The findings of the Interstate Commerce Commission are made by
the law
prima facie true, and this Court has ascribed to
them the strength due to the judgments of a tribunal appointed by
law and informed by experience.
The reasonableness of a rate is a question of fact, and while
the conclusions of the commission are subject to review if that
body excludes facts and circumstances that ought to have been
considered, they will not, after having been affirmed by the
circuit court and circuit court of appeals, be reversed because the
commission did not adopt the presumptions of mixed law and fact put
forward by appellants as elements for determining the
reasonableness of a rate.
A presumption is the expression of a process of reasoning, and
of inferring one fact from another, and most if not all the rules
of indirect evidence may be expressed as such, but the fact on
which the inference is based must first be established before the
law can draw its inference.
Where the inquiry before the Interstate Commerce Commission is
essentially one of fact, the existence of competition cannot in
this Court be made an inference of law dominating against the
actual findings of the commission and their affirmance by the
circuit court.
In determining the reasonableness of a railroad rate,
expenditures for additions to construction and equipment to handle
the traffic should be distributed over the period of the duration
of those additions, and not charged entirely against the revenue of
the year in which they are made.
Union Pacific Railway Co. v.
United States, 99 U. S. 402,
distinguished.
This case involves the validity of an order of the Interstate
Commerce Commission requiring the appellants
"to cease and desist on or before the first day of April, 1905,
from further maintaining or enforcing the unlawful advance of two
cents per one hundred pounds, or the said unlawful rates resulting
therefrom, for the transportation of lumber from shipping
points
Page 206 U. S. 442
on defendants' respective lines in the State of Louisiana east
of the Mississippi River, and in the States of Mississippi and
Alabama to Cincinnati, Louisville, Evansville, Cairo, and other
points on the Ohio River commonly called and known as Ohio River
points."
The order was made in the matter of the complaint filed with the
Commission by the Central Yellow Pine Association, an incorporated
association composed of persons, firms. and corporations engaged in
the business of manufacturing yellow pine lumber in the States of
Mississippi, Alabama, and that part of Louisiana east of the
Mississippi River.
The complaint charged that the appellants were common carriers
by rail, engaged in interstate commerce, and as such were engaged
in the transportation of yellow pine lumber from the mills and
lumber plants of the members of the Yellow Pine Lumber Association
to the territory known as the "Central Freight Association
territory," which lies on the north of the Ohio River and on and
between the Mississippi River on the west and a line running
through Buffalo and Pittsburgh on the east, and that the members of
the association are dependent upon appellants for the
transportation of their lumber to the markets of the country; that
the appellants and the railways carrying yellow pine lumber to the
same markets from the territory west of the Mississippi River,
embracing the states of Texas, Arkansas, and that part of Louisiana
west of the river, by agreement or concert of action advanced the
rate on yellow pine lumber from the territories both east and west
of the Mississippi River on and beyond the Ohio River in Central
Freight Association territory two cents per one hundred pounds. The
advance was made applicable south of the Ohio River and effective
on and from April 15, 1903, except as to the Louisville &
Nashville road, as to which it became effective June 22, 1903. And
it was alleged that such advance was "unjust, unreasonable, as well
as discriminative, in violation of the Act to Regulate Commerce."
The answer of the railways admitted the advance, but denied that it
had the
Page 206 U. S. 443
character and effect charged, but alleged that, on the contrary,
it was reasonable and just, and not in violation of law. The
answers also specifically justified the advance by the conditions
of the market and the traffic, including competition, and the costs
of operating the roads. Testimony was taken on the issues thus
formed.
The Commission sustained the complaint and made the order
recited above. 10 I.C.C. 505. The railways refused to obey. The
Commission then instituted this proceeding in the Circuit Court of
the United States for the Eastern District of Louisiana, where
further proof was taken and a decree rendered which affirmed the
order of the Commission and made it the order of the court. The
roads were also enjoined from further disobedience to the order. No
opinion was filed. The testimony was voluminous, and the report and
findings of the Commission are very long. They are reported in 10
I.C.C. 505,
supra. The conclusions of the Commission are
mingled somewhat with legal arguments, but the following may be
selected as important and pertinent to the questions which the
controversy presents:
The lumber-producing districts are divided in territory (1) west
of the Mississippi River; (2) territory east of the river, and (3)
southeastern territory, composed of the states of Georgia, Florida,
and part of Alabama. The lumber of each of these districts competes
in the sale of their products in "Central Freight Association
territory."
The roads of the appellants are located in and serve the second
of these territories.
