In view of continuity of operation, manner of compensation for,
and performance of, services in connection with interstate
transportation, the Union Stock Yard & Transit Company and the
Chicago Junction Railway Company are subject to the terms of the
Act to Regulate Commerce and must conform to its requirements in
regard to filing tariff and also desist from unlawful
discriminations to shippers.
The Interstate Commerce Act, as amended by the Elkins and
Hepburn Acts, extends to all terminal facilities and
instrumentalities.
Service that is performed wholly in one state is still subject
to the Act to Regulate Commerce if it is a part of interstate
commerce.
The duties of a common carrier in the transportation of
livestock begin with their delivery to be loaded and end only after
unloading and delivery, or offer of delivery, to the consignee.
Covington Stock Yards Co. v. Keith, 139 U.
S. 128.
The character of the service rendered in regard to carriage of
interstate freight, and not the manner in which the goods are
billed, determines whether the commerce is interstate or not, and
so
held that, although neither the Stock Yard Company nor
the Junction Railway Company issues through bills of lading, still,
as the goods handled are in transit from one state to another, both
corporations are engaged in interstate commerce.
Where two corporations, the controlling stock of both of which
is owned by one holding company, operate jointly, one handling only
the stockyard business and the other the business of transferring
and switching cars containing freight in interstate transit, both
are to be deemed railroads within the terms of the Act to Regulate
Commerce and are subject to its requirements.
Page 226 U. S. 287
While the Act to Regulate Commerce excludes transportation
wholly within a state, a corporation owning a railroad and doing
other business in connection with freight in interstate carriage
cannot, by leasing the railroad to another company for a share of
the profit, exempt itself from the operation of the law.
A contract by an interstate carrier by railroad to pay a part of
the cost of the plant of one of its shippers who agrees only to
handle goods moved by it
held in this case to be an
illegal discrimination and rebate under the Act to Regulate
Commerce.
A shipper receiving a bonus from the carrier for erecting a
plant on the line of the carrier has an undue advantage over a
shipper not receiving any bonus or a smaller bonus.
It is the object of the Interstate Commerce Act and the Elkins
Act to prevent favoritism by any means or device whatsoever, and to
prohibit all practices running counter to the purpose of placing
all shippers upon equal terms.
192 F. 330 affirmed in part and reversed in part.
The facts, which involve the application of §§ 2, 6 and 20, of
the Interstate Commerce Act, and of § 1 of the Elkins Act, to the
Union Stock Yard & Transit Company of Chicago and the Chicago
Junction Railway Company, are stated in the opinion.
Page 226 U. S. 295
MR. JUSTICE DAY delivered the opinion of the Court.
These are appeals from a decree entered by the Commerce Court in
an action begun by the United States on the application of the
Attorney General at the request of the Interstate Commerce
Commission, against the Union Stock Yard & Transit Company of
Chicago, an Illinois corporation (hereinafter called the "Stock
Yard Company"), the Chicago Junction Railway Company, an Illinois
corporation (hereinafter called the "Junction Company"), and the
Chicago Junction Railways & Union Stock Yards Company, a New
Jersey Corporation (hereinafter called the "Investment Company"),
and David Pfaelzer, Abe Pfaelzer, and Jones L. Pfaelzer, a
copartnership doing business under the firm name and style of Louis
Pfaelzer & Sons. The bill sought to enjoin violations of §§ 2,
6, and 20 of the Interstate Commerce Act, as amended, 24 Stat. 379,
c. 104; 34 Stat. 584, c. 3591; 36 Stat. 539, c. 309, and of § 1 of
the Elkins Law, 34 Stat. 584, c. 3591. Its prayer was that an
injunction should issue to restrain the Stock Yard Company and the
Junction Company from further engaging in interstate commerce until
they had filed tariffs, as required by § 6 of the act, and to
restrain the performance of a certain contract with the Pfaelzers,
and that the Stock Yard Company and the Junction Company be
required to file the statements and reports provided by § 20 of the
act.
