United States v. Illinois Cent Co Wyoming Ry Co v. United States

• Decision Date: 07 January 1924
• Docket Number: No. 40,No. 38,40,38
• Citation: 263 U.S. 515,68 L.Ed. 417,44 S.Ct. 189
• Parties: UNITED STATES et al. v. ILLINOIS CENT. R. CO. et al. WYOMING RY. CO. v. UNITED STATES et al
• Court: U.S. Supreme Court

263 U.S. 515

44 S.Ct. 189

68 L.Ed. 417

UNITED STATES et al.

v ILLINOIS CENT. R. CO. et al.

WYOMING RY. CO.

v. UNITED STATES et al.

No. 40.

No. 38.

Argued Nov. 12, 13, 1923.

Decided Jan. 7, 1924.

The contract by which the Swift Lumber Company acquired the mill property referred to in the opinion, contained the following covenant:

'That Swift Lumber Company, their successors or assigns, shall deliver to the Fernwood & Gulf Railroad Company all and singular the freight tonnage originating on or tributary to the logging railroad of the Swift Lumber Company that may be offered and destined to a point upon said logging railroad or any extensions thereof.'

[Argument of Counsel from pages 515-517 intentionally omitted] Mr. Blackburn Esterline, of Chicago, Ill., for the United states.

Mr. Robert V. Fletcher, of Chicago, Ill. (Mr. Walter S. Horton, of Chicago, Ill., of counsel), for Illinois Cent. R. Co.

Messrs. Garner Wynn Green and Marcellus Green, both of Jackson, Miss., for Fernwood & G. R. Co.

Messrs. W. T. Alden and H. C. Lutkin, both of Chicago, Ill. (Messrs. C. R. Latham, H. P. Young, and Chas. Martin, all of Chicago, Ill., of counsel), for Wyoming Ry. Co.

Mr. J. Carter Fort, of Washington, D. C. (Mr. P. J. Farrell, of Washington, D. C., of counsel), for Interstate Commerce Commission.

Mr. Justice BRANDEIS delivered the opinion of the Court.

These cases, brought to set aside orders of the Interstate Commerce Commission, were argued together, and present, in the main, the same questions of law. In each, carriers who were found to have unjustly discriminated against shippers of lumber located on an independent short line, were ordered by the Commission to cease and desist from charging them higher through rates than were contemporaneously charged for like services from other points within what is called blanket territory.¹ Each case was heard before three judges on plaintiff's motion for a preliminary injunction, on defendant's motion to dismiss the bill for want of equity, and on final hearing. In each the whole record before the Commission was introduced. In No. 40 the federal court for Southern Mississppi perpetually enjoined the enforcement of the order issued by the Commission in Swift Lumber Co. v. Fernwood & Gulf R. R. Co., 61 Interst. Com. Com'n R. 485. In No. 38 the federal court for Wyoming dismissed the bill, thus sustaining the order issued for the Commission in Pioneer Lumber Co. v. Director General, 64 Interst. Com. Com'n R. 485. Each case is here on direct appeal under the Act of October 22, 1913, c. 32, 38 Stat. 208, 220 (Comp. St. § 998).

The facts in No. 40 present most of the questions of law requiring discussion. The so-called blanket territory, which extends south from Jackson, Miss., to the Gulf of Mexico (about 200 miles), and from the Mississippi river into Alabama, produces yellow pine lumber in quantity. Through this territory, the Illinois Central Railroad extends from New Orleans to Jackson and thence to the Ohio river crossings and leading lumber markets of the North. Partly by its main line, partly, also, by branches, and partly by connections with independent lines, it serves a large percentage of the lumber mills in the territory. From all these points on the Illinois Central main line, from all on its branches, from all on three independent short lines which connect indirectly with it, and from all on the Mississippi Central (a longer independent line which crosses it running east and west) the carriers have established the same through lumber rates to the Northern markets, regardless of the varying distances within the blanket territory. At Fernwood, Miss., a little south of its Monticello branch, the Illinois Central connects with the Fernwood & Gulf, an independent short line, on which the Swift Lumber Company has a mill at Knoxo. The distance from Knoxo to the junction is 27 miles. The joint through rate from Knoxo via Fernwood to Northern points, voluntarily established by these carriers, is 2 cents per 100 pounds higher than the rate from Fernwood, or any other point within the so-called blanket territory on the Illinois Central main or branch lines or on the connections mentioned above. The distance to the Northern markets from many of the points on these lines is much greater than the distance from Knoxo, which lies near the center of the so-called blanket territory.

