1. Where the Commission has, upon complaint and after hearing,
declared what is the maximum reasonable rate to be charged by a
carrier, it may not at a later time, and upon the same or
additional evidence a to the fact situation existing when its
previous
Page 284 U. S. 371
order was promulgated, by declaring its own finding as to
reasonableness erroneous, subject a carrier which conformed thereto
to the payment of reparation measured by what the Commission now
holds it should have decided in the earlier proceedings to be a
reasonable rate. Pp.
284 U. S.
383-390.
2. When the Commission, by its authority under the
Transportation Act, declares a specific rate to be the reasonable
and lawful rate for the future, it exercises a legislative
function, and its pronouncement has the force of a statute. This is
well established as to the fixing of specific rates by state
commissions, and in this respect there is no difference between
authority delegated by a state legislature and that conferred by
Congress. P.
284 U. S.
386.
3. When the Commission fixes a maximum rate, or maximum and
minimum rates, the carrier is not obliged at its peril to see that
the rates it maintains within the limits so authorized are
reasonable. Pp.
284 U. S.
386-387.
4. In declaring a maximum rate the Commission exercises a
delegated power legislative in character, and may act only within
the scope of the delegation; its authority is to fix a maximum
reasonable rate, and it is precluded by the statute from fixing one
which is unreasonable. P.
284 U. S.
387.
5. When the carrier establishes a rate within the limits of the
Commission's order, that rate becomes a lawful -- that is, a
reasonable rate.
Id.
6. The prescription of a maximum rate, or maximum and minimum
rates, is as legislative in quality as the fixing of an exact rate.
P.
284 U. S.
388.
7. The action of the Commission in fixing rates for the future
is subject to the same tests as to its validity as would be an act
of Congress intended to accomplish the same purpose.
Id.
8. Where the Commission has made an order having a dual aspect,
it may not, in a subsequent proceeding, acting in its
quasi-judicial capacity, ignore its own pronouncement
promulgated in its
quasi-legislative capacity and
retroactively repeal its own enactment as to the reasonableness of
the rate it has prescribed. P.
284 U. S.
389.
49 F.2d 563 affirmed.
Certiorari,
post, p. 600, to review a judgment
reversing a judgment in favor of a shipper in a suit to enforce an
order of the Interstate Commerce Commission awarding
reparations.
Page 284 U. S. 381
MR. JUSTICE ROBERTS delivered the opinion of the Court.
This case turns upon the power of the Interstate Commerce
Commission to award reparations with respect to shipments which
moved under rates approved or prescribed by it.
The respondent carriers maintained a rate of $1.045 per hundred
pounds for shipment of sugar from California points to Phoenix,
Ariz. On complaint of petitioner and others, the Commission, after
hearing, on June 22, 1921, found that the rate attacked had been,
then was, and for the future would be, unreasonable to the extent
that it exceeded 96.5 cents, [
Footnote 1] and ordered the establishment
Page 284 U. S. 382
of a rate not exceeding that figure. September 17, 1921, the
carriers promulgated a rate of 96 cents, which they later
voluntarily reduced to 86.5 cents. November 3, 1922, certain of the
complainants in the earlier proceeding, other than petitioner,
filed a new petition attacking the current rate. While this case
was pending, the carriers, on January 10, 1924, again made a
voluntary reduction to 84 cents. February 25, 1925, the Commission
filed a report prescribing for the future a maximum reasonable rate
of 71 cents, to that extent modifying its earlier order. [
Footnote 2] Reparation was found to be
due shippers under the old rate, but none was awarded. February 8,
1927, the second case was reopened for further consideration, but
the 71-cent rate was not disturbed. In a later proceeding, with
which petitioner's and other claims for reparation were
consolidated, the Commission found that the rates to Phoenix from
and after July 1, 1922, had been unreasonable to the extent they
had exceeded 73 cents from Northern California and 71 cents from
Southern California, prescribed rates for the future from those
origins to Phoenix and other Arizona destinations, and awarded
petitioner and other shippers reparation in the amounts by which
the rates paid (86.5 and 84 cents) exceeded those (73 and 71 cents)
found to have been the reasonable rates during the period since
July 1, 1922. [
Footnote 3]
The date of the first shipment made by petitioner on which
reparation was awarded was February 21, 1923, and of the last
February 5, 1925, so that all were made between the effective dates
of the first and second orders above mentioned.
