1. The long and short haul provision of the Interstate Commerce
Act (§ 4) is violated, and the carrier incurs,
prima
facie, at least, the penalties prescribed by § 10, by
publishing, without authority from the Commission, a rate for a
longer haul lower than that scheduled for a shorter haul of the
same kind of property over the same line or route in the same
direction. P.
264 U. S.
424.
2. In such case, a shipper who is charged the higher rate for
the shorter haul is entitled, under § 8, to the full amount of his
resulting damages, with reasonable counsel fees, but not to collect
from the
Page 264 U. S. 404
carrier the difference between the rate paid and the lower rate
published for the longer haul upon the theory that the latter was
the only legal rate and the difference an illegal exaction
recoverable without proof of damage or regard to the intrinsic
reasonableness of the rate.
Pennsylvania R Co. v. International
Coal Co., 230 U. S. 184. Pp.
264 U. S. 415,
264 U. S.
424.
3. The ruling in
Kansas City Southern Ry. Co. v. Wolf,
261 U. S. 133,
that action of this kind are subject to the two-year limitation
(Act to Regulate Commerce, §§ 9 and 16,) is adhered to. P.
264 U. S. 426.
281 F. 10 and 154 Minn. 28 reversed.
Review of four judgments recovered by shippers as overcharges
alleged to have been exacted by the respective defendant carriers
in violation of the "long and short haul clause" of the Interstate
Commerce Act.
No. 114 was an action in the district court for the difference
between the freight paid during federal control on a shipment of
alfalfa seed to Walla Walla, Washington, from Roswell, New Mexico,
and the amount that would have been paid if a lower rate scheduled
from a more distant point over the same route had been applied.
Nos. 122 and 123 were like actions in the district court upon
claims assigned by various shippers in respect of sugar transported
by the above-named steamship company, wholly by water, from San
Francisco, California, to Portland and Astoria, Oregon, partly
while that company and its northern rail connection, the
Oregon-Washington Railroad & Navigation Company, were under
federal control, and at times when the joint rate of these carriers
from San Francisco to North Portland, a greater distance, as it was
claimed, was less than the local rate paid for the water carriage
to Portland and Astoria. In these three cases, the judgments for
the plaintiffs were affirmed by the circuit court of appeals, and
its judgments were brought here by error and certiorari.
In No. 209, here by certiorari, the Supreme Court of Minnesota
affirmed a like judgment in favor of a shipper whose shipments of
wheat, from Benchland, Montana, to
Page 264 U. S. 405
Minneapolis and Duluth, Minnesota, were charged for by the
carrier at a published tariff rate higher than the published rate
to the same destination from Billings, a more distant point.
Page 264 U. S. 413
MR. JUSTICE McREYNOLDS delivered the opinion of the Court.
The courts below affirmed judgment for the plaintiffs in four
separate actions brought to recover alleged overcharges on freight
said to have been demanded by the respective carriers in violation
of the long and short haul clause (Fourth Section, Interstate
Commerce Act, c. 104, § 4, 24 Stat. 379, 380; 36 Stat. 539, 547, c.
309; 41 Stat. 456, 480, c. 91), which declares:
"That it shall be unlawful for any common carrier subject to the
provisions of this Act to charge or receive any greater
compensation in the aggregate for the transportation of passengers,
or of like kind of property, for a shorter than for a longer
distance over the same line or route in the same direction, the
shorter being included within the longer distance, or to charge any
greater compensation
Page 264 U. S. 414
as a through rate than the aggregate of the intermediate rates
subject to the provisions of this Act, but this shall not be
construed as authorizing any common carrier within the terms of
this Act to charge or receive as great compensation for a shorter
as for a longer distance:
Provided, that, upon application
to the Commission, such common carrier may, in special cases, after
investigation, be authorized by the Commission to charge less for
longer than for shorter distances for the transportation of
passengers or property, and the Commission may from time to time
prescribe the extent to which such designated common carrier may be
relieved from the operation of this section. [The Transportation
Act 1920 added:] But, in exercising the authority conferred upon it
in this proviso, the Commission shall not permit the establishment
of any charge to or from the more distant point that is not
reasonably compensatory for the service performed. . . ."
All the cases involve the same fundamental question of law. The
essential charge is that the carrier demanded and received greater
compensation for transporting freight for a shorter distance than
its published rate for transporting like property for a longer
distance over the same route and in the same direction.
It will suffice to state the salient facts and issues disclosed
by record No. 114 --
Davis, Agent v. Portland Seed
Company. They are typical.