The advance in rates was made as well in territory west of the
Mississippi River, "and was made, in fact though not expressly, by
agreement between the defendants (appellants) and the roads west of
the river," after several meetings at a consultation between the
representatives of the roads. The roads east of the river took the
initiative.
At Cairo, traffic from a large portion of the lumber-producing
districts meets or converges en route to destination. The
Page 206 U. S. 444
rates on other Ohio River crossings are based on Cairo -- that
is, they bear a fixed relation to the Cairo rate, being advanced or
reduced as that rate is advanced or reduced. The through rates to
points beyond the Ohio River in Central Freight Association
territory are made up of the full local rates of the roads north of
the Ohio as the proportions of those roads. Whatever is left of the
through rates are the proportions of the roads south of the Ohio.
The rates to interior points north of the Ohio are made on the
lowest combination rates to the Ohio plus the rates beyond, and are
blanket rates, being the same from all shipping points or points of
production to the same destination. The rates to the Ohio are to
the north bank, and include the bridge tolls.
There are divisions of rates south of the Ohio between what are
termed the "originating" roads, on which the lumber is principally
manufactured, and the roads intermediate between them and the
river.
There had been, from time to time, changes or fluctuations in
the rate. Prior to 1894, the roads west of the Mississippi claimed
and were allowed a differential of two cents. This placed at a
disadvantage the shippers east of the Mississippi, and a
readjustment of rates was made, and on May 1, 1894, the rate to
Cairo from east of the Mississippi was reduced to thirteen cents
per one hundred pounds, the rate in force from west of the
Mississippi. This rate remained until September 9, 1899, about five
years, when it was advanced to fourteen cents, and so remained
until April 15, 1903, nearly four years, when the advance of two
cents complained of was made.
The railroads west of the Mississippi make a certain allowance
to the mills which have "logging roads," that is, roads by which
logs are hauled from the timber to the mills. This is called "tap
line allowance or division." It ranges one to two cents per one
hundred pounds, up to as high as six cents, and varies, to some
extent, according to the destination of the traffic. The mills east
of the river have logging roads also, but appellants make no
allowance to them. The only exception
Page 206 U. S. 445
is the Mobile & Ohio road, which grants allowances to about
four mills on its line. The New Orleans & Northeastern road put
in a tap line allowance of two cents, but other roads east of the
river objected, and it was withdrawn. There does not appear to be
any reason for such allowance west of the Mississippi which does
not apply east of that river, and it amounts to a rebate or
reduction from the regularly published rate, and gives an advantage
to the mills west of the Mississippi over those east, although the
published rates from both are the same.
The lumber business had grown from its inception, and was
largely and possibly more prosperous than it had been before, but
the proof does not show that, for two of three years preceding the
advance, the prices of mill products had materially increased, or
that the profits realized were unusual or excessively large.
As to the operating expense of the roads, the Commission
said:
"The proof shows increases in wages and in prices of material
and equipment, but not in a marked degree for the two years, 1901
and 1902, immediately preceding the advance rate. These increases
have doubtless added materially to operating expenses, but the
total annual increases in those expenses are, of course, due only
in part to the advances in wages and prices of supplies and
equipment. They are attributable in a great measure to the constant
growth or enlargement of the business of the roads. Not only has
the lumber business of the roads greatly increased, but their
business in general. The greater the volume of business, the
greater is the aggregate cost of conducting it -- or, in other
words, of operating the roads. The total operating expenses of the
roads, as reported by them, have also been much enlarged by the
inclusion therein of large expenditures for permanent
improvements."
"
* * * *"
"While the operating expenses of the defendants have constantly
grown, the gross earnings from operation have also
Page 206 U. S. 446
increased from year to year to such an extent as to have
resulted in a constant increase in net earnings. This is shown in
the tables set forth in our findings of fact (Finding 14)."
