Section 218 of the Constitution of the Kentucky reads as
follows:
"It shall be unlawful for any person or corporation owning or
operating a railroad in this state, or any common carrier, to
charge or receive any greater compensation in the aggregate for the
transportation of passengers, or of property of like kind, under
substantially similar circumstances and conditions, for a shorter
than for a longer distance over the same line, in the same
direction, the shorter being included within the longer distance;
but this shall not be construed as authorizing any common carrier
or person or corporation owning or operating a railroad in this
state to receive as great compensation for a shorter as for a
longer distance:
Provided, That, upon application to the
Railroad Commission, such common carrier or person or corporation
owning or operating a railroad in this state may in special cases,
after investigation by the Commission, be authorized to charge less
for longer than for shorter distances for the transportation of
passengers or property, and the Commission may, from time to time,
prescribe the extent to which such common carrier, or person, or
corporation owning or operating a railroad in this state, may be
relieved from the operation of this section,"
As construed by the courts of that state, and so far as it is
made applicable to or affects interstate commerce, it is
invalid.
The railroad company has brought this case here by a writ of
error to the Circuit Court of Simpson County, State of Kentucky,
that being the highest court of the state in which a decision could
be had, for the purpose of reviewing the judgment of that court in
favor of the defendant in error (plaintiff below) based upon a
violation of section 218 of the Constitution of Kentucky. That
section reads as follows:
"It shall be unlawful for any person or corporation owning or
operating a railroad in this state, or any common carrier, to
charge or receive any greater compensation in the aggregate for the
transportation of passengers, or of property of like kind,
Page 184 U. S. 28
under substantially similar circumstances and conditions, for a
shorter than for a longer distance over the same line, in the same
direction, the shorter being included within the longer distance;
but this shall not be construed as authorizing any common carrier,
or person, or corporation owning or operating a railroad in this
state to receive as great compensation for a shorter as for a
longer distance:
Provided, That upon application to the
railroad commission such common carrier, or person, or corporation
owning or operating a railroad in this state may in special cases,
after investigation by the commission, be authorized to charge less
for longer than for shorter distances for the transportation of
passengers or property, and the commission may from time to time
prescribe the extent to which such common carrier, or person, or
corporation owning or operating a railroad in this state may be
relieved from the operations of this section."
This action involves the question of the validity of the above
section, as construed by the court below with reference to
interstate commerce.
The plaintiff, T. R. Eubank, on June 9, 1899, duly filed in the
clerk's office of the Simpson County Circuit Court a petition in
which he alleged, in substance, that he was doing business in
Franklin, in the State of Kentucky; that the defendant was a
corporation chartered under the laws of that state as a common
carrier, and that it owned and operated a line of railway for the
transportation of freight and passengers from Nashville, Tennessee,
running north through Franklin, Kentucky, and continuing on to
Louisville, Kentucky, a distance of 185 miles, and that the
distance from Franklin, Kentucky, to Louisville, Kentucky, over the
defendant's line, is 134 miles, and is included in and a part of
the distance of 185 miles from Nashville to Louisville; that,
during the years 1897 and 1898, the defendant transported tobacco
for the complainant from Franklin, Kentucky, to Louisville,
Kentucky at the rate of 25 cents per one hundred pounds, and that,
during all this time, the plaintiff was shipping and did ship and
transport tobacco from Nashville, Tennessee, to Louisville,
Kentucky, over the same road at the sum of 12 cents for one hundred
pounds, and the complainant averred in his petition
Page 184 U. S. 29
that the company had no right to charge him a greater freight
rate for the transportation of tobacco from Franklin, Kentucky, to
Louisville, Kentucky, than 12 cents per one hundred pounds, and he
therefore brought suit to recover back from the defendant the
difference between that sum and the sum paid by him,
viz.,
13 cents per one hundred pounds, the amount carried being 145,245
pounds.
The defendant tendered special and general demurrers to this
petition on the ground, among others, that it sought to make a law
of the State of Kentucky applicable to a rate charged by defendant
from Nashville, Tennessee, to Louisville, Kentucky, and that, if
the law were so construed it would become a regulation of
interstate commerce and be invalid, because in conflict with and
repugnant to subsection 3 of section 8 of article I of the
Constitution of the United States, and also in violation of the
Interstate Commerce Act.
These demurrers were overruled by the court, and thereupon the
defendant tendered its answer, setting up its defenses in four
separate paragraphs.