Pecos is in western Texas, 160 miles south of Roswell, N.M. A
line of the Atchison, Topeka & Santa Fe Railway system joins
these points and extends northward to Denver, Colorado, where it
connects with the Union Pacific System, which leads into the
northwest. January 4, 1919, the carrier received a car of alfalfa
seed at Roswell for transportation to Walla Walla, Washington, by
way of Denver. Three weeks later, respondent Portland Seed Company
received this car at destination and paid
Page 264 U. S. 415
freight charges reckoned at $2.44 per 100 pounds -- the
scheduled rate from Roswell. During all of January, 1919, the
initial carrier's published schedule specified $1.515 per 100
pounds as the rate for transporting alfalfa seed from Pecos to
Walla Walla through Roswell and Denver, and no application had been
made to the Interstate Commerce Commission for permission to charge
less for the longer than for the shorter haul. The seed company
demanded judgment for the excess above the Pecos rate as an
overcharge illegally exacted, and recoverable as money had and
received.
The insistence is that, under the long and short haul clause,
the lower published rate from Pecos became the maximum which the
carrier could charge for the shipment from Roswell, notwithstanding
the higher published rate therefor; that the sum charged above the
Pecos rate amounted to an illegal exaction, recoverable without
other proof of actual damage and without regard to the intrinsic
reasonableness of either rate.
Relying on
Pennsylvania R. Co. v. International Coal
Co., 230 U. S. 184, the
Interstate Commerce Commission has definitely rejected respondent's
theory by many opinions, and holds that, while a charge prohibited
by the long and short haul clause, § 4, may subject the carrier to
prosecution by the government, it does not afford adequate basis
for reparation where there is no other proof of pecuniary damage.
Nix & Co. v. Southern Ry. Co. (1914), 31 I.C.C. 145; S. J.
Greenbaum Co. v. Southern Ry. Co., 38 I.C.C. 715; Chattanooga
Implement & Mfg. Co. v. Louisville & Nashville R. Co., 40
I.C.C. 146; La Crosse Shippers' Assn. v. C., I. & L. Ry. Co.,
43 I.C.C. 520; Oregon Fruit Co. v. Southern Pacific Co., 50 I.C.C.
719; Iten Biscuit Co. v. C., B. & Q. R. Co., 53 I.C.C. 729;
Illinois Brick Co. v. Director General (1920), 57 I.C.C. 320,
323.
Counsel insist that, under § 4, it was unlawful to charge
compensation above the published Pecos rate for the
Page 264 U. S. 416
transportation from Roswell to Walla Walla. Therefore, the
published Roswell rate being unlawful -- nonexistent indeed -- the
Pecos rate became the only one in force.
United States v.
Louisville & Nashville R. Co., 235 U.
S. 314,
235 U. S.
322-323, is relied upon, and it is said that the opinion
there interprets the long and short haul clause as "absolutely
prohibiting the existence" of higher rates for shorter hauls unless
approved by the Commission. Read with the real issue in mind, the
opinion gives no support to respondent's argument. The Interstate
Commerce Commission held that certain reshipping privileges granted
to Nashville, but refused to Atlanta, amounted to unreasonable
preference under § 3, and ordered the carrier to discontinue them.
The Commerce Court restrained the enforcement of this order. This
Court declared that the challenged privileges were prohibited by
the long and short haul clause; that § 4 controlled the right to
grant them; that they had not been authorized by the Commission,
and therefore it would be unlawful to continue them. Accordingly,
the order to desist was approved, and the decree of the Commerce
Court reversed. No disagreement with
Pennsylvania R. Co. v.
International Coal Co. was suggested. The Court said (p.
235 U. S.
322-323):
"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 § 4 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 § 4
by the Act of June 18, 1910, c. 309, 36 Stat. 539, 547. This
results from the fact that, by the amendment in question, the
original power to determine
Page 264 U. S. 417
the existence of the conditions justifying the greater charge
for a shorter than was exacted for a longer distance was taken from
the carriers and primarily vested in the Interstate Commerce
Commission, and, for the purpose of making the prohibition
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 § 4 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."
The opinion does not discuss the carrier's liability to shippers
who had paid higher rates for the shorter hauls. No doubt similar
relief would have been granted by the Commission if the situation
here revealed had been brought before it.
Respondent has not asked an injunction against illegal rates. It
seeks to secure something for itself without proof of pecuniary
loss consequent upon the unlawful act. A similar effort failed in
Pennsylvania R. Co. v. International Coal Co., supra. The
International Company shipped 40,000 tons of coal from the
Clearfield district, paying full schedule rates. The carrier had
allowed other shippers from and to the same places at the same time
rebates ranging from 5 to 35 cents per ton. Without alleging or
proving pecuniary injury resulting
Page 264 U. S. 418
to itself from this unlawful action, the company sought to
recover like concessions upon all its shipments. Through Mr.