Page 226 U. S. 296
The Commerce Court held that neither the Stock Yard Company nor
the Investment Company was a common carrier, and that it had no
jurisdiction to determine whether the contract would amount to an
unlawful discrimination or advantage, or rebate, and dismissed the
bill as to the Stock Yard Company and the Investment Company and as
to the Pfaelzers. As to the Junction Company, it held that it was a
common carrier subject to the Interstate Commerce Act, and obliged
to file its tariffs as required by the statute. It further held
that, since there was no allegation in the bill that the Interstate
Commerce Commission had by general or special order required the
Stock Yard Company or the Junction Company to File statements and
reports under § 20, it could not issue mandamus to make such
statements and reports. 192 F. 330.
The government appealed from the dismissal of the bill as to the
Stock Yard Company, the Investment Company, and the Pfaelzers,
which is case No. 261. It, however, makes no contention against the
holding of the Commerce Court as to the construction of § 20. The
Junction Company appealed from the decision of the Commerce Court
as to it, which appeal is case No. 622.
The correctness of the decision and decree of the Commerce Court
is submitted upon facts which are practically undisputed. The Stock
Yard Company was incorporated under a special act of the
Legislature of Illinois, February 13, 1865, which authorized it to
locate, construct, and maintain near the southerly limits of the
City of Chicago:
". . . [a]ll the necessary yards, enclosures, buildings,
structures, and railway lines, tracks, switches, and turnouts,
aqueducts, for the reception, safekeeping, feeding, and watering,
and for the weighing, delivery, and transfer of cattle and
livestock of every description, and also dead and undressed animals
that may be at or passing
Page 226 U. S. 297
through or near the City of Chicago, and for the accommodation
of the business of a general union stockyard for cattle and
livestock, including the erection and establishment of one or more
hotel buildings, and the right to use the same; . . . to make
advances of money upon such cattle and livestock for freight or
other purposes as may become expedient. . . ."
The charter further provided:
"That said company shall construct a railway, with one or more
tracks, as may be expedient, from the grounds which may be selected
for its said yards so as to connect, outside of the City of
Chicago, the same with the tracks of all the railroads which
terminate in Chicago, the lines of which enter the city on the
south between the lakeshore and the southwest corner of said city,
. . . and to make connections with such suitable sidetracks,
switches, and connections as to enable all of the trains running
upon said railroads easily and conveniently to approach the grounds
selected for said yards, and may make such arrangements or
contracts with such railroad companies, or either of them, for the
use of any part or portion of the track or tracks of such company
or companies which now is or hereafter may be constructed, for the
purposes aforesaid, as may be agreed upon between the parties; . .
. and to transport and allow to be transported thereon between said
railroads and cattle yards, all cattle and livestock and persons
accompanying the same to and from said yards, and may also
transport and allow to be transported between the railroads
entering said city, . . . freight and property of every kind as
well as stock and cattle. . . ."
After its creation, it acquired real estate, constructed and
operated stockyards, with a stock market, built a hotel for the
accommodation of its patrons, and constructed in the stockyards
district about 300 miles of railroad track, consisting of main
lines connecting with the
Page 226 U. S. 298
trunk lines entering Chicago, and a large number of switches to
the various industries which had been established adjacent to such
tracks.
Prior to December 15, 1897, the Stock Yard Company carried on
the stockyards and railroad business, and, although it had regular
charges for the services it performed, it filed no tariffs with the
Interstate Commerce Commission and concurred in none. On December
15, 1897, the Stock Yard Company leased all of its railroad tracks
and equipment for a term of fifty years to a corporation known as
the Chicago & Indiana state Line Company (hereinafter called
the "state Line Company"), retaining for itself the loading and
unloading platforms and facilities used in connection with its
stockyards business. This lease covered all its railroad and
railroad tracks, switches, etc., roundhouse, repair shops, machine
shops, coal chutes, etc., then in existence or theretofore used by
the Stock Yard Company in connection with its railroad, and all and
singular the equipment and the telegraph lines, instruments, and
appurtenances owned or possessed by the Stock Yard Company and used
by it in conducting its railroad business. By the terms of the
lease, the state Line Company was given the right in the future to
maintain and operate upon the lands of the Stock Yard Company
additional side tracks and switch tracks and other appurtenances
necessary to reach industrial plaints.
