Railroad Commission of Wisconsin v. Chicago Co

• Decision Date: 27 February 1922
• Docket Number: No. 206,206
• Citation: 257 U.S. 563,66 L.Ed. 371,42 S.Ct. 232
• Parties: RAILROAD COMMISSION OF WISCONSIN et al. v. CHICAGO, B. & Q. R. CO. Re
• Court: U.S. Supreme Court

257 U.S. 563

42 S.Ct. 232

66 L.Ed. 371

RAILROAD COMMISSION OF WISCONSIN et al.

v CHICAGO, B. & Q. R. CO.

No. 206.

Reargued December 5, 6 and 7, 1921,

Decided Feb. 27, 1922.

The proceeding out of which this case has grown, known as the 'Wisconsin Passenger Fares,' began in an investigation by the Interstate Commerce Commission, under paragraphs 3 and 4 of section 13 of the Interstate Commerce Act as amended by section 416 of the Transportation Act of 1920 (41 Stat. 484), into alleged undue and unreasonable discrimination against interstate commerce arising out of intrastate railroad rates in Wisconsin. The interstate carriers by steam railroad of the state were made respondents, and the Governor and State Railroad Commission were duly notified. The Interstate Commerce Commission made its report and order November 27, 1920. Wisconsin Passenger Fares, 59 Interest. Com. Comn. R. 391.

The Commission had investigated the interstate rates of carriers in the United States, in a proceeding known as Ex parte 74, Increased Rates, 58 Interst. Com. Comn. R. 220, for the purpose of complying with section 15a of the Interstate Commerce Act as amended by section 422 of the Transportation Act of 1920 (41 Stat. 488). That section requires that the Commission so adjust rates that the revenues of the carriers shall enable them as a whole or by groups to earn a fixed net income on their railway property. The Commission ordered an increase for the carriers in the group of which the Wisconsin carriers were a part, of 35 per cent. in interstate freight tates, and 20 per cent. in interstate passenger fares and excess baggage charges, and a surcharge upon passengers in sleeping cars amounting to 50 per cent. of the charge for space in such cars to accrue to the rail carriers. Thereupon the carriers applied to the Wisconsin Railroad Commission for corresponding increases in intrastate rates. The state commission granted increases in intrastate freight rates of 35 per cent., but denied any in intrastate passenger fares and charges on the sole ground that a state statute prescribed a maximum for passengers of 2 cents a mile.

In the Wisconsin Passenger Fares, the Interstate Commerce Commission found that all of the respondent carriers of Wisconsin transported both intrastate and interstate passengers on the same train, with the same service and accommodations; that the state passenger paying the lower rate rode on the same train, in the same car, and perhaps in the same seat with the interstate passenger who paid the higher rate; that the circumstances and conditions were substantially similar for interstate as for intrastate passenger service in Wisconsin; that travelers destined to, or coming from, points outside the state, found it cheaper to pay the intrastate fare within Wisconsin and the interstate fare beyond the border than to pay the through interstate fare; that undue preference and prejudice were shown by the falling off of sales of tickets from border line points in Minnesota and Michigan to stations in Wisconsin, and by a marked increase in sales of local tickets from corresponding border line points in Wisconsin to stations in Wisconsin; that the evidence as to the practice with respect to passenger fares applied in like manner to the surcharge upon passengers in sleeping and parlor cars and to excess baggage charges.

The Commission further found that the fare necessary to fulfill the requirement as to net income of this interstate railroad group under section 15a was 3.6 cents per mile, and that this was reasonable, that the direct revenue loss to the Wisconsin carriers, due to their failure to secure the 20 per cent. increase in intrastate fares, would approximate $2,400,000 per year if the 3-cent fare fixed by the President under federal war control were continued, and $6,000,000 per year if the 2-cent fare named in the state statute should become effective.

The Commission found that there was undue, unreasonable and unjust discrimination against persons traveling in interstate commerce and against interstate commerce as a whole; and ordered that the undue discrimination should be removed by increases in all intrastate passenger fares and excess baggage charges and by surcharges corresponding with the increases and surcharges ordered in interstate business.

The order was made without prejudice to the right of the authorities of the state or of any other party in interest to apply in the proper manner for a modification of the order as to any specified intrastate fares or charges if the latter were not related to the interstate fares or charges in such a way as to contravene the provisions of the Interstate Commerce Act (24 Stat. 379).

The carriers filed bills in equity, of which the present is one, in the District Court to enjoin the State Railroad Commission and other state officials from interfering with the maintenance of the fares thus ordered and published.