Justice Lamar, this Court said (p.
230 U. S.
196-197):
"The published tariffs made no distinction between contract coal
and free coal, but named one rate for all alike. That being true,
only that single rate could be charged. When collected, it was
unlawful, under any pretense or for any cause, however equitable or
liberal, to pay a part back to one shipper or to every shipper. The
statute required the carrier to abide absolutely by the tariff. It
did not permit the company to decide that it had charged too much,
and then make a corresponding rebate; nor could it claim that it
had charged too little, and insist upon a larger sum being paid by
the shipper. . . . The tariff, so long as it was of force, was, in
this respect, to be treated as though it had been a statute,
binding as such upon railroad and shipper alike. If, as a fact, the
rates were unreasonable, the shipper was nevertheless bound to pay
and the carrier to retain what had been paid, leaving, however, to
the former the right to apply to the Commission for
reparation."
P.
230 U. S.
200:
"Though the Act has been held to be in many respects highly
penal, yet there was no fixed measure of damage in favor of the
plaintiff. But, as said in
Parsons v. Chicago & N.W.
Railway, 167 U. S. 447,
167 U. S.
460, construing this section (8):"
"Before any party can recover under the Act, he must show not
merely the wrong of the carrier, but that that wrong has in fact
operated to his injury."
"Congress had not then, and has not since, given any indication
of an intent that persons not injured might nevertheless recover
what, though called damages, would really be a penalty, in addition
to the penalty payable to the government. On the contrary, and in
answer to the argument that damages might be a cover for rebates,
the Act of June 18, 1910 (36 Stat. 539, c. 309),
Page 264 U. S. 419
provided that, where a carrier misquotes a rate, it should pay a
penalty of $250, not to the shipper, but to the government,
recoverable by a civil action brought by the United States. 35
Stat. 166. Congressional Record 1910, 7569. The danger that payment
of damages for violations of the law might be used as a means of
paying rebates under the name of damages is also pointed out by the
Commission in 12 I.C.C. 418-421, 423, and 14 I.C.C. 82."
"It is said, however, that it is impossible to prove the damages
occasioned one shipper by the payment of rebates to another, and
that, if the plaintiff is not entitled to recover as damages the
same drawback that was paid to its competitor, the statute not only
gives no remedy, but deprives the plaintiff of a right it had at
common law to recover this difference between the lawful and the
unlawful rate."
P.
230 U. S.
201:
"We are cited to no authority which shows that there was any
such ancient measure of damages, and no case has been found in
which damages were awarded for such discrimination. Indeed, it is
exceedingly doubtful whether there was at common law any right of
action for any sort of damages in a case like this, while this
statute does give a clear, definite, and positive right to recover
for unjust discrimination."
P.
230 U. S.
202:
"
Union Pacific R. Co. v. Goodridge, 149 U. S.
680,
149 U. S. 709, involved the
construction of the Colorado statute which did not, as does the
Commerce Act, compel the carrier to adhere to published rates, but
required the railroad to make the same concessions and drawbacks to
all persons alike, and for a failure to do so made the carrier
liable for three times the actual damage sustained or overcharges
paid by the party aggrieved. This distinction is also to be noted
in the English cases cited. The Act of Parliament did not require
the carrier to maintain its published tariff, but made the lowest
rate the lawful rate.
Page 264 U. S. 420
Anything in excess of such lowest rate was extortion, and might
be recovered in an action at law as for an overcharge.
Denaby
v. Manchester Ry., L.R. 11 App.Cases, 97, 116. But the English
courts make a clear distinction between overcharge and damages, and
the same is true under the Commerce Act. For if the plaintiff here
had been required to pay more than the tariff rate, it could have
recovered the excess not as damages, but as overcharge, and while
one count of the complaint asserted a claim of this nature, the
proof did not justify a verdict thereon, for the plaintiff admitted
that it had only paid the lawful rates named in the tariff. Of
course, no part of such payment of lawful rates can be treated as
an overcharge or as an extortion."
"Having paid only the lawful rate, plaintiff was not
overcharged, though the favored shipper was illegally undercharged.
For that violation of law, the carrier was subject to the payment
of a fine to the government, and, in addition, was liable for all
damages it thereby occasioned the plaintiff or any other shipper.