The respondents objected that they should not be required to pay
reparations on shipments which moved under rates approved or
prescribed by the Commission as reasonable. To this that body
replied:
"We reserve the right, upon a more comprehensive record, to
modify our
Page 284 U. S. 383
previous findings, upon matters directly in issue before us as
to which it clearly appears that our previous findings would not
accord substantial justice under the laws which we administer. We
have such a case here. For the first time, the record before us is
comprehensive in the evidence which it contains upon the
reasonableness of the rates assailed. Upon this record, we reach
the conclusion that the rates prescribed in the first Phoenix case,
during the period embraced in these complaints, were unreasonable,
and that a lower rate would have been reasonable during that
period. If we are within our authority in finding that a lower rate
would have been reasonable, then it must follow that shippers who
paid the freight charges at the higher rate paid charges which were
unreasonable, and are entitled to reparation. . . ."
The carriers having failed to pay the amount awarded, the
petitioner sued therefor in the District Court, and recovered
judgment. The Circuit Court reversed, and entered judgment for
respondents. [
Footnote 4] This
Court granted certiorari. Whether, as the petitioner argues, the
Commission correctly construed its authority is to be determined by
examination of the legislation defining its powers.
The exaction of unreasonable rates by a public carrier was
forbidden by the common law.
Interstate Commerce Commission v.
Baltimore & Ohio R. Co., 145 U. S. 263,
145 U. S. 275.
The public policy which underlay this rule could, however, be
vindicated only in an action brought by him who paid the excessive
charge to recover damages thus sustained. Rates, fares, and charges
were fixed by the carrier, which took its chances that, in an
action by the shipper, these might be adjudged unreasonable, and
reparation be awarded.
But we are here specially concerned with the Interstate Commerce
Act of 1887, [
Footnote 5] and
with some of the changes of
Page 284 U. S. 384
supplements adopted since its original enactment. That Act did
not take from the carriers their power to initiate rates -- that
is, the power in the first instance to fix rates or to increase or
to reduce them.
Skinner & Eddy Corp. v. United States,
249 U. S. 557,
249 U. S. 564;
Cincinnati, N. O. & T. P. R. Co. v. Interstate Commerce
Comm'n, 162 U. S. 184,
162 U. S. 197. In
order to render rates definite and certain, and to prevent
discrimination and other abuses, the statute required the filing
and publishing of tariffs specifying the rates adopted by the
carrier, and made these the legal rates -- that is, those which
must be charged to all shippers alike. [
Footnote 6] Any deviation from the published rate was
declared a criminal offense, and also a civil wrong giving rise to
an action for damages by the injured shipper. [
Footnote 7] Although the Act thus created a legal
rate, it did not abrogate, but expressly affirmed, the common law
duty to charge no more than a reasonable rate, and left upon the
carrier the burden of conforming its charges to that standard.
[
Footnote 8] In other words,
the legal rate was not made by the statute a lawful rate -- it was
lawful only if it was reasonable. Under § 6, the shipper was bound
to pay the legal rate, but, if he could show that it was
unreasonable, he might recover reparation.
The act altered the common law by lodging in the Commission the
power, theretofore exercised by courts, of determining the
reasonableness of a published rate. [
Footnote 9] If the finding on this question was against
the carrier, reparation
Page 284 U. S. 385
was to be awarded the shipper, and only the enforcement of the
award was relegated to the courts. In passing upon the issue of
fact, the function of the Commission was judicial in character;
[
Footnote 10] its action
affected only the past so far as any remedy of the shipper was
concerned, and adjudged for the present merely that the rate was
then unreasonable; no authority was granted to prescribe rates to
be charged in the future. Indeed, after a finding that an existing
rate was unreasonable, the carrier might put into effect a new and
slightly different rate and compel the shipper to resort to a new
proceeding to have this declared unreasonable. [
Footnote 11] Since the carrier had complete
liberty of action in making the rate, it necessarily followed that,
upon a finding of unreasonableness, an award of reparation should
be measured by the excess paid, subject only to statutory
limitations of time.
