The very purpose for which the Interstate Commerce Commission
was created was to bring into existence a body which, from its
peculiar character, would be most fitted to primarily decide
whether, from facts, disputed or undisputed, in a given case
preference or discrimination existed.
Where the evidence is undisputed and shows a discrimination
between localities, a finding by the Interstate Commerce Commission
that such discrimination is undue is a finding of fact which is not
subject to review by the Commerce Court.
Quaere, and not now decided, whether the method adopted
by the Interstate Commerce Commission of considering, and basing
its opinion upon, matter gathered in its general investigations
regarding the subject matter in controversy, but not produced upon
the particular proceeding against particular carriers in which an
order is made requiring them to desist from practices complained of
in that proceeding, amounts to a denial of a hearing and results in
want of due process of law.
After the amendment to § 4 of the Interstate Commerce Act by the
Act of June 18, 1910, the authority of the carriers to primarily
determine for themselves the propriety of charging a higher rate
for a shorter than for a longer distance ceased to exist and was
taken from them and primarily vested in the Commission.
In this case, the rates and allowances involved and the grain
reshipping privilege at Nashville are governed by § 4 of the act.
Intermountain Rate Cases, 234 U.
S. 476.
The application of the principle of public policy embodied in §
4 of the Interstate Commerce Act is to be determined by the
substance of things, and not by names; otherwise, the statute would
be wholly inefficacious.
The facts, which involve the jurisdiction of the Commerce Court
to review orders of the Interstate Commerce Commission, are stated
in the opinion.
Page 235 U. S. 318
MR. CHIEF JUSTICE WHITE delivered the opinion of the Court.
This case involves a controversy as to the legality of a
reshipping privilege permitted at Nashville by the carriers who are
parties to the record, described by the court below as follows:
"On grain, grain products, and hay shipped to Nashville by rail
from or through Ohio or Mississippi River crossing points such as
Louisville, Evansville, Hickman, Paducah, Cairo, etc., the L. &
N. and N.C. & St.L. charge the full local freight rate from
said crossing points to Nashville. These shipments may then be
stopped at Nashville for a period not exceeding six months, during
which time they may be rebilled or reshipped to destination in
southeastern and Carolina territory, and on such reshipments so
rebilled the freight charges into and out of Nashville are
readjusted so that the total transportation charge on any one
shipment from any given Ohio or Mississippi River crossing via
Nashville to any given destination in said territory shall exactly
correspond with the transportation charge legally assessable on
that shipment had it been billed and moved through from its point
of origin at the said Ohio or Mississippi River crossing points to
its final destination without having been stopped in transit at
Nashville. "
Page 235 U. S. 319
We adopt the history of the litigation insofar as it relates to
the privilege in question contained in the brief on the part of the
United States.
"1. In 1908, certain Georgia grain dealers complained to the
Interstate Commerce Commission of various traffic practices at
Nashville; after taking voluminous proof, the Commission, on June
24, 1909, held the reshipping privilege illegal and ordered it
stopped (16 I.C.C. 590, 595)."
"2. The Commission, on its own motion, postponed the effective
date of the order so that it might institute a countrywide
investigation of the practices involved, and on May 3, 1910, the
Commission, after a hearing at which about 150 shippers and
carriers were represented by counsel, reported that its former
order abolishing the reshipping privilege
in toto was too
strict, and remitted the matter to the carriers and shippers to
frame regulations that would prevent any rebating under the
privilege (18 I.C.C. 280), and, pursuant thereto, new and
satisfactory regulations were adopted to safeguard the reshipping
privilege (21 I.C.C. 183, 188)."
The previous order of June 24, 1909, which had abolished the
reshipping privilege at Nashville, was vacated, and the Commission
thereafter again considered the controversy between the grain
dealers of Georgia and the Nashville dealers and carriers.
"3. . . . On June 9, 1911, the Commission delivered a
supplemental report, holding that the action of the carriers in
granting the reshipping privilege to Nashville, while refusing it
to Atlanta, etc., was an undue and unreasonable preference to
Nashville, in violation of § 3 of the Interstate Commerce Act (21
I.C.C. 186). The Commission entered an order in accordance
therewith."