By paragraph 1, it substantially admitted the transportation of
the tobacco at the rates stated in the plaintiff's petition. In the
second paragraph, it averred that its rate of 12 cents per one
hundred pounds for the transportation of tobacco from Nashville,
Tennessee, to Louisville, Kentucky, was made under and in
conformity with the act of Congress called the Interstate Commerce
Act, above referred to, and that, in pursuance of the sixth section
of that act, the rate was printed, posted, and kept open to public
inspection, and duly filed with the Interstate Commerce Commission,
and that, by virtue of that act, it would have been unlawful for
the defendant to have charged either more or less than the rate of
12 cents per one hundred pounds from Nashville, Tennessee, to
Louisville, Kentucky. The defendant further averred that section
218 of the Constitution of the State of Kentucky applied only to a
railroad in that state, and had no application to that portion of
any railroad that was without the State of Kentucky, and hence had
no application to the railroad of the defendant between Nashville,
Tennessee, and the state line between Tennessee and Kentucky,
Page 184 U. S. 30
and it was averred that the rates which the defendant might
charge from Franklin, Kentucky, to Louisville, Kentucky, were not
and could not become unlawful under the long- and-short-haul laws
of Kentucky by reason of any rates that might be charged by the
defendant on traffic transported from Nashville, Tennessee, to
Louisville Kentucky, and that the long- and short-haul laws of
Kentucky could apply only when both the long- and short-hauls were
within Kentucky, and that the hauls from Nashville, Tennessee, to
Louisville, Kentucky, were not within the jurisdiction of
Kentucky.
Defendant further averred that, at the times named in the
petition, it charged no rate on tobacco to Louisville, Kentucky,
from any point in the State of Kentucky on the same line with
Franklin and farther from Louisville than Franklin, less than the
rate of 25 cents per one hundred pounds charged by it from Franklin
to Louisville. It was further averred that, if the constitutional
provision in question were so construed as to make this rate of 25
cents per one hundred pounds from Franklin, Kentucky, to
Louisville, Kentucky, unlawful by reason of the less rate charged
by it from Nashville, Tennessee, to Louisville, Kentucky, the
result would be to regulate commerce among the states by the long-
and short-haul laws of Kentucky, and to compel the defendant to,
and it would, raise its rates of 12 cents per one hundred pounds
from Nashville, Tennessee, to Louisville, Kentucky, unless it could
obtain the authority from the railroad commission of Kentucky to
charge the less rate from Nashville. Tennessee, to Louisville,
Kentucky; that thereby the long- and short-haul laws of Kentucky
would regulate commerce among the states, and would be in conflict
with and repugnant to the Interstate Commerce Act, and also
subsection 3 of section 8, Article I, Constitution of the United
States, and would therefore be void, and there was contained in the
paragraph the following averment: that
"the defendant hereby sets up, pleads, and relies on the right
and privilege secured to it by the said act of Congress and by said
provisions of the Constitution of the United States to have its
interstate traffic and the commerce conducted among the states and
between Kentucky and Tennessee regulated by the Constitution and
the laws of the
Page 184 U. S. 31
United States, and to be free from the regulation and
interference of the Constitution and laws of the State of
Kentucky."
By paragraph 3, the defendant set up the statute of limitations
of the State of Kentucky.
By paragraph 4, the defendant averred that its rate on tobacco
from Franklin to Louisville during the times mentioned was much
less than the defendant's standard tariff rates for that distance,
and that the less rate resulted from and was necessitated by the
fact of competition existing at Franklin, Kentucky, which arose
from the fact that tobacco could be and was hauled by wagon from
Franklin, Kentucky, to Bowling Green, Kentucky, and then shipped to
Louisville on boats plying the Green and Barren and Ohio Rivers at
extremely low rates of transportation, and on account of
competition, the defendant had to and did accept the rate of 25
cents per one hundred pounds; that, but for that competition, it
would and could have charged a much higher rate, which higher rate
would have been just and reasonable, and that the rate of 25 cents
per one hundred pounds was just and reasonable in itself by reason
of the competition.
It was further averred that Nashville, Tennessee, was situated
on the Cumberland River, navigable by boats plying between
Nashville and various points on the Ohio River, including
Louisville, Kentucky, and that these boats transported tobacco from
Nashville to Louisville at extremely low rates of transportation,
and that, by reason of this water competition, Nashville enjoyed
extremely low rates for the shipment of tobacco to Louisville and
many other places, and if the defendant, at any of the times
mentioned, had charged more for the transportation of tobacco from
Nashville, Tennessee, to Louisville, Kentucky, than 12 cents per
one hundred pounds, it would not have secured the transportation of
any of said tobacco from Nashville to Louisville, but the same
would have been shipped from Nashville to Louisville, or some other
tobacco market, at rates less than 12 cents per one hundred pounds,
and thereby the defendant would have wholly lost the transportation
of any tobacco from Nashville to Louisville, and that the defendant
succeeded in obtaining, even at the low rate of 12 cents per one
hundred
Page 184 U. S. 32
pounds, the transportation of only twelve hogsheads of tobacco
from Nashville to Louisville during the time named in the petition.
It was averred that the tobacco transported by the defendant from
Nashville to Louisville was transported under the circumstances and
conditions thus stated, and that none of the same could have been
transported at any higher rate than 12 cents per one hundred
pounds, and that at none of the times mentioned in the petition was
the transportation of tobacco from Franklin to Louisville affected
by the circumstances or conditions set forth regarding the
transportation of tobacco from Nashville to Louisville, and that
the competition at Nashville differed substantially from the
competition at Franklin, in that it was far more effective, and
necessitated a much lower rate, and that, in making the difference
in rates between Franklin and Nashville, the defendant simply
recognized the substantial difference in the circumstances and
conditions of the transportation from and to the two places.
