East Tennessee, Virginia Georgia Railway Company v. Interstate Commerce Commission

• Decision Date: 08 April 1901
• Docket Number: No. 175,175
• Citation: East Tennessee, Virginia Georgia Railway Company v. Interstate Commerce Commission, 181 U.S. 1, 21 S.Ct. 516, 45 L.Ed. 719 (1901)
• Parties: EAST TENNESSEE, VIRGINIA, & GEORGIA RAILWAY COMPANY et al., Appts. , v. INTERSTATE COMMERCE COMMISSION
• Court: U.S. Supreme Court

181 U.S. 1

21 S.Ct. 516

45 L.Ed. 719

EAST TENNESSEE, VIRGINIA, & GEORGIA RAILWAY COMPANY et al., Appts.,

v INTERSTATE COMMERCE COMMISSION.

No. 175.

Argued February 26, 27, 1900.

Decided April 8, 1901.

The Board of Trade of Chattanooga, Tennessee, a chartered corporation, petitioned the Interstate Commerce Commission for relief under the Act to Regulate Commerce. The defendants, the East Tennessee, Virginia, & Georgia Railway, and numerous other rail and steamship companies, were alleged to be common carriers subject to the Act to Regulate Commerce, and engaged in the transportation of passengers and freight by all rail, or partly by rail and water, from Boston, New York, Philadelphia, Baltimore, and other places on the eastern seaboard to Chattanooga, Nashville, and Memphis, in the state of Tennessee.

It was alleged that the defendants conveyed freight from the eastern seaboard, through and beyond Chattanooga, to the cities of Nashville and Memphis for a lesser rate to such long-distance points than was charged by them for like freight to Chattanooga, the shorter distance. This, it was averred, was a violation of § 4 of the act, prohibiting a greater charge for the shorter than for the longer haul, under substantially similar circumstances and conditions. And the disregard of the statute in the particular just stated, it was asserted, necessarily gave rise to violations of other provisions of the Act to Regulate Commerce; viz., of § 1, which forbids unjust and unreasonable charges, and of § 3, making unlawful the giving of undue or unreasonable preferences.

It is unnecessary to consider the complaint of the lesser charge to Memphis, the longer, than to Chattanooga, the shorter, distance, since this grievance was in effect held by the Commission to be without substantial merit; and its conclusion on this subject was not reviewed by either of the courts below, and it is not now seriously, if at all, questioned. After hearing, the Commission made elaborate findings of fact, and stated the legal conclusions which were deduced therefrom. 5 I. C. C. Rep. 546, 4 Inters. Com. Rep. 213. An order was made forbidding the defendant carriers from charging a greater compensation for the transportation for the shorter distance to Chattanooga than was demanded to Nashville, the longer distance. The execution, however, of this order, was suspended until a date named, so that the carriers might have opportunity to apply to the Commission to be relieved from the operation of the order. No application to be exempted having been made, and the carriers not having conformed to the behests of the Commission, this proceeding to compel obedience was commenced in the circuit court. In that court additional testimony was taken, but it was all merely cumulative of that which had been adduced before the Commission. The circuit court (85 Fed. Rep. 107), whilst not approving the reasoning by which the Commission had sustained the order by it entered, nevertheless on other grounds affirmed the command of the Commission. The circuit court of appeals for the sixth circuit, to which the case was taken, whilst it held that the Commission had misapplied the law, and although it did not approve of the reasoning given by the circuit court for its decree, nevertheless affirmed the action of that court. 39 C. C. A. 413, 99 Fed. Rep. 52.

Mr. Ed. Baxter for appellants.

Messrs. L. A. Shaver and James E. Boyd for appellee.

Mr. Justice White, after making the foregoing statement of the case, delivered the opinion of the court:

To comprehend the contentions which are made on this record it is essential to give a summary of the condition as depicted in the findings of the Commission, and upon which the relief which it granted was based.