"4. The Nashville Board of Trade, the L. & N. R. Co., and
the N.C. & St.L. R. Co. thereupon sued in the Commerce Court to
enjoin the enforcement of the order; the two suits were
consolidated."
The record evidence
Page 235 U. S. 320
before the Commission was introduced, and some additional
testimony was taken.
The Commerce Court, finding that there was no conflicting or
disputed evidence concerning the origin and character of the
reshipping privilege, concluded that whether such privilege was an
undue preference was not a matter of fact, but a question of law,
upon which it was its duty to reach an independent conclusion. The
court therefore, among other considerations, because the privilege
was of longstanding and was justified by water competition at
Nashville, declared it to be not unlawful and not preferential. A
peremptory injunction was allowed, restraining the enforcement of
the order of the Commission. And the correctness of this action is
the question here for decision.
In view of the doctrine announced in
Interstate Com. Com. v.
Illinois Cent. R. Co., 215 U. S. 452;
Interstate Com. Com. v. Delaware, L. & W. R. Co.,
220 U. S. 235;
Interstate Com. Com. v. Louisville & Nashville R. Co.,
227 U. S. 88, it
plainly results that the court below, in substituting its judgment
as to the existence of preference for that of the Commission, on
the ground that, where there was no dispute as to the facts, it had
a right to do so, obviously exerted an authority not conferred upon
it by the statute. It is not disputable that, from the beginning,
the very purpose for which the Commission was created was to bring
into existence a body which, from its peculiar character, would be
most fitted to primarily decide whether from facts, disputed or
undisputed, in a given case, preference or discrimination existed.
East Tenn. &c. Ry. Co. v. Interstate Com. Com.,
181 U. S. 1,
181 U. S. 23-29.
And the amendments by which it came to pass that the findings of
the Commission were made not merely
prima facie, but
conclusively, correct in case of judicial review, except to the
extent pointed out in the
Illinois Central and other
cases,
supra, show the progressive evolution of the
legislative purpose and the
Page 235 U. S. 321
inevitable conflict which exists between giving that purpose
effect and upholding the view of the statute taken by the court
below. It cannot be otherwise, since, if the view of the statute
upheld below be sustained, the Commission would become but a mere
instrument for the purpose of taking testimony to be submitted to
the courts for their ultimate action.
While these conclusions demonstrate the error in the action of
the court below, that result does not authorize us to reverse and
give effect to the order of the Commission without going further,
since it must be determined whether the action of the Commission
was repugnant to the Constitution, in excess of the powers which
that body possessed, or, what is equivalent thereto, was wholly
unsustained by proof -- questions which the court below failed to
pass upon because of the erroneous conception in which it indulged
concerning its own powers. But if it were essential for us to
consider these questions, we should be confronted with a grave
situation arising from the serious doubt which would exist whether
it would be possible for us to do so in view of the manner in which
the Commission had discharged its functions, and whether that
method had not, in and of itself, amounted to a denial of a
hearing, and thus resulted in want of due process of law.
See
Interstate Com. Com. v. Louisville & Nashville R. Co.,
supra, at p.
227 U. S. 91,
and the paragraph from the answer of the commission, filed in the
court below, which is in the margin.
*
Page 235 U. S. 322
We pass this subject by, however, because its consideration is
not essential to determine whether the Commission was right in
prohibiting a continuance of the rebilling privilege, since we are
of opinion that, even if the allowance of such rebilling privilege
when originally made was authorized by the statute, and was
therefore not a preference, the right to continue it had been
expressly prohibited by statute until, on application made to the
Commission, its consent to that end was given. The express or
implied statutory recognition of the authority on the part of
carriers to primarily determine for themselves the existence of
substantially similar circumstances and conditions as a basis of
charging a higher rate for a shorter than for a longer distance
within the purview of the fourth section of the Act to Regulate
Commerce, and the right to make a rate accordingly, to continue in
force until, on complaint, it was corrected in the manner pointed
out by statute, ceased to exist after the adoption of the amendment
to
Page 235 U. S. 323
§ 4 by the Act of June 18, 1910, c. 309, 36 Stat. 547. This
results from the fact that, by the amendment in question, the
original power to determine the existence of the conditions
justifying the greater charge for a shorter than was exacted from a
longer distance was taken from the carriers and primarily vested in
the Interstate Commerce Commission, and, for the purpose of making
the prohibitions efficacious, it was enacted that, after a time
fixed, no existing rate of the character provided for should
continue in force unless the application to sanction it had been
made and granted.