It was also averred that it was to the advantage of the
defendant to transport the tobacco that it might secure from
Nashville to Louisville at the rate of 12 cents per one hundred
pounds, rather than lose such transportation altogether, as it
would have done if it had attempted to charge more than the rate of
12 cents per one hundred pounds; but the fact that the defendant
did transport tobacco from Nashville to Louisville at 12 cents per
one hundred pounds did not increase the rate that it charged from
Franklin to Louisville, or make the rate from Franklin to
Louisville any higher than it would otherwise have been, and that,
if it had refused to transport tobacco from Nashville to Louisville
for any less rate than the rate charged from Franklin to
Louisville, the Nashville shippers of tobacco could and would have
shipped it to Louisville or other tobacco markets over routes which
this defendant could not control and at rates not exceeding 12
cents per one hundred pounds, and that the defendant could and did
engage in the transportation of tobacco from Nashville to
Louisville at the rate of 12 cents per one hundred pounds without
in anywise injuring Franklin or any person or interest at
Franklin.
Other defenses were set up not now material.
Page 184 U. S. 33
The plaintiff demurred to paragraphs 2, 3, and 4 of the
defendant's answer, which demurrer was sustained by the court. The
plaintiff then moved for judgment for the plaintiff upon the
pleadings, which motion, under objection by the defendant, the
court granted, and thereupon it was adjudged that the plaintiff
recover of the defendant the sum of $188.81 and his costs.
MR. JUSTICE PECKHAM, after making the foregoing statement of
facts, delivered the opinion of the Court.
The writ of error in this case does not bring up for review any
judgment of the Court of Appeals of the State of Kentucky, the
highest court of that state. It appears that the circuit court of
that state is the highest court in which a decision of the case
could be had, presumably on account of the amount of the judgment.
There was no opinion delivered by the judge holding the court in
which the case was tried, and as the case did not go to the highest
court of that state, we are without the benefit of any written
opinion of the courts of Kentucky in regard to the question
involved. We have already held, in the case of
Louisville &
Nashville Railroad Company v. Kentucky, 183 U.
S. 503, that the section of the Kentucky Constitution
above set forth, as applied to places all of which are within the
state, violates no provision of the federal Constitution.
The effect of the decision by the state court now under review
is to hold that the provision of section 218 of the state
constitution is not confined to a case where the long and short
hauls are both within the State of Kentucky, but that it extends to
and embraces a long haul from a place outside of to one within the
state, and a shorter haul between points on the same line and in
the same direction, both of which are within the state, and the
question is whether the provision of that
Page 184 U. S. 34
Constitution as thus construed is or is not a violation of the
commerce clause of the Constitution of the United States.
It would seem that the foundation upon which the validity of the
constitutional provision is based is the theory that it operates
solely upon the rate within the state, making that rate unlawful if
it exceed the rate for the longer distance over the same line in
the same direction, though, as in this case, the longer distance is
from Nashville, Tennessee, to Louisville, Kentucky. The claim must
be that the only effect of the provision is to regulate the rate
between points within the state, and that it has no direct effect
upon, nor does it in any degree regulate or affect, the rate
between points outside and those points which are within the state.
The contention is that the state does not prescribe or regulate the
rates outside of its borders; that the company may announce and
enforce any rate it pleases regarding interstate commerce. It
simply directs that between points within the State of Kentucky the
charge shall not be greater for a shorter haul than for a longer
haul, even though such longer haul may be between a point outside
and one inside of the state; that this does not constitute an
interference with or a regulation by the State of interstate
commerce, and hence the provision is valid.
If this contention were correct, and the constitutional
provision as construed by the state court did not by its
enforcement regulate or immediately and directly influence and
affect the interstate commerce of defendant, either as to amount or
rates, the provision in question would be valid. But is it correct?
And is there no such immediate influence upon or regulation of the
interstate commerce of the defendant?
By the demurrer and the motion for judgment on the pleadings it
is admitted that the rates from all points on the defendant's road
within the State of Kentucky to Louisville for the transportation
of tobacco are not too high, but are in fact just and reasonable in
themselves, and to that extent the general obligation of a carrier
to make charges that are just and reasonable is fulfilled. There is
also a rate for the transportation of tobacco from Nashville to
Louisville of 12 cents per one hundred pounds, and that rate is
arrived at because of the existence
Page 184 U. S. 35
of water competition between the two points which absolutely
prevents the company from making a greater charge, for if it did,
it would get no business, and yet, on account of the fact that
trains are to be run in any event, and expenses incurred by reason
of the operation of the road, it pays the company to take the
tobacco at the rate named, even though it is below what would
otherwise be a fair and reasonable compensation for the
transportation. It follows, therefore, and the fact is averred,
that, although, under the circumstances, it pays the company to
transport the tobacco from Louisville at the rate of 12 cents per
one hundred pounds, yet, if it were confronted with the alternative
of either giving up such transportation (which a charge of 25 cents
per one hundred pounds would necessarily result in) or of reducing
the charge from Franklin to Louisville to 12 cents per one hundred
pounds for tobacco, it would be compelled to give up the
transportation from Nashville, rather than reduce the charge from
Franklin to Louisville. If the State of Kentucky has the right to
base its provision for the rate of a short haul within its own
borders by comparison with the rate for a longer haul partly within
and partly without its own borders, notwithstanding the direct
effect of a limitation arrived at by such comparison may be the
regulation or even the suppression of the interstate commerce of
the carrier, then this provision is valid; otherwise it would seem
to be the reverse.
