Meanings and relations of the terms "through route," "through
rate," "joint rate," "sum of the locals," "division of joint rate,"
"rate-breaking point" and "combination rate" explained and
defined.
Railroad companies, which, though chartered by different states,
are all operating interstate railroads and otherwise engaged in
interstate commerce, and which have established a through route
between interstate points with a through rate consisting of the sum
of the local rates, or of a combination of a local rate with a
joint rate to an intermediate point, are not deprived of their
rights under the Fifth Amendment when required, by an order of the
Interstate Commerce Commission, to substitute a joint through rate
(of reasonable amount) for the through rate thus existing, and to
maintain the same through route or, at their election, substitute a
modification of it which the Commission has found preferable.
Such an order is within the power conferred upon the Commission
by the Act to Regulate Commerce, as amended.
The Commission's order, establishing through routes and a joint
rate on logs and lumber from the "blanket territory" of Arkansas to
Paducah, Kentucky, which permitted complaining carriers to maintain
their route via Cairo, Illinois, or to substitute a route via
Memphis, Tennessee, which the Commission found to be the more
natural one, the joint rate fixed by the Commission to be the same
in either case, is consistent with that provision of § 15 of the
Act to Regulate Commerce forbidding the Commission to embrace in a
through route "less than the entire length" of a railroad "unless
to do so would make such through route unreasonably long."
The power of Congress and of the Commission to prevent
interstate carriers from discriminating against a particular
locality applies to carriers the lines of which do not reach the
locality, but which bill through traffic to it over connecting
lines.
Page 245 U. S. 137
An order of the Commission requiring carriers to reduce existing
through rates by establishing joint rates, or, in the alternative,
new through routes with joint rates, rests on § 15 of the Act to
Regulate Commerce. It is not to be regarded as primarily an order
to remove discrimination in violation of § 3, even though
discrimination in rates as between two localities may have
furnished the occasion for the complaint upon which the Commission
acted and may have afforded reason for the rate fixed by its
order.
234 F. 668 affirmed.
The case is stated in the opinion.
MR. JUSTICE BRANDEIS, delivered the opinion of the Court.
This suit was brought in the District Court of the United States
for the Western District of Kentucky by three railroad companies
[
Footnote 1] against the United
States and the Interstate Commerce Commission. Plaintiffs seek to
enjoin the enforcement of and to set aside an order entered by the
Commission on January 21, 1916, directing these and other carriers
to establish certain through routes and joint rates on logs and
lumber to
Page 245 U. S. 138
Paducah, Kentucky, and reducing existing rates. An application
was made for a temporary injunction. Both defendants moved to
dismiss the bill. The Commission also answered. The case was fully
heard upon the evidence before three judges "as upon final
submission upon the merits;" a decree was entered dismissing the
bill without costs (234 F. 668), and the case comes to this Court
by direct appeal.
Paducah is situated on the south bank of the Ohio River, 42
miles above Cairo, Illinois, which lies on the north bank of the
Ohio near its confluence with the Mississippi. An important
business in each city is manufacturing and jobbing lumber. They
compete in both the buying and the selling markets. Each draws its
supplies of logs and lumber, in part, from the extensive region
lying west of the Mississippi and south of the Arkansas River,
known in the trade as the "blanket territory." [
Footnote 2] The distances from this region to
Paducah are not greater than to Cairo; but, prior to the order of
the Interstate Commerce Commission herein complained of, the
through freight rate on logs and lumber was 22 cents per hundred
pounds to Paducah, while it was only 16 cents to Cairo.
The principal railroads serving the "blanket territory" are the
St. Louis Southwestern, the St. Louis, Iron Mountain &
Southern, and the Chicago, Rock Island & Pacific. The first two
have their own lines from the "blanket territory" to Cairo, but can
reach Paducah only over a connecting line. The Rock Island reaches
both Cairo and Paducah only over a connecting line. The most direct
route to Paducah from the lines of each
Page 245 U. S. 139
of the three complainants is via Memphis, Tennessee, but, prior
to the order of the Interstate Commerce Commission herein
complained of, only the Rock Island had established its through
route via Memphis. The other two companies had through routes to
Paducah via Cairo. These, which had been in operation for many
years, are materially longer than possible routes via Memphis, and
also necessitate crossing the Ohio as well as the Mississippi. Both
the Cairo and the Memphis routes to Paducah involve using as
connecting carrier the Illinois Central, which has a line extending
from Memphis through Paducah to Cairo. [
Footnote 3] The 22-cent rate from the "blanket territory"
to Paducah via Cairo is made by adding to the "joint rate" or
"local" of 16 cents to Cairo, the local rate of 6 cents from Cairo
to Paducah, Cairo being a "rate-breaking" point. [
Footnote 4] The connection of the Rock
Page 245 U. S. 140
Island with the Illinois Central at Memphis is made under
similar conditions.
