Nashville St Ry v. States of Tennessee United States v. Same, s. 396

• Decision Date: 21 May 1923
• Docket Number: Nos. 396,429,s. 396
• Citation: 43 S.Ct. 583,67 L.Ed. 999,262 U.S. 318
• Parties: NASHVILLE, C. & ST. L. RY. et al. v. STATES OF TENNESSEE et al. UNITED STATES v. SAME
• Court: U.S. Supreme Court

262 U.S. 318

43 S.Ct. 583

67 L.Ed. 999

NASHVILLE, C. & ST. L. RY. et al.

v STATES OF TENNESSEE et al.

UNITED STATES

v. SAME.

Nos. 396, 429.

Argued April 11 and 12, 1923.

Decided May 21, 1923.

[Syllabus from 318-319 intentionally omitted] Mr. Blackburn Esterline, of Washington, D. C., for the United states.

Mr. J. Carter Fort, of Washington, D. C., for Interstate Commerce Commission.

Mr. Wm. H. Swiggart, Jr., of Nashville, Tenn., for appellees.

Messrs. Fitzgerald Hall, of Nashville, Tenn., Charles N. Burch, of Memphis, Tenn., and John B. Keeble, of Nashville, Tenn., for Nashville, C. & St. L. Ry.

Mr. Justice BRANDEIS delivered the opinion of the Court.

Section 22 of the Act to Regulate Commerce, as amended by Act of March 2, 1889, c. 382, § 9, 25 Stat. 855, 862 (Comp. St. § 8595), provides, among other things:

'That nothing in this act shall prevent the carriage, storage or handling of property free or at reduced rates for the United States, state, or municipal governments, or for charitable purposes, or to or from fairs and expositions for exhibition thereat. * * *'¹

Whether this section should be construed as denying to the Interstate Commerce Commission power to prohibit such reduced rates, even where they result in unjust discrimination or in undue prejudice to interstate commerce is the main question for decision.

On July 29, 1920, the Interstate Commerce Commission authorized a general increase, throughout Southern territory, of 25 per cent. in interstate freight rates. Ex parte 74, Increased Rates, 1920, 58 Interst. Com. Com'n R. 220. Thereafter the Railroad and Public Utilities Commission of Tennessee authorized, for that state, a like increase of intrastate rates. But the following articles (among others) were excluded from this increase: Carload shipments of stone and gravel when for use in building public highways and consigned to federal, state, county, and municipal authorities or their bona fide agents. To remove the exception, carrier applied to the Interstate Commerce Commission, claiming that the exception produced illegal discrimination against interstate commerce and an undue prejudice to persons and localities engaged in such commerce. The Commission found such discrimination; and ordered that the intrastate rates on these commodities, also, be increased to the level of the interstate rates. Tennessee Rates and Charges, 63 Interst. Com. Com'n R. 160, 172. On October 21, 1921, the state of Tennessee and its commission brought, in the federal court for the Middle District of Tennessee, this suit against the United States to have the order set aside. The Interstate Commerce Commission, the Nashville, Chattanooga St. Louis Railway, and two other interstate carriers intervened as defendants. The case was heard by three judges under the Act of October 22, 1913, c. 32, 38 Stat. 220 (Comp. St. § 998). A final decree was entered, declaring the order void, and enjoining its enforcement. 284 Fed. 371. The case is here on two appeals. No. 396 is that of the carriers; No. 429, that of the United States and the Interstate Commerce Commission.

Railroad Commission of Wisconsin v. Chicago, Burlington & Quincy R. R. Co., 257 U. S. 563, 42 Sup. Ct. 232, 22 A. L. R. 1086, 66 L. Ed. 371, had been decided by this court before entry of the judgment appealed from. But the District Court considered that case inapplicable, and held that, by reason of section 22, the Interstate Commerce Commission is 'without jurisdiction to forbid the railroads from carrying freight for the public at a less price than it charges individuals for the same carriage of the same freight'; that the section 'excludes this particular traffic from the rate structure which the Commission is authorized to erect and control; in still other words, there is freedom of discrimination.'

The argument is, in substance, this: An order of the Interstate Commerce Commission, increasing intrastate rates to the level of interstate rates, must rest upon a finding of illegal preference resulting from the relation of intrastate to interstate rates. Preference to governmental shippers is expressly permitted by section 22 of the act. Hence a grant of such preference cannot be held to be unjust or unreasonable under sections 2 and 3 (Comp. St. §§ 8564, 8565). There was no finding that these lower intrastate rates resulted in failure of the intrastate traffic to yield its proper share of the earnings of the carriers. Consequently the order of the Commission is void.² The argument is, in our opinion, unsound.

Every rate which gives preference or advantage to certain persons, commodities, localities or traffic is discriminatory; for such preference prevents absolute equality of treatment among all shippers or all travelers. But discrimination is not necessarily unlawful. The Act to Regulate Commerce prohibits (by sections 2 and 3) only that discrimination which is unreasonable, undue, or unjust. Texas & Pacific Ry. Co. v. Interstate Commerce Commission, 162 U. S. 197, 219, 220, 16 Sup. Ct. 666, 40 L. Ed. 940; Manufacturers Railroad Co. v. United States, 246 U. S. 457, 481, 38 Sup. Ct. 383, 62 L. Ed. 831. Whether a preference or discrimination is undue, unreasonable, or unjust is ordinarily left to the Commission for decision; and the determination is to be made, as a question of fact, on the matters proved in the particular case. Interstate Commerce Commission v. Alabama Midland Ry. Co., 168 U. S. 144, 170, 18 Sup. Ct. 45, 42 L. Ed. 414. The Commission may conclude that the preference given is not unreasonable, undue or unjust, since it does not, in fact, result in any prejudice or disadvantage to any other person, locality, commodity, or class of traffic. On the other hand, preferential treatment of a class, ordinarily harmless, may become undue, because, under the special circumstances, it results in prejudice, or disadvantage to some other person, commodity, or locality, or to interstate commerce.

Section 22 must in this matter, as in others, be read in connection with the rest of the act, and be interpreted with due regard to its manifest purpose. Robinson v. Baltimore & Ohio R. Co., 222 U. S. 506, 511, 32 Sup. Ct. 114, 56 L. Ed. 288.³ Congress did not intend, by this provision concerning reduced rates and free transportation, to create an instrument, by which the carrier was authorized, in its discretion, to subject interstate commerce to undue prejudice, or by which the state was empowered...