Houston, East West Texas Railway Company v. United States Texas Racific Railway Company v. United States, No. 567

CourtUnited States Supreme Court
Writing for the CourtHughes
Citation58 L.Ed. 1341,234 U.S. 342,34 S.Ct. 833
PartiesHOUSTON, EAST & WEST TEXAS RAILWAY COMPANY and Houston & Shreveport Railroad Company et al., Appts., v. UNITED STATES, the Interstate Commerce Commission et al. TEXAS & RACIFIC RAILWAY COMPANY et al., Appts., v. UNITED STATES, the Interstate Commerce Commission et al
Docket NumberNo. 567,Nos. 567 and 568,No. 568
Decision Date08 June 1914

234 U.S. 342
34 S.Ct. 833
58 L.Ed. 1341
HOUSTON, EAST & WEST TEXAS RAILWAY COMPANY and Houston & Shreveport Railroad Company et al., Appts.,

v.

UNITED STATES, the Interstate Commerce Commission et al.

No. 567.

TEXAS & RACIFIC RAILWAY COMPANY et al., Appts.,

v.

UNITED STATES, the Interstate Commerce Commission et al.

No. 568.
Nos. 567 and 568.
Argued October 28 and 29, 1913.
Decided June 8, 1914.

[Syllabus from pages 342-344 intentionally omitted]

Page 344

Messrs. Hiram M. Garwood, James G. Wilson, and Maxwell Evarts for appellants in No. 567.

Messrs. Thomas J. Freeman, George Thompson, and W. L. Hall for appellants in No. 568.

Assistant Attorney General Denison and Mr. Thurlow M. Gordon for the United States.

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

Page 345

Messrs. R. G. Pleasant, Luther M. Walter, John S. Burchmore, M. W. Borders, and W. M. Barrow for intervener, the Railroad Commission of Louisiana, in No. 567.

Mr. Justice Hughes delivered the opinion of the court:

These suits were brought in the commerce court by the Houston, East & West Texas Railway Company and the Houston & Shreveport Railroad Company, and by the Texas & Pacific Railway Company, respectively, to set aside an order of the Interstate Commerce Commission, dated March 11, 1912, upon the ground that it exceeded the Commission's authority. Other railroad companies1 intervened in support of the petitions, and the Interstate Commerce Commission and the Railroad Commission of Louisiana intervened in opposition. The petitions were dismissed. 205 Fed. 380, 391.

The order of the Interstate Commerce Commission was made in a proceeding initiated in March, 1911, by the Railroad Commission of Louisiana. The complaint was that the appellants, and other interstate carriers, maintained unreasonable rates from Shreveport, Louisiana, to various points in Texas, and, further, that these carriers, in the adjustment of rates over their respective lines, unjustly discriminated in favor of traffic within the state of Texas, and against similar traffic between Louisiana and Texas. The carriers filed answers; numerous pleas of intervention by shippers and commercial bodies were allowed; testimony was taken and arguments were heard.

The gravamen of the complaint, said the Interstate

Page 346

Commerce Commission, was that the carriers made rates out of Dallas and other Texas points into eastern Texas which were much lower than those which they extended into Texas from Shreveport. The situation may be briefly described: Shreveport, Louisiana, is about 40 miles from the Texas state line, and 231 miles from Houston, Texas, on the line of the Houston, East & West Texas and Houston & Shreveport Companies (which are affiliated in interest); it is 189 miles from Dallas, Texas, on the line of the Texas & Pacific. Shreveport competes with both cities for the trade of the intervening territory. The rates on these lines from Dallas and Houston, respectively, eastward to intermediate points in Texas, were much less, according to distance, than from Shreveport westward to the same points. It is undisputed that the difference was substantial, and injuriously affected the commerce of Shreveport. It appeared, for example, that a rate of 60 cents carried first-class traffic a distance of 160 miles to the eastward from Dallas, while the same rate would carry the same class of traffic only 55 miles into Texas from Shreveport. The first-class rate from Houston to Lufkin, Texas, 118.2 miles, was 50 cents per 100 pounds, while the rate from Shreveport to the same point, 112.5 miles, was 69 cents. The rate on wagons from Dallas to Marshall, Texas, 147.7 miles was 36.8 cents, and from Shreveport to Marshall, 42 miles, 56 cents. The rate on furniture from Dallas to Longview, Texas, 124 miles, was 24.8 cents, and that from Shreveport to Longview, 65.7 miles was 35 cents. These instances of differences in rates are merely illustrative; they serve to indicate the character of the rate adjustment.

