Board of Railroad Com Rs of State of North Dakota v. Great Northern Ry Co

• Decision Date: 19 May 1930
• Docket Number: No. 364,364
• Citation: 50 S.Ct. 391,281 U.S. 412,74 L.Ed. 936
• Parties: BOARD OF RAILROAD COM'RS OF STATE OF NORTH DAKOTA et al. v. GREAT NORTHERN RY. CO. et al
• Court: U.S. Supreme Court

281 U.S. 412

50 S.Ct. 391

74 L.Ed. 936

BOARD OF RAILROAD COM'RS OF STATE OF NORTH DAKOTA et al.

v GREAT NORTHERN RY. CO. et al.

No. 364.

Argued April 17, 1930.

Decided May 19, 1930.

Messrs. John E. Benton, of Washington, D. C., and James Morris, of Carrington, N. D., for appellants.

[Argument of Counsel from pages 412-414 intentionally omitted] Mr. R. J. Hagman, of St. Paul, Minn., for appellees.

[Argument of Counsel from pages 414-416 intentionally omitted] Mr. Chief Justice HUGHES delivered the opinion of the Court.

On May 8, 1929, the Board of Railroad Commissioners of the State of North Dakota made an order prescribing intrastate class rates. The existing rates were reduced about 10 per cent, and the order was made effective on July 1, 1929. The appellees, common carriers engaged in interstate transportation and also in intrastate transportation in North Dakota, brought this suit on June 25, 1929, in the District Court to enjoin enforcement of the order pending the determination by the Interstate Commerce Commission of the question whether the intrastate rates, as thus prescribed, cause an undue or unreasonable discrimination against interstate commerce in violation of section 13 of the Interstate Commerce Act (49 USCA § 13). The District Court, composed of three judges, as required by statute, granted an interlocutory injunction to this effect (33 F.(2d) 934), and the Railroad Commission of the State and the other state officials, who were defendants, have brought this appeal.

On August 26, 1920, the Interstate Commerce Commission, in a proceeding known as Ex parte 74, authorized a general advance in interstate freight rates throughout the United States. Increased Rates, 1920, 58 I. C. C. 220. The appellees then applied to the Board of Railroad Commissioners of North Dakota for authority to make increases in the North Dakota intrastate class rates to correspond with the increases which had been made in the interstate class rates. The State Commission denied the application. Thereupon, in a proceeding (Docket No. 12,085) under section 13 of the Interstate Commerce Act the Interstate Commerce Commission made a finding that the interstate rates established by the carriers, as a result of the decision in Ex parte 74, were reasonable for interstate transportation and that the failure correspondingly to increase the intrastate rates within the state of North Dakota resulted in an undue preference to the shippers of intrastate traffic within that state and in an unjust discrimination against interstate commerce. On May 3, 1921, the Interstate Commerce Commission entered an order requiring these carriers to increase the intrastate freight rates in North Dakota so as to correspond with the advances in interstate rates. North Dakota Rates, Fares, and Charges, 61 I. C. C. 504. These increases were made, effective May 27, 1921.

On June 5, 1922, the Board of Railroad Commissioners of North Dakota made an order reciting that the order of the Interstate Commerce Commission of May 3, 1921, practically deprived the State Commission of its power to regulate intrastate rates and that appropriate action should be taken to terminate the disability. Upon application by the State Commission, the Interstate Commerce Commission (July 22, 1922) vacated its order of May 3, 1921, in so far as it related to intrastate rates in North Dakota, stating that 'the existing increased intrastate rates and charges for freight services in said State will continue in force and effect until revoked, modified or superseded by appropriate lawful proceedings before said Board' (the State Commission) 'or as otherwise provided by law.' The State Commission was thus left free to exercise its lawful authority over intrastate rates.