Sufficient cause was not shown, either in the alleged profit in
the lumber business or in the increased cost of operating the
roads, for the advance in the rates on lumber. And, answering the
contention that the former rate was not adequately remunerative,
the Commission expressed the view that "reasonableness in this
sense of a rate on a single article of traffic is one of almost
insuperable difficulty." And further, that the value of the entire
property of a road "can shed but little, if any, light upon the
question." The rate on one article might reasonably or unreasonably
be high and the total of rates be remunerative or otherwise. But,
it was concluded, even if that be a mistaken view, it was
impossible with any degree of accuracy to determine from the
voluminous and conflicting testimony on the subject introduced in
behalf of both parties what was the value of the property employed
by the roads. The Commission thought that the elements to be
considered in determining the reasonableness of an entire system of
rates were "widely variant" from those to be considered in
determining the reasonableness of a single rate, and expressed the
elements upon which the latter depends to be "the value, volume,
and other characteristics affecting the transportation of the
particular commodity to which it is applied." The Commission
referred to its findings of facts as having "many things disclosed
by the evidence" which bore directly upon the reasonableness of the
particular rate in question, and which aided it in arriving at a
correct judgment in respect thereto, saying that:
"In the first place, the present advanced rate is the last (up
to date) of a series of advances, and was made by joint or
concerted action of the carriers. It is claimed by them that, in
advancing the rate, they acted independently, each for itself, but
the proof shows conclusively that the advance was the outcome of a
concert of action and a previous understanding
Page 206 U. S. 447
between the companies. Through their authorized official
representatives, they conferred with each other repeatedly as to
the making of an advance; recognized the fact that, because of
competition in common markets between the lumber-producing
districts served by them, the advance should be from all those
districts or none, and finally they all promulgated the advance, to
take effect at exactly the same time for exactly the same amount.
This concurrence of action was not only between the railway
companies, parties defendant in this case, and in relation to the
rates charged by them, but was participated in by the
lumber-hauling roads serving the territories west as well as east
of the Mississippi River."
The fourteen-cent rate in force at the date of the advance had
been maintained nearly four years, and a still lower rate, thirteen
cents, had been maintained for the preceding five years and four
months. And the testimony of the officers of the roads was that
there was a profit in both rates. The answer also admitted profit,
but averred that lumber "was not an exceedingly profitable
commodity." The Commission said:
"No reason is given or shown why lumber should be singled out as
a commodity upon which an 'exceedingly' large profit should be
earned. A reasonable profit is all the defendants are entitled to,
and the testimony is far from convincing us that the profit under
the fourteen-cent rate was not reasonable or would not now be
reasonable. As stated in our 'Findings of Facts,' the fourteen-cent
rate appears to be reasonably high when compared with the rates on
other commodities which are at all analogous to lumber in respect
to value, volume, and the various conditions affecting the service
of transportation. During the period from 1894 to 1899, while the
thirteen-cent rate was operative, there were large annual increases
in the net earnings of the defendants, and the same was the case
from 1899 to 1903, while the fourteen-cent rate was operative
(Finding 15). During those periods there was also a large
Page 206 U. S. 448
growth in the tonnage of lumber hauled by the defendants, and
therefore their increases in net earnings were, in part at least,
derived from the lumber traffic under those rates. Dividends have
been declared during those periods, and in addition considerable
surpluses have been reported (Finding 16), and large sums have been
invested in permanent improvements or betterments (Finding
14)."
The seventh and eighth conclusions of the Commission we give
entire, as follows:
"The defendants, other than the originating roads, complain of
the small amount of revenue or low rate per ton per mile realized
by them out of their proportions of the through rates. This is due
to the large allowances out of the rates made to the originating
roads. (
See Findings 3 and 4.) Those allowances commenced
under the lower rates in force prior to the advance, and raise the
presumption that those lower rates, minus the allowances, were then
considered reasonably remunerative for the remainder of the hauls
to the Ohio River crossings. As the two cents advance goes entirely
to the roads continuing the transportation on to the Ohio, and none
of it to the originating roads, the inference is that advance was
made solely with a view of increasing the proportions of the former
roads. If the allowances to the originating roads are unreasonably
large, as they appear to be from a distant standpoint, and result
in unreasonably low proportions to the other roads, this cannot be
remedied by an advance in the total through rates charged the
public. It is the total rate, and not its proportions, which is in
issue."
"Although both the net and gross earnings of the defendants have
grown from year to year, the percentages of what are reported by
the defendants as 'operating expenses' to earnings have also
somewhat increased (table, Finding 14), and this is urged as
showing the necessity for an advance in the lumber and some other
rates. It is to be noted that these operating expenses embrace
large annual expenditures for real estate, right of way, tunnels,
bridges, and other strictly
Page 206 U. S. 449
permanent improvements, and also for equipment, such as
locomotives and cars."
And the Commission said repairs, whether to improvement or
equipment, were properly chargeable to operating expenses, but that
expenditures for improvements and equipments should not
"be taxed as part of the current or operating expenses of a
single year, but should be, so far as practicable, and so far as
rates exacted from the public are concerned, 'projected
proportionately over the future.'"
It was said further, if such expenditures should be deducted
from the annual operating expenses, it would be found that the
percentage of operating expenses to earnings had, in some
instances, diminished, and in others increased, to no material
extent.
