commerce Commission to set aside as unfair, unreasonable, and discriminatory certain class and commodity rates (local) from New Orleans to (1) Mobile, to (2) Pensacola, and (3) through rates, via those cities, to Montgomery, Selma, and Prattville. The railroad answered. A hearing was had, the issue as to commodity rates was adjusted by agreement, and on December 31, 1909, the Commission made a single order in which it found the class rates complained of to be unreasonable, directed the old locals to be restored, and a corresponding reduction made in the through rates. The railroad thereupon, on January 26, 1910, filed a bill in the United States circuit court for the western district of Kentucky, praying that the Commission be enjoined from enforcing this order, which it alleged was arbitrary, oppressive, and confiscatory, and deprived the company of its property and right to make rates, without due process of law.

After a hearing before three circuit court judges, the carrier's application for a temporary injunction was denied. 184 Fed. 118. Testimony was then taken before an examiner. Later the suit was transferred to the newly organized commerce court,—the United States being made a party. There, in addition to the evidence in the circuit court, the railroad exhibited all that had been introduced before the Commission, as a basis for the contention that this evidence utterly failed to show that the rates attacked were unreasonable. This view was sustained by the commerce court, which in a lengthy opinion held (one judge dissenting) that the order was void because there was no material evidence to support it.

On the appeal here, the government insisted that while the act of 1887 to regulate commerce (24 Stat. at L. 379, §§ 14-16, chap. 104, U. S. Comp. Stat. Supp. 1911, p. 1284) made the orders of the Commission only prima facie correct, a different result followed from the provision in the Hepburn act of 1906 (34 Stat. at L. 584, § 4, chap. 3591, U. S. Comp. Stat. Supp. 1911, p. 1297) that rates should be set aside if after a hearing the 'Commission shall be of the opinion that the charge was unreasonable.' In such case it insisted that the order based on such opinion is conclusive, and (though Interstate Commerce Commission v. Union P. R. Co. 222 U. S. 547, 56 L. ed. 311, 32 Sup. Ct. Rep. 108, was to the contrary) could not be set aside, even if the finding was wholly without substantial evidence to support it.

1. But the statute gave the right to a full hearing, and that conferred the privilege of introducing testimony, and at the same time imposed the duty of deciding in accordance with the facts proved. A finding without evidence is arbitrary and baseless. And if the government's contention is correct, it would mean that the Commission had a power possessed by no other officer, administrative body, or tribunal under our government. It would mean that, where rights depended upon facts, the Commission could disregard all rules of evidence, and capriciously make findings by administrative fiat. Such authority, however beneficently exercised in one case, could be injuriously exerted in another, is inconsistent with rational justice, and comes under the Constitution's condemnation of all arbitrary exercise of power.

In the comparatively few cases in which such questions have arisen it has been distinctly recognized that administrative orders, quasi judicial in character, are void if a hearing was denied; if that granted was inadequate or manifestly unfair; if the finding was contrary to the 'indisputable character of the evidence' (Tang Tun v. Edsell, 223 U. S. 681, 56 L. ed. 610, 32 Sup. Ct. Rep. 359; Chin Yow v. United States, 208 U. S. 13, 52 L. ed. 370, 28 Sup. Ct. Rep. 201; Low Wah Suey v. Backus, 225 U. S. 468, 56 L. ed. 1167, 32 Sup. Ct. Rep. 734; Zakonaite v. Wolf, 226 U. S. 272, 57 L. ed. ——, 33 Sup. Ct. Rep. 31), or if the facts found do not, as a matter of law, support the order made (Interstate Commerce Commission v. Baltimore & S. W. R. Co. 226 U. S. 14, 57 L. ed. ——, 33 Sup. Ct. Rep. 5, Cf. Atlantic Coast Line R. Co. v. North Carolina Corp. Commission, 206 U. S. 20, 51 L. ed. 942, 27 Sup. Ct. Rep. 585; Wisconsin, M. & P. R. Co. v. Jacobson, 179 U. S. 301, 45 L. ed. 201, 21 Sup. Ct. Rep. 115; Washington ex rel Oregon R. & Nav. Co. v. Fairchild, 224 U. S. 510, 56 L. ed. 863, 32 Sup. Ct. Rep. 535; Interstate Commerce Commission v. Illinois C. R. Co. 215 U. S. 470, 54 L. ed. 287, 30 Sup. Ct. Rep. 155; Southern P. Co. v. Interstate Commerce Commission, 219 U. S. 433, 55 L. ed. 283, 31 Sup. Ct. Rep. 288; Muser v. Magone, 155 U. S. 247, 39 L. ed. 137, 15 Sup. Ct. Rep. 77).

