Houston Chamber of Commerce v. Railroad Com'n

• Citation: 19 S.W.2d 583
• Decision Date: 21 June 1929
• Docket Number: (No. 7367.)
• Parties: HOUSTON CHAMBER OF COMMERCE et al. v. RAILROAD COMMISSION OF TEXAS et al.
• Court: Court of Appeals of Texas

19 S.W.2d 583

HOUSTON CHAMBER OF COMMERCE et al. v. RAILROAD COMMISSION OF TEXAS et al.

(No. 7367.)

Court of Civil Appeals of Texas. Austin.

June 21, 1929.

Rehearing Denied July 17, 1929.

COPYRIGHT MATERIAL OMITTED

Appeal from District Court, Travis County; George Calhoun, Judge.

Consolidated suits by the Houston Chamber of Commerce and others against the Railroad Commission of Texas and others. From the judgment, the Houston Chamber of Commerce and others separately appeal. Reversed and rendered.

Fulbright, Crooker & Freeman, of Houston, for appellants Houston Chamber of Commerce, city of Houston, and commercial interests of Houston.

A. H. McKnight, of Dallas, Fred L. Wallace, of Fort Worth, Baker, Botts, Parker & Garwood, of Houston, Terry, Cavin & Mills, of Galveston, Andrews, Streetman, Logue & Mobley, of Houston, and Charles C. Huff, of Dallas, for appellants railroads.

Claude Pollard, Atty. Gen., Jack Blalock, Asst. Atty. Gen., Mart H. Royston, of Galveston, and Albert L. Reed, of Dallas, for appellees.

McCLENDON, C. J.

This case involves the validity of Railroad Commission circular No. 7529, issued March 20, 1928, equalizing the intrastate carload (60,000 pounds minimum) rates on sugar and molasses shipments originating at Galveston, Texas City, Sugarland, Beaumont, and Port Arthur, with the Houston rates on such shipments. Three suits were filed in the district court attacking the circular, one by the city of Houston, Houston Chamber of Commerce, and other Houston interests, and the other two by railroad companies. The suits were consolidated and tried to the court without a jury, resulting in a judgment upholding the circular and denying the relief sought. The Houston interests and the railroad companies have separately appealed.

The issues presented arise out of the following facts: Prior to April 12, 1927, the rates on sugar and molasses were based upon a graduated mileage scale which reached a maximum of 50 cents per 100 pounds at a distance of 185 miles from point of origin. Beyond this distance the rate remained at 50 cents per 100 pounds, regardless of distance; making in effect all points in Texas beyond 185 miles from point of origin common point territory. Some time prior to March 8, 1927, certain shippers instituted in the Railroad Commission a proceeding seeking a readjustment of Texas intrastate rates on sugar and molasses, predicated upon a similar readjustment of interstate rates provided in tariffs which had been filed with the Interstate Commerce Commission and were to become effective April 12, 1927. The Galveston Chamber of Commerce intervened, asking that Galveston and Texas City be grouped with Houston at the same rates in case any change from the old basis were made. The Port Arthur and Beaumont Chambers of Commerce intervened with a like prayer. The Houston Chamber of Commerce opposed the equalization, and the Imperial Sugar Company, operating at Sugarland, concurred in this opposition, requesting, however, in case Galveston and Texas City were equalized with Houston, that the Houston rates likewise be applied as maxima on shipments from Sugarland. The proceeding was carried on the Railroad Commission docket as cause No. 2551.

There was a hearing before the commission on March 8, 9, and 10, 1927. On April 11, 1927, as the result of a conference between the Railroad Commission and representatives of the several carriers, cities, and other parties interested in the proceeding, the Railroad Commission issued circular No. 7193, which in effect promulgated a graduated mileage scale of rates (on 60,000 pound minimum cars) reaching a maximum of 73 cents per 100 pounds at 975 miles. It should be noted here that the interstate rates were predicated upon 60,000 pound minimum cars which alone are affected by the commission's circular; and the rates herein discussed are limited to that class of freight. This circular was made effective at 12:01 a. m. April 12, 1927, and recited the fact that the interstate rates would then become effective as creating "an emergency and necessity for the invoking of the authority conferred upon it (the Commission) by Articles 6458 and 6459 (Revised Civil Statutes)." There was no further notice or hearing upon the matter.

