Louisville & Nashville R. Co. v. Behlmer - 175 U.S. 648 (1900)
U.S. Supreme Court
Louisville & Nashville R. Co. v. Behlmer, 175 U.S. 648 (1900)
Louisville & Nashville Railroad Company v. Behlmer
Argued April 17-18, 1899
Decided January 8, 1900
175 U.S. 648
The conceded facts from which it has been assumed in this case, as a matter of law, that the railway carriers were operating "under a common control, management or arrangement for a continuous carriage or shipment" were as follows: the several carriers transported hay from Memphis under through bills of lading, by continuous carriage, to Summerville and Charleston. The several roads shared in an agreed rate on traffic to Charleston and in a precisely equal in amount rate on traffic to Summerville. On shipments to Summerville, however, there was added to the Charleston rate the amount of the local rate from Charleston to Summerville, the benefit of which additional exaction was solely received by the local road on which Summerville was situated. The contention that, under this state of facts, the carriers did not constitute a continuous line, bringing them within the control of the Act to Regulate Commerce, is no longer open to controversy in this Court. In Cincinnati, New Orleans & Texas Pacific Railway v. Interstate Commerce Commission, 162 U. S. 184, which was decided after this case was before the Commission and the circuit court, it was held under a state of facts substantially similar to that here found that the carriers were thereby subject to the Act to Regulate Commerce.
It is settled by previous decisions that the construction given in this cause by the Interstate Commerce Commission and the circuit court of appeals to the fourth section of the Act to Regulate Commerce was erroneous, and hence that both the Interstate Commerce Commission and the circuit court of appeals mistakenly considered, as a matter of law, that competition, however material, arising from carriers who were subject to the Act to Regulate Commerce could not be taken into consideration, and likewise that all competition, however substantial, not originating at the initial point of the traffic, was equally as a matter of law excluded from view.
What was decided in the previous cases was that, under the fourth section of the act, substantial competition which materially affected transportation and rates might under the statute be competent to produce dissimilarity of circumstances and conditions, to be taken into consideration by the carrier in charging a greater sum for a lesser than for a longer haul. The meaning of the law was not decided to be that one kind of competition could be considered and not another kind, but that all competition, provided it possessed the attributes of producing a substantial and material
effect upon traffic and ratemaking, was proper under the statute to be taken into consideration.
It follows that while the carrier may take into consideration the existence of competition as the producing cause of dissimilar circumstances and conditions, his right to do so is governed by the following principles: First: the absolute command of the statute that all rates shall be just and reasonable, and that no undue discrimination be brought about, though, in the nature of things, this latter consideration may in many cases be involved in the determination of whether competition was such as created a substantial dissimilarity of condition. Second: that the competition relied upon be not artificial or merely conjectural, but material and substantial, thereby operating on the question of traffic and ratemaking, the right in every event to be only enjoyed with a due regard to the interest of the public, after giving full weight to the benefits to be conferred on the place from whence the traffic moved as well as those to be derived by the locality to which it is to be delivered.
This controversy was commenced on December 29, 1892, when Henry W. Behlmer, a resident of Summerville, South Carolina, and a wholesale hay and grain dealer therein, began proceedings before the Interstate Commerce Commission under the Act to Regulate Commerce, passed February 4, 1887, as amended, to restrain the continuance of acts asserted by him to be a violation of the statute referred to. The petition was filed by Behlmer on his own behalf and that of other merchants, residents of Summerville, and the parties complained of were the Memphis & Charleston Railroad Company, the East Tennessee, Virginia & Georgia Railroad Company, the Georgia Railroad & Banking Company (the owner of a railroad designated as the Georgia Railroad), the South Carolina Railway Company, and other companies and individuals who were averred to be lessees or receivers of some of the above-named companies. All the lines of railroad mentioned were asserted to be members of a combination styled the Southern Railway & Steamship Association.
It was averred that the defendants were carriers under a common control, management, or arrangement for continuous carriage, and were engaged in the transportation of passengers and property wholly by railroad between Memphis in the State of Tennessee and Summerville in the State of South Carolina and through Summerville to Charleston. The distance between
Memphis and Summerville was averred to be 748 miles, as follows: between Memphis and Chattanooga, 310 miles over the Memphis & Charleston Railroad; between Chattanooga and Atlanta, Georgia, 152 miles over the East Tennessee, Virginia & Georgia Railroad; from Atlanta to Augusta, Georgia, 171 miles over the Georgia Railroad, and from Augusta, Georgia, to Summerville, South Carolina, 115 miles over the South Carolina Railway. The principal subject of complaint was that, though Summerville was 22 miles west of Charleston and was that distance nearer to Memphis, where the hay and grain shipments originated, yet the defendants exacted from the petitioner and other merchants of Summerville a freight charge of twenty-eight cents per hundred pounds for hay, carried from Memphis to Summerville, while only nineteen cents per hundred pounds were charged for the same article when carried to Charleston, the longer distance. It was averred that the rate of twenty-eight cents to Summerville was made up of the through rate to Charleston, with the addition of the local rate from Charleston to Summerville of nine cents per hundred pounds. It was also alleged that the shipments of hay to Summerville were made over the same line, in the same direction as Charleston, and under substantially similar circumstances and conditions. The freight charges complained of were averred to be in violation of the fourth section of the Act to Regulate Commerce, commonly referred to as the long- and short-haul clause. Besides, it was alleged that the local rate between Summerville and Charleston of nine cents per hundred pounds was excessive and unreasonable, and that such also was the case as regards the charge of twenty-eight cents from Memphis to Summerville, and hence such charges were in violation of the first section of the Act to Regulate Commerce. It was also asserted that the discrimination and excessive rates against Summerville existed not only on hay, "but on all articles of interstate commerce coming to that place, much to the detriment and disadvantage of the town and the business of its merchants."