The tenth and eleventh conclusions are as follows:
"10. The general rule is, the greater the tonnage of an article
of traffic, the lower is the rate. No rule is more firmly grounded
in reason or more universally recognized by carriers. It is because
of the greater density of traffic north of the Ohio River in
Central. Freight Association territory and in eastern territory
that rates in general are materially lower in those territories
than in southern territory. The defendants have made yellow pine
lumber an exception to this rule; while the tonnage in general of
the defendants and lumber tonnage in particular have grown greatly,
the lumber rate has not been lowered, but has been materially
advanced. Moreover, the testimony is that 'a decrease in the rates
on traffic in general has been going on throughout the United
States since the improvements in transportation have been put in
operation;' here again, lumber has been taken from under, and
deprived of the benefits of, the general rule."
"11. As said in Marten v. L. & N. R. Co., 9 I.C.C. 589, and
shown by the proof in this case, 'lumber is an inexpensive freight,
and only a few other commodities furnish to carriers so large a
tonnage.' The lumber business is constant, yielding the carriers
revenue all the year; no special equipment is constructed or
furnished for its carriage; it is
Page 206 U. S. 450
loaded by the shipper and unloaded by the consignee, and where
open cars are furnished, the shipper is required at considerable
expense to equip them so as to protect the load and the train;
there is small risk incident to its transportation, and, in case of
accident, the damage is insignificant. For these reasons, lumber
should be given rates which are relatively low."
"Our conclusion on the whole is that the advance, April 15,
1903, of two cents in the Cairo rate (with a corresponding increase
in the rates to the other Ohio River crossings) was not warranted
under all the facts in evidence, and that the resultant increased
rate is unreasonable and unjust. An order will be issued in
accordance with these views. "
Page 206 U. S. 454
MR. JUSTICE McKENNA delivered the opinion of the Court.
Counsel for appellants in his oral argument made the declaration
that it would not be necessary for this Court to open the pages of
testimony contained in the record, and says in his supplemental
brief:
"I do not insist that this Court shall read the voluminous
testimony contained in these records, but I do most respectfully
ask it to lay down the rules or principles of transportation law
which are fairly involved in the just determination of these cases,
and to remand them to the Commission, to be reexamined upon the
testimony in conformity with the principles of transportation law
to be announced by this Court."
To what, then, shall we resort? How shall we determine what
"principles of transportation law" were involved? How determine
whether they were recognized and applied, or denied and rejected,
by the Commission, and, necessarily, by the circuit court? An
examination of the testimony, by concession of counsel, is out of
the question. And the findings of the Commission are made by law
prima facie true. This Court has ascribed to them the
strength due to the judgments of a tribunal appointed by law and
informed by experience.
Louisville & Nashville Railroad Co.
v. Behlmer, 175 U. S. 648;
East Tenn. &c. R. Co. v. Interstate Commerce
Commission, 181 U. S. 1,
181 U. S. 27.
And, in any special case of conflicting evidence, a probative force
must be attributed to the findings of the Commission, which, in
addition to "knowledge of conditions, of environment, and of
transportation relations," has had the witnesses before it and has
been able to judge of them and
Page 206 U. S. 455
their manner of testifying. In the case at bar, these
considerations are reinforced by a concurrent judgment of the
circuit court.
The question is one of the reasonableness of a rate, and such a
question was said to be one of fact in
Texas & Pacific Ry.
Co. v. Interstate Commerce Commission, 162 U.
S. 197;
Cincinnati, New Orleans & Texas Pacific
Railway v. Interstate Commerce Commission, 162 U.
S. 184. In these cases, however, it was declared that
the conclusions of the Commission are subject to review if it
excluded "facts and circumstances that ought to have been
considered." Upon this declaration appellants rely, and justify
their invocation that this Court express and enforce the principles
of transportation which, they contend, the Commission disregarded,
and appellants venture the observation that, unless this be done
"there will be no settled principles of law for the guidance of
either the Commission or of the courts," and that
"the interstate railroad companies will be the only persons in
this country who will not be able to obtain the opinion of the
courts upon questions of law which vitally affect their
interest."
We think the apprehension is groundless, and is demonstrated to
be groundless by the cases cited. In all of them, legal
propositions were reviewed as elements in the inquiry of the
reasonableness of a rate. Those cases, however, are in marked
contrast to the pending case. It will be observed that, in them,
the instances were very simple. There was a salient circumstance in
each of them about which there was no uncertainty. In other words,
it was unconfused by dispute, and was not put to question by a
conflict of testimony. A definite legal proposition unmixed with
fact was presented, and the only act of judgment exercised by the
Commission was to reject it.
In
Cincinnati, New Orleans & Texas Pacific Railway v.