March 20, 1928, the commission issued circular 7529, the one here in question, under the same docket No. 2551, and filed an elaborate opinion setting forth the grounds upon which the circular was predicated. This circular, other than in some unimportant details, provided that the Houston rates, where less than from Galveston, Texas City, Sugarland, Beaumont, and Port Arthur, should apply as maxima (a) from Galveston, Texas City, and Sugarland to all points more than 100 miles from Houston; (b) from Beaumont to all points more than 130 miles from Houston; and (c) from Port Arthur to all points more than 150 miles from Houston. The effect of this circular was to equalize Houston and the several other shipping points involved in all territory where Houston enjoyed the benefit of the lower rate without giving to Houston a corresponding benefit in the territory in which the rates were lower from the other shipping points. Manifestly, therefore, Port Arthur and Beaumont retained the advantage of the strict mileage scale of rates in a large section of Northeast Texas, whereas in all other portions of the state more than 130 or 150 miles from Houston those ports enjoyed the benefit of the lower Houston mileage rates. The same situation was created with reference to Sugarland, Texas City, and Galveston, in that they alone retained the benefit of the lower mileage rates in a large section of Southwest Texas, but were given the benefit of the Houston lower mileage rates in all other portions of the state beyond 100 miles from Houston. In other words, while the other several shipping points were equalized with Houston in Houston territory, there was no equalization between Houston and those points in the respective territories of the latter. That this situation resulted in a palpable discrimination against Houston in favor of the other shipping points is manifest.

Our statutes defining and condemning "unjust discrimination" specify as coming within this definition the giving of "any undue or unreasonable preference or advantage to any particular * * * locality." Rev. St. 1925, art. 6474, subd. 1. The words "undue" and "unreasonable" are probably used synonymously. "Undue" is defined as "excessive, inordinate, disproportioned." "Unreasonable" we think is used in the sense of not having any sound basis or justification in reason. As above shown, the discrimination here wrought is manifest, and, unless it can be justified upon some ground affording a reasonable basis for the discrimination, it is necessarily excessive, inordinate, disproportioned, and beyond the power of the commission to create, and therefore void. See in this connection Railroad Commission v. Galveston (Tex. Civ. App.) 115 S. W. 94 (writ of error denied) and Railroad Commission v. Compress Co. (Tex. Civ. App.) 264 S. W. 214 (expressly approved by Supreme Court, 114 Tex. 582, 278 S. W. 1115). The several grounds upon which appellees contend that it can be reasonably maintained and justified will be considered later.

Before considering the merits of the controversy, we will dispose of a question of procedure. Appellants contended in the trial court, and now urge, that circular 7529 was void because it was issued without notice or hearing, and therefore contravenes Revised Statutes 1925, art. 6449, which provides for ten days' notice to the affected carriers before any rates may be established by the commission.

It is not contested that notice is necessary, except where dispensed with by statute. Appellants contend that, when circular 7193 was issued on April 11, 1927, the commission exhausted its power to act under the previous notice and hearing, and, before any modification of the rates prescribed in that circular could be made, a further hearing after due notice was essential. Appellees contend, on the other hand, that circular 7193 was merely an emergency order, that the commission still held jurisdiction over the matter by reserving the question of equalization for future determination, and that further notice or hearing was unnecessary.

Circular No. 7193 constituted an entire change in the basis of rates from that theretofore existing. It was an emergency order we think only in the sense that it was put into effect at midnight of the day on which it was made to meet the emergency of the effectiveness of interstate rates at that time. If the order had disposed of the entire matter then before the commission, we would have an entirely different question; but such was not the case. The matter then pending before the commission involved the entire subject of sugar and molasses rates in Texas, and the circular merely prescribed the general basis of rates without passing upon the equalization matter which had been brought into the case and was then pending before the commission. While conceding the necessity of notice and hearing, and conceding that such necessity applies to a modification of a commission rate as well as to an original rate made by the commission (see Rev. St. 1925, art. 6448, subd. 6), we are of the view that it is not essential that the commission dispose of a matter pending before it in a single order, but that it may in a proper case make a preliminary disposition of the matter, and reserve for further consideration, and dispose of by subsequent order, other questions or issues involved in the main issue without further notice or hearing. The record shows that this is what the commission attempted to do, and we hold that it acted in that regard within its powers.

The carrier appellants urge two grounds of invalidity of circular 7529 other than its discriminatory effect upon the contending cities and their respective commercial interests. These we...