1. Where one of several carriers which, by their agreement, have
established joint rates and fixed the divisions, is illegally
deprived of part or all of its agreed share through the action of
the other carriers in dividing the freight collections on another
basis, the aggrieved carrier is entitled to apply under § 15(6) of
the Interstate Commerce Act for an order that the agreed divisions
be maintained, and the Commission cannot refuse to entertain the
complaint. P.
287 U. S.
236.
2. An order of the Commission denying relief under such an
application, upon a finding that the reduced divisions complained
of are not "unjust, unreasonable, or otherwise unlawful," is in
effect an order reducing the divisions to which the complaining
carrier was entitled under the agreement; it is a "negative" order
in form only. P.
287 U. S.
237.
3. The Commission, in concluding that the share received by the
complaining carrier was not unjust, unreasonable, or otherwise
unlawful, construed the words of § 15(6), "importance to the public
of the services of such carriers," as referring to the
importance
Page 287 U. S. 230
of the particular services in question, and the term
"intermediate line" as including a road over which was "reshipped"
warehoused grain that had been brought in by other roads with which
it did not participate in joint rate.
Held: That the correctness of these constructions, and
the question whether a noncompensatory share of existing joint
rates can constitutionally be imposed by the Commission are
questions subject to review in a suit under the Urgent Deficiencies
Act to set aside that part of the order. P.
287 U. S.
239.
4. There may be judicial review of a part of an order of the
Commission. P.
287 U. S.
237.
58 F.2d 399 reversed.
Appeal from a decree of the District Court of three judges
dismissing a bill to set aside part of an order of the Interstate
Commerce Commission. The ground of dismissal was that the order was
negative in character, and that therefore the court had no
jurisdiction.
MR. JUSTICE BRANDEIS delivered the opinion of the Court.
This suit, under the Urgent Deficiencies Act of October 22,
1913, c. 32, 38 Stat. 208, 220, was brought by the Alton Railroad
Company in the federal court for Northern Illinois to set aside
part of an order entered by the Interstate Commerce Commission
under § 15(6) of the Interstate Commerce Act,
see
Transportation Act, February 28, 1920, c. 91, § 418, 41 Stat. 456,
475, 484, 486. The
Page 287 U. S. 231
defendants are the United States and, by intervention, the
Commission and carriers adversely interested. The proceeding before
the Commission was commenced by the receivers of the Chicago &
Alton "to establish, just, reasonable, and equitable divisions" of
existing joint rates for grain and grain products from Peoria,
Illinois, to points east of Buffalo. [
Footnote 1] The Commission found that the divisions of the
so-called "local" rates were too low, and ordered them increased.
It found that the divisions of the so-called "reshipping" rates
were "not unjust, unreasonable, or otherwise unlawful," and refused
relief as to them. Wheelock v. Akron, Canton & Youngstown Ry.
Co., 169 I.C.C. 594; 179 I.C.C. 517. [
Footnote 2] The Alton Railroad (the
Page 287 U. S. 232
corporation which acquired the line under the reorganization,
Alton R. Co. Acquisition and Stock Issue, 175 I.C.C. 301) insists
that, by so denying relief, the Commission has, in view of the
facts specifically found, subjected its property to confiscation,
and on this ground seeks to have that part of the order set
aside.
Lines of the Alton extend from Peoria to Chicago, Joliet, and
Dwight, Ill., and at each of those cities connect with railroads
whose lines extend to the East. Peoria is an important market for
grain received from the West and Northwest. At Peoria, the grain
goes into elevators. There it may be sold and resold or it may be
manufactured into grain products and byproducts. Much of the grain
is later shipped from Peoria to the East in the form of grain
products and byproducts. The transportation of grain consigned to
Peoria is completed, however, by the unloading of the cars there
and the payment of charges. The carriers serving Peoria have not
established joint rates from such points of origin of the grain
Page 287 U. S. 233
to the East, with a transit privilege at Peoria.
Compare
Central R. Co. v. United States, 257 U.
S. 247. But the tariffs of outbound joint rates from
Peoria to points east of Buffalo, voluntarily established by the
Alton and connecting railroads, provide for a lower scale of rates
applicable, under certain conditions, to grain and the products of
grain which had a rail movement inbound from the territory referred
to. This lower scale is called "reshipping" rates, and the
merchandise shipped thereunder is called transit grain or grain
products. [
Footnote 3] The
higher scale applicable to other grain or grain products is called
"local" rates.