On February 8, 1915, the Paducah Board of Trade filed with the
Interstate Commerce Commission a complaint charging (1) that the
22-cent rate to Paducah was unjust and unreasonable; (2) that it
was discriminatory, and gave an undue preference and advantage to
Cairo, and (3) that the route from the "blanket territory" via
Cairo was unduly long as compared with the route via Memphis. The
complainant asked that through routes be established via
Memphis
"with joint rates . . . which shall not exceed the rates
contemporaneously charged for the transportation of logs and lumber
from the same points to Cairo."
Fifty-three railroads, which participate in this traffic,
including those named above, were joined as respondents. Hearings
were duly had, much evidence was introduced,
Page 245 U. S. 141
and on January 21, 1916, the Commission filed a report in which
it found:
(a) That the 16-cent rate to Cairo was not unduly low;
(b) That the 22-cent rate to Paducah was unreasonable to the
extent that it exceeded the existing rate to Cairo;
(c) That the existing disparity of rates gave to Cairo an undue
preference and advantage over Paducah;
(d) That the distances to Paducah via Cairo were so much greater
than the distances via Memphis "that the natural route is via
Memphis, rather than via Cairo;"
(e) That through routes and joint rates not higher than the
Cairo rate should be established from the "blanket territory" to
Paducah via either Memphis or Cairo.
An appropriate order was entered prohibiting the carriers from
continuing to charge the existing rate to Paducah and directing
them to establish and thereafter maintain through routes to Paducah
via either Memphis or Cairo, and joint rates "not in excess of the
rates at present in effect . . . to Cairo." Paducah Board of Trade
v. Illinois Central Railroad Co., 37 I.C.C. 719. [
Footnote 5]
Before the effective date of the order, this bill was filed. It
sets forth sixteen reasons for holding the order void, and most of
them are repeated in the assignment of errors in this Court. One is
a charge, left wholly unsupported by evidence, that a 16-cent rate
to Paducah is confiscatory. Eight deal with the sufficiency or
weight
Page 245 U. S. 142
of the evidence before the Commission, of which there was ample
to sustain its findings. Some relate to the form of the order,
which was clearly appropriate. Few only of the errors assigned
require discussion here.
First: The carriers deny that the Commission has the
power to compel them to establish through routes and joint rates.
It is admitted that all the complaining carriers were interstate
railroads and were engaged otherwise in interstate commerce. It is
undisputed that for many years there has been over the lines of two
of these carriers a through route to Paducah via Cairo, and over
the other a through route via Memphis, and that, on all the lines,
there were through rates. But it is contended that if a carrier
establishes a through route and joint rate with its connections, it
creates in effect a relation of partnership, that this relation
must be entered into, if at all, voluntarily, and that to "compel a
carrier chartered by a state" to enter into such a relation with a
carrier chartered in another state violates the Fifth Amendment of
the federal Constitution.
The complaining carriers having engaged in this particular
commerce, it is clear that Congress has power to regulate it.
Atlantic Coast Line Case, 219 U.
S. 186. No reason appears why the regulation might not
take the form of compelling the substitution of a joint rate for a
through rate made by a combination of local rates or by a
combination of a local rate with a joint rate to an intermediate
point.
Cincinnati, New Orleans & Texas Ry. Co. v.
Interstate Commerce Commission, 162 U.
S. 184. So far as the order relates to the existing
routes via Cairo and Memphis, respectively ,it did no more than
this: it substituted for the through rate of 22 cents (made up on
two of the lines of a combination of a joint rate or local rate of
16 cents to Cairo with a local rate on the Illinois Central of 6
cents from Cairo to Paducah), a joint rate of 16 cents from
Page 245 U. S. 143
the "blanket territory" to Paducah, thus reducing the existing
through rate. The carrier connecting at Cairo (the Illinois
Central) and all but one of the carriers connecting with these
complainants in the "blanket territory," acquiesced in the order
establishing this joint rate. The Illinois Central's share of the
22-cent rate was its local rate of 6 cents. If these complaining
carriers cannot reach satisfactory agreements with the Illinois
Central as to what its share of the 16-cent rate should be, they
may, under § 15 of the Act to Regulate Commerce, apply to the
Commission for an appropriate order. In respect to the Rock Island,
the situation is similar.
