Railroad Comm'n of Wisconsin v. Chicago, B. & Q. R. Co. - 257 U.S. 563 (1922)
U.S. Supreme Court
Railroad Comm'n of Wisconsin v. Chicago, B. & Q. R. Co., 257 U.S. 563 (1922)
Railroad Commission of Wisconsin v.
Chicago, Burlington & Quincy Railroad Company
Argued March 11, 14, 15, 1921
Restored to docket for reargument October 24, 1921
Reargued December 5, 6, 7, 1921
Decided February 27, 1922
257 U.S. 563
1. An order of the Interstate Commerce Commission requiring a horizontal increase of intrastate passenger fares and excess baggage charges, to correspond with fares and charges fixed for like interstate service in the same state, cannot be sustained under § 13 of the Interstate Commerce Act, as amended by the Transportation Act of 1920, as an order to remove undue and unreasonable prejudice to persons traveling in interstate commerce, when it broadly embraces not only the intrastate rates to and from border points, which may work discrimination against interstate passengers and localities, but also those between points more remotely internal from which no such prejudice can arise upon the facts found by the Commission. P. 257 U. S. 579. The Shreveport Case, 234 U. S. 342, and Illinois Central R. Co. v. Public Utilities Commission, 245 U. S. 493, distinguished.
2. Such an order is not validated by a clause saving the right of the state, or other party in interest, to apply to the Commission for a modification as to particular intrastate fares or charges. P. 257 U. S. 580.
3. The Transportation Act of 1920, § 422 (§ 15a), provides in part that the Commission, in the exercise of its power to prescribe just and reasonable rates, shall initiate, modify, establish, or adjust such rates so that carriers as a whole, or in groups or territories designated by the Commission, will earn an aggregate net income equal to a fair return on the aggregate value of their railway property held and used for transportation; that the Commission shall determine what percentage of such aggregate property value constitutes a fair return, and such percentage shall be uniform for the groups or territories, and that, in making such determination, it shall give due consideration to the transportation needs of the country and the necessity of enlarging transportation facilities in order to provide the people of the United States with adequate transportation.
(a) The effective operation of the Transportation Act reasonably requires that intrastate traffic over the lines of interstate carriers pay a fair proportionate share of the cost of maintaining an adequate railway system. P. 257 U. S. 585.
(b) While § 15a, supra, confers no power on the Commission to deal with intrastate rates, § 416 (§ 13, par. 4) of the same act, in authorizing it to remove and in forbidding and declaring unlawful "any undue, unreasonable, or unjust discrimination against interstate or foreign commerce," clearly contemplates that such discrimination, resulting from intrastate rates unduly low as compared with interstate rates as fixed under § 15a, and tending to thwart the purpose of that section, may be removed by the Commission. P. 257 U. S. 586.
(c) The act being clear on this point, reports and debates of Congress cannot be resorted to to introduce ambiguity. P. 257 U. S. 588.
(d) The valuation required by § 15a is not confined to that part of the property of the interstate carrier used in interstate, segregated from that used in intrastate, commerce. P. 257 U. S. 587.
(e) Raising the level of the intrastate rates in such case is an incident to the effective control of the interstate system, and does not violate the proviso against the Commission's regulating traffic wholly within a state. P. 257 U. S. 588.
(f) The act as so applied is within the power of Congress over interstate commerce. P. 257 U. S. 589.
(g) The action of the Commission under it respecting intrastate rates should be directed to substantial disparity which operates as a real discrimination against and obstruction to interstate commerce, leaving state authorities to deal with intrastate rates inter sese on the general level found fair by the Commission. P. 257 U. S. 590.
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 § 13 of the Interstate Commerce Act as amended by § 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 I.C.C. 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 I.C.C. 220, for the purpose of complying with § 15a of the Interstate Commerce Act as amended by § 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 thirty-five percent in interstate freight states, and twenty percent in interstate passenger fares and excess baggage charges, and a surcharge upon passengers in sleeping cars amounting to fifty percent 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 thirty-five percent, but denied any in intrastate passenger fares and charges on the sole ground that a state statute prescribed a maximum for passengers of two 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 § 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 twenty percent increase in intrastate fares would approximate $2,400,000 per year if the three-cent fare fixed by the President under federal war control were continued, and $6,000,000 per year if the two-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.
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 § 266 of the Judicial Code. After a hearing before three judges, they granted an interlocutory injunction from which this appeal was taken.