Interstate Commerce Commission v. Chicago Great Western Railway Company

• Decision Date: 23 March 1908
• Docket Number: No. 73,73
• Parties: INTERSTATE COMMERCE COMMISSION, Appt., v. CHICAGO GREAT WESTERN RAILWAY COMPANY et al., Appellees
• Court: U.S. Supreme Court

209 U.S. 108

28 S.Ct. 493

52 L.Ed. 705

INTERSTATE COMMERCE COMMISSION, Appt.,

v CHICAGO GREAT WESTERN RAILWAY COMPANY et al., Appellees.

No. 73.

Argued April 16, 17, 1907.

Decided March 23, 1908.

Certain proceedings were had before the Interstate Commerce Commission. They were commenced by the filing of a petition by the Chicago Live Stock Exchange in April, 1902, charging the defendants, who are now the appellees, with the violation of §§ 1 and 3 of the interstate commerce act of February 4, 1887. [24 Stat. at L. 379, chap. 104, U. S. Comp. Stat. 1901, p. 3154.] The specific offense stated was that the defendants were charging higher rates of freight upon live stock shipped from Missouri river points, and other points similarly situated, to Chicago, than upon dressed meats and the prepared products known as packing-house products. It was contended that this higher rate of freight was an unlawful discrimination against shippers of live stock to Chicago, and gave to shippers of packing-house products an undue and unreasonable preference and advantage over the former; that it subjected the Chicago Live Stock Exchage and its members, who were engaged in the business of selling live stock on commission, as well as the owners of live stock and the shippers thereof, to an unreasonable prejudice and disadvantage. The several defendants, with one or two exceptions, answered, denying the allegations of the complaint. After a hearing, the Interstate Commerce Commission, on January 7, 1905, filed its report and opinion, including findings of fact, and made an order, which is the foundation of this suit. The order is in these words:

Order of Commission.

This case being at issue upon complaint and answers on file, and having been duly heard and submitted by the parties, and full investigation of the matters and things involved having been had, and the Commission having, on the date hereof, made and filed a report and opinion containing its findings of fact and conclusions thereon, which said report and opinion is hereby referred to and made a part of this order:

It is ordered that, in accordance with said report and opinion, the present relation of rates maintained and enforced by defendants [naming them all, eighteen in number], whereby their rates for transportation are higher upon live cattle and live hogs than upon the dressed or prepared products of cattle and hogs on shipments thereof to Chicago, in the state of Illinois, from points on the Missouri river, Sioux City, in the state of Iowa, to Kansas City, in the state of Missouri, inclusive, and from South St. Paul, in the state of Minnesota, or from points in the territory between the Missouri river or South St. Paul and Chicago, constitutes wrongful prejudice and discrimination, in violation of the provisions of the act to regulate commerce; and that said defendants be, and each of them is hereby, notified and required to cease and desist, on or before the 15th day of February, 1905, from maintaining or enforcing the said unlawful relation of rates, and from further continuing said unlawful prejudice and discrimination.

And it is further ordered that a notice embodying this order be forthwith sent to each of the defendant corporations, together with a copy of the report and opinion of the Commission herein, in conformity with the provisions of § 15 of the act to regulate commerce.

The defendants not complying with this order, the Interstate Commerce Commission caused this suit to be commenced in the circuit court of the United States for the northern district of Illinois, seeking to compel compliance. The defendants answered, admitting service of the order and refusal to comply therewith, denying that it was legal or binding, but, on the contrary, claiming that it was in violation of their rights. After the filing of the petition to enforce the order of the Commission, and the answers thereto, and in August, 1905, the Commission also commenced an original proceeding under and by virtue of the act of February 19, 1903 (32 Stat. at L. 847, chap. 708, U. S. Comp. Stat. Supp. 1907, p. 880), known as the Elkins act, charging substantially the same discrimination. These case were consolidated and heard before the circuit court, an enormous volume of additional testimony being taken, and on November 20, 1905, that court announced its opinion, stated its findings of fact and conclusions of law, and ordered that the bill should be dismissed. A decree accordingly was so entered. 141 Fed. 1003. The findings of fact were as follows:

'First. That the live-stock rates are reasonable in themselves. All live stock from points west, southwest, and northwest of the Missouri river and St. Paul are shipped on a proportional rate from the Missouri river or St. Paul to Chicago. These rates are equal to or less than the rates on dressed meats and packing-house products between the same points. There can be, and is, no complaint as to such traffic. The local rates from the Missouri river and St. Paul, and from 150 miles east, to Chicago, are as shown in above schedule. These rates gradually decrease until the Mississippi river is reached, and the average Iowa rate is 21 cents. The great weight of evidence indicates that these rates are at least reasonably low.

