The case is not moot where interests of a public character are
asserted by the Government under conditions that may be immediately
repeated, merely because the particular order involved has expired.
United States v. Trans-Missouri Freight Assn.,
166 U. S. 290,
166 U. S.
308.
The rule that this court will only determine actual
controversies, and will dismiss if events have transpired pending
appeal which render it impossible to grant the appellant effectual
relief does not apply to an appeal involving an order of the
Interstate Commerce Commission merely because that order has
expired. Such orders are usually continuing and capable of
repetition, and their consideration, and the determination of the
right of the Government and the carriers to redress, should not be
defeated on account of the shortness of their term.
The Interstate Commerce Commission has jurisdiction to regulate
charges of a terminal company which is part of a railroad and
steamship system and operates terminals such as those of the
Southern Pacific Terminal at Galveston, Texas.
Verbal declarations cannot alter facts, and although the
different parts of a system may be separate as regards their
charters, each forms a link in the chain of transportation. One of
the separate links in a system controlled by a holding company such
as the Southern Pacific Company cannot escape regulation by the
Commission because designated as a wharfage company; its property
is necessarily employed in the transportation of interstate
commerce.
All shippers must be treated alike, and, under the facts in this
case, an arrangement, involving the lease of a wharf at a
stipulated rental, between the shipper and a corporation whose
wharves and terminal facilities thereon form links in a chain of
interstate transportation, amounts to an unlawful or undue
preference under the Interstate Commerce Act, the Commission having
found the facilities amounted
Page 219 U. S. 499
to an absolute advantage to the favored shipper, and that
similar facilities could not be given to other shippers.
Where a means of interstate transportation is used to give one
shipper an undue preference, the traffic comes under the
jurisdiction of the Interstate Commerce Commission.
Goods actually destined for export are necessarily in
interstate, as well as in foreign, commerce, when they actually
start in the course of transportation to another State or are
delivered to a carrier for transportation,
Coe v. Errol,
116 U. S. 577;
this is the same whether the goods are shipped on through bills of
lading or on an initial bill only to the terminal within the same
State where they are to be delivered to a carrier for the foreign
destination.
This is a bill in equity to enjoin an order of the Interstate
Commerce Commission requiring appellants to cease and desist, on or
before the first day of September, 1908 (subsequently postponed to
November 15, 1908), and for a period of not less than two years
thereafter, from granting and giving undue preferences and
advantages to one E. H. Young, a shipper of cotton seed products at
the port of Galveston, Texas, through failure to exact from him
payment of wharfage charges for handling cotton seed cake and meal
over the wharves, docks and piers of appellants, while at the same
time exacting such charges from other shippers of cotton seed cake
and meal, and from giving and allowing him or any other person
whomsoever, for his exclusive use, space on the wharves of
appellants at Galveston for use in the storage and handling of
cotton seed cake and meal, while contemporaneously refusing and
denying similar privileges to other shippers under substantially
similar circumstances and conditions. Young was not a formal party
before the Interstate Commerce Commission. However, he was made a
respondent in this suit, and filed an answer and cross-bill. The
Commission demurred to both bill and cross bill, and, the demurrer
being overruled, answered.
On final hearing the case was submitted upon an agreed statement
of facts, and both bills were dismissed.
Page 219 U. S. 500
The most important facts we set out below and in the opinion. We
refer to the report of the Interstate Commerce Commission for
further details.
The Republic of Texas conveyed to one Menard the property upon
which the wharves of the terminal company are situated. Menard
conveyed the property to the president and directors of the
Galveston City Company, who conveyed it to Collis P. Huntington,
for the sum of $200,000, and it is recited in the deed to him that
it
"is made upon the further Express Covenant and condition as
follows: . . . when, through and by means of such acts of Congress,
act of the legislature, and ordinance and conveyance from the city
of Galveston, if any, as may be required for the purpose, . . . the
right has been secured to the said Collis P. Huntington, or his
heirs or assigns, to construct piers, as he or they may from time
to time determine, . . . then and in that event the said Collis P.
Huntington, his heirs or assigns, will, within six months thereof,
commence the construction of terminal facilities upon the property
. . . for the use of what are commonly called the Southern Pacific
Railroad & Steamship Systems."