Intermountain Rate Cases, 234 U.
S. 476. If, then, it be that the rebilling privilege
which is here in question, disregarding immaterial considerations
of form and looking at the substance of things, was, when
originally established, an exertion of the authority conferred or
recognized by the fourth section of the act, as there is no
pretense that permission for its continuance had been applied for
as required by the amendment, and the statutory period for which it
could be lawfully continued without such permission had expired, it
follows that its continued operation was manifestly unlawful, and
error was committed in permitting its continuance under the shelter
of the injunction awarded by the court below. To determine whether
the fourth section is applicable requires a very brief
consideration of the uncontroverted situation from which the
rebilling privilege arose and upon the existence of which it
depended. It is undoubted that, for many years, the Ohio River was
a basing point for rates, and traffic moving from the producing
regions of the northwest to the consuming regions in the southeast
bore rates from Ohio River points to destination, which, because of
competition, were lower from Ohio River points to the farther
points of consumption than were charged from intermediate (nearer)
points between the Ohio River and such points of consumption. This
lesser charge for the longer than for the shorter distance as to
the traffic in question was
Page 235 U. S. 324
typically illustrative of the condition contemplated by the
fourth section of the Act to Regulate Commerce. As to Nashville,
however, this idiosyncracy arose: the carriers from the Ohio River
to Nashville, instead of giving the lesser rate for the longer
distance from the Ohio River to Nashville than was asked for
intermediate points, maintained a local and proportionate rate for
grain and other northwestern products from the Ohio River to
Nashville, although giving a lower rate for the longer haul from
the Ohio River to points in the south or southeast territory beyond
Nashville. Upon the basis, however, that there was water
competition between the Ohio River and Nashville, if not for other
reasons, as to which we think it is not relevant to inquire, there
was granted by the carriers to shippers of grain at Nashville the
rebilling privilege which we have at the outset described. That is
to say, shippers of grain at Nashville, on establishing the receipt
at Nashville of grain from Ohio River points equal in quantity to
grain proposed to be shipped, received an allowance on the local
rate from Nashville to the point of destination which made the rate
on the shipment equivalent to what it would have been had the grain
originally moved from the Ohio River point to its ultimate point of
destination, and not stopped at Nashville at all. We quote a clear
illustration of the operation of the privilege taken from the
argument at bar of one of the carriers:
"For example, the local rate on grain from Evansville, on the
Ohio River, to Nashville, is 10 cents per 100 pounds, and the local
rate from Nashville to Atlanta is 17 cents per 100 pounds. The
joint rate from Evansville to Atlanta is 24 cents per 100 pounds,
or 3 cents less than the sum of the locals. Under the reshipping
practice, the joint rate of 24 cents is protected when the shipment
has been stopped in transit at Nashville. The local rate of 10
cents from Evansville to Nashville having been paid at the time of
the shipment into Nashville, an adjustment
Page 235 U. S. 325
of the total transportation charge is made when the reshipment
to Atlanta occurs, so that the shipper in the end pays upon the
shipment the joint rate instead of the combination of local rates
into and out of Nashville."
When the result of this allowance is understood, there seems to
be no room for serious controversy that the right to continue the
privilege is controlled by the fourth section of the act. The
actual shipment from Nashville must either be considered as a
movement from Nashville, irrespective of the rate which would have
been applicable on a through shipment from an Ohio River point to
the same point of destination, or it must be treated by a fiction
as one moving from an Ohio River point to the same destination. If
the first, then clearly the allowance made of a rate from Nashville
to the point of destination was a lesser charge for the longer
distance hauled as to such grain than was charged for the shorter
distance as to any other grain moving from Nashville to
intermediate points, or from such points to places further on, and
came clearly within the grasp of the fourth section. If, on the
other hand, it be imagined to be a shipment from the Ohio River
crossing to the point of destination, upon the theory that the
traffic, before stoppage at Nashville, originated at the Ohio River
point, then exactly the same conditions would be reproduced, since
the charge as the result of the reduction made was the equivalent
of a lesser rate for the longer than for the shorter distance,
which, as we have stated, was the prevailing system from Ohio River
crossings to points of destination in the southeast.