The Congress, by Joint Resolution of January 30, 1925 (43 Stat. 801 (49 USCA § 55)), directed the Interstate Commerce Commission to make an investigation of the rate structure of common carriers in order to determine to what extent and in what manner existing rates and charges might be unreasonable or unjustly discriminatory, and to make such changes, adjustments and redistribution of rates and charges as might be found to be necessary. The Commission was required to make from time to time such decisions as it might deem appropriate to establish a just and reasonable relation between rates upon designated classes of traffic.¹ Pursuant to this direction, the Inter- state Commerce Commission on March 12, 1925, instituted the proceeding known as Docket No. 17000, 'Rate Structure Investigation,' and all common carriers subject to the Interstate Commerce Act were made respondents. Notice was sent to the Governor of each state and to the state regulatory commissions. The Interstate Commerce Commission thus undertook the investigation of the rate structure in the entire western district, including class rates in the region embracing the state of North Dakota. The Board of Railroad Commissioners of that state, with other state railroad commissions, have been cooperating in this investigation and the proceeding is still pending.

On May 29, 1925, the Board of Railroad Commissioners of North Dakota on its own motion began an investigation for the purpose of determining to what extent, if any, the North Dakota intrastate rates were unreasonable or unjustly discriminatory. In September, 1927, the State Commission directed that the record should be held open for further hearing after the Interstate Commerce Commission rendered a decision in its Docket No. 17000. A few months later, the State Commission resumed its general investigation, and a hearing was held in relation to class rates and certain other rates. This resulted in the order of May 8, 1929, now in question, reducing the existing intrastate class rates.

The appellees then filed a petition with the Interstate Commerce Commission alleging that the scale of class rates required by the State Commission would unjustly discriminate against persons and localities in interstate commerce, and would constitute an unreasonable burden on interstate commerce, in violation of section 13 of the Interstate Commerce Act, and asked the Interstate Commerce Commission to institute a proceeding to determine whether such unjust discrimination would result and to prohibit it by prescribing the class rates to be charged by the carriers for intrastate transportation in North Dakota. Thereupon, this suit was brought. The interlocutory injunction, granted below, restrained the State Commission and other state officials from putting into effect the intrastate class rates prescribed by the order of May 8, 1929, until the Interstate Commerce Commission, either in its Docket No. 17000, or in the proceeding under section 13 of the Interstate Commerce Act which the plaintiffs (appellees) had petitioned the Interstate Commerce Commission to institute, determined the question of unjust discrimination with respect to interstate commerce, and until the further order of the court.

It should be observed at the outset that there is no contention on the part of the carriers that the intrastate rates fixed by the State Commission are confiscatory. There is no challenge of the authority of the State Commission under the Constitution and laws of the state to prescribe these rates for intrastate traffic, or of the validity or regularity of the proceedings which resulted in the order of the State Commission, aside from the alleged effect upon interstate commerce.

The question of the control of the state, as against an objection of this sort, over rates for transportation exclusively intrastate was considered in the Minnesota Rate Cases, 230 U. S. 352, 33 S. Ct. 729, 57 L. Ed. 1511, 48 L. R. A. (N. S.) 1151, Ann. Cas. 1916A, 18. The state of Minnesota had established rates for intrastate transportation throughout the state, and the complaining carriers insisted that by reason of the passage of the Interstate Commerce Act the state could no longer exercise the untrammeled statewide authority that it had formerly enjoyed in prescribing reasonable intrastate rates, and that the scheme of rates which Minnesota had prescribed, even if found to be otherwise not subject to attack, was void because of their injurious effect upon interstate commerce. There had been no finding by the Interstate Commerce Commission of unjust discrimination against interstate commerce by reason of the intrastate rates and, reserving the question of the validity and consequence of such a finding if one were made by the Interstate Commerce Commission, the court decided that there was no ground for invalidating the action of the state. Dealing with the interblending of operations in the conduct of interstate and local business by interstate carriers, the court said that these considerations were for the practical judgment of Congress, and that if adequate regulation of interstate rates could not be maintained without imposing requirements as to such intrastate rates as substantially affected the former, it was for Congress, within the limits of its constitutional authority over interstate commerce, to determine the measure of the regulation it should apply. It was not the function of the court to provide a more comprehensive scheme of regulation than Congress had decided upon, nor, in the absence of Federal action, to deny effect to the laws of the state enacted within the field which it was entitled to occupy until its authority was limited through the exertion by Congress of its paramount constitutional power. On the assumption that section 3 of the Interstate Commerce Act (49 USCA § 3) should be construed as applicable to unreasonable discriminations between localities in different states, as well when arising from an intrastate rate as compared with an interstate rate as when due to interstate rates exclusively, the court was of the opinion that the controlling principle governing the enforcement of the act should be applied to...