Afterwards, the state Line Company consolidated with the
Chicago, Hammond & Western Railroad Company, and the
consolidated company became known as the Chicago Junction Railway
Company (defendant herein), and, in addition to the railroad leased
from the Stock Yard Company, operated a belt line around the City
of Chicago. In November, 1907, the Junction Company sold the belt
line to the East Chicago Belt Railroad Company, retaining the
tracks which had been leased by the Stock Yard Company. The
equipment operated by the Junction
Page 226 U. S. 299
Company, consisting of locomotives and rolling stock, is owned
by the Stock Yard Company, but the Junction Company employs its own
engineers and crews.
The tracks of the Junction Company are frequently used by the
trunk lines to connect the eastern and western systems and to
deliver shipments originating without the state to the platforms of
the Stock Yard Company, for which service they pay the Junction
Company a trackage charge of a fixed sum per car. Large numbers of
car load lots of dead freight from points without the state are
placed on the receiving tracks of the Junction Company, bearing
transfer cards showing the destination of the cars, and the
Junction Company delivers the cars either to the consignee, if
situated on its tracks, or to the receiving track of the forwarding
carrier. It is paid by the trunk lines a fixed charge for this
service, which the latter absorb. The Junction Company, upon the
order of the trunk lines, places cars for loading by shippers in
the stockyards district, and after they are loaded hauls them to
the receiving tracks of the trunk lines, and it receives from the
trunk lines a fixed amount for this service, which is absorbed by
the latter. Less than carload lot freight is delivered at the
freight depot known as the Union Freight Station, and placed in
cars by the Junction Company, which transports them to the
receiving tracks of trunk lines, and for this service the trunk
lines pay the Junction Company five cents per hundredweight.
Sometimes such freight is hauled from the industries in the
stockyards district to the Union Freight Station by the Junction
Company and distributed in the cars. The Junction Company receipts
for the less than carload lot freight in the name of the trunk
lines, such receipts being exchangeable for bills of lading at the
office of the trunk lines, and all charges paid to the Junction
Company are receipted for in the name of the trunk lines and
remitted to them. The Junction Company has an arrangement with the
Baltimore
Page 226 U. S. 300
& Ohio Railroad Company whereby it performs a like service
for such company as to the less than carload lot freight brought by
it to the Union Freight Station and destined to points beyond the
state. Shipments of horses are transported by the trunk lines to
the loading platforms of the Stock Yard Company, and there picked
up by the Junction Company and hauled to the unloading chutes for
horses, and the Junction Company receives, besides the trackage
charge, a certain amount per car for this service. A large part of
the service thus performed by the Junction Company is in connection
with interstate shipments. The Junction Company does not issue any
bills of lading with respect to any kind of freight.
After leasing its railroad property to the Junction Company, the
Stock Yard Company continued to operate its stockyard facilities
for loading and unloading cattle and other livestock bound for and
coming from points outside the state, and to feed and water
livestock in transit over the lines of trunk line carriers, and
also to feed, bed, and water livestock shipped to consignees doing
business in the stockyards district.
The employees of trunk lines bringing livestock to the
stockyards turn over the waybills accompanying such shipments, with
what are called "livestock stubs" attached, to the employees of the
Stock Yard Company, who use the waybills in unloading and counting
the stock, and the waybills and stubs are then sent to the auditor
of the Stock Yard Company (being also the auditor of the Junction
Company), who retains the stubs and forwards the waybills to the
local agents of the trunk lines. The Stock Yard Company advances
the charges on such shipments to the trunk lines and collects from
the consignees, usually commission men doing business at the
stockyards, the moneys it has so advanced for their
accommodation.
The Junction Company publishes tariffs showing the charges which
it exacts for its services, such tariffs being
Page 226 U. S. 301
in general circulation in Chicago, especially about the
stockyards district, but they were not filed with the Interstate
Commerce Commission. Prior to 1907, the Junction Company, while
owning railroad facilities in Indiana, had filed tariffs with the
Interstate Commerce Commission, but, upon the sale of such
properties, cancelled the tariffs. It was the belief of the
government and of the Junction Company that all tariffs and
concurrences had been cancelled, but it is shown by a stipulation
which the parties have filed that, since the issues were made up,
it has been discovered that one particular concurrence, through
inadvertence, was not cancelled.
The Investment Company is a holding company, and owns over 90
percent of the shares of the Stock Yard Company and practically all
of the shares of the Junction Company.