The order entered does not require any complaining carriers to
substitute the route via Memphis for that via Cairo; nor does it
require any to establish an additional route via Memphis. Carriers
are left free to furnish the through transportation either via
Cairo or via Memphis. The order merely compels a through route and
a joint rate of 16 cents to Paducah. If they elect to continue
existing through route via Cairo, the order operates merely to
introduce reduced joint rates. If they elect to discontinue the
through routes via Cairo, the order operates to establish through
routes and joint rates via Memphis, which the findings of the
Commission fully justify.
That Congress has power to authorize the Commission to enter an
order for through routes and joint rates like that here complained
of has been heretofore assumed. [
Footnote 6] No reason is shown for questioning its
existence now. The provisions of the Act to Regulate Commerce as
amended (1887, c. 104, §§ 1, 12, 15, 24 Stat. 379; 1906, c. 3591, §
4, 34 Stat. 584; 1910, c. 309, § 12, 36 Stat. 539, 552) are also
appropriate to confer this authority upon
Page 245 U. S. 144
the Commission. And there is no foundation in fact or law for
the contention of complainants that the Commission disregarded the
provision of § 15, by which it is prohibited from embracing in a
through route "less than the entire length of a" railroad "unless
to do so would make the route unreasonably long." Whether a carrier
engaged solely in intrastate commerce could be compelled by
Congress to enter interstate commerce, or even whether a carrier,
having entered into some interstate commerce, may be compelled to
enter into all, we have no occasion to consider, [
Footnote 7] for the complaining carriers had
voluntarily entered into the particular class of interstate
commerce with Paducah to which alone the order related.
Second: Carriers insist also that the order is void on
the ground that, since their "rails do not reach Paducah, they
cannot be guilty of discrimination against that city." They,
however, bill traffic via Cairo or Memphis through to Paducah in
connection with the Illinois Central, thus reaching Paducah,
although not on their own rails. And thereby they become effective
instruments of discrimination. Localities require protection as
much from combinations of connecting carriers as from single
carriers whose "rails" reach them. Clearly the power of Congress
and of the Commission to prevent interstate carriers from
practicing discrimination against a particular locality is not
confined to those whose rails enter it.
Cincinnati, New Orleans
& Texas Pacific Railway v. Interstate Commerce Commission,
supra.
Furthermore, the order in the case at bar is not merely
Page 245 U. S. 145
one to prevent discrimination. Orders to remove discrimination,
as commonly framed, do not fix rates. They merely determine the
relation of rates, by prohibiting the carrier from charging more
for carriage to one locality than under similar conditions to
another, and they usually leave the carriers free to remove the
discrimination either by raising the lower rate or by lowering the
higher rate or by doing both.
American Express Co. v.
Caldwell, 244 U. S. 617,
244 U. S. 624.
The order here complained of gives the carriers no such option. It
directs that the rates to Paducah shall be "not in excess of the
rates at present in effect from the same points or groups to Cairo,
Illinois." In other words, the Commission having found the 22-cent
rate unduly high, reduces it to 16 cents by establishing joint
through rates. The injury resulting from discrimination was
doubtless the reason which induced the Paducah Board of Trade to
institute the proceedings, and the Commission may have considered
the existence of the lower rate to Cairo persuasive evidence that
the 22-cent rate to Paducah was unreasonably high and the resulting
discrimination strong reason for establishing the 16-cent joint
rate. But the order is strictly one under § 15 of the Act to
Regulate Commerce to reduce existing through rates by establishing
joint rates or, in the alternative, to establish new through routes
with joint rates. It is not primarily an order to remove
discrimination in violation of § 3.
Decree affirmed.
[
Footnote 1]
A fourth carrier, the Louisiana & Arkansas Railway Company,
was permitted to intervene as party plaintiff and joined in the
appeal, but the special facts concerning it are not of
importance.
[
Footnote 2]
This region is called "blanket territory" because a "blanket"
rate on logs and lumber is made from all shipping points within the
territory to points beyond. That is, the rate is the same
regardless of the distance hauled within the territory, which
extends about 400 miles from north to south and 300 from east to
west.