That the railroad commission is authorized upon application to
permit the company to charge less for longer than for shorter
distances is immaterial. If the provision in question, if enforced,
does directly affect interstate commerce, its invalidity is not
cured by the fact that, if the railroad commission should choose,
it might permit the interstate charges to remain. In either case
the interference is illegal.
The result of the construction of this provision by the court
below is in effect to prohibit the carrier from making a less
charge for the transportation from Nashville to Louisville than
from Franklin to Louisville, or else to make a charge that will
prevent its doing any business between the states in the carrying
of tobacco. The necessary result of the provision under
Page 184 U. S. 36
the circumstances set up in the answer directly affects
interstate rates, or, in other words, directly affects interstate
commerce, for it directly affects commerce between Nashville and
Louisville. The fact is not altered by putting the proposition in
another form, and saying that the constitutional provision only
prevents the carrier from charging a greater sum for the shorter
distance from Franklin to Louisville, both within the state, unless
the consent of the railroad commission is obtained, because in
either event, the charge from Nashville to Louisville enters into
and forms a part of the real subject matter of the provision, the
greater sum for the shorter distance within the state being
compared with the lesser sum for the longer distance without the
state, and the prohibition is absolute, unless the consent of the
commission is obtained, from charging any more for the shorter
distance within the state than for the longer distance partly
within and partly without the state. And in this case, in order to
maintain its state rate, it must fix its interstate rate at an
amount which prohibits its doing interstate business.
We fully recognize the rule that the effect of a state
constitutional provision, or of any state legislation upon
interstate commerce, must be direct, and not merely incidental and
unimportant; but it seems to us that, where the necessary result of
enforcing the provision may be to limit or prohibit the
transportation or articles from without the state to a point within
it, or from a point within to a point without the state, interstate
commerce is thereby affected, and may be thereby to a certain
extent directly regulated, and in that event the effect of the
provision is direct and important, and not a mere incident.
Although not exactly in point, yet the case of
Wabash, St.
Louis &c. Railway v. Illinois, 118 U.
S. 557, is somewhat analogous in principle. In that
case, chapter 114 of the Revised Statutes of Illinois, section 126,
came under consideration. That section enacted that, if any
railroad corporation should charge for the transportation of
freight, etc., upon its railroad, of any distance within the state,
the same or a greater amount of toll or compensation than is at the
same time charged collected,
Page 184 U. S. 37
or received for the transportation in the same direction of any
passenger, etc., over a greater distance of the same road, such
charges should be deemed
prima facie evidence of unjust
discrimination prohibited by the act, and penalties were provided
for its violation.
An action was brought to recover for a violation of the
provisions of the act, and in the declaration it was alleged that
the company had charged Elder & McKinney for transporting goods
from Peoria in the State of Illinois to New York City at the rate
of 15 cents per one hundred pounds, and on the same day the company
charged Bailey & Swannell for transporting another carload of
the same kind of goods from Gilman in the State of Illinois to the
City of New York at the rate of 25 cents per one hundred pounds,
although the carload transported for Elder & McKinney from
Peoria was carried 86 miles further in the State of Illinois than
the other carload of the same weight, and it was claimed that, as
the freight was of the same class in both instances and carried
over the same route except as to the difference of distance, a
discrimination against Bailey & Swannell was made in the
charges against them, as compared with those given to Elder &
McKinney, and hence suit was brought. Mr. Justice Miller delivered
the opinion of this Court, in which he expressed some doubt whether
the statute of Illinois had been correctly construed by the court
below, yet as that court had given an interpretation to it which
made it apply to commerce among the states, although the contract
was made within the State of Illinois and a part of its performance
was within the same state, this Court was held to be bound as to
the construction given to the act by the state court. What that
construction was is stated by the court itself. It said:
"We see no reason to depart from the conclusion reached in this
case when it was here before.
See People v. W., St.L. & P.
Railway Co., 104 Ill. 476. But to avoid misapprehension we
deem it advisable to state explicitly that we disclaim any idea
that Illinois has authority to regulate commerce in any other
state. We understand and simply hold that, in the absence of
anything showing to the contrary, a single and entire contract to
carry for a gross sum from Gilman, in this state,
Page 184 U. S. 38
to the City of New York, implies necessarily that that sum is
charged proportionately for the carriage on every part of that
distance, and that a single and entire contract to carry for a
gross sum from Peoria, in this state, to the City of New York,
implies the same thing, and that therefore when it is shown that
there is charged for carriage upon the same line less from Peoria
to New York (the greater distance) than from Gilman to New York
(the less distance), and nothing is shown to the effect that such
inequality in charge is all for carriage entirely beyond the limits
of this state, a
prima facie case is made out of unjust
discrimination under our statute occurring within this state. We
hold that the excess in the charge for the less distance presumably
affects every part of the line of carriage between Gilman and the
state line proportionately with the balance of the line. The
judgment is affirmed."