As to the contract with the Pfaelzers: they were members of a
copartnership (since incorporated) engaged in the slaughtering
business, their plant being located in the vicinity of the tracks
operated by the Junction Company and the cattle pens of the Stock
Yard Company. They purchased cattle from time to time outside the
City of Chicago and in states other than Illinois, and shipped them
to the partnership at the stockyards, where they were handled as
hereinbefore stated for delivery to the consignee. The freight
charges on such business averaged for the five years prior to the
filing of the Pfaelzers' answer about $2,800 annually. The amount
of freight consigned to the Pfaelzers tends to increase the
business of the Stock Yard Company and the Junction Company, and
therefore the revenue of each.
In 1906, the Department of Agriculture required the Pfaelzers to
make changes in their plant; in 1908, it directed them to erect a
new plant, and in 1909 they were notified that the government would
deny to them further inspection of the products of their plant.
They then proposed
Page 226 U. S. 302
to locate in Kansas City, Missouri, but, upon negotiation with
the Stock Yard Company, made the contract under consideration here.
This contract provided that, upon the erection by the Pfaelzers of
a modern slaughtering, packing, and canning plant adjacent to the
stockyards in Chicago, costing a certain sum and having a required
capacity, the Stock Yard Company would pay them $50,000, and the
Pfaelzers agreed that all livestock slaughtered or canned by them
within a radius of 200 miles would either be purchased at such
stockyards or pass through and use them, the customary yardage,
tolls, and charges to be paid thereon, or that the Pfaelzers would
pay full tolls and charges on livestock the same as if it had been
sent to the stockyards for sale and had there been bought by them,
and that for fifteen years they would conduct all their
slaughtering, packing, and canning business at such plant, and not
interest themselves directly or indirectly in any other plant or in
any other stockyards. The Investment Company guaranteed the
performance of the contract by the Stock Yard Company.
It is stated in the answer of the Stock Yard Company and stands
admitted in the case that there are other competitive stockyards in
the United States which have built up their business in competition
with it by offering and giving inducements, either in the shape of
land or money, to packing houses and other industries to locate at
or near their yards.
From this statement it is apparent that the Stock Yard Company
was organized for the purpose of maintaining a stockyard, with the
usual facilities of such yards as to loading and unloading and
caring for freight, and it was authorized to and did own and
operate a railroad system, transporting cars to and from trunk
lines in the course of their transportation from beyond the state
and to points outside of the state. This service, so far as the
railroad
Page 226 U. S. 303
and its operation is concerned, is now performed by the Junction
Company. The Stock Yard Company still continues to perform the
customary stockyard operations, but by means of the lease to the
Junction Company it has divested itself of the operation of the
railroad system which it was authorized by its charter to construct
and operate, and which for many years before the lease it did in
fact operate. The Stock Yard Company, under the lease, still gets,
however, two-thirds of the profits received by the Junction Company
for performing the service in connection with the railroad
transportation. This joint service now takes the place of the
single service formerly rendered by the Stock Yard Company. The
stock of both these companies is held in common ownership by the
Investment Company, and it appears that the Investment Company
guarantees the contracts, or at least some of them, of the Stock
Yard Company.
In view of this continuity of operation, the manner of
compensation, and the performance of services in connection with
interstate transportation by railroads such as are described, are
the Stock Yard Company and the Junction Company subject to the
terms of the Act to Regulate Commerce, and bound to conform to its
requirements?
The Interstate Commerce Act, as amended by the Hepburn Act, 34
Stat. 584, § 1, c. 3591, applies to common carriers engaged in the
transportation of persons or property from state to state wholly by
railroad, and the term "railroad" is defined to include
"all switches, spurs, tracks, and terminal facilities of every
kind, used or necessary in the transportation of the persons or
property designated herein, and also all freight depots, yards, and
grounds used or necessary in the transportation or delivery of any
of said property,"
and transportation is defined to include
"cars and other vehicles and all instrumentalities and
facilities of shipment or carriage,
Page 226 U. S. 304
irrespective of ownership or of any contract, express or
implied, for the use thereof, and all services in connection with
the receipt, delivery, elevation, and transfer in transit,
ventilation, refrigeration, or icing, storage, and handling of
property transported."
That the service is performed wholly in one state can make no
difference if it is a part of interstate carriage. "The
transportation of livestock," said this Court in
Covington
Stock Yards Co. v. Keith, 139 U. S. 128, in
treating of the duties of common carriers, irrespective of the Act
to Regulate Commerce,
"begins with their delivery to the carrier to be loaded upon its
cars, and ends only after the stock is unloaded and delivered, or
offered to be delivered, to the consignee."