The state of affairs was as follows: Freight from the eastern seaboard to Cincinnati and other western points north of the Ohio river was controlled by the classification and tariff of rates prevailing in what was denominated as the northern or trunk line territory. On the other hand, the area south of the Ohio river, which was denominated the southern territory, was governed by the classification and tariff of rates prevailing in that territory; such classification and tariff giving rise in most instances to a higher charge than that which prevailed in the northern territory. This general difference between the rates in the northern and those in the southern territory the Commission found arose from inherent causes, and, although they might in some aspects disadvantageously influence traffic in the southern territory, were yet the result of such essentially normal conditions as to give rise to no just cause of complaint. On this subject the Commission said:

'There may be some disadvantage to Chattanooga from this circumstance, since an article of a given class under the first-named system may be in a lower class under the other system, but the injury, if any, resulting from differences of that character is not believed to be serious.

'The general range of rates in the territory covered by the Southern Railway & Steamship Association is materially higher than in the territory of the Trunk Line Association, the difference resulting mainly from the much greater volume of traffic in the latter section; and it is inevitable that difficulties should exist and complaints arise along the line of division between varying systems of classification and unlike methods of traffic construction.'

The grievance alleged arose in this wise: Where freight destined to a point in the southern territory, instead of being sent by the southern routes, was shipped from the eastern seaboard by the northern or trunk line, via Cincinnati or other trunk-line points north of the Ohio river, it would be classified and charged for according to the northern trunk-line rates. But such freight thus shipped through the trunk line or northern route, bound for Chattanooga or other southern points, on leaving Cincinnati and on entering the southern area for the purpose of completing the transit, became subject to the southern classification and rates. Thus, irrespective of the mere form, and considering the substance of things, the charge on freight shipped in this way was made according to the northern classification and rate for the transportation in the northern territory to points on the Ohio river, plus the southern classification and rates from those points to the place in the southern territory to which the freight was ultimately destined, this being equivalent to the rate which the merchandise would have borne had it been shipped so as to subject it wholly to the southern-territory rates.

This was, however, not universally the case. The single exception (eliminating Memphis from view) was this: The Louisville & Nashville Railroad, operating from Cincinnati to Nashville, instead of causing the merchandise shipped from the eastern seaboard through Cincinnati to Nashville to bear the southern territory classification and rate from Cincinnati to Nashville, submitted the traffic between Cincinnati and Nashville to the northern, instead of to the southern, territory rates. It hence followed that merchandise shipped from the eastern seaboard to Nashville through the northern territory bore a less charge than it would have borne if shipped to Nashville through the southern territory.

To compete with the Louisville & Nashville Railroad for Nashville traffic, the carriers in the southern territory fixed their rate to Nashville so as to make it as low as that charged to that point by the Louisville & Nashville Railroad. It hence came to pass that freight shipped from the eastern seaboard to Chattanooga paid the southern rate, whilst freight shipped to Nashville, although it passed through Chattanooga, went on to Nashville at the lower rate there prevailing, which lower rate was caused by the action of the Louisville & Nashville Railroad in exceptionally reducing its charge to Nashville. We say, by the action of the Louisville & Nashville Railroad, because the findings of the Commission expressly establish that the exceptional rate to Nashville, which was established by the Louisville & Nashville Railroad, was not caused by water competition at Nashville, but was exclusively the result of the action of the Louisville & Nashville Railroad in exceptionally charging a lower rate to Nashville different from that which it demanded for traffic to other points through the southern territory. That the other carriers through the southern territory, including those operating from Chattanooga to Nashville, were, in consequence of this condition at Nashville, compelled either to adjust their rates to Nashville to meet the competition or abandon all freight traffic to Nashville, was found by the Commission to be beyond dispute. On both these subjects the Commission said.

'There might, of course, be such an advance in rail rates that shipments from the east would take the water route from Cincinnati. What amount of difference would produce that result it is impossible to determine from the testimony; but we find that such difference might be substantially greater than it is at present without important effect upon the railroad tonnage from the east, and that the through rate to Nashville is in no sense controlled by water competition at that point, either actually encountered or seriously apprehended.

* * * * *

'The lower rates accepted by the carriers engaged in the transportation of eastern merchandise to Nashville via Chattanooga are not forced upon them by any water competition at the former place. In performing this service for the compensation fixed by the present tariffs, these carriers are not affected by the circumstance that water communication exists between Cincinnati and Nashville. The Nashville rate is independent of the lines operating through Chattanooga, and those lines have no voice in determining its amount. That rate is made by the...