Pennsylvania Co v. Illinois Brick Co, 360

• Decision Date: 02 March 1936
• Docket Number: No. 360,360
• Parties: PENNSYLVANIA R. CO. v. ILLINOIS BRICK CO. *
• Court: U.S. Supreme Court

297 U.S. 447

56 S.Ct. 556

80 L.Ed. 796

PENNSYLVANIA R. CO.

v ILLINOIS BRICK CO.^*

No. 360.

Argued Feb. 6, 7, 1936.

Decided March 2, 1936.

Messrs. Frederic D. McKenney, of Washington, D.C., and David L. Dickson and Frank J. Loesch, both of Chicago, Ill., for petitioner.

[Argument of Counsel from pages 448-449 intentionally omitted] Mr. Abraham R. Miller, of Chicago, Ill., for respondent.

[Argument of Counsel from pages 450-452 intentionally omitted] Mr. Justice BUTLER, delivered the opinion of the Court.

December 31, 1924, respondent sued petitioner and the Pittsburgh, Cincinnati, Chicago & St. Louis Railroad Company, called the Panhandle, in the circuit court of Cook county, Ill., to recover reparation awarded by the Illinois Commerce Commission on the ground that they collected from respondent unreasonable and discriminatory charges for intrastate transportation of brick from Bernice, Ill., to places within the Chicago switching district.¹ January 1, 1921, the Pennsylvania Railroad Company, through lease, obtained control of the Panhandle. The court gave judgment against the Pennsylvania for $44,428.09.² That amount includes reparation, interest, and attorney's fee. The reparation adjudged is in respect of transportation on the Pennsyl- vania between October 28, 1920, and February 16, 1922, including that on the Panhandle after acquisition by the Pennsylvania. Petitioner appealed directly to the State Supreme Court, and there sought re ersal on the ground that, as later to be specified, the reparation order is repugnant to the Interstate Commerce Act (49 U.S.C.A. § 1 et seq.), an order of the Commission, and the Constitution of the United States. After hearing argument, that court, being of opinion that the case had been erroneously appealed to it, directed transfer to the Appellate Court. There the judgment was affirmed; the Supreme Court denied a writ of certiorari.

First for consideraton is a question raised by the answer and decided by the Appellate Court, the highest court of the state in which a decision could be had. 28 U.S.C. § 344(b), 28 U.S.C.A. § 344(b); Chicago, R.I. & P.R. Co. v. Perry, 259 U.S. 548, 551, 42 S.Ct. 524, 66 L.Ed. 1056; Home Ins. Co. v. Dick, 281 U.S. 397, 407, 50 S.Ct. 338, 74 L.Ed. 926, 74 A.L.R. 701; Minneapolis, etc., R. Co. v. Rock, 279 U.S. 410, 411, 412, 49 S.Ct. 363, 73 L.Ed. 766; Chesapeake & O.R. Co. v. Mihas, 280 U.S. 102, 104, 50 S.Ct. 42, 74 L.Ed. 207. That question is whether the Illinois statutes under which the state commission acted and its order awarding respondent reparation are repugnant to the Interstate Commerce Act³ and the order of the Interstate Commerce Commission⁴ providing for the intrastate rates that became effective February 19, 1921, and continued in force until February 16, 1922, in respect of which the state commission made its award.

The Chicago switching district is a large area in and near that city; it extends into Indiana, but by far the larger part is in Illinois.⁵ A number of railroads, including the Pennsylvania and the Panhandle, extend into the district, and conduct within it transportation of brick and other commodities in intrastate and interstate commerce. There are many brickyards in the district and elsewhere in Illinois. Re pondent has several in the district and two at Bernice in Illinois, outside, but close to, the district. One of them is located on the Pennsylvania, and the other on the Panhandle.

For a long time prior to federal control of railroads which commenced January 1, 1918, and up to June 25 of that year, the rate applicable to interstate and intrastate transportation of brick, by the Pennsylvania and Panhandle, respectively, from Bernice into the district and between points within the switching district, was 25 cents per ton.

June 25, 1918, the Federal Railroad Administration, by General Order No. 28, increased rates on brick by 2 cents per hundred pounds. November 8, 1918, Freight Rate Authority No. 1887 substituted an increase of 25 per cent. for transportation within the district. These changes operated to make the rate from Gernice into the district 70 cents⁶ and that between points within the district 30 cents per ton.

The Transportation Act (of February 28) 1920, § 208(a), 49 U.S.C.A. § 76(a), directed that existing rates should obtain until changed by federal or state authority or pursuant to authority of law.