[
Footnote 3]
The distance on the Illinois Central from Memphis to Paducah is
about 169 miles. The Nashville, Chattanooga & St. Louis
Railroad also has a line from Memphis to Paducah, but it is much
longer.
[
Footnote 4]
A "through route" is an arrangement, express or implied, between
connecting railroads for the continuous carriage of goods from the
originating point on the line of one carrier to destination on the
line of another. Through carriage implies a "through rate." This
"through rate" is not necessarily a "joint rate." It may be merely
an aggregation of separate rates fixed independently by the several
carriers forming the "through route," as where the "through rate"
is "the sum of the locals" on the several connecting lines or is
the sum of lower rates otherwise separately established by them for
through transportation. Through Rates and Through Routes, 12 I.C.C.
164, 166. Ordinarily "through rates" lower than "the sum of the
locals" are "joint rates." Prior to the amendment of the Act to
Regulate Commerce (1906, c. 3591, § 4, 34 Stat. 584, 590)
authorizing the Commission to establish through routes and joint
rates, all "joint rates" were (as most still are) the result of
agreements between carriers, which fix also the "divisions" -- that
is, the share of the "joint rate" to be received by each. New York,
New Haven & Hartford R. Co. v. Platt, 7 I.C.C. 323, 329. The
bases of such divisions differ greatly in practice. Sometimes all
the carriers participate in the joint rate in the proportions which
their local rates bear to the sum of the locals; in other words,
the percentage of reduction from the local rate is the same for
each. Sometimes one carrier is allowed the full local, while the
rate of another is seriously reduced. The share of each being a
matter of bargain, it may be fixed at an arbitrary amount. Chamber
of Commerce of Milwaukee v. Flint & Pere Marquette R. Co., 2
I.C.C. 553, 567-568. In constructing the joint rates, the charge
per mile ordinarily decreases with the increase of the length of
haul. But even where the through route and through rates are
matters of express agreement between the carriers, a continuous
"joint rate" does not always extend from the point of origin to
point of destination. There may be, on the "through route" an
intermediate point at which, in common railroad practice, the rate
"breaks." That is, the "joint rate" from the point of origin ends
at this "rate-breaking point," and there is charged for the
distance beyond the same local rate or joint rate that would have
been charged had the business originated at this intermediate
point. That is, instead of a "joint through rate," there is a
"combination." The so-called "Ohio river crossings" or "gateways"
are among the "rate-breaking points."
See Rates on Lumber
from Southern Points, 34 I.C.C. 652, 654; Lehigh Portland Cement
Co. v. B. & O. S.W. R. Co., 35 I.C.C. 14, 17;
Interstate
Commerce Commission v. Chicago, Rock Island & Pacific
Railway, 218 U. S. 88,
218 U. S.
90.
[
Footnote 5]
The log and lumber rates from blanket territory to Cairo and
Paducah or competitive points had been investigated by the
Commission also in earlier proceedings. Rates on Lumber from
Southern Points, 34 I.C.C. 652; Wisconsin & Arkansas Lumber Co.
v. St. Louis, Iron Mountain & Southern Railway, 33 I.C.C. 33;
Paducah Board of Trade v. Illinois Central Railroad, 29 I.C.C. 583;
Lumberman's Exchange of St. Louis v. Anderson & Saline River
Railroad, 24 I.C.C. 220; Chicago Lumber & Coal Co. v. Tioga
Southeastern Railway Co., 16 I.C.C. 323; Central Yellow Pine
Association v. Illinois Central Railroad, 10 I.C.C. 505.
See
also St. Louis, Iron Mountain & Southern Railway v. United
States, 217 F. 80.
[
Footnote 6]
O'Keefe v. United States, 240 U.
S. 294;
Interstate Commerce Commission v. Northern
Pacific Ry. Co., 216 U. S. 538.
[
Footnote 7]
But see Michigan Central Railroad v. Michigan R. Co.,
236 U. S. 615,
236 U. S. 631;
Minneapolis & St. Louis R. Co. v. Minnesota,
186 U. S. 257;
Wisconsin, Minnesota & Pacific R. Co. v. Jacobson,
179 U. S. 287.
Compare Norfolk & Western Ry. Co. v. Dixie Tobacco
Co., 228 U. S. 593,
228 U. S. 595;
Galveston, Harrisburg & San Antonio Ry. Co. v.
Wallace, 223 U. S. 481,
223 U. S.
491.