Compare Atchison, Topeka & Santa Fe Ry. Co.
v. United States, 279 U. S. 768.
Until July 1, 1929, the divisions of both classes of rates were
fixed by agreement of the Alton and the connecting lines. Then the
connecting lines, without the sanction of the Commission and over
the protest of the Alton, reduced, for both classes of rates, the
amounts paid to it as divisions. The connecting lines were and are
physically in a position to deprive the Alton of a larger share
by
Page 287 U. S. 234
reason of the fact that the freight is collected at the
destinations and distributed by the collecting carrier. The haul on
the Alton outbound from Peoria is from 82 to 155 miles, dependent
upon the route selected. The divisions constitute the only revenue
received by the Alton for the service performed by it under the
"reshipping" rates. Under the reduced allowances, the Alton does
not receive on any shipment more than 2 cents per 100 pounds and on
many shipments it receives nothing. [
Footnote 4] The Commission
Page 287 U. S. 235
did not suggest that the divisions so received could be deemed
compensatory for the outbound haul. It justified its conclusion
that the divisions were not "unjust, unreasonable, or otherwise
unlawful" on the ground that the transportation service for the
performance of which the Alton sought increased divisions was not
of importance to the public, and that, if the Alton desired to
participate in the transportation and was dissatisfied with the
share allotted, it should secure in some way allowances from the
carriers which bring the grain into Peoria.
The District Court, three judges sitting, did not consider the
merits of the controversy. It dismissed the bill on the ground that
the part of the order complained of was negative in character, and
that, hence, the court was without jurisdiction. The case is here
on direct appeal. Whether the order is a negative one within the
meaning of the rule (
compare Procter & Gamble Co. v. United
States, 225 U. S. 282,
United States v. Los Angeles & Salt Lake R. Co.,
273 U. S. 299) is
the main question requiring decision. The Alton concedes that
courts have ordinarily no power to review a finding of the
Commission that a particular division is not unreasonable or
inequitable. The Alton's contention is that, while the joint rates
are in force, it is obliged to accept traffic under them; that,
until the Commission decides otherwise, it is entitled to the
divisions agreed upon when the joint rates were established; that
the order of the Commission in approving the reduced allowance to
the Alton made by the connecting carriers in effect established new
divisions, and that, since these are obviously confiscatory, the
order is void.
First. The order, while negative in form was, in
effect, an affirmative one. The joint "reshipping" rates and the
divisions thereof were established by agreement of the carriers
participating in the transportation. The divisions were a term of
that agreement. So long as the
Page 287 U. S. 236
joint rates voluntarily established remain in force, each
carrier is entitled as of right to the division originally agreed
upon, unless a readjustment of the divisions has been made either
by the parties or by the Commission pursuant to the power conferred
by paragraph 6 of § 15. The connecting carriers were legally
without power to reduce the divisions of the Alton over its
objection. If they deemed its divisions unreasonably large, they
could have invoked the power of the Commission to make a reduction.
Instead of applying to the Commission to adjust the existing
divisions, they resorted to force. Availing themselves of their
strategic position as collectors of the freight, they withheld from
the Alton a part of what was due it.
The Alton might have sued at law for the part of the divisions
wrongfully withheld.
St. Louis S.W. Ry. Co. v. Bolinger &
Co., 17 F.2d 924.
Compare Malvern & F.V. R. Co. v.
Chicago, R.I. & P. Ry. Co., 182 F. 685. But that was not
its only remedy. Under § 15(6), it was entitled to invoke the
jurisdiction of the commission. [
Footnote 5] It could obviously have applied to the
Commission to have the agreed divisions increased, and likewise it
was entitled to apply to secure a determination that the agreed
division shall be maintained. The Commission was not at liberty to
decline to exercise its jurisdiction. Paragraph 6 imposed upon it
the obligation to act upon the complaint.
Compare 261 U.
S. 261 U.S.
Page 287 U. S. 237
184;
United States v. Abilene & Southern Ry. Co.,
265 U. S. 274. The
Commission's finding that the Alton's divisions were "not unjust,
unreasonable or otherwise unlawful," and the refusal of relief, had
the effect of reducing the divisions which had been fixed by
agreement of the parties and to which, but for the Commission's
action, the Alton would have continued to be legally entitled.