The Interstate Commerce Commission found that the interstate class rates out of Shreveport to named Texas points were unreasonable, and it established maximum class rates for this traffic. These rates, we understand, were substantially the same as the class rates fixed by the

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Railroad Commission of Texas, and charged by the carriers, for transportation for similar distances in that state. The Interstate Commerce Commission also found that the carriers maintained 'higher rates from Shreveport to points in Texas' than were in force 'from cities in Texas to such points under substantially similar conditions and circumstances,' and that thereby 'an unlawful and undue preference and advantage' was given to the Texas cities, and a 'discrimination' that was 'undue and unlawful' was effected against Shreveport. In order to correct this discrimination, the carriers were directed to desist from charging higher rates for the transportation of any commodity from Shreveport to Dallas and Houston, respectively, and intermediate than were contemporaneously charged for the carriage of such commodity from Dallas and Houston toward Shreveport for equal distances, as the Commission found that relation of rates to be reasonable. 23 Inters. Com. Rep. 31, 46-48.

The order in question is set forth in the margin.2 The

Page 348

report states that under this order it will be the duty of the companies 'to duly and justly equalize the terms and conditions' upon which they will extend 'transportation to traffic of a similar character, moving into Texas from

Page 349

Shreveport, with that moving wholly within Texas,' but that, in effecting such equalization, the class scale rates as prescribed shall not be exceeded.

In their petition in the commerce court, the appellants assailed the order in its entirety, but subsequently they withdrew their opposition to the fixing of maximum class rates, and these rates were put in force by the carriers in May, 1912. The attack was continued upon that portion of the order which prohibited the charge of higher rates for carrying articles from Shreveport into Texas than those charged for eastward traffic from Dallas and Houston, respectively, for equal distances. There are, it appears, commodity rates fixed by the Railroad Commission of Texas for intrastate hauls, which are substantially less than the class, or standard, rates prescribed by that Commission; and thus the commodity rates charged by the carriers from Dallas and Houston eastward to Texas points are less than the rates which they demand for the transportation of the same articles for like distances from Shreveport into Texas. The present controversy relates to these commodity rates.

The point of the objection to the order is that, as the discrimination found by the Commission to be unjust arises out of the relation of intrastate rates, maintained under state authority, to interstate rates that have been upheld as reasonable, its correction was beyond the Commission's power. Manifestly the order might be complied with, and the discrimination avoided, either by reducing the interstate rates from Shreveport to the level of the competing intrastate rates, or by raising these in-

Page 350

trastate rates to the level of the interstate rates, or by such reduction in the one case and increase in the other as would result in equality. But it is urged that, so far as the interstate rates were sustained by the Commission as reasonable, the Commission was without authority to compel their reduction in order to equalize them with the lower intrastate rates. The holding of the commerce court was that the order relieved the appellants from further obligation to observe the intrastate rates, and that they were at liberty to comply with the Commission's requirements by increasing these rates sufficiently to remove the forbidden discrimination. The invalidity of the order in this aspect is challenged upon two grounds:

(1) That Congress is impotent to control the intrastate charges of an interstate carrier even to the extent necessary to prevent injurious discrimination against interstate traffic; and

(2) That, if it be assumed that Congress has this power, still it has not been exercised, and hence the action of the Commission exceeded the limits of the authority which has been conferred upon it.

First. It is unnecessary to repeat what has frequently been said by this court with respect to the complete and paramount character of the power confided to Congress to regulate commerce among the several states. It is of the essence of this power that, where it exists, it dominates. Interstate trade was not left to be destroyed or impeded by the rivalries of local government. The purpose was to make impossible the recurrence of the evils which had overwhelmed the Confederation, and to provide the necessary basis of national unity by insuring 'uniformity of regulation against conflicting and discriminating state legislation.' By virtue of the comprehensive terms of the grant, the authority of Congress is at all times adequate to meet the varying exigencies that arise, and to protect the national interest by securing the freedom of interstate

Page 351

commercial intercourse from local control. Gibbons v. Ogden, 9 Wheat. 1, 196, 224, 6 L. ed. 23, 70, 76; Brown v. Maryland, 12 Wheat. 419, 446, 6 L. ed. 678, 688; Mobile County v. Kimball, 102 U. S. 691, 696, 697, 26 L. ed. 238, 240; Smith v. Alabama, 124 U. S. 465, 473, 31 L. ed. 508, 510, 1 Inters. Com. Rep. 804, 8 Sup. Ct. Rep. 564; Second Employers' Liability Cases (Mondou v. New York, N. H. & H. R. Co.) 223 U. S. 1, 47, 53, 54, 56 L. ed. 327, 345, 347, 348, 38 L.R.A.(N.S.) 44, 32 Sup. Ct. Rep. 169, 1 N. C. C. A. 875; Minnesota Rate Cases (Simpson v. Shepard) 230 U. S. 352, 398, 399, 57 L. ed. 1511, 1540, 1541, 48 L.R.A.(N.S.) 1151, 33 Sup. Ct. Rep. 729.

Congress is empowered to regulate,—that is, to provide...

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