Missouri Pac Co v. Boone, 203

• Decision Date: 22 March 1926
• Docket Number: No. 203,203
• Parties: MISSOURI PAC. R. CO. v. BOONE
• Court: U.S. Supreme Court

270 U.S. 466

46 S.Ct. 341

70 L.Ed. 688

MISSOURI PAC. R. CO.

v BOONE.

No. 203.

Argued January 29, 1926.

Decided March 22, 1926.

Mr. Merritt U. Hayden, of St. Louis, Mo., for petitioner.

Mr. Fred L. English, of St. Louis, Mo., for respondent.

Mr. Justice BRANDEIS delivered the opinion of the Court.

In 1922, Byrd J. Boone, a passenger on an intrastate journey in Missouri over the Missouri Pacific Railroad, checked a trunk which she took with her. It arrived safely at its destination, but was not delivered to her, because a thief obtained possession through the device of changing checks. She brought this suit against the carrier in a court of the state, and claimed that, under section 9941 of the Revised Statutes of Missouri of 1919, she was entitled to the full value. This law, first enacted in 1855 (Rev. Stat. Mo. c. 39, § 45), had never been suspended or repealed by any law of the state. The defendant relied upon a baggage tariff which limited liability to $100 unless a greater value was declared and extra payment made. This tariff, applicable to both intrastate and interstate traffic, had been duly filed by the Director General of Railroads pursuant to the Federal Control Act of March 21, 1918, c. 25, § 10, 40 Stat. 451, 456 (Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 3115 3/4 j), and was in force on the termination of federal control, February 29, 1920. The defendant contended that, by virtue of section 208(a) of Transportation Act Feb. 28, 1920, c. 91, 41 Stat. 456, 464 (Comp. St. Ann. Supp. 1923, § 10071 1/4 d), this limitation had remained in force as applied to intrastate commerce, because the provision for unlimited liability contained in section 9941 of the Missouri Revised Statutes had not been re-enacted after the termination of federal control.

Section 208(a) provides:

'All rates, fares, and charges, and all classifications, regulations, and practices, in any wise changing, affecting, or determining, any part or the aggregate of rates, fares, or charges, or the value of the service rendered, which on February 29, 1920, are in effect on the lines of carriers subject to the Interstate Commerce Act, shall continue in force and effect until thereafter changed by state or federal authority, respectively, or pursuant to authority of law; but prior to September 1, 1920, no such rate, fare, or charge shall be reduced, and no such classification, regulation, or practice shall be changed in such manner as to reduce any such rate, fare, or charge, unless such reduction or change is approved by the Commission.'

The trial court entered judgment for $1,000 and interest. The judgment was affirmed by the St. Louis Court of Appeals, the highest court of the state in which a decision in the suit could be had. 263 S. W. 495. The court held that, under the law of Missouri, misdelivery of the trunk was a conversion which rendered the carrier liable for its full value, and that the state law governed because the journey was intrastate. This court granted a writ of certiorari. 45 S. Ct. 196, 266 U. S. 600, 69 L. Ed. 461. Under the federal law misdelivery is not deemed a conversion depriving a carrier of the benefit of the provision limiting liability. American Railway Express Co. v. Levee, 44 S. Ct. 11, 263 U. S. 19, 21, 68 L. Ed. 140. The sole question for decision is the construction and effect to be given section 208(a).

The provision in the baggage tariff limiting liability is within the purview of that section. There was no legislation by the state on the subject after the termination of federal control. The state had confessedly power to restore the full statutory liability as applied to intrastate commerce unless the Interstate Commerce Commission should, for the purpose of preventing discrimination against interstate commerce, issue an order under Transportation Act 1920 to the contrary. See Railroad Commission of Wis. v. Chicago, Burlington & Quincy R. R. Co., 42 S. Ct. 232, 257 U. S. 563, 66 L. Ed. 371, 22 A. L. R. 1086; New York v. United States, 42 S. Ct. 239, 257 U. S. 591, 66 L. Ed. 385. There was no such order. Compare Chicago, Milwaukee & St. Paul Ry. Co. v. Public Utilities Commission, 37 S. Ct. 173, 242 U. S. 333, 61 L. Ed. 341. The precise question is whether the state provision, which had been suspended by the filing of the tariffs of the Director General, became operative on September 1, 1920, without re-enactment, or whether affirmative action by the state after February 29, 1920, was necessary to restore the full liability theretofore created by its statute and which it had not repealed. The analogy of state insolvent laws suspended by the enactment of a bankruptcy act, and again becoming operative upon its repeal, was relied upon. See Tua v. Carriere, 6 S. Ct. 565, 117 U. S. 201, 29 L. Ed. 855; Butler v. Goreley, 13 S. Ct. 84, 146 U. S. 303, 36 L. Ed. 981.