Second. The jurisdiction of courts to review orders of
the Commission is not dependent upon the form in which the order is
couched. If the Eastern carriers had applied to the Commission for
a change in the divisions fixed by agreement, and the Commission
had authorized divisions precisely like those which they are now
imposing upon the Alton by their unauthorized action, the order
would have been affirmative in form and would obviously have been
subject to attack by the Alton in a suit in the federal court. By
their unauthorized action, the connecting carriers forced the Alton
to become the moving party before the Commission, with the result
that the Commission's approval of the divisions effected by them
was expressed in the form of a refusal to interfere. This result of
the alignment of parties does not endow the Commission's order with
immunity from judicial review.
An order of the Commission which denies relief in part, or which
dismisses the complaint, may be reviewed by a court.
Inter-Mountain Rate Cases, 234 U.
S. 476,
234 U. S. 490;
United States v. New River Co., 265 U.
S. 533,
265 U. S.
539-541.
Page 287 U. S. 238
To annul the order would not, as in
Lehigh Valley R. Co. v.
United States, 243 U. S. 412,
merely leave unchanged the very situation which the Commission's
order refused to alter. Here, the Alton, by virtue of the
preexisting agreement for divisions, would secure a measure of
protection simply from the annulment of the order. To take
jurisdiction would not be tantamount to usurpation by the court of
the functions of the Commission. The court is not called upon here,
as it was in
Manufacturers' Ry. Co. v. United States,
246 U. S. 457,
246 U. S. 483,
and
Standard Oil Co. v. United States, 283 U.
S. 235,
283 U. S. 241,
to afford relief which the Commission, in the exercise of its
powers, had found that the complainant was not entitled to receive.
[
Footnote 6] The court is not
asked to prescribe reasonable divisions, or to
Page 287 U. S. 239
direct that they be prescribed by the Commission. [
Footnote 7] The court is asked to find that
the Commission denied the Alton a constitutional right as a result
of acting upon erroneous principles of law, and therefore to enjoin
that part of the order.
The determination of the questions presented is properly within
the scope of judicial review of the Commission's orders. The
questions are not the correctness of its conclusion as to the
reasonableness of the divisions, or the correctness of its findings
as to any of the factors which the act directs it to consider in
determining reasonableness. The question is the correctness of the
legal principles adopted by the Commission as a basis for reaching
a conclusion from its findings. The Commission reasoned that, since
the particular transportation services of the Alton here in
question were not of importance to the public, and since the Alton
was in substance an intermediate, not an originating, carrier, it
might be denied a compensatory share of the existing joint rates
with the defendant carriers. Whether the "importance to the public
of the transportation services of such carriers," as specified in
the act, means the importance of the particular services in
question, and whether a carrier not participating in joint rates
with inbound roads is an "intermediate line" within the meaning of
the section dealing with divisions, are questions upon which a
court may properly pass. So, too, is the more fundamental question
whether, assuming the Commission was correct in its construction of
the act, it follows that a noncompensatory share of existing joint
rates may be imposed. Upon these questions, the Alton was entitled
to invoke the judgment
Page 287 U. S. 240
of the court.
Compare Southern Ry. Co. v. St. Louis Hay
Co., 214 U. S. 297,
214 U. S. 301;
Southern Pacific Co. v. Interstate Commerce Commission,
219 U. S. 433,
219 U. S.
449.
Third. The defendants contend that what is sought to be
enjoined is not an "order" within the meaning of the Urgent
Deficiencies Act. That contention is unsound. The action of the
Commission presents none of the characteristics which have led this
Court in other cases to hold that there was want of jurisdiction.
It is part of an order (
compare United States v. Atlanta, B.
& C. R. Co., 282 U. S. 522,
282 U. S.
527), and the order is final, not tentative.
Compare
Delaware & Hudson Co. v. United States, 266 U.
S. 438,
266 U. S. 448.
It was entered as the result of a formal controversy, not a project
of the Commission,
compare United States v. Los Angeles &
Salt Lake R. Co., 273 U. S. 299, and
it marked the disposition of the controversy, not a preliminary
stage.
Compare United States v. Illinois Central R. Co.,
244 U. S. 82.
[
Footnote 8] The suit to enjoin
the order is not premature.
Compare Piedmont & Northern Ry.
v. United States, 280 U. S. 469. It
subjects the Alton to damage which is substantial, immediate, and
irreparable. If the order is allowed to stand, and the Eastern
carriers continue to retain their present share of the joint rates,
the Alton's only redress will be a subsequent complaint before the
Commission. Even if the Commission should then decide that the
existing divisions are unreasonable, it might be powerless to award
reparation for the period from the entry of the present order.