But, under § 8, it was only liable for damages. Making an illegal
undercharge to one shipper did not license the carrier to make a
similar undercharge to other shippers, and, if having paid a rebate
of 25 cents a ton to one customer, the carrier, in order to escape
this suit, had made a similar undercharge or rebate to the
plaintiff, it would have been criminally liable even though it may
have been done in order to equalize the two companies. For, under
the statute, it was not liable to the plaintiff for the amount of
the rebate paid on contract coal, but only for the damages such
illegal payment caused the plaintiff. The measure of damages was
the pecuniary loss inflicted on the plaintiff as the result of the
rebate paid. Those damages might be the same as the rebate, or less
than the rebate, or many times greater than the rebate; but, unless
they were proved, they could not be recovered.
Page 264 U. S. 421
Whatever they were, they could be recovered, because § 8
expressly declares that, wherever the carrier did an act prohibited
of failed to do any act required, it should be"
"
liable to the person injured thereby for the full amount of
damages sustained in consequence of such violation . . . together
with reasonable attorney's fee."
P.
230 U. S.
206:
"To adopt such a rule and arbitrarily measure damages by rebates
would create a legalized, but endless, chain of departures from the
tariff, would extend the effect of the original crime, would
destroy the equality and certainty of rates, and, contrary to the
statute, would make the carrier liable for damages beyond those
inflicted and to persons not injured. The limitation of liability
to the persons damaged and to an amount equal to the injury
suffered is not out of consideration for the carrier who has
violated the statute. On the contrary, the act imposes heavy
penalties, independent of the amount of rebate paid, and as each
shipment constitutes a separate offense, the law, in its measure of
fine and punishment, is a terror to evil-doers. But, for the public
wrong and for the interference with the equal current of commerce,
these penalties or fines were made payable to the government. If,
by the same act, a private injury was inflicted, a private right of
action was given. But the public wrong did not necessarily cause
private damage, and, when it did, the pecuniary loss varied with
the character of the property, the circumstances of the shipment,
and the state of the market, so that, instead of giving the shipper
the right to recover a penalty fixed in amount or measure, the
statute made the guilty carrier liable for the full amount of
damages sustained, whatever they might be and whether greater or
less than the rate of rebate paid."
Southern Pacific Co. v. Darnell-Taenzer Co.,
245 U. S. 531,
presents no conflict with
Pennsylvania R. Co. v. International
Coal Co. There, the shipper paid a published rate which the
Commission afterwards found to be unreasonable.
Page 264 U. S. 422
This Court held he could recover, as the proximate damage of the
unlawful demand, the excess above the rate which the Commission had
declared to be reasonable. The opinion went no further. Certainly
it did not suggest that the unreasonable rate was nonexistent for
any purpose because forbidden by law.
Section 6 of the Commerce Act directs:
"(1) That every common carrier subject to the provisions of this
act shall file with the Commission created by this act and print
and keep open to public inspection schedules showing all the rates,
fares, and charges for transportation between different points on
its own route and between points on its own route and points on the
route of any other carrier by railroad, by pipeline, or by water
when a through route and joint rate have been established. . . .
(3) No change shall be made in the rates, fares, and charges or
joint rates, fares, and charges which have been filed and published
by any common carrier in compliance with the requirements of this
section except after thirty days' notice to the Commission: . . .
Provided, that the Commission may, in its discretion and
for good cause shown, allow changes upon less than the notice
herein specified. . . . (7) No carrier, unless otherwise provided
by this act, shall engage or participate in the transportation of
passengers or property, as defined in this act unless the rates,
fares, and charges upon which the same are transported by said
carrier have been filed and published in accordance with the
provisions of this act, nor shall any carrier charge or demand or
collect or receive a greater or less or different compensation for
such transportation of passengers or property, or for any service
in connection therewith, between the points named in such tariffs
than the rates, fares, and charges which are specified in the
tariff filed and in effect at the time; nor shall any carrier
refund or remit in any manner or by any device any portion
Page 264 U. S. 423
of the rates, fares, and charges so specified, nor extend to any
shipper or person any privileges or facilities in the
transportation of passengers or property, except such as are
specified in such tariffs."
"Sec. 8. That, in case, any common carrier subject to the
provisions of this act shall do, cause to be done, or permit to be
done any act, matter, or thing in this act prohibited or declared
to be unlawful, or shall omit to do any act, matter, or thing in
this act required to be done, such common carrier shall be liable
to the person or persons injured thereby for the full amount of
damages sustained in consequence of any such violation of the
provisions of this act, together with a reasonable counsel or
attorney's fee, to be fixed by the court in every case of recovery,
which attorney's fee shall be taxed and collected as part of the
costs in the case."