Under the Act of 1887, the Commission was without power either
to prescribe a given rate thereafter to be charged (
Interstate
Commerce Comm'n v. Cincinnati, N.O. & T.P. Ry. Co.,
167 U. S. 479), or
to set a maximum rate for the future (
Cincinnati, N.O. &
T.P. Ry. Co. v. Interstate Commerce Comm'n, supra, p.
162 U. S.
196), for the reason that so to do would be to exercise
a legislative function not delegated to that body by the statute.
[
Footnote 12]
The Hepburn Act [
Footnote
13] and the Transportation Act [
Footnote 14] evince an enlarged and different policy on
the part of
Page 284 U. S. 386
Congress. The first granted the Commission power to fix the
maximum reasonable rate; the second extended its authority to the
prescription of a named rate, or the maximum or minimum reasonable
rate, or the maximum and minimum limits within which the carriers'
published rate must come. When, under this mandate, the Commission
declares a specific rate to be the reasonable and lawful rate for
the future, it speaks as the legislature, and its pronouncement has
the force of a statute. [
Footnote 15] This Court has repeatedly so held with
respect to the fixing of specific rates by state commissions,
[
Footnote 16] and in this
respect there is no difference between authority delegated by state
legislation and that conferred by congressional action.
But it is suggested that the mere setting of limits by
Commission order leaves the carrier free to name any rate within
those limits, and, as at common law, it must, at its peril, publish
a reasonable rate within the boundaries
Page 284 U. S. 387
set by the order; that, as it has the initiative, it must take
the burden, notwithstanding the Commission's order, of maintaining
the rate at a reasonable level, and will be answerable in damages
if it fails so to do. This argument overlooks the fact that, in
declaring a maximum rate, the Commission is exercising a delegated
power legislative in character; [
Footnote 17] that it may act only within the scope of the
delegation; that its authority is to fix a maximum or minimum
reasonable rate, for it is precluded by the statute from fixing one
which is unreasonable, which by the statute is declared unlawful.
If it were avowedly to attempt to set an unreasonably high maximum,
its order would be a nullity.
The report and order of 1921 involved in the present case
declared in terms that 96.5 cents was, and for the future would be,
a reasonable rate. There can be no question that, when the
carriers, pursuant to that finding, published a rate of 96 cents,
the legal rate thus established, to which they and the shipper were
bound to conform, became, by virtue of the Commission's, order also
a lawful -- that is, a reasonable rate.
Specific rates prescribed for the future take the place of the
legal tariff rates theretofore in force by the voluntary action of
the carriers, and themselves become the legal rate. As to such
rates, there is therefore no difference between the legal or
published tariff rate and the lawful rate. The carrier cannot
change a rate so prescribed and take its chances of an adjudication
that the substituted rate will be found reasonable. It is bound to
conform to the order of the Commission. If that body sets too low a
rate, the carrier has no redress save a new hearing and the fixing
of a more adequate rate for the future. It cannot have reparation
from the shippers for a rate collected under the order upon the
ground that it was unreasonably
Page 284 U. S. 388
low. This is true because the Commission, in naming the rate,
speaks in its
quasi-legislative capacity. The prescription
of a maximum rate, or maximum and minimum rates, is as legislative
in quality as is the fixing of a specified rate.
In
Oklahoma Operating Co. v. Love, 252 U.
S. 331,
252 U. S. 335,
it was said:
"The order of the Commission prohibiting the company from
charging, without its permission, rates higher than those
prevailing in 1913, in effect prescribed maximum rates for the
service. It was therefore a legislative order. . . ."