Brimstone R. Co. v. United States, 276 U.
S. 104,
276 U. S.
121.
The decree of the District Court dismissing the bill for want of
jurisdiction is reversed, and the cause remanded to it for further
proceedings.
Reversed.
[
Footnote 1]
The proceedings before the Commission involved also the rates
from Pekin, which lies about ten miles from Peoria. But, as the
inbound and outbound rates to and from these two points and the
transit regulations and practices in effect are the same as to
both, only Peoria will be referred to.
[
Footnote 2]
Division 5 of the Commission, after a hearing, found that the
share accorded the Alton was unreasonable and otherwise unlawful,
and fixed new divisions. On petition by the defendants, the order
of Division 5 was indefinitely postponed and a rehearing before the
full Commission granted. The order entered by the full Commission
reads as follows:
"This case having been reheard and submitted by the parties, and
full investigation of the matters and things involved having been
had, and the commission having, on the date hereof, made and filed
a report on rehearing containing its findings of fact and
conclusions thereon, which said report, together with the original
report and order herein, 169 I.C.C. 594, is hereby referred to and
made a part hereof, and the commission having found in said report
on rehearing, (1) that just, reasonable, and equitable divisions to
be received, respectively, by complainants herein and the defendant
carriers east of Chicago, Joliet, or Dwight, Ill., out of the joint
nontransit rates on grain, grain products, and grain byproducts, in
carloads, from Peoria and Pekin, Ill., via Chicago, Joliet, or
Dwight, to destinations in eastern trunk-line and New England
territories, east of Buffalo, N.Y. over the lines of complainants
to Chicago, Joliet, or Dwight, will be the specific or arbitrary
over the Chicago reshipping rate to complainants and the reshipping
rate from Chicago to destination to the carriers defendant east of
Chicago, and (2) that the present divisions of joint reshipping or
proportional rates on grain, grain products, and grain byproducts,
in carloads, from Peoria and Pekin over the lines of complainants
to Chicago, Joliet, or Dwight destined to points in eastern
trunk-line and New England territories east of Buffalo are not
unjust, unreasonable or otherwise unlawful as alleged by
complainants:"
"It is ordered that the aforementioned original order of
November 28, 1930, be, and it is hereby, vacated and set
aside."
"It is further ordered that the above-named defendants,
according as they participate in the transportation, be, and they
are hereby notified and required to cease and desist, on or before
January 16, 1932, and thereafter to abstain from demanding,
collecting, or receiving divisions of the joint nontransit rates
specified in the preceding paragraph which do not allow said
complainants the divisions found in said reports to be just,
reasonable, and equitable."
"And it is further ordered that this order shall continue in
force until the further order of the commission."
[
Footnote 3]
Reshipping rates from Peoria vary somewhat with the point of
origin of the grain. A subsequent outbound shipment of grain or its
products may be from a shipment which did not move inbound from the
territory above referred to. But the shipper, in order to avail
himself of the reshipping rates on outbound grain, grain products,
or byproducts, must establish the fact that he sent an equivalent
amount of like grain from the point of origin to Peoria within the
twelve-month period allowed for transit privileges. This proof is
made by the presentation of paid freight bills as memoranda of the
inbound shipments.
Compare Restriction on Number of
Tonnage Slips Surrendered at Transit Points, 77 I.C.C. 239. The
inbound and outbound shipments are carried under separate bills of
lading; the final destination of the grain is usually undetermined
at the time of the inbound shipment. In this respect, the practice
differs from that of through shipment with transit privileges. On
the prevalence, legality, and possible abuses of both reshipping
rates and through rates with transit privileges,
see Atchison,
T. & S.F. Ry. Co. v. United States, 279 U.
S. 768,
279 U. S.
777-780, and cases there cited.