'Second. That the cost of carrying live stock is greater than that of carrying dressed meats and packing-house products.

'Third. That the value of the service of carriage is greater to the packers, because of the higher price of a car of dressed meats or packing-house products. Dressed meats and packing-house products are in value worth nearly twice as much as live stock. This factor is important, in ordinary cases, however, in part, because of the greater risk of carriage of high-priced commodities. In these cases, as to the particular commodities in question, the evidence shows that the defendant railroad companies pay out a much larger amount of damages for losses arising from the carriage of live stock than they do for losses arising from the carriage of dressed meats and packing-house products, in proportion to the value of the products carried, and more in damages per car regardless of the value. This makes the risk of carriage greater for live stock. The result is that the value of the service is not such an important factor in this kind of a case as it is considered to be in ordinary cases.

'Fourth. That the rates in question given to the packers at Missouri river and St. Paul were the result of competition. The product of the packers at these points was large in quantity, was certain and continuous in amount, was in the hands of a few people, and for years before the Federal injunction of March, 1902, had been competed for so strenuously by the railroads reaching and passing through these points, as to cause the cutting of rates and the giving of secret rebates in large amounts. Four of the defendant companies, the Chicago Milwaukee, & St. Paul Railroad Company, the Chicago & Northwestern Railway Company, the Chicago, Rock Island, & Pacific Railway Company, and the Chicago, Burlington, & Quincy Railroad Company, passed through these points into the territory west of the Missouri river and St. Paul. Four other of the defendant companies, the Chicago Great Western Railway Company, the Chicago & Alton Railway Company, the Illinois Central Railroad Company, and the Wabash Railroad Company, reached the Missouri river points and St. Paul, competing for this business. Other railroads, running south to the Gulf of Mexico, also competed more or less for said business, including the Atchison, Topeka, & Santa F e Railway. After said injunction was granted the defendant railroads (according to evidence herein) obeyed it, and until August of that year the said traffic was carried under competition between the defendants at the rate of 23 1/2 cents from Missouri river points to Chicago, and 25 cents from St. Paul to Chicago, etc., as set our above. As a result of such competition, the Chicago Great Western Railway Company became dissatisfied with the proportion of the business it received, and, in order to get what it claimed as its share, cut the rate to 20 cents to Chicago and 18 1/2 cents to the Indiana line for eastern business, and published the same. This it did under a contract with the packers running for seven years. The Chicago Great Western Railway Company was the longest route from Chicago to the Missouri river points. The other railroad defendants, to meet the rate made by the Chicago Great Western Railway Company, as a result of competition, met and published the same rate. These rates were not made voluntarily, but from necessity arising from competition; the necessity being that of carrying the goods at the lower rate or losing the business to which the officers of said companies thought they were entitled. This cutting of the rate by the Chicago Great Western Railway Company was not the origin of competition. That had existed legally since March, 1902, between defendant railroads and also between them and the Atchison, Topeka, & Santa F e- Railway Company. There was not competition enough at said points to lower the rate as to live stock. There was little and different competition on rates as to live stock at points between the Missouri river and St. Paul and Chicago. The only places where the opportunities for competition existed as to live stock the same as to packing-house products were immediately at Missouri river points and St. Paul, and there only as to live stock driven in on foot from the surrounding country. There is comparatively a small amount of this stock. If it was exactly the same kind of a commodity as that furnished by the packers, there would be an opportunity for competition in this at these points alone.

'Fifth. That the competition in question did not result from agreement of the defendants, but was actual, genuine competition.

'Sixth. That the present rates on live stock have...