Wabash, St.Louis & Pacific Railway Co. v. Illinois,
105 Ill. 236.
In regard to this question, Mr. Justice Miller, in the course of
his opinion, said:
"It becomes, therefore, necessary to inquire whether the charge
exacted from the shippers in this case was a charge for interstate
transportation, or was susceptible of a division which would allow
so much of it to attach to commerce strictly within the state, and
so much more to commerce in other states. The transportation, which
is the subject matter of the contract, being the point on which the
decision of the case must rest, was it a transportation limited to
the State of Illinois, or was it a transportation covering all the
lines between Gilman, in the one case, and Peoria, in the other, in
the State of Illinois, and the City of New York in the State of New
York?"
The Court held it was the latter, and said, after examining the
other cases (page
118 U. S.
575):
"We must therefore hold that it is not and never has been the
deliberate opinion of a majority of this Court that a statute of a
state which attempts to regulate the fares and charges by railroad
companies within its limits, for a transportation which constitutes
a part of commerce among the states, is a valid law. "
Page 184 U. S. 39
In regard to the effect of the Illinois statute upon interstate
commerce, it was further said:
"Let us see precisely what is the degree of interference with
transportation of property or persons from one state to another
which this statute proposes. A citizen of New York has goods which
he desires to have transported by the railroad companies from that
city to the interior of the State of Illinois. A continuous line of
rail over which a car loaded with these goods can be carried, and
is carried habitually, connects the place of shipment with the
place of delivery. He undertakes to make a contract with a person
engaged in the carrying business at the end of this route from
whence the goods are to start, and he is told by the carrier,"
"I am free to make a fair and reasonable contract for this
carriage to the line of the State of Illinois, but when the car
which carries these goods is to cross the line of that state,
pursuing at the same time this continuous track, I am met by a law
of Illinois which forbids me to make a free contract concerning
this transportation within that state, and subjects me to certain
rules by which I am to be governed as to the charges which the same
railroad company in Illinois may make, or has made, with reference
to other persons and other places of delivery."
"So that, while that carrier might be willing to carry these
goods from the City of New York to the City of Peoria at the rate
of fifteen cents per one hundred pounds, he is not permitted to do
so because the Illinois railroad company has already charged at the
rate of twenty-five cents per one hundred pounds for carriage to
Gilman, in Illinois, which is eighty-six miles shorter than the
distance to Peoria."
"So, also, in the present case, the owner of corn, the principal
product of the country, desiring to transport it from Peoria, in
Illinois, to New York, finds a railroad company willing to do this
at the rate of fifteen cents per one hundred pounds for a carload,
but is compelled to pay at the rate of twenty-five cents per one
hundred pounds, because the railroad company has received from a
person residing at Gilman twenty-five cents per one hundred pounds
for the transportation of a carload of the same class of freight
over the same line of road from Gilman to New York. This is the
result of the statute of Illinois, in its endeavor to
Page 184 U. S. 40
prevent unjust discrimination, as construed by the Supreme Court
of that state. The effect of it is that whatever may be the rate of
transportation per mile charged by the railroad company from Gilman
to Sheldon, a distance of twenty-three miles, in which the loading
and the unloading of the freight is the largest expense incurred by
the railroad company, the same rate per mile must be charged from
Peoria to the City of New York."
Is not this reasoning applicable here? The Nashville owner of
tobacco wishes to have it transported to Louisville, and asks the
defendant to carry it. It responds that it would like to carry it
at the rate of twelve cents per one hundred pounds, but that it
cannot do so because it has established a reasonable rate between
points both of which are in Kentucky, and which rates are more than
twelve cents, and that, if it were to carry at the rate of twelve
cents from Nashville to Louisville, it would be necessary, on
account of the law of Kentucky, to carry at the same rate all
tobacco between all points in that state, which would entail a loss
in the business between those points which the company would not be
justified in sustaining; therefore, the transportation is declined,
for it cannot get more than twelve cents from the Nashville man. Is
it an answer to this statement to say that the company can get this
business by lowering its rates within the state to the same rate as
charged from Nashville? Is it bound, in order to secure this
interstate commerce, to lower its rates all through the state? If
it be, is not the law which accomplishes this result a direct
interference by the state with interstate commerce? And if it do
not lower its state rates, and in consequence must raise its
interstate rates in order to make its state rates valid, and thus
must lose to an appreciable and important extent the interstate
commerce, is not a law from which such necessary and direct
consequences result a regulation in effect by the state, of that
commerce which ought to be free therefrom?
In
Hall v. DeCuir, 95 U. S. 485, it
was said:
"But we think it may safely be said that state legislation which
seeks to impose a direct burden upon interstate commerce, or to
interfere directly with its freedom, does encroach upon the
exclusive power of Congress. "
Page 184 U. S. 41
The vice of the provision lies in the regulation of the rates
between points wholly within the state, by the rates which obtain
between points outside of and those which are within the state.