In their answers, certain of the defendants conceded that they were subject to the Act to Regulate Commerce, while
others, though admitting that they were common carriers and engaged in the transportation of passengers wholly by railroad between points in the states of Tennessee and South Carolina, averred that they had no joint through tariff from Memphis to Summerville, and therefore had no "line" from Memphis to Summerville in the sense of the Act to Regulate Commerce, and were in consequence not affected by the statute. All the defendants averred that the aggregate freight rate on hay carried from Memphis to Summerville, as well as the local rates from Charleston to Summerville, were just and reasonable. By some of the defendants, it was alleged that the transportation of hay from Memphis to Summerville was not done under substantially similar circumstances and conditions as the transportation of like property from Memphis to Charleston, and hence the carriers were justified in making a lesser charge to Charleston than was made to Summerville, the shorter distance. The dissimilarity alleged was asserted to have been caused first, by the existence between Memphis and Charleston of at least eight competing lines of railroad, and second, by the competition by sea on hay and grain and freight of that class originating in Chicago, New York, and eastern points and destined to Charleston via the lakes, canal, and ocean, and by part water and part rail. The exact condition of the competition existing at Charleston because of its situation on the seaboard and consequent relations with many markets other than Memphis was stated in the joint and several answers of the Louisville & Nashville Railroad Company and the Central Railroad & Banking Company as follows:
"(Second.) Charleston is a port on the Atlantic coast, accessible and easily reached from the ports of Baltimore, Philadelphia, New York, Boston, and other eastern ports from which hay is shipped by water. If the rail lines from Memphis to Charleston charged rates to Charleston as high as the rate to Summerville, although the latter rate is, in itself, reasonable, no hay would be brought from Memphis to Charleston, but Charleston would be supplied with hay from north Atlantic ports and the railroads would lose the hay business and Memphis would lose a hay market. "
"(Third.) The rates on western produce to Charleston and other coast cities, such as Savannah, Port Royal, and Brunswick, are made with a view to actual, existing water competition. Western produce, such as grain, hay, etc., distributed from Chicago, can reach Charleston through the ports of New York, Philadelphia, and Baltimore over continuous water routes via the lakes and canal or over combined rail and water routes."
"The all-rail lines seeking to do business between Chicago and Charleston and other coast cities are compelled to make their rates approximate those which are offered by the continuous water route or by the combined rail and water routes. The all-rail routes make their rates as much higher as the difference in the service will permit, and those rates are correspondingly adjusted from all western points, such as Evansville, Cairo, St. Louis, Memphis, etc. At present, the all-rail rate from Chicago to Charleston on hay, for instance, is 33 c. per 100 lbs.; from St. Louis, 28 c.; from Louisville, Evansville, and Cairo, 23 c., and from Memphis, 19 c. -- the route through Memphis offering facilities for the transportation of hay, grain, and western products generally from the states of Missouri, Kansas, Nebraska, etc."
"The rate from Memphis to Charleston on hay is therefore forced upon the defendant lines by actual existing water competition and other competition beyond the control of defendant."
"The controlling element in said competition is the lake, canal, and ocean transportation between Chicago and Charleston, or the lake transportation from Chicago to Buffalo, or other lake port, thence by rail to New York, thence by ocean to Charleston; or rail transportation from Chicago to Baltimore, Philadelphia, or New York, thence by ocean to Charleston."
On the foregoing issues, testimony was taken before the Commission, which entered an order requiring the defendants to desist on or before a data named from charging any greater sum in the aggregate for the transportation from Memphis to Summerville of hay, or other commodities carried by them
under circumstances and conditions similar to those appearing in the case, than was being charged for such transportation for the longer distance to Charleston. This order, however, stated that it was made without prejudice to the right of the defendants to apply to the Commission for relief under the fourth section of the Act to Regulate Commerce. The order not having been obeyed, Behlmer, as authorized by section 5 of the Act of March 2, 1889, 25 Stat. 855, c. 382, amending section 16 of the original act, filed his complaint in the Circuit Court of the United States for the Fourth Circuit, Eastern District of South Carolina, against the defendants in the proceedings before the Commission and the purchasers, assignees, and successors of some of them, praying that the court might enforce compliance with the order of the Commission. By stipulation, the testimony taken before the Commission was used at the hearing in the circuit court, and by consent certain documentary evidence (consisting of railway agreements, tariffs, reports, etc.) was filed as additional evidence on behalf of the defendants.
The case was heard by the circuit court, and on January 22, 1896, the bill was ordered to be dismissed. 71 F. 835. The controversy was then taken by appeal to the Circuit Court of Appeals for the Fourth Circuit, and that court reversed the judgment of the circuit court, and remanded the cause with instructions to render a decree substantially in accordance with the order made by the Commission. 83 F. 898. A motion for a rehearing having been denied, the case was then brought to this Court.