[
Footnote 4]
As stated in
note 3
supra, the reshipping rates from Peoria to the East vary
with the points of origin of the grain or grain product. Thus, the
reshipping rate from Peoria to New York on grain originating in the
Northwest is 30.5 cents per 100 pounds, while that on grain
originating in the Illinois-Iowa territory is 32.5 cents. On grain
originating at other points, the rates fall somewhere between these
two figures. The outbound reshipping rate from Chicago to New York,
with exceptions not material here, is 30.5 cents irrespective of
the point of origin. The inbound rates to Chicago and to Peoria are
the same on shipments from the Illinois-Iowa territory, but, on
shipments from the Northwest, the inbound rate to Peoria is 2 cents
less than to Chicago, and on shipments from other points the
difference is less than 2 cents. It is evident that the outbound
reshipping rates from Peoria, varying as they do with the point of
origin of the grain, are designed to equalize the total rate from
point of origin to final destination, whether Peoria or Chicago is
taken as the place for utilizing transit privileges. Stated in
general terms, where the rate to Peoria is less than that to
Chicago, the rate from Peoria is correspondingly greater than that
from Chicago. In no case is this excess of outbound rate from
Peoria over that from Chicago more than 2 cents per 100 pounds, and
in some cases there is no excess. It is this excess, if any exists,
of the rate from Peoria over the 30.5 cent rate from Chicago that
constitutes the share being paid to the Alton by the connecting
lines out of the joint rate from Peoria to New York. The connecting
carriers invariably retain 30.5 cents as their own share, leaving
the Alton a maximum of 2 cents per 100 pounds as its allotment. In
some instances -- specifically, on shipments of grain whose origin
was in the Northwest -- the Alton receives nothing, although it may
have hauled the grain over its line from Peoria 155 miles.
[
Footnote 5]
In its complaint to the Commission, the Alton charged that the
divisions allotted to it were unjust and unreasonable and in
violation of the Interstate Commerce Act, as amended. The
Commission has held that it has no authority to enforce agreements
for divisions, apart from a showing of such violation of the act.
Laona & Northern R. Co. v. Minneapolis, St. P & S. Ste. M.
Ry. Co., 52 I.C.C. 7;
compare Morgantown & Wheeling
Ry. Co. v. Pennsylvania R. Co., 63 I.C.C.197. Section 208(b) of
Transportation Act 1920 provides:
"All divisions of joint rates, fares, or charges, which on
February 29, 1920, are in effect between the lines of carriers
subject to the Interstate Commerce Act shall continue in force and
effect until thereafter charged by mutual agreement between the
interested carriers or by state or federal authorities,
respectively."
The purpose of this provision, as stated by Chairman Esch of the
House Committee on Interstate and Foreign Commerce, was to prevent
rates and divisions from reverting,
ipso facto, upon
termination of federal control, to their pre-control status.
See H.R. No. 456, 66th Cong., 1st Sess., p. 12; 58
Cong.Rec. p. 8314. The Commission has held that this provision did
not confer authority upon it to enforce agreements for divisions.
Hampton & Branchville R. Co. v. Atlantic Coast Line R. Co., 88
I.C.C. 77, 84.
[
Footnote 6]
Compare also Procter & Gamble Co. v. United States,
225 U. S. 282, in
which the petition in the Commerce Court included a prayer that the
defendant railroads be enjoined from collecting demurrage charges
on the complainant's tank cars while on its own tracks -- the
relief which the Commission had refused to grant.
After the decision in the Procter & Gamble case, eleven
cases pending in the Commerce Court were dismissed by it for want
of jurisdiction. In five of these, the Commission had refused to
award reparation; in three, it had refused to order the
establishment of through routes and joint rates; in one, it had
refused both an award of reparation and the establishment of
through routes and joint rates; in one, it had dismissed a
complaint challenging the lawfulness of rates, and in one, it had
dismissed a complaint attacking an advanced rate as unreasonable.
See Twenty-Sixty Ann.Rep. I.C.C. pp. 34, 202-205.
The Commission thus understood the import of the Procter &
Gamble decision:
"Its [this Court's] conclusion was that, upon the plain reading
of that statute, the jurisdiction of the court was confined to
restraining the operation of the orders of the Commission and that
it possessed no affirmative authority to enforce the administrative
provisions of that act. . . . The central thought to be gathered
from this exposition of the law seems to be that the administrative
judgment of the Commission, as expressed by its orders, cannot be
reviewed by the courts, insofar as they are within its delegated
authority, not confiscatory, and not palpably arbitrary and
unreasonable."
Id., pp. 24, 27.
[
Footnote 7]
Compare Hooker v. Knapp, 225 U.
S. 302, in which a mandatory injunction was asked
requiring the Commission to annul its order and reopen the case.
The bill was dismissed on the authority of
Procter & Gamble
Co. v. United States, 225 U. S. 282.
Compare also Interstate Commerce Commission v. Waste Merchants'
Association, 260 U. S. 32.
[
Footnote 8]
Compare also New York, O. & W. Ry. Co. v. United
States, 14 F.2d
850,
aff'd per curiam, 273 U.S. 652.