The facts in this case have been thus fully referred to for the
purpose of showing how directly and also how injuriously such a
provision might affect interstate commerce. Other cases may be
supposed where the effect might not be so oppressive. But the fact
which vitiates the provision is that it compels the carrier to
regulate, adjust, or fix his interstate rates with some reference
at least to his rates within the state, thus enabling the state by
constitutional provision or by legislation to directly affect, and
in that way to regulate, to some extent the interstate commerce of
the carrier, which power of regulation the Constitution of the
United States gives to the federal Congress.
It has been urged that, assuming Congress to have the power to
fix interstate rates, if that body should prescribe the interstate
rate for the transportation of commodities (tobacco, for instance)
from Nashville to Louisville, for a railroad carrier, that the
state might then fix the local rates by that standard, and if so,
why could it not do the same thing when the carrier itself fixes
its interstate rate? In the case supposed, the rate is fixed and
the interstate commerce regulated by the body which has the power
to impose such rate on the carrier and to regulate its interstate
commerce. The state might, in the case supposed, enact that the
road should not charge more, or at a greater rate, for a short haul
within the state than Congress provided for the long interstate
haul. The reason is that Congress, in the case presented, is
assumed to have the power to direct and regulate the interstate
rate, and having that power and exercising it, the state could then
provide that its internal charge should not exceed that rate, and
there would be in that case no interference with or regulation of
interstate commerce directly or indirectly by the state, its action
could have no possible effect upon the interstate rate, as the
amount of the charge would be regulated by the body with which the
right of regulation exists.
It seems also to be thought that there is no regulation of
commerce,
Page 184 U. S. 42
provided it is not interfered with or regulated in all ways by
which transportation of commodities between interstate localities
may be accomplished, that, if the commodity (tobacco in this case)
can be transported by any other means or route, or by any other
individual or corporation, than the one affected by the regulation,
commerce is not regulated within the constitutional meaning. On the
contrary, it seems quite clear that any law which in its direct
result regulates the interstate transportation of a single
individual carrier, or company of carriers, violates the provision
in question; that it is no answer to say the commodity can still be
transported by another carrier or by water instead or rail, so long
as the direct effect of the state legislation is to regulate the
transportation of the commodity by a particular means, by rail
instead of by water, or by a particular individual or company.
It is also argued that if Congress should enact that an
interstate rate shall be the sum of the local rates prescribed by
the several states for the parts in the line within its borders, it
could not correctly be maintained that such enactment would amount
to an interference with the power of the state over local rates,
and the mere fact that Congress accepted the local rates and made
them the basis of an interstate rate could not be held to be an
interference by Congress with local commerce, and if not, how can
it be held an interference by the state when it recognizes existing
interstate rates as a basis for its legislation concerning local
rates? We think there is no analogy between the two cases.
In the case supposed the states have fixed the local rates
within their respective borders, and the action of Congress in
fixing their sum as the rate for interstate commerce does not in
any way regulate or interfere with the respective state rates
already, or from time to time, adopted by the state. In thus fixing
the interstate rate, Congress may most seriously interfere with or
regulate interstate commerce, but that it has the right to do, and
on the other hand the state by such a statute regulates the local
rate, but that it has the right to do.
Congress does not directly or indirectly interfere with local
rates by adopting their sum as the interstate rate.
Page 184 U. S. 43
In the case at bar, the state claims only to regulate its local
rates by the standard or the interstate rate, and says the former
shall be no higher than the latter, but the direct effect of that
provision is, as we have seen, to regulate the interstate rate, for
to do any interstate business at the local rate is impossible, and
if so, it must give up its interstate business or else reduce the
local rate in proportion. That very result is a hindrance to an
interference with, and a regulation of, commerce between the
states, carried on, though it may be, by only a single company.
We are of opinion that, as construed by the state court, and so
far as it is made applicable to or affects interstate commerce, the
two hundred and eighteenth section of the Constitution of Kentucky
is invalid, and the judgment of the Circuit Court of Simpson
County, Kentucky, is therefore
Reversed, and the case remanded to that court for such
further proceedings therein as shall not be inconsistent with this
opinion, and it is so ordered.
MR. JUSTICE BREWER, with whom concurred MR. JUSTICE GRAY,
dissenting:
I am unable to concur in the opinion and judgment in this case.
We have just held that section 218 of the Constitution of Kentucky
and section 820 of the Kentucky Statutes, based thereon, are not in
conflict with the Constitution of the United States when applied to
a case in which both the long and the short are wholly within the
state.
Louisville & Nashville Railroad Company v.
Kentucky, 183 U. S. 503. The
constitutional section, briefly stated, forbids a carrier from
charging more for a short than for a long haul within which the
short haul is included. The prohibition is upon the short-haul
charge. There is no prohibition in respect to the long haul charge,
no restriction of the power of the carrier over it, no regulation
concerning it, no prescribing by whom or how or when it shall be
made -- all this is absolutely untouched by the section.