2. The government's claim is not only opposed to the ruling in Interstate Commerce Commission v. Union P. R. Co. 222 U. S. 547, 56 L. ed. 311, 32 Sup. Ct. Rep. 108, and the cases there cited, but is contrary to the terms of the act to regulate commerce, which in its present form provides (25 Stat. at L. 861, § 6, chap. 382, U. S. Comp. Stat. 1901, p. 3168), for methods of procedure before the Commission that 'conduce to justice.' The statute, instead of making its orders conclusive against a direct attack, expressly declares that they may 'be suspended or set aside by a court of competent jurisdiction.' 36 Stat. at L. 551, § 12, chap. 309. Of course, that can only be done in cases presenting a justiciable question. But whether the order deprives the carrier of a constitutional or statutory right, whether the hearing was adequate and fair, or whether for any reason the order is contrary to law,—are all matters within the scope of judicial power.

3. Under the statute the carrier retains the primary right to make rates, but if, after hearing, they are shown to be unreasonable, the Commission may set them aside and require the substitution of just for unjust charges. The Commission's right to act depends upon the existence of this fact, and if there was no evidence to show that the rates were unreasonable there was no jurisdiction to make the order. Interstate Commerce Commission v. Northern P. R. Co. 216 U. S. 544, 54 L. ed. 609, 30 Sup. Ct. Rep. 417. In a case like the present the courts will not review the Commission's conclusions of fact (Interstate Commerce Commission v. Delaware, L. & W. R. Co. 220 U. S. 251, 55 L. ed. 456, 31 Sup. Ct. Rep. 392) by passing upon the credibility of witnesses or conflicts in the testimony. But the legal effect of evidence is a question of law. A finding without evidence is beyond the power of the Commission. An order based thereon is contrary to law, and must, in the language of the statute, be 'set aside by a court of competent jurisdiction.' 36 Stat. at L. 551, chap. 309.

4. The government further insists that the commerce act (26 Stat. at L. 743, chap. 128, U. S. Comp. Stat. 1901, p. 3163) requires the Commission to obtain information necessary to enable it to perform the duties and carry out the objects for which it was created; and having been given legislative power to make rates it can act, as could Congress, on such information, and therefore its findings must be presumed to have been supported by such information, even though not formally proved at the hearing. But such a construction would nullify the right to a hearing,—for manifestly there is no hearing when the party does not know what evidence is offered or considered, and is not given an opportunity to test, explain, or refute. The information gathered under the provisions of § 12 may be used as basis for instituting prosecutions for violations of the law, and for many other purposes, but is not available, as such, in cases where the party is entitled to a hearing. The Commission is an administrative body and, even where it acts in a quasi judicial capacity, is not limited by the strict rules, as to the admissibility of evidence, which prevail in suits between private parties. Interstate Commerce Commission v. Baird, 194 U. S. 25, 48 L. ed. 860, 24 Sup. Ct. Rep. 563. But the more liberal the practice in admitting testimony, the more imperative the obligation to preserve the essential rules of evidence by which rights are asserted or defended. In such cases the Commissioners cannot act upon their own information, as could jurors in primitive days. All parties must be fully apprised of the evidence submitted or to be considered, and must be given opportunity to cross-examine witnesses, to inspect documents, and to offer evidence in explanation or rebuttal. In no other way can a party maintain its rights or make its defense. In no other way can it test the sufficiency of the facts to support the finding; for otherwise, even though it appeared that the order was without evidence, the manifest deficiency could always be explained on the theory that the Commission had before it extraneous, unknown, but presumptively sufficient information to support the finding. Interstate Commerce Commission v. Baltimore, &c. R. R. 226 U. S. 14, 57 L. ed. ——, 33...