Interstate Commerce Commission, passing on the effect of a
shipment on a through bill of lading to give jurisdiction to the
Commission (in which the Commission was sustained), the questions
presented were the power in the Commission
Page 206 U. S. 456
to fix a maximum rate, and whether competitive conditions could
be considered by a railroad in fixing a greater charge for a
shorter than a longer distance on its own line. It was decided that
the power to pass on the reasonableness of an existing rate did not
imply the power to prescribe a rate. On the conditions affecting
competition it was not found necessary to pass, but the following
passage is worth the quoting as bearing on the contention of
appellants:
"It has been forcibly argued that, in the present case, the
Commission did not give due weight to the facts that tended to show
that the circumstances and conditions were so dissimilar as to
justify the rates charged. But the question was one of fact,
peculiarly within the province of the Commission, whose conclusions
have been accepted and approved by the circuit court of appeals,
and we find nothing in the record to make it our duty to draw a
different conclusion."
In
Texas & Pacific Railway v. Interstate Commerce
Commission, ocean competition as constituting a dissimilar
condition and as justifying a difference in rates between import
and domestic traffic was the circumstance considered. The
Interstate Commerce Commission had ruled against such competition
as a factor, and condemned rates made in view of it to be undue and
unjust. The court observed:
"But we understand the view of the Commission to have been that
it was not competent for the Commission to consider such facts --
that it was shut up by the terms of the act of Congress, to
consider only such 'circumstances and conditions' as pertained to
the articles of traffic after they had reached and been delivered
at a port of the United States or Canada."
And further:
"We have therefore to deal only with a question of law, and that
is, what is the true construction, in respect to the matters
involved in the present controversy, of the Act to Regulate
Commerce? If the construction put upon the act by the Commission
was right, then the order was lawful; otherwise it was not. "
Page 206 U. S. 457
The ruling of the Commission was reversed.
In
Interstate Commerce Commission v. Alabama Midland
Railway, 168 U. S. 144,
there was passed upon a decision of the Commission that the
competition of river lines of transportation was not a factor to be
considered when determining whether property transported over the
same line is carried under "substantially similar circumstances and
conditions," as that phrase is found in the fourth section of the
Interstate Commerce Act. The decision was declared to be an
erroneous construction of the act.
In
Louisville & Nashville Railroad Co. v. Behlmer
(passing by subordinate questions), the dominant element was the
construction of the fourth section of the Interstate Commerce Act.
The Commission and the circuit court of appeals, it was said,
"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."
In all these cases, therefore, there was a single, distinct, and
dominant proposition of law which the Commission had rejected, and
the exact influence of which, in its decisions, could be estimated.
Indeed, they were mere constructions of the statute, the delegation
of the Commission's duties and power. Let us now see what the
propositions are which appellants propose for our adoption. They
are presented as presumptions of law, which dispense with evidence
until rebutted, or countervail evidence by their probative force.
(1) That the rate published by a carrier is reasonably low. (2) A
rate upon a commodity, made by the competition of carriers, is
reasonably low, and the burden is on him who assails it. (3) A rate
upon a commodity as low, or lower, than the majority of rates
charged by other carriers for the transportation of the same grade
of commodities for similar distances in the same or other
territory, is reasonably low, and the burden is upon him who
Page 206 U. S. 458
insists that it is unreasonably high. (4) A rate charged by a
carrier which has the "strongest possible motive" to develop and
increase a traffic in a particular commodity, and has maintained
such rate for a "long series of years," so as to have induced a
large and continuous increase of business in that commodity and of
the capital invested, is reasonably low. (5) Rates being so
adjusted upon a commodity as to enable it to move with profit to
the shipper, whatever the conditions of the market, reducing the
rates as the market declines, only increasing them as the market
improves, a particular increase is reasonable if it be shown that
the percentage of increase has been greater in the price of the
commodity than in the rates on it. (6) Rates reduced to meet a
market depression, and kept in effect during the depression, and
increased when the depression ceases, which does not cause the
increased rates to exceed the rates that were maintained by the
carrier prior to the depression, are reasonable. (7) (8) Increase
in rates upon all commodities impartially to meet largely increased
expenditures on account of an abnormal increase in the volume of
traffic is reasonable, "provided the gross earnings of the carrier
yield less than the normal proportion of net earnings." Or provided
the percentage of increase has been greater in the operating
expenses of the carrier than in the rates upon the commodity. (9)
(10) Upon the supposition that certain improvements have been made
necessary by "an abnormal increase of traffic," they should be
taken into account in determining the reasonableness of an increase
of rates upon a commodity, whether, as a matter of bookkeeping, the
expenditures should be charged to capital account or to the
operating expenses, and without regard to the fact whether such
expenditures have been paid out of the carrier's earnings or have
been provided for by the issuance of bonds. (11) A rate on a
commodity is profitable if it exceeds the cost of its movement, and
yet the rate may be unreasonably low if it does not contribute its
fair share to operating expenses, taxes, and fixed charges.
