ICC v. Louisville & Nashville R. Co.
190 U.S. 273 (1903)

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U.S. Supreme Court

ICC v. Louisville & Nashville R. Co., 190 U.S. 273 (1903)

Interstate Commerce Commission v.

Louisville and Nashville Railroad Company

No. 214

Argued April 13, 1903

Decided May 18, 1903

190 U.S. 273

Syllabus

1. When competition which controls rates prevails at a given point, a dissimilarity of circumstances and conditions is created justifying a carrier in charging a lesser rate to such point, it being the longer distance, than it exacts to a shorter distance and noncompetitive point on the same line.

2. A nearer and noncompetitive point on the same line is not entitled to lower rates prevailing at a longer distance and competitive place on the theory that it could also be made a competitive point if designated lines of railway carriers, by combinations between themselves, agreed to that end. The competition necessary to produce a dissimilarity of conditions must be real and controlling, and not merely conjectural or possible.

3. Where a charge of a lesser rate for a longer than a shorter haul over the same line is lawful because of the existence of controlling competition at the longer distance place, the mere fact that the less charge is made for the longer distance does not alone suffice to cause the lesser rate for the longer distance to be unduly discriminatory.

Page 190 U. S. 274

4. The Commission having found a rate to be unreasonable solely because it was violative of the act which forbids a greater charge for a lesser than for a longer distance under stated conditions and which prohibits undue discrimination, held that, as the grounds upon which such holding was based resulted from an error of law, it was proper not to conclude the question of the inherent unreasonableness of the rates, but to leave it open for further action by the Commission to be considered free from the errors of law which had previously influenced the Commission.

5. A carrier, in order to give particular places the benefit of their proximity to a competitive point and thereby afford them a lower rate than they would otherwise enjoy, may take into consideration the rate to the point of competition and make it the basis of rates to the points in question. To give a lower rate as the result of competition does not violate the provisions of the Act to Regulate Commerce.

6. Held that where a rate was based on an error of fact, which was not complained of before or acted on by the Commission, and had been corrected by the carriers long before the decision below, and the corrected rate had been in force for a long period, it was not necessary to revise the decree of the court below, which was in all other respects correct, so as to secure a continuance of the corrected rate.

The connecting roads of the appellees form the short line -- 496 miles in length -- between New Orleans and Atlanta. The through line consists of the Louisville & Nashville Railroad from New Orleans to Montgomery, the Western Railway of Alabama between Montgomery and West Point, and the Atlanta & West Point Railroad from West Point to Atlanta.

LaGrange is on the Western Railway of Alabama, 104 miles from Montgomery. Opelika lies between Montgomery and LaGrange, and is 38 miles distant from the latter place. LaGrange and the following stations between it and Atlanta are distant from Atlanta, as follows: LaGrange, 71 miles; Hogansville, 58 miles; Newnan, 30 miles; Palmetto, 25 miles, and Fairburn, 18 miles.

Pursuant to § 13 of the Act to Regulate Commerce, Fuller E. Calloway, a merchant of LaGrange, filed a complaint against the appellees herein with the Interstate Commerce Commission. We take from the opinion rendered by the Commission in that proceeding the following synopsis of the averments of the complaint and answer:

"The complaint alleges in substance that defendants are subject to the provisions of the Act to Regulate Commerce; that rates charged by them for the transportation by continuous carriage or shipment of freights, wholly by railroad, from New Orleans, Louisiana, to LaGrange, Georgia, are unjust and unreasonable

Page 190 U. S. 275

in themselves, and relatively unjust and unreasonable as compared with lower rates charged by defendants for carrying the same commodities over longer distances from New Orleans through LaGrange to Hogansville, Newnan, Palmetto, and Fairburn, Georgia, and other localities; that defendants' said rates from New Orleans to LaGrange and said longer-distance points and other localities unjustly discriminate against complainant and others, the City of LaGrange and vicinity and traffic carried thereto, and subject merchants and dealers therein to undue and unreasonable prejudice and disadvantage, and give undue and unreasonable preference and advantage to merchants and dealers at Hogansville, Newnan, Palmetto, Fairburn, and other localities and traffic consigned thereto; that defendants' said rates from New Orleans to LaGrange, Hogansville, Newnan, Palmetto, and Fairburn give them greater aggregate compensation for the transportation of like kind of property, under substantially similar circumstances and conditions, for the shorter distance from New Orleans to LaGrange than for the longer distance over the same line, in the same direction, from New Orleans to Hogansville, Newnan, Palmetto, or Fairburn; that the rates charged by defendants as aforesaid are in violation of §§ 1, 2, 3, and 4 of the Act to Regulate Commerce. The rates and distances involved are set forth in the complaint, and it is further alleged therein that the lowest rate charged by defendants from New Orleans to LaGrange yields them over 1 1/3 cents per ton for each mile of haul, and that their highest rate between said points affords them nearly 6 3/4 cents revenue per ton per mile."