In this connection,
see Coe v. Errol, 116 U.
S. 517;
Southern Pacific Terminal Co. v. Interstate
Commerce Commission, 219 U. S. 498.
The fact that the performance of the service is distributed
among different corporations having common ownership in a holding
company which controls an interstate system was held in
Southern Pacific Terminal Co. v. Interstate Commerce
Commission, supra, to make no difference, where the service to
be performed was a part of the carriage of freight by railroad in
interstate commerce. Nor does it make any difference that neither
the Junction Company nor the Stock Yard Company issues through
bills of lading. It is the character of the service rendered, not
the manner in which goods are billed, which determines the
interstate character of the service.
Ibid.; Railroad Commission
v. Worthington, 225 U. S. 101.
Together, these companies, as to freight which is being carried
in interstate commerce, engage in transportation within the meaning
of the act, and perform services as a railroad when they take the
freight delivered at the stockyards, load it upon cars, and
transport it for a substantial distance upon its journey in
interstate commerce, under
Page 226 U. S. 305
a through rate and bill furnished by the trunk line carrier, or
receive it while it is still in progress in interstate commerce
upon a through rate which includes the terminal services rendered
by the two companies, and complete its delivery to the consignee.
They are common carriers because they are made such by the terms of
their charters, hold themselves out as such, and constantly act in
that capacity, and because they are to so treated by the great
railroad systems which use them. In
Union Stock Yards Co. v.
United States, 169 F. 404, MR. JUSTICE VAN DEVANTER (while a
circuit judge), speaking for the court of appeals, said (406):
"Its [the Stock Yards Company's] operations . . . include the
maintenance and use of railroad tracks and locomotives, the
employment of a corps of operatives in that connection, and the
carriage for hire over its tracks of all livestock destined to or
from the sheds or pens, which in effect, are the depot of the
railroad companies for the delivery and receipt of shipments of
livestock at South Omaha. The carriage of these shipments from the
transfer track to the sheds or pens, and
vice versa, is no
less a part of their transit between their points of origin and
destination than is their carriage over any other portion of the
route. True, there is a temporary stoppage of the loaded cars at
the transfer track, but that is merely incidental, and does not
break the continuity of the transit any more than does the usual
transfer of such cars from one carrier to another at a connecting
point. And it is of little significance that the stockyards company
does not hold itself out as ready or willing generally to carry
livestock for the public, for all the railroad companies at South
Omaha do so hold themselves out, and it stands ready and willing to
conduct, and actually does conduct, for hire, a part of the
transportation of every livestock shipment which they accept for
carriage to or from that point, including such shipments as are
interstate. "
Page 226 U. S. 306
We think that these companies, because of the character of the
service rendered by them, their joint operation and division of
profits, and their common ownership by a holding company, are to be
deemed a railroad within the terms of the Act of Congress to
regulate commerce, and the services which they perform are included
in the definition of transportation as defined in that act. It is
the manifest purpose of the act to include interstate railroad
carriers, and, by its terms, the act excludes transportation wholly
within a state. In view of this purpose, and so construing the act
as to give it force and effect, we think the Stock Yard Company did
not exempt itself from the operation of the law by leasing its
railroad and equipment to the Junction Company, for it still
receives two-thirds of the profits of that company, and both
companies are under a common stock ownership, with its consequent
control. We therefore think the Commerce Court was right in holding
that the Junction Company should file its rates with the Interstate
Commerce Commission, and that it should also have held the Stock
Yard Company subject to the provisions of the Interstate Commerce
Acts.
As to the contract, both parties concede the authority of the
Commerce Court to pass upon this subject, and no objection was made
as to the manner and form in which the jurisdiction of that court
was invoked. There being no objection taken to the method of
proceeding, we think, if this contract is within the prohibitions
of the act, that the Commerce Court had the right to entertain the
bill and to enjoin the performance of the contract. Sections 2 and
3 of the Elkins Act. It is contended that this contract is
violative of certain features of the Act to Regulate Commerce and
of the Elkins Act. Section 2 of the former and § 2 of the latter
provide:
"SEC. 2. That if any common carrier subject to the provisions of
this act shall, directly or indirectly, by any special rate,
rebate, drawback, or other devise, charge,
Page 226 U. S. 307
demand, collect, or receive from any person or persons a greater
or less compensation for any service rendered, or to be rendered,
in the transportation of passengers or property, subject to the
provisions of this act, than it charges, demands, collects, or
receives from any other person or person for doing for him or them
a like and contemporaneous service in the transportation of a like
kind of traffic under substantially similar circumstances and
conditions, such common carrier shall be deemed guilty of unjust
discrimination, which is hereby prohibited and declared to be
unlawful."