Page 206 U. S. 459
If these propositions should be granted as axioms of
transportation there is the difficulty, as we have already pointed
out, of determining to what extent -- that is, whether to
prejudicial extent, if at all -- they were disregarded by the
Commission and by the circuit court. The circuit court affirmed the
order of the Commission, and it is an instant assumption that the
court considered all the elements in the testimony and inferences
from it. And the propositions of appellants are inferences of mixed
law and fact, hence disputable -- may be overcome or counterpoised,
and therefore the court, in reaching its ultimate judgment, may
have given them all the weight to which they were entitled.
It is almost impossible to discuss the contentions of appellants
without bringing forward the elemental. A presumption is the
expression of a process of reasoning, and most, if not all, the
rules of indirect evidence may be expressed as such. We cannot go
far in the investigation of any controversy without finding
ourselves compelled to infer one fact from another, but we would
not therefore be justified in declaring such inferences legal
axioms. It is to this that appellants invite us and seek to erect
disputable inferences from conduct that may have many explanations
into intendments of law.
In this connection,
Texas & Pacific Railway v.
Interstate Commerce Commission, supra, is an instructive case.
In that case, we have seen, it was decided that whether the rate
was reasonable or unreasonable was a question, whatever its
theoretical nature, for the tribunal that decides upon matters of
fact. Among other cases cited to sustain that position was
Denaby Main Colliery Co. v. Manchester &c. Railway
Company, 3 Railway & Canal Traffic Cases 426. In that
case, it was declared that reasonableness of a rate was a question
of fact, and not reviewable by an appellate court unless
circumstances which ought to have been considered were not
considered, and that a decision must be arrived at fairly looking
at all the circumstances that are proper to be looked at. The
appellant in the case contended against the consideration by the
railway
Page 206 U. S. 460
commissioners of competition between two places, and the court
of appeals, replying, said:
"If the appellants can make out that, in point of law, that is a
consideration which cannot be permitted to have any influence at
all, that those circumstances must be rigidly excluded from
consideration, and that they are not circumstances legitimately to
be considered, no doubt they establish that the court below has
erred in point of law. But it is necessary for them to go as far as
that in order to make any way with this appeal, because once admit
that to any extent, for any purpose, the question of competition
can be allowed to enter in, whether the court has given too much
weight to it or too little becomes a question of fact, and not of
law. The point is undoubtedly a very important one."
And it may be well to say here, as a suggestive principle
throughout, that it was pointed out, such conclusions of fact were
"to be arrived at, looking at the matter broadly and applying
common sense to the facts that are proved." The remarks of Wills,
J., in
Phipps v. London & North-Western Railway
[1892], 2 Q.B. pp. 229, 236, when the case was before the railway
commissioners, were in effect approved. This Court also quoted
them. Willes, J., said, speaking of the questions of undue or
unreasonable preference or advantage to or in favor of any
particular person under § 2 of the Railway and Canal Traffic Acts,
that they were eminently practical,
"and if this Court once attempts the hopeless task of dealing
with questions of this kind with any approach to mathematical
accuracy, and tries to introduce a precision which is unattainable
in commercial and practical matters, it would do infinite mischief
and no good."
It is conceded, as we have said, that the presumptions contended
for by appellants are mixed of law and fact, except maybe those
which we shall presently consider. If either element is dominant in
such presumptions, it must be that of fact. In other words, the
fact must be ascertained before the law draws its inference. This
is especially pertinent to
Page 206 U. S. 461
the propositions urged by appellants. Let us illustrate. Take,
for example, the second proposition, that "a rate upon a commodity
made by competition of carriers is reasonably low, and the burden
is on him who assails it." But suppose competition is not
established, or is disproved, what becomes of the inference and the
onus of proof dependent upon it? The question marks the condition
that appellants encounter in the findings of the Commission. The
findings of the Commission in effect negative the facts upon which
the propositions depend. In still greater degree, there is
illustration in the first proposition. That proposition is an
inference from an inference, as we shall presently point out. The
reasonableness of the rate is inferred from competition, and
competition is inferred from the publication of the rate.