If, by act of Congress, maximum rates were declared lawful for
certain classes of service, neither carrier nor shipper could
thereafter draw into question in the courts the conduct of the
other if it conformed to the legislative mandate, save by an attack
on the constitutionality of the statute. By the amendatory
legislation, Congress has delegated to the Commission, as its
administrative arm, its undoubted power to declare, within
constitutional limits, what are lawful rates for the service to be
performed by the carriers. The action of the Commission in fixing
such rates for the future is subject to the same tests as to its
validity as would be an act of Congress intended to accomplish the
same purpose.
As has been pointed out, the system now administered by the
Commission is dual in nature. As respects a rate made by the
carrier, its adjudication finds the facts, and may involve a
liability to pay reparation. The Commission may, and often does, in
the same proceeding and in a single report and order, exercise its
additional authority by fixing rates or rate limits for the future.
But the fact that this function is combined with that of passing
upon the rates theretofore and then in effect does not alter the
character of the action. [
Footnote 18]
Page 284 U. S. 389
As respects its future conduct, the carrier is entitled to rely
upon the declaration as to what will be a lawful -- that is, a
reasonable -- rate, and, if the order merely sets limits, it is
entitled to protection if it fixes a rate which falls within them.
Where, as in this case, the Commission has made an order having a
dual aspect, it may not, in a subsequent proceeding, acting in its
quasi-judicial capacity, ignore its own pronouncement
promulgated in its
quasi-legislative capacity and
retroactively repeal its own enactment as to the reasonableness of
the rate it has prescribed.
The Commission, in its report ,confuses legal concepts in
stating that the doctrine of
res judicata does not affect
its action in a case like this one. It is unnecessary to determine
whether an adjudication with respect to reasonableness of rates
theretofore charged is binding in another proceeding, for that
question is not here presented. The rule of estoppel by judgment
obviously applies only to bodies exercising judicial functions; it
is manifestly inapplicable to legislative action. The Commission's
error arose from a failure to recognize that, when it prescribed a
maximum reasonable rate for the future, it was performing a
legislative function, and that, when it was sitting to award
reparation, it was sitting for a purpose judicial in its nature. In
the second capacity, while not bound by the rule of
res
judicata, it was bound to recognize the validity of the rule
of conduct prescribed by it, and not to repeal its own enactment
with retroactive effect. It could repeal the order as it affected
future action, and substitute a new rule of conduct as often as
occasion might require, but this was obviously the limit of its
power, as of that of the legislature itself.
The argument is pressed that this conclusion will work serious
inconvenience in the administration of the Act, will require the
Commission constantly to reexamine the fairness of rates
prescribed, and will put an unbearable
Page 284 U. S. 390
burden upon that body. If this is so, it results from the new
policy declared by the Congress, which, in effect, vests in the
Commission the power to legislate in specific cases as to the
future conduct of the carrier. But it is also to be observed that,
so long as the Act continues in its present form, the great mass of
rates will be carrier-made rates, as to which the Commission need
take no action except of its own volition or upon complaint, and
may in such case award reparation by reason of the charges made to
shippers under the theretofore existing rate.
Where the Commission has, upon complaint and after hearing,
declared what is the maximum reasonable rate to be charged by a
carrier, it may not at a later time, and upon the same or
additional evidence as to the fact situation existing when its
previous order was promulgated, by declaring its own finding as to
reasonableness erroneous, subject a carrier which conformed thereto
to the payment of reparation measured by what the Commission now
holds it should have decided in the earlier proceeding to be a
reasonable rate.
The judgment is
Affirmed.
MR. JUSTICE HOLMES and MR. JUSTICE BRANDEIS think that the
judgment should be reversed for the reasons stated by Judge
Hutcheson in the concurring opinion in
Eagle Cotton Oil Co. v.
Southern Ry. Co., 51 F.2d 443, 445.
[
Footnote 1]
62 I.C.C. 412.
[
Footnote 2]
95 I.C.C. 244.
[
Footnote 3]
140 I.C.C. 171.
[
Footnote 4]
49 F.2d 563.
[
Footnote 5]
Act of February 4, 1887, 24 Stat. 379.