"The defendants filed a joint answer, in which they admit that the rates charged are substantially as alleged in the complaint; that their rates to LaGrange amount for each mile to 1.36 cents per ton on the lowest class of freight (D), and to 6.71 cents per ton on the highest class (1), and that the rates for the shorter distance from New Orleans to LaGrange are more than they charge for the longer distances in the same direction from New Orleans to Hogansville, Newnan, Palmetto, and Fairburn; but they deny that the transportation to LaGrange Hogansville, and other points mentioned is conducted under substantially

Page 190 U. S. 276

similar circumstances and conditions, and thereupon further deny that their said rates are in violation of section 4 of the statute. The defendants also deny the unreasonableness, injustice, wrongful discrimination, and undue and unreasonable prejudice and preference, advantage, and disadvantage, alleged by complainant under the first, second, and third sections of the act. The answer contains statements of rates from New Orleans to the points in question, and to and from Montgomery, Alabama, and Atlanta, Georgia, showing also that the through rates to LaGrange, Hogansville, and the other points mentioned are made by combination of rates to Atlanta with local rates back over the same line to Fairburn, Palmetto, Newnan, Hogansville, and LaGrange, and it is further averred that the disparities in rates complained of are caused by a competitive situation at Atlanta which compels low rates to that point from New Orleans. The competitive circumstances and conditions at Atlanta are stated in the answer to be the competition of such supply markets as New Orleans, Baltimore, and other northeastern cities, Cincinnati, Louisville, and other Ohio River cities, and the competition of carriers from such markets to Atlanta, and to have resulted, after frequent and disastrous rate wars, in the establishment of certain relative rates from these various market cities to Atlanta, a disturbance of which would immediately lead to a repetition of such wars. Similar competitive conditions are claimed by the defendants to exist at Montgomery, Alabama, through which freight passes over defendants' through line to LaGrange and the other points mentioned or referred to in the complaint, and they further assert that the present relation of rates to Montgomery and Atlanta must also, under existing circumstances, be maintained. The following extract from the answer seems to succinctly set out the defendants' position in this case:"

"The rates from Atlanta to those stations, respectively, LaGrange, Hogansville, Newnan, Palmetto, and Fairburn, are fixed by the Georgia Railroad Commission, and are just and reasonable. The rates from New Orleans to Atlanta are fixed by the competition between markets, and the competition between carriers, as explained above, and are just and reasonable. The rates charged by respondents are the sum of those rates,

Page 190 U. S. 277

and therefore respondents' rates themselves are just and reasonable. The reason that Fairburn, Palmetto, Newnan, and Hogansville have lower rates than LaGrange is due alone to the fact that they are nearer to Atlanta, and not to any favoritism or discrimination on the part of the respondents."

The evidence introduced at the hearing before the Commission, in support of the complaint, consisted solely of the testimony of the complainant, which dealt merely with the discrimination alleged to exist against LaGrange in the lesser rates accorded to greater distance points from New Orleans beyond LaGrange towards Atlanta, viz., Hogansville, Newnan, Palmetto, and Fairburn. Much evidence -- both oral and documentary -- was introduced on behalf of the railroads in support of the averments of the answer.

The various contentions contained in the complaint were sustained by the Commission, which made voluminous findings, and issued an order requiring the railroads in general terms to "wholly cease and desist from each and every of the violations of law" found and set forth in its report and opinion. The remaining clauses of the order are set out in the margin. *

Page 190 U. S. 278

The railroads not having obeyed the order, the Commission instituted the present proceedings in equity in the Circuit Court of the United States for the Southern District of Alabama. That court sustained the order of the Commission. 102 Fed.

Page 190 U. S. 279

709. The circuit court of appeals reversed the decree of the circuit court and remanded the cause, but

"without prejudice to the right of the Commission to proceed, upon the evidence already introduced before it, or upon such further pleadings and evidence as it may allow to be made or introduced, to hear and determine the controversy according to law."

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