This comment, it may be said, is not applicable to the ninth and
tenth propositions of appellants, as they present propositions of
law which were not only disregarded by the Commission, but the
antithesis of them was asserted in the eighth finding. This
contention must be specifically considered. The Commission finds
that the net and gross earnings of the appellants have grown from
year to year, and also that what they have reported as operating
expenses have also grown. But in these operating expenses there
were included
"expenditures for real estate, right of way, tunnels, bridges,
and other strictly permanent improvements, and also for equipment,
such as locomotives and cars."
The Commission expressed the opinion that such expenditures
should not be charged to a single year, but
should be, so far
as practicable and so far as rates exacted from the public are
concerned, "projected proportionately over the future.'" And it was
said:
"If these large amounts are deducted from the annual operating
expenses reported by the defendants (appellants), it will be found
that the percentage of operating expenses to earnings has in some
instances diminished and in others increased to no material
extent."
The exact effect of the difference of view between appellants
and the Commission as to operating expenses there is no test;
Page 206 U. S. 462
but it cannot be said, even if the commission was wrong as to
such expenses, that error in its ultimate conclusion is
demonstrated or that the correctness of the conclusion is made so
doubtful as to justify a reversal. The findings show that the old
rates were profitable and that dividends were declared even when
permanent improvements and equipment were charged to operating
expenses. But may they be so charged? Appellants contend that the
answer should be so obviously in the affirmative that it should be
made an axiom in transportation. On principle, it would seem as if
the answer should be otherwise. It would seem as if expenditures
for additions to construction and equipment, as expenditures for
original construction and equipment, should be reimbursed by all of
the traffic they accommodate during the period of their duration,
and that improvements that will last many years should not be
charged wholly against the revenue of a single year. But it is
insisted that
Union Pacific Railway Co. v. United States,
99 U. S. 402,
establishes the contrary. That case was not concerned with rates of
transportation or the rule which should determine them against
shippers. It was concerned with the construction of the words "net
earnings" in an act of Congress, five percent of which earnings
were provided to be applied annually to a loan by the government to
the railroad. Considering the provision of the act and its purpose,
it was concluded "that the true interest of the government" was
"the same as that of stockholders, and would be subserved by
encouraging a liberal application of the earnings to the
improvement of the works." "It is better," it was said,
"for the ultimate security of the government in reference to the
payment of its loan, as well as for the service which it may
require in the transportation of its property and mails, that one
hundred dollars should be spent in improving the works than that it
should receive five dollars towards the payment of its subsidy. If
the five percent of net earnings demandable from the company
amounted to a new indebtedness, not due before, like a rent
accruing upon a lease, a more
Page 206 U. S. 463
rigid rule might be insisted on. But it is not so; the amount of
the indebtedness is fixed and unchangeable. The amount of the five
percent and its receipt at one time or another is simply a question
of earlier or later payment of a debt already fixed in amount. If
the employment of any earnings of the road in making improvements
lessens the amount of net earnings, the government loses nothing
thereby. The only result is that a less amount is presently paid on
its debt, whilst the general security for the whole debt is largely
increased."
The interest of the government in the improvement of the road
was even greater than that of a stockholder. This was manifest from
its munificent gift of lands, in addition to its generous loan of
credit. As benefactor of the road and as creditor of it, as a
government concerned with the development of the country, as a
money lender concerned with the extent of security, "the true
interest" of the United States might be that revenue should be
applied to improvements. Payment of the debt was only postponed,
not denied, and this and the other considerations might well
determine the construction of words in the statute which were
capable of different meanings. But such is not the relation or
concern of a shipper of lumber. His right is immediate. He may
demand a service. He must pay a toll, but a toll measured by the
reasonable value of the service. The elements of that value may be
many and complex, not always determinable, as we have seen, with
mathematical accuracy, but we think it is clear that
instrumentalities which are to be used for years should not be paid
by the revenues of a day or year, and this is the principle of
returns upon capital which exists in durable shape.
The first proposition submitted by appellants may also be said
to be so far absolute and independent of evidence as to be
considered as a presumption of law simply. This is contended on the
authority of
Van Patten v. Chicago, Milwaukee & St. Paul
Railway Co., 81 F. 545. It is difficult to analyze the case
briefly. It was an action of damages against the railroad for
charging unjust and unreasonable rates under
Page 206 U. S. 464
the assumption that sections 8 and 9 of the Interstate Commerce
Act gave such an action, though the railroad had charged according
to the schedule of rates filed with the Interstate Commerce
Commission. The answer of the railroad set up the schedule and that
rates had been charged shippers in accordance with it. The court
overruled a demurrer to a demurrer to the answer and adjudged the
defense good. The court discussed the question in an elaborate
opinion, and, led by the difficulties of applying all of the
provisions of the act, which were enacted, the court observed, to
correct "the mode in which carriers imposed their charges," sought
in the act itself a standard of reasonableness.