[
Footnote 6]
Id., § 6.
Kansas City Southern Ry. Co. v.
Carl, 227 U. S. 639,
227 U. S. 653;
Pennsylvania R. Co. v. International Coal Mining Co.,
230 U. S. 184,
230 U. S. 197;
Louisville & N. R. Co. v. Maxwell, 237 U. S.
94,
237 U. S. 97;
Dayton C. & I. Co. v. Cincinnati, N. O. & T. P. Ry.
Co., 239 U. S. 446,
239 U. S.
450.
[
Footnote 7]
Id., §§ 8, 9, 10.
[
Footnote 8]
Id., § 1.
[
Footnote 9]
Id., § 13.
Texas & P. R. Co. v. Abilene Cotton
Oil Co., 204 U. S. 426,
204 U. S. 443;
Robinson v. Baltimore & O. R. Co., 222 U.
S. 506;
Skinner & Eddy Corp. v. United
States, 249 U. S. 557,
249 U. S. 562,
and cases cited.
[
Footnote 10]
Interstate Commerce Comm'n v. Cincinnati, N.O. & T.P.
Ry. Co., 167 U. S. 479,
167 U. S.
499-500;
Baer Bros. v. Denver & R.G. R.
Co., 233 U. S. 479,
233 U. S.
486.
[
Footnote 11]
See Baer Bros. v. Denver & R.G. R. Co., supra, p.
233 U. S.
487.
[
Footnote 12]
Compare Prentis v. Atlantic C. L. Co., 211 U.
S. 210,
211 U. S. 226;
Louisville & N. R. Co. v. Garrett, 231 U.
S. 298,
231 U. S. 301;
Terminal R. Assn. v. United States, 266 U. S.
17,
266 U. S. 30;
Assigned Car cases, 274 U. S. 564,
274 U. S.
582.
[
Footnote 13]
§ 4, 34 Stat. 589.
[
Footnote 14]
§§ 418-421, 41 Stat. 484-488.
[
Footnote 15]
As a statute fixing or limiting rates to be charged by one whose
business is affected by a public interest may be declared void for
violation of the due process and equal protection clauses (
Dow
v. Beidelman, 125 U. S. 680;
Chicago & G. T. R. Co. v. Wellman, 143 U.
S. 339;
Budd v. New York, 143 U.
S. 517;
Covington & L. Turnpike Road Co. v.
Sandford, 164 U. S. 578), an
order made by a commission created by statute is subject to the
like action of the courts (
Reagan v. Farmers' L. & T.
Co., 154 U. S. 362;
Willcox v. Consolidated Gas Co., 212 U. S.
19;
Minnesota Rate Case, 230 U.
S. 352,
230 U. S.
433-434). There is, however, in the case of a commission
order, the additional element that the courts will examine the
question whether the administrative agency of the legislature has
exceeded its statutory powers (
Skinner & Eddy Corp. v.
United States, 249 U.S. at p.
249 U. S. 562,
and cases cited), or has based its order upon a finding without
evidence or upon evidence which clearly fails to support it
(
Northern Pacific Ry. Co. v. Dept. of Public Works,
268 U. S. 39).
[
Footnote 16]
Chicago, M. & St.P. Ry. Co. v. Minnesota,
134 U. S. 418;
Reagan v. Farmers' L. & T. Co., 154 U.
S. 362,
154 U. S. 394;
Home Tel. & Tel. Co. v. Los Angeles, 211 U.
S. 265,
211 U. S. 271;
Louisville & N. R. Co. v. Garrett, 231 U.
S. 298,
231 U. S. 306,
and compare the cases cited in
note 12
[
Footnote 17]
Oklahoma Operating Co. v. Love, 252 U.
S. 331,
252 U. S.
335.
[
Footnote 18]
Interstate Commerce Comm'n v. Cincinnati, N.O. & T.P.
Ry. Co., 167 U. S. 479,
167 U. S. 499;
Baer Bros. v. Denver & R.G. R. Co., 233 U.
S. 479.