March 10, 1920, respondent complained to the Interstate Commerce Commission that the 70-cent rate was unreasonable and discriminatory. The Commission made its report and order October 27, 1921, the pertinent substance of which is given below.

July 29, 1920, the Commission authorized increases applicable to interstate traffic of 40 per cent. and 35 per cent. respectively, in Eastern and Western groups and 33 1/3 per cent. on intergroup transportation. Exparte 74.⁷ August 10, the Illinois commission authorized a general increase of 33 1/3 per cent.⁸

August 11, the Interstate Commerce Commission ordered that Illinois territory be treated as within the Eastern group for the purpose of applying the authorized increase of 40 per cent. in the rates on interstate traffic between points in that territory.⁹

August 26, rates on intrastate transportation of brick established by the carriers pursuant to authority of the Illi- nois commission became effective. They were 93 1/2 cents per ton from Bernice into the switching district in Illinois, and 40 cents between Illinois points within the district. October 18, having regard to the abovementioned order of August 11, the Illinois commission modified its order of August 10 so as to allow increases of 35 per cent. to be made effective November 15, instead of the 33 1/3 per cent. it earlier permitted.¹⁰ Accordingly, the intrastate rate from Bernice into the switching district became 94 1/2 cents, and the rate between points within the district became 40 1/2 cents.

January 11, 1921, the Interstate Commerce Commission, dealing with intrastate rates within Illinois, notified and required carriers to cease and desist from practicing the undue prejudice, undue preference and advantage, and unjust discrimination which, as specified in the Commission's report, it found to exist. The order also notified and required the carriers to 'establish, put in force, and maintain rates and charges for freight services * * * in intrastate commerce within the state of Illinois which shall exceed the rates and charges of the carriers now in force and applicable to such transportation in amounts corresponding to the increases heretofore made by the carriers, now in effect, under Ex Parte 74 * * * in said carriers' rates and charges for freight services * * * in interstate commerce within the state of Illinois and between points in the state of Illinois and points in other states in the eastern group, including the Illinois distri t. It is further ordered, That this order shall become effective on or before the 7th day of March, 1921, upon notice * * * by not less than five days' filing and posting in the manner prescribed in section 6 of the Interstate Commerce Act (49 U.S.C.A. § 6), and remain in force until the further order of this Commission in the premises.'

And the report, which was made a part of the order, stated: 'Some readjustments may be appropriate in individual instances where substantial injury results. * * * Such inequalities as call for readjustment may be brought to our attention in the appropriate way and dealt with as occasion Requires. * * * The record establishes that the present intrastate charges for freight services * * * lower than the just and reasonable corresponding interstate rates and charges authorized in and established in the eastern group, including the Illinois district, pursuant to Ex Parte 74, afford intrastate traffic and shippers and localities within the state undue preference and subject interstate traffic and shippers and localities outside the state to undue prejudice, and unduly, unjustly, and unreasonably discriminate against interstate commerce.'¹¹

February 19, 1921, the carriers in accordance with the Commission's order, put in effect and until February 16, 1922, maintained for intrastate transportation a rate of 98 cents on brick from Bernice into the switching district and a rate of 42 cents between points within the district.

October 27, 1921, the Interstate Commerce Commission, dealing with plaintiff's complaint filed March 10, 1920, found the 70-cent rate on brick in interstate commerce from Bernice into the district was not unreasonable, but that it was, and for the future would be, unduly prejudicial to the extent that it exceeded the rates from points within the district to interstate destinations therein by more than 10 cents per ton. It further found that respondent failed to show itself entitled to damages as the result of the undue prejudice.¹² The Commission ordered that the carriers 'cease and desist, on or before February 16, 1922, * * * from * * * collecting for the transportation of common brick in carloads, from Bernice * * * (and other named points in Illinois and Indiana) to interstate destinations within the Chicago switching district rates which exceed the rates contemporaneously maintained by them on like traffic from points within said district to interstate destinations within said district by more than 10 cents per net ton.'

And it ordered the carriers to 'establish, on or before February 16, 1922, upon notice * * * by not less than 30 days' filing and posting * * * and thereafter to maintain and apply to the transportation of common brick, in carloads, from Bernice * * * (and other named points) to interstate destinations within the Chicago switching district rates which shall not exceed the rates contemporaneously maintained by them on like traffic from points within said switching district to interstate destinations within said district by more than 10 cents per net ton.'

Then the carriers...