The court, in its opinion, referred to the evils which had
existed -- rebates from published schedules, preferences and
discriminations against shippers -- and the purpose and hope of the
act to correct them through the requirement of an imperative
statutory standard, and by that and other requirements to establish
free competition between railroads, and, as a result of
competition, reasonable rates. But it was not said or intended to
be said that competition followed as a presumption of law in any
given case. The court did not intend to assert a rule deduced from
the conduct of railroads -- conduct so far constant that the law
would base a presumption upon it and forever fix it as one of its
intendments. Indeed, the court meant to do no more than to deny a
right of action for unreasonableness in the rates as filed. And
this Court, in
Texas & Pacific Railway Co. v. Abilene
Cotton Oil Co., 204 U. S. 426, has
decided that the redress of a shipper for such unreasonableness
must be through the Interstate Commerce Commission. It is certain
that a presumption that was sufficient to defeat an action in the
circuit court could not be urged to defeat an inquiry by the
Commission. Of course, if a complaint should be filed before the
Commission and no proof adduced to support it, we cannot doubt but
that the complaint would be dismissed; but this because of the
principle that the party who asserts the affirmative in any
controversy ought
Page 206 U. S. 465
to prove the assertion, and that he who denies may rest on his
denial until at least, the probable truth of the matter asserted
has been established.
"The reason is obvious: to all propositions which are neither
the subject of intuitive or sensitive knowledge nor probabilized by
experience, the mind suspends its assent until proof of them is
adduced."
Best, Presumptions, § 32.
There are other contentions of appellants which we think are
untenable. One only needs comment. It is said that it was error to
hold the advance unreasonable and unjust because the charges made
on lumber to Cairo and other points on the Ohio River
"are mere divisions of through rates, the justness of which
neither the Interstate Commerce Commission nor the circuit court
has any jurisdiction to determine."
Indeed, it is said, to do so is an exercise of a legislative
function. We think the contention is in effect answered by
Cincinnati, New Orleans & Texas Pacific Railway v.
Interstate Commerce Commission, 162 U.
S. 184. If the contention is intended to be as extensive
as its words seemingly make it, it would withdraw from the
supervision of the Interstate Commerce Commission and from the
courts every shipment over two or more railroads. There necessarily
must be some apportionment of the rates between such roads, and
whether the advance should be made in the rates over one road or
the other, or in the rates over all, can make no difference. In
other words, it is competent for the Commission or the courts to
consider the through rate, however composed. It must not be
overlooked that the Commission and the circuit court found that the
advance in the case at bar was made by agreement between the roads,
and was not the individual action of each, induced by competition.
It is true the contrary fact is asserted. It is asserted that such
action was the result of competition, and that the "legal value" to
which competition was entitled was not given it. The argument to
support the contention has not convinced us. The inquiry was
essentially one of fact, and the attempt to make competition an
inference of law and dominating against the
Page 206 U. S. 466
findings of the Commission and their affirmance by the circuit
court we have already rejected.
But little more discussion is necessary. The concession of
counsel with which we have commenced this opinion is a frank
recognition of the effect which this Court has given to the
decisions of the Interstate Commerce Commission on questions of
fact. And we have said very recently:
"The statute gives
prima facie effect to the findings
of the Commission, and, when those findings are concurred in by the
circuit court, we think they should not be interfered with unless
the record establishes that clear and unmistakable error has been
committed."
Cincinnati, Hamilton & Dayton R. Co. v. Interstate
Commerce Commission, 206 U. S. 142.
It is true, appellants assert, that clear and unmistakable error
has been committed, but upon ground untenable, as we have seen. And
the present case, above all others, calls for the application of
the rule. The question submitted to the Commission, as we have
said, with tiresome repetition, perhaps, was one which turned on
matters of fact. In that question, of course, there were elements
of law, but we cannot see that any one of these or any
circumstances probative of the conclusion was overlooked or
disregarded. The testimony was voluminous. It is not denied that it
was conflicting, and, by concession of counsel, it included a large
amount of testimony taken on behalf of appellants in support of the
propositions contended for by them. Whether the Commission gave too
much weight to some parts of it and too little weight to other
parts of it is a question of fact, and not of law. It seems from
the findings, report, and conclusions of the Commission that it
considered every circumstance pertinent to the problem before
it.
Further testimony was taken by the circuit court, and its
judgment confirmed that of the Commission and approved its
order.
Decree affirmed.
MR. JUSTICE MOODY took no part in the decision of this case.
MR. JUSTICE BREWER dissented.