"SEC. 1. . . . It shall be unlawful for any person, persons, or
corporation to offer, grant, or give, or to solicit, accept, or
receive any rebate, concession, or discrimination in respect to the
transportation of any property in interstate or foreign commerce by
any common carrier subject to said Act to Regulate Commerce and the
acts amendatory thereof, whereby any such property shall, by any
devise whatever, be transported at a less rate than that named in
the tariffs published and filed by such carrier, as is required by
said Act to Regulate Commerce and the acts amendatory thereof, or
whereby any other advantage is given or discrimination is
practiced. . . ."
This Court has had frequent occasion to comment upon the purpose
of Congress in the passage of these laws to require equal treatment
of all shippers and to prohibit unjust discrimination in favor of
any of them.
New York, New Haven & Hartford R. Co. v.
Interstate Commerce Commission, 200 U.
S. 361;
Armour Packing Co. v. United States,
209 U. S. 56;
Louisville & Nashville R. Co. v. Mottley, 219 U.
S. 467;
Chicago & Alton R. Co. v. Kirby,
225 U. S. 155.
By § 2 of the Act to Regulate Commerce, the carrier is guilty of
unjust discrimination, which is prohibited and declared unlawful,
if by any rebate or other device it charges one person less for any
service rendered in the
Page 226 U. S. 308
transportation of property than it does another for a like
service. The Elkins Act makes it an offense for any person or
corporation to give or receive any rebate, concession, or
discrimination in respect to the transportation of property in
interstate commerce whereby any such property shall be transported
at a rate less than that named in the published tariff, or whereby
any other advantage is given or discrimination is practiced. By the
very terms of the contract, it is evident that the interest of the
Stock Yard Company and also of the Junction Company is in the
profit to be made in receiving and delivering, handling, and caring
for and transporting livestock, shipments of which, to the extent
stated, are made in interstate commerce. The contract provides
that, if the Pfaelzers construct a packing plant adjacent to the
stockyards of the Stock Yard Company, they shall receive $50,000,
and it obligates them to maintain and operate the plant for a
period of fifteen years, and buy and use in their slaughtering
business such livestock only as moves through such stockyards, and
if not so brought, to pay the regular charges thereon as if the
same had moved into the stockyards and had been there purchased by
them. In other words, this plant in effect may pay for the services
of the Stock Yard Company, up to the sum of $50,000, with the bonus
given to the Pfaelzers for the location of their plant in
juxtaposition to the stockyards. The only interest which the Stock
Yard Company has in Pfaelzer & Sons' interstate business is
compensation for its services in handling their freight and its
share of the profits realized by the Junction Company in rendering
its service. Any other company with which it has made no contract
would be compelled to pay the full charge for the services
rendered, without any rebate or concession. Another company might
have a contract for a larger or smaller bonus, and thereby receive
different treatment. Certainly, as to the company which receives no
such bonus, there has
Page 226 U. S. 309
been an undue advantage given to and an unlawful discrimination
practiced in favor of Pfaelzer & Sons. If these companies had
filed their tariffs, as we now hold they should have filed them,
they would have been subject to the restrictions of the Elkins Act
as to departures from published rates -- and we must consider the
case in that light -- and this preferential treatment, as we have
said, would have been in violation of that act. It is the object of
the interstate commerce law and the Elkins Act to prevent
favoritism by any means or device whatsoever, and to prohibit
practices which run counter to the purpose of the act to place all
shippers upon equal terms. We think the Commerce Court should have
enjoined the carrying out of this contract.
It follows that, in case No. 621, the judgment of the
Commerce Court should be reversed and the case remanded for the
entry of a decree in conformity to this opinion. In No. 622, the
judgment of the Commerce Court should be affirmed.