The proposition now advanced is that, while the state may
constitutionally prohibit a short-haul charge in excess of a
long
Page 184 U. S. 44
haul charge, it can do so only when both hauls are within the
limits of the state. Nothing in the section makes such limitation.
Nothing in the federal Constitution, in terms, at least, restricts
the power of the state in this respect over its internal commerce.
This question may arise under either of two conditions -- one in
which Congress has prescribed the interstate rate, and the other in
which it has left the matter to be fixed by the carrier.
Considering the first of these conditions, suppose Congress, in
the exercise of its power over interstate commerce, should enact
that all interstate passengers be charged exactly four cents a
mile, and the railroad company, while obeying that statute in its
charges for carrying passengers from Nashville to Louisville,
should from Franklin to Louisville charge five cents a mile --
could it be pretended that the prohibition of the state
constitution against charging more for a short haul than for a long
haul was not operative because an interference with interstate
commerce? Has the state no power to compel its corporations to give
to parties traveling within its limits the same rates and
privileges that Congress prescribes for interstate passengers? And
can it not do so by simply prohibiting a greater charge for a long
than a short haul clause? In other words, is it interfering with
interstate commerce when the state, not prescribing the charges for
interstate travel, simply requires that the passenger shall be
charged no higher rates for local travel?
The form in which the state legislation is cast cannot be vital
in determining the question of power. If an act which in terms
prescribes a rate per mile for local travel the same as has been
prescribed by Congress for interstate travel is within the power of
the state (and that it is cannot be doubted), surely one
accomplishing the same thing by simply forbidding the carrier to
charge more for a short than for a long haul is likewise within its
power. The state is merely using the standard fixed by Congress and
enforcing that standard in respect to local rates. In
Miller v.
Swann, 150 U. S. 132, it
was held that the construction of that part of the state statute
which authorized the disposal of the state's lands in
accordance
Page 184 U. S. 45
with the provisions of the public land laws of the United States
involved no federal question. The reference to the land laws of the
United States was simply by way of selecting a standard.
But if a state may select as a standard the interstate rates
prescribed by Congress, and make its local rates the same without
interfering with interstate commerce, it would certainly seem that
it could in like manner take the interstate rates which the carrier
himself prescribes, and compel conformity of local rates thereto,
and still not be subject to the charge of interfering with
interstate commerce. It is strange to be told that the action of a
carrier in fixing interstate rates is potent to render
unconstitutional the legislation of the state respecting local
rates when the like action of Congress in prescribing interstate
rates is not so potent. In other words, action by the carrier in
pursuit of its own financial interests overturns the Constitution
and statute of the state when like action by Congress in the
exercise of its constitutional power does not.
It must be borne in mind that there is here no question of
reasonableness of rates. It is true the carrier avers that the rate
of 25 cents per one hundred pounds from Franklin to Louisville was
just and reasonable, but it also avers that it made that charge
only by reason of water competition, whereas,
"but for that competition, the defendant would and could have
charged a much higher rate, which higher rate would have been just
and reasonable."
According to these allegations, while 25 cents was a just and
reasonable rate, a much higher rate would also be just and
reasonable, and it is nowhere alleged that a rate of 12 cents --
that from Nashville to Louisville -- would have been unreasonable
as a rate between Franklin and Louisville. If invalid at all, it is
not because it is no higher than the rate between Nashville and
Louisville, but because it is, in and of itself, unreasonably low
for the services rendered. As the amount of tobacco which the
defendant shipped from Nashville to Louisville between February 23
and July 15 was only twelve hogsheads, weighing 20,910 pounds, and
paying $25.09 freight, it is obvious that the loss of this entire
amount of freight would not have worked a confiscation of the
defendant's railroad property, if that be the test of
reasonableness so far as
Page 184 U. S. 46
the power of the legislature over rates is concerned, though, as
to the true test of reasonableness,
see Cotting v. Kansas City
Stock Yards Co., 183 U. S. 79.
The question may be looked at in another light. The railroad
company avers that it made its rate of 12 cents from Nashville to
Louisville in conformity with the act of Congress; that the said
rate was duly printed, posted, and kept open to public inspection,
and that, by virtue of the Interstate Commerce Act, it was unlawful
for it to charge either more or less than the rate of 12 cents from
Nashville to Louisville. Suppose the Legislature of Kentucky,
accepting that statement as correct, should pass an act in terms
prohibiting this company from charging more than 12 cents from
Franklin to Louisville, who would undertake to say that such act
was unconstitutional without evidence that in and of itself the
rate of 12 cents was unreasonable within some recognized definition
of reasonableness? Does the act become
prima facie
unconstitutional because, instead of naming 12 cents, the
legislature forbids the carrier from charging more than 12 cents,
which the carrier has fixed as its rate from Nashville to
Louisville?