Application for interlocutory injunction was made to the District Court under section 266 of the Judicial Code (Comp. St. § 1243). After a hearing before three judges, they granted an interlocutory injunction from which this appeal was taken.

Messrs. M. B. Olbrich and Ralph M. Hoyt, both of Madison, Wis., for appellants.

[Argument of Counsel from pages 567-572 intentionally omitted]

Page 573

Messrs. Robert Bruce Scott, of Chicago, Ill., Alfred P. Thom, of Washington, D. C., and Kenneth F. Burgess, of Chicago, Ill., for appellee.

[Argument of Counsel from pages 573-578 intentionally omitted]

Page 578

Mr. John E. Benton, of Washington, D. C., for 45 States, amici curiae.

Mr. Patrick J. Farrell, of Washington, D. C., for Interstate Commerce Commission.

Mr. Chief Justice TAFT, after stating the case, delivered the opinion of the Court.

The Commission's order, interference with which was enjoined by the District Court, effects the removal of the unjust discrimination found to exist against persons in interstate commerce, and against interstate commerce by fixing a minimum for intrastate passenger fares in Wisconsin at 3.6 cents per mile per passenger. This is done under paragraph 4 of section 13 of the Interstate Commerce Act, as amended by the Transportation Act of 1920, which authorizes the Interstate Commerce Commission, after a prescribed investigation, to remove——

'Any undue or unreasonable advantage, preference, or prejudice as between persons or localities in intrastate commerce on the one hand and interstate or foreign commerce on the other hand, or any undue, unreasonable,

Page 579

or unjust discrimination against interstate commerce.'

We have two questions to decide.

First. Do the intrastate passenger fares work undue prejudice against persons in interstate commerce, such as to justify a horizontal increase of them all?

Second. Are these intrastate fares an undue discrimination against interstate commerce as a whole which it is the duty of the Commission to remove?

We shall consider these in their order.

First. The report and findings of the Commission undoubtedly show that the intrastate fares work an undue discrimination against travelers in interstate commerce and against localities (Houston & Texas Ry. v. United States, 234 U. S. 342, 34 Sup. Ct. 833, 58 L. Ed. 1341) in typical instances numerous enough to justify a general finding against a large class of fares. In a general order thus supported, possible injustice can be avoided by a saving clause allowing any one to except himself from the order by proper showing. This practice is fully sustained by precedent in what was done as a sequence of the Shreveport Case (Houston & Texas Ry. Co. v. United States, supra). See Meredith v. St. Louis Southwestern R. Co., 34 Interst. Com. Comn. R. 472; Railroad Comn. of Louisiana v. Arkansas Harbor Terminal Railway Co., 41 Interst. Com. Comn. R. 83; Eastern Texas R. R. Co. v. R. R. Commission (D. C.) 242 Fed. 300; Looney v. R. R. Co., 247 U. S. 214, 38 Sup. Ct. 460, 62 L. Ed. 1084. In Illinois C. R. R. Co. v. Public Utilities Commission, 245 U. S. 493, 508, 38 Sup. Ct. 170, 62 L. Ed. 425, this court indicated its approval of such practice which was adopted by the Commission. Business Men's League of St. Louis v. Atchison & S. F. R. Co., 49 Interst. Com. Comn. R. 713. Any rule which would require specific proof of discrimination as to each fare or rate and its effect would completely block the remedial purpose of the statute.

The order in this case, however, is much wider than the orders made in the proceedings following the Shreveport and Illinois Central Cases. There, as here, the report of the Commission showed discrimination against persons

Page 580

and localities at border points, and the orders were extended to include all rates or fares from all points in the state to border points. But this order is not so restricted. It includes fares between all interior points although neither may be near the border and the fares between them may not work a discrimination against interstate travelers at all. Nothing in the precedents cited justifies an order affecting all rates of a general description when it is clear that this would include many rates not within the proper class or the reason of the order. In such a case, the saving clause by which exceptions are permitted cannot give the order validity. As said by this court in the Illinois Central R. R. Case:

'It is obvious that an order of a subordinate agency, such as the Commission, should not be given precedence over a state rate statute otherwise valid, unless, and except so far as, it conforms to a high standard of certainty.'

See, also, American Express Co. v. Caldwell, 244 U. S. 617, 627, 37 Sup. Ct. 656, 61 L. Ed. 1352.

If, in view of the changes, made by federal authority, in a large class of discriminating state rates, it is necessary from a state point of view to change nondiscriminating state rates to harmonize with them, only the state authorities can produce such...