It is true that, in argument, it was said that the question here
is whether there was a preference or discrimination under the
second and third sections of the act, and not an inquiry under the
fourth section, and that a distinction between the various sections
has been recognized. It has, indeed, been held that the provisions
of the second, third, and fourth sections of the act, being
in
pari materia, required harmonious construction, and therefore
they
Page 235 U. S. 326
should not be applied so that one section destroyed the others,
and consequently that a lesser charge for a longer than for a
shorter distance permitted by the fourth section could not, for
such reason, be held to be either a preference or discrimination
under the second or third sections.
Louisville & Nashville
R. Co. v. Behlmer, 175 U. S. 648;
East Tenn. &c. Ry. v. Interstate Com. Com.,
181 U. S. 1. But the
rule which requires that a practice which is permitted by one
section should not be prohibited upon the theory that it is
forbidden by another gives no support to the unwarranted assumption
that that may be permitted which is devoid of all sanction, and
indeed is in direct conflict with all three of the sections -- a
result clearly arising in the case before us in consequence of the
amendment of § 4. Indeed, when the evil which it may be assumed
conduced to the adoption of the amendment of the fourth section and
the remedy which that amendment was intended to make effective are
taken into view (
see Intermountain Rate cases, supra), it
would seem that the case before us cogently demonstrates the
applicability of the amendment to the situation. And it needs no
argument to demonstrate that the application of the principle of
public policy which the statute embodies is to be determined by the
substance of things, and not by names, for if that were not the
case, the provisions of the statute would be wholly inefficacious,
as names would readily be devised to accomplish such a purpose.
It follows from what we have said that the court below was wrong
in enjoining the order of the Commission, and, on the contrary,
should have dismissed the complaint. The case will therefore be
appropriately remanded to enable a decree to that effect to be
entered, without prejudice, however, to the right of the carriers
to apply to the Commission to be relieved from the operation of the
provisions of the fourth section if they are so advised.
Reversed.
MR. JUSTICE PITNEY concurs in the result.
*
"That in said investigation, and in arriving at its decision
therein, this respondent, as in duty bound under the law, weighed
and considered all the facts and arguments presented by the
petitioners herein, by other carriers, and all other parties to
said proceeding; that, in forming its opinion and arriving at its
conclusion, this respondent, exercising its administrative
functions and powers, considered all pertinent facts and matters
set forth in many reports and statistics on file with said
respondent, together with other facts coming to the knowledge of
this respondent in the performance of its duties and functions
prescribed and set forth in the acts to regulate commerce and the
amendments thereto pertaining to the privileges of rebilling and
reshipping; that from said reports and tariffs it appears that said
rebilling and reshipping privileges exist at many interior points
where no water competition obtains; it is therefore not competent,
nor it is relevant, for said petitioners to allege that any
particular fact of facts before this respondent in said proceeding
are uncontradicted or conclusive in favor of the petitioners'
contention, nor can the petitioners by judicial proceeding
ascertain each and all the facts, circumstances, and conditions in
regard to said transportation that were necessarily and properly
considered by, and which aided this respondent in arriving at, its
conclusions that said practice of rebilling and reshipping said
products from Nashville was unduly and unreasonably
discriminatory."
"This respondent denies that there is, or can be, under the law,
any complete record of all the evidence, facts, and circumstances
before the Commission in determining that this, or any other,
practice by carriers is unduly and unjustly discriminatory as
between localities or persons, and respondent is advised, and so
alleges, that the determination of said question as to whether said
admitted discrimination is undue and contrary to the provisions of
said Act to Regulate Commerce is one wholly and exclusively within
the jurisdiction of this respondent."