Again, Louisville is on the northern border of the state, and
the route of defendant's railroad extends through the state, and
thence southward to Nashville. Every place on the line of the road
within the limits of Kentucky makes therefore a shorter haul to
Louisville than the haul from Nashville, and is included in the
latter. Under the reasoning of this opinion the State of Kentucky
has no power to prescribe a rate from any point within the State of
Kentucky to Louisville which shall be less than the rate which the
company has fixed from Nashville to Louisville. Nor are we to
suppose that competition between Nashville and Louisville is
limited to the matter of the transportation of tobacco. It is a
competition between water and railroad transportation, and
naturally extends to all articles of freight, as well as to
passengers. By the reasoning of the opinion, the State of Kentucky
would be powerless to compel the Louisville & Nashville Company
to charge a less than the competitive Nashville rate, no matter how
reasonable, from any
Page 184 U. S. 47
point within its borders to Louisville. It does not seem to me
that much is left of state control over local rates.
In the opinion of the court it is said:
"The result of the construction of this provision by the court
below is in effect to prohibit the carrier from making a less
charge for the transportation from Nashville to Louisville than
from Franklin to Louisville, or else to make a charge that will
prevent its doing any business between the states in the carrying
of tobacco. The necessary result of the provision under the
circumstances set up in the answer directly affects interstate
rates, or, in other words, directly affects interstate commerce,
for it directly affects commerce between Nashville and Louisville.
. . . We fully recognize the rule that the effect of a state
constitutional provision, or of any state legislation, upon
interstate commerce must be direct, and not merely incidental and
unimportant; but it seems to us that, where the necessary result of
enforcing the provision may be to limit or prohibit the
transportation of articles from without the state to a point within
it, or from a point within to a point without the state, interstate
commerce is thereby affected, and may be thereby to a certain
extent directly regulated, and in that event the effect of the
provision is direct and important, and not a mere incident."
The fallacy of this is that it makes transportation by the
Louisville & Nashville Company essential to commerce between
Nashville and Louisville. The burden of the complaint on the part
of the company is that there is competition at Nashville for the
transportation of tobacco to Louisville, and that it must make a
low charge to get a share of that transportation -- not that the
tobacco will not be transported, not that commerce will be
interfered with, but that this company will lose some portion of
that transportation. In other words, the power of the State of
Kentucky over this corporation, which it has created, in respect to
local rates, is denied in order that the corporation may obtain
some portion of interstate transportation. I think we may well
recall what was said only three weeks since by this Court in the
opinion in the case referred to, of this same company against the
Commonwealth of Kentucky:
Page 184 U. S. 48
"It may be that the enforcement of the state regulation
forbidding discrimination in rates in the case of articles of a
like kind carried for different distances over the same line may
somewhat affect commerce generally; but we have frequently held
that such a result is too remote and indirect to be regarded as an
interference with interstate commerce; that the interference with
the commercial power of the general government to be unlawful must
be direct, and not the merely incidental effect of enforcing the
police powers of a state.
N.Y, Lake Erie & Western Railroad
v. Pennsylvania, 158 U. S. 431,
158 U. S.
439;
Henderson Bridge Co. v. Kentucky,
166 U. S.
150."
Another matter is worthy of consideration. Suppose that Congress
enacts that an interstate rate shall be the sum of the local rates
prescribed by the several states for the parts of the through line
within their borders. Will it be contended that this is an
interference with the power of the state over local rates? Does the
mere fact that Congress accepts the local rates and makes them the
basis of an interstate rate make it an interference by Congress
with local commerce? And if that be not so, how, on the other hand,
can it be held that a mere recognition by the state of existing
interstate rates as a basis for its legislation concerning local
rate is an interference with interstate commerce?
I do not suppose it will be seriously contended that the
defendant can invalidate all the local rates which the Legislature
of Kentucky may see fit to enforce by simply saying that, outside
of the state, it somewhere touches a competitive point, and is
forced to reduce its interstate rates by reason of the competition
there existing. In other words, if in the present case there was in
fact no water competition between Nashville and Louisville, or if
there was no tobacco shipped from Nashville to Louisville, I take
it no one would seriously contend that the railroad company, by
affirming that there was, could upset the provisions of the
Kentucky legislation. There would be a question of fact to be
determined, even according to the theory that competition in
interstate rates has anything to do with local rates, and that
question of fact might be presented in actions like the present,
actions for overcharges, actions in which the
Page 184 U. S. 49
parties would have the right to trial by jury. Suppose that one
jury, upon the testimony presented before it, should find that
there was water competition between Nashville and Louisville, and
that there was tobacco shipped between the two places, and another
jury, upon the testimony introduced in a succeeding case, exactly
the contrary, is the legislation of Kentucky to be declared
unconstitutional in one case and constitutional in the other?
It seems to me, in conclusion, that a state legislature has full
power over local rates, subject only to the restriction that it
cannot require a carrier to carry without reasonable compensation,
and that, when it legislates for local rates alone, it may fix
those rates by figures, or upon the basis of any standard which it
sees fit to adopt, and the mere fact that it bases them upon some
standard is not legislation regulating that standard -- the local
rates are alone the matter regulated. For these reasons, I cannot
concur in the opinion and judgment.
I am authorized to state that MR. JUSTICE GRAY agrees with this
dissent.