Most of the rates, fares, and charges in effect on February 29, 1920, had been established without suspending any provision of any statute or the order of any regulatory body. They related to matters with which, both before and after federal control, carriers were, in the main, at liberty to deal in their discretion, without first securing the consent of either the federal or the state commission. For despite the enlarging sphere of regulation, the field in which the carrier may exercise initiative and discretion was and is still a wide one.¹ The existing right of the carriers to initiate rates was transferred by the second paragraph of section 10 of the Federal Control Act to the Director General, with three modifications.² The Interstate Commerce Commission for the time was made the regulatory body in respect to intrastate as well as ionterstate rates. The power of suspending tariffs involving increases (which had been first conferred upon the Commission by Act of June 18, 1910, c. 309, § 12, 36 Stat. 539, 552 (Comp. St. § 8583)) was denied to it in respect to such as were filed by the Director General. And the power to fix the date when the new tariffs should take effect was vested in the Director General, instead of being fixed (as provided by section 6 of the Interstate Commerce Act (Comp. St. § 8569)) at not less than 30 days subject to the discretion of the Commission. It was by virtue of the ordinary corporate power of carriers to establish rates, so transferred to the Director General, that the rates, fares, charges, classifications, regulations and practices referred to in the first clause of section 208(a) had, in the main, been established. ³

In support of the judgment below, it is contended that the section would be unconstitutional, if construed as providing that the Missouri statute, although applicable only to intrastate commerce, should not become operative unless and until re-enacted. The argument is this: If so construed, the Act of Congress would, in effect repeal all such state laws affecting intrastate commerce existing at the termination of federal control, while granting to the states permission to legislate on the subject thereafter or recognizing their power to do so. The prohibition of reductions of intrastate rates during the six months' period of guaranteed return, was a proper exercise of power incident to federal operation and control during the war. Congress could, under that power, also make reasonable provision to ensure workable tariffs on the restoration of the railroads to their owners. But a repeal by Congress of all such existing state laws, affecting intrastate commerce, coupled with permission to enact new ones, would not be an appropriate means to that end, nor could such legislation be sustained under the commerce clause. Regulation by a state of intrastate rates is not a function exercised by permission of the federal government (In re Rahrer, 11 S. Ct. 865, 140 U. S. 545, 564, 35 L. Ed. 572), or because of its inaction. The power of Congress over intrastate rates conferred by the commerce clause is limited to action reasonably necessary for the protection of interstate commerce. Railroad Commission of Wis v. Chicago, Burlington & Quincy R. R. Co., 42 S. Ct. 232, 257 U. S. 563, 66 L. Ed. 371, 22 A. L. R. 1086. No necessity is here shown. Such is the argument. The section, if so construed, would, at least, raise a grave and doubtful constitutional question. Under the settled practice, a construction which does so will not be adopted, where some other is open to us. United States v. Delaware & Hudson Co., 29 S. Ct. 527, 213 U. S. 366, 408, 53 L. Ed. 836; Federal Trade Commission v. American Tobacco Co., 44 S. Ct. 366, 264 U. S. 298, 307, 68 L. Ed. 696, 32 A. L. R. 786. An examination of the section in the light of the then existing federal and state law will make clear that another and reasonable construction is open to us, and that it should prevail.

Section 208(a) contains two clauses. Each was to take effect immediately. Each dealt with rates, fares, charges, classifications, regulations and practices. But in purpose, character, and scope the two clauses differ widely. The primary purpose of the second clause was to protect the United States from liability on its guaranty to the carriers of the standard return. It sought to do so by prohibiting any reduction of rates, fares or charges without the consent of the Interstate Commerce Commission. The prohibition applied alike to intrastate and to interstate rates. It extended to reductions made by the carriers, as well as to those made by the states. But the prohibition was limited to reductions. Increases might be made. The prohibition was confined to the first six months after the surrender of the railroads to their owners, because the government guaranty was limited to that period.

The first clause of section 208(a) is legislation permanent in character. It relates alike to changes which increase rates and to those which reduce. It contains no prohibition. It explains. Its purpose was not to conserve revenues but to remove doubts...