The Swift Lumber Company instituted proceedings before the Commission against the Illinois Central, the Fernwood & Gulf, and connecting carriers in which it attacked the higher rates from Knoxo both as unreasonable, under section 1 of the Act to Regulate Commerce (Comp. St. § 8563), and as unjustly discriminatory, under section 3 (Comp. St. § 8565). The Commission found that the rates from Knoxo were not unreasonable, but that they subject the Lumber Company to undue prejudice, in view of the lower rates so given competing points within the so-called blanket territory. The order directed the carriers 'according as they participate in the transportation * * * to cease and desist' from the discrimination found. All the carriers except the Illinois Central and the Fernwood & Gulf acquiesced in the order. These two joined as plaintiffs in this suit, and urge on several grounds that the order is void.

First. It is contended that the order exceeds the powers of the Commission. The argument is that a carrier cannot be held to have participated in an unjust discrimination unless it is a party both to the rate by which a preference has been given to others and to the higher rate which is given to the complainant; that the Fernwood & Gulf did not participate in the discrimination complained of, since it did not join in the lower rates from other points by which the Swift Lumber Company claims to be prejudiced, and hence that it cannot be required to co-operate with the Illinois Central in reducing rates from Knoxo which have been found to be inherently reasonable; that, on the other hand, the Illinois Central cannot be held to have subjected the Swift Lumber Company to undue prejudice, since Knoxo is not on its own lines, and it is not in a position to remove, by its own act, the discrimination complained of. Neither proposition is sound. Proceedings to remove unjust discrimination are aimed directly only at the relation of rates. By joining with the Illinois Central in establishing the prejudicial through rate from Knoxo, the Fernwood & Gulf became as much a party to the discrimination practiced as if it had joined also in the lower rates to other points which are alleged to be unduly preferential. Compare St. Louis Southwestern Ry. Co. v. United States, 245 U. S. 136, 144, 38 Sup. Ct. 49, 62 L. Ed. 199. If such were not the law, relief on the ground of discrimination could never be had against preferential rates given by a great railway system to points on its own lines which result in undue prejudice to shippers on short lines connecting with it.² Moreover, it is not true that the Illinois Central can not remove the discrimination without the co-operation of the Fernwood & Gulf. The order leaves the carriers free to remove the discrimination either by making the Knoxo rate as low as that from Fernwood, or by raising the rate from Fernwood, or by giving both an intermediate rate. American Express Co. v. Caldwell, 244 U. S. 617, 624, 37 Sup. Ct. 656, 61 L. Ed. 1352. The Illinois Central, acting alone, is in a position to raise the rate from Fernwood. For its main line extends from there to the Ohio River crossings, the rate-breaking point.³

Second. It is contended that the order of the Commission is unsustained by proof. That there is discrimination against Knoxo is not denied. The rates charged from that station are higher than those charged from competing points within the so-called blanket territory for transportation of the same commodity, to the same market, for the same or longer distances, mainly over the same route; some of these competing points being located on the Illinois Central main line, some on its branch lines, and some on independent lines. But mere discrimination does not render a rate illegal under section 3. Only such rates as involve unjust discrimination are obnoxious to that section. Manufacturers' Ry. Co. v. United States, 246 U. S. 457, 481, 38 Sup. Ct. 383, 62 L. Ed. 831. There is no claim that any one of the evidential facts found by the Commission, and relied upon to show that the discrimination was unjust, is without adequate supporting evidence. The argument is that these facts, even when supplemented by others appearing in the evidence, do not warrant the finding of the ultimate fact, that the higher rates from Knoxo are unduly prejudicial to the Swift Lumber Company to the extent that they exceed the blanket basis of rates from Fernwood (the junction with the Illinois Central) and other points.

A carrier is entitled to initiate rates and, in this connection, to adopt such policy of rate-making as to it seems wise. Interstate Commerce Commission v. Chicago Great Western Ry., 209 U. S. 108, 118-119, 28 Sup. Ct. 493, 52 L. Ed. 705; Southern Pacific Co. v. Interstate Commerce Commission, 219 U. S. 433, 31 Sup. Ct. 288, 55 L. Ed. 283; Interstate Commerce Commission v. Louisville & Nashville R. R. Co., 227 U. S. 88, 92, 33 Sup. Ct. 185, 57 L. Ed. 431. In the exercise of this right, the Illinois Central adopted the policy of establishing blanket, or group, rates on its main and branch lines, by which the remoter lumber producing points were granted, regardless of distances within the territory, the same rates to Northern markets as points located nearer. In the exercise of the same right to initiate rates, the Illinois Central adopted, also, the policy of granting to connecting independent short lines, and to longer connecting carriers, an allowance (called shrinkage or absorption) by reason of which the Illinois Central's division of the through rate on traffic...