"Sec. 10(1). That any common carrier subject to the provisions
of this act, or, whenever such common carrier is a corporation, any
director or officer thereof, or any receiver, trustee, lessee,
agent, or person acting for or employed by such corporation who,
alone or with any other corporation, company, person, or party
shall willfully do or cause to be done, or shall willingly suffer
or permit to be done any act, matter, or thing in this act
prohibited or declared to be unlawful, or who shall aid or abet
therein, or shall willfully omit or fail to do any act, matter, or
thing in this act required to be done, or shall cause or willingly
suffer or permit any act, matter, or thing so directed or required
by this act to be done or not to be so done, or shall aid or abet
any such omission or failure, or shall be guilty of any infraction
of this act for which no penalty is otherwise provided, or who
shall aid or abet therein shall be deemed guilty of a misdemeanor,
and shall, upon conviction thereof in any district court of the
United States within the jurisdiction of which such offense was
committed, be subject to a fine of not to
Page 264 U. S. 424
exceed five thousand dollars for each offense:
Provided, that, if the offense for which any person shall
be convicted as aforesaid shall be an unlawful discrimination in
rates, fares, or charges for the transportation of passengers or
property, . . . such person shall, in addition to the fine
hereinbefore provided for, be liable to imprisonment in the
penitentiary for a term of not exceeding two years, or both such
fine and imprisonment in the discretion of the court."
What liability did the carrier incur by publishing a rate from
Pecos lower than the scheduled one from Roswell without the
Commission's permission, and thereafter imposing and collecting the
higher rate upon the shipment to Walla Walla?
Construing the words of § 4 literally, it is argued that, unless
some property moved over the longer distance at the lower rate
before greater compensation was charged for transporting like
property over a shorter one, there was no violation of law. We
cannot accept this view. It does not accord proper weight to
imperative requirements concerning publication of rates and
subsequent observance of them. The Commission holds, for example,
that, although the schedule contains a plain clerical error,
nevertheless no other charge may be demanded and the shipper may
recover any excess. Lamb-Fish Lumber Co. v. Y. & M. v. R. Co.,
42 I.C.C. 470.
The record shows, we think, that the carrier violated the
statute by publishing the lower rate for the longer haul without
permission, and,
prima facie at least, incurred the
penalties of § 10. Also it became "liable to the person or persons
injured thereby for the full amount of damages sustained in
consequence of . . . such violation," together with reasonable
counsel fees, as provided by § 8. But mere publication of the
forbidden lower rate did not wholly efface the higher intermediate
one from the schedule and substitute for all purposes the
Page 264 U. S. 425
lower one, as a supplement might have done, without regard to
the reasonableness or unreasonableness of either.
With special knowledge of rate schedules and relying on
Pennsylvania R. Co. v. International Coal Company, the
Interstate Commerce Commission for 10 years has required proof of
financial loss as a prerequisite to reparation for infractions of
the fourth section. The rule is firmly established. Congress has
not shown disapproval. The Transportation Act of 1920, with evident
purpose to conserve the carriers' revenues, added the following to
the proviso which gives power to exempt from the long and short
haul clause:
"But, in exercising the authority conferred upon it in this
proviso, the Commission shall not permit the establishment of any
charge to or from the more distant point that is not reasonably
compensatory for the service performed."
The rule adopted by the Commission follows the logic of the
opinion relied upon, and can be readily applied. The contrary view
would not harmonize with other provisions of the act, and, put into
practice, would produce unfortunate consequences.
The statute requires rigid observance of the tariff, without
regard to the inherent lawfulness of the rates specified. It
commanded adherence to the published rate from Roswell; § 6 forbade
any other charge. Observance of the lower rate from Pecos, put in
without authorization, might have been forbidden, as pointed out in
United States v. Louisville & Nashville R. Co., supra;
but it would be going too far to hold, as respondent insists, that
the unauthorized publication established the lower rate as the
maximum permissible charge from the intermediate point -- the only
rate therefrom which could be demanded.
If a lower rate published without authority becomes the maximum
which may be charged from any intermediate
Page 264 U. S. 426
point, mistakes in schedules (and they are inevitable) may
become disastrous. Suppose the rate from an obscure point in Maine
to San Francisco via Boston, New York, and Chicago should be
printed at $15.00, instead of $150, and the error remain
undiscovered for many months -- could all who had paid more than
$15.00 for passage along that route recover the excess without
proof of pecuniary loss?
After the challenged judgments were entered,
Kansas City
Southern Ry. v. Wolf, 261 U. S. 133, was
decided. We adhere to the ruling there announced, and, in view of
it, defenses in these causes based upon prescribed limitations must
be determined.
The judgments below are reversed. The causes will be remanded,
with appropriate instructions for further proceedings.
MR. JUSTICE BRANDEIS dissents.