The city of Galveston, on the 4th of February, 1899, passed an
ordinance which recited the conditions of Huntington's purchase to
be as above stated, and that it was greatly to the interest of the
city that the work contemplated by him should be performed, and
that, for the proper utility of the property, no streets should be
opened through or across it, and it was ordained that streets,
avenues, or alleys, if any, theretofore opened, laid out, or in any
manner designated upon the property be perpetually abandoned,
discontinued, and closed. And Huntington, his heirs and assigns,
were granted the right perpetually to construct and maintain piers
as he or they might from time to time determine, "and to maintain
upon the property terminal facilities for the use of what are
commonly
Page 219 U. S. 501
called the Southern Pacific Railroad & Steamship Systems,
their successors or assigns." It was provided that, if Huntington
should "charge wharfage for the use of such piers and other
facilities upon said property, except so far as wharf service"
might be covered by the freight rate, all such wharfage should be
subject to the regulation of the railroad commission of Texas. And
it was recited that it was greatly for the public interest that the
property
"should be developed for shipping and transportation purposes,
and that the shipping facilities of the port of Galveston should be
thereby improved and enlarged in order to better accommodate the
commerce of the port and State. . . ."
The ordinance was ratified by an act of the legislature approved
May 1, 1899. The act set out the ordinance in full, and
relinquished to Huntington the title and claim of the state to the
property upon the conditions expressed in the ordinance, and, in
addition to subjecting the wharfage charges to regulation by the
railroad commission, required an annual report to that body. And it
was provided "that the system of railroad tracks" which might be
constructed by Huntington on the property should connect with the
track of any railroad company which might be built to the property,
at a place designated; and, further, that there should be no
consolidation of the property, or the stock or franchise of any
corporation which might own or control the same, with the Galveston
Wharf Company, or any other wharf company, by which the "wharf or
other terminal charges should be fixed," and that "no charter
formed for the use, operation, and management of the property"
should be granted without containing the section providing as
above.
Huntington performed the conditions expressed in the conveyance
and in the ordinance and the act of the legislature.
The Southern Pacific Terminal Company is a Texas
Page 219 U. S. 502
corporation, organized in 1901, to construct and maintain
wharves and docks for the accommodation of all kinds of
vessels,
"and to avail of, use, and enjoy the properties, rights,
privileges, and franchises granted and described and referred to in
the act of the legislature of the state of Texas of May 1, 1899,
ratifying the ordinance of the city of Galveston, and to construct
and maintain upon the property terminal facilities for the use of
what are commonly called the Southern Pacific Railroad &
Steamship Systems."
At the time of the incorporation of the terminal company, the
following were commonly referred to as the Southern Pacific
Railroad & Steamship Systems: the line of steamships owned by
the Southern Pacific Company, running from New York to Galveston
and New Orleans, and also running from and between the latter city
and Havana; Morgan's Louisiana & Texas Railroad and Steamship
Company; the Louisiana Western Railroad, which leads from New
Orleans to the Sabine River; the Texas & New Orleans Railroad,
leading from that river to the city of Houston; the Galveston,
Harrisburg & San Antonio Railway; and the railroads in which
the Southern Pacific Company owns stock, extending from the
connection of the latter in El Paso, at the Rio Grande River, to
San Francisco. Each of the railways was incorporated as a separate
and distinct railway, and has its own officers and board of
directors, but the Southern Pacific Company owns 99 percent of
their stock, and the same percent of the stock of the terminal
company. The two latter companies have the same president, and the
Galveston, Harrisburg, & San Antonio Railway Company and the
terminal company have the same general manager.
Import and export traffic passing through Galveston passes over
the wharves of the terminal company, and the only track facilities
for such traffic are those owned by the
Page 219 U. S. 503
terminal company on its own lands. And the Galveston,
Harrisburg, & San Antonio railway is the only railway having
physical connection with the tracks of the terminal company, and it
does all of the switching to and from the tracks of the terminal
company, charging $1.75 per car. The latter company receives a
trackage charge of 50 cents per car.
The terminal company owns no cars or locomotives, and issues no
bills of lading. It owns no stock in any of the railroads or
corporations in which the Southern Pacific owns stock. It carries
on a wharfage business and publishes a schedule of charges for such
business, which, however, is not filed with the Interstate Commerce
Commission, its charge being 20 cents per ton on cottonseed meal
and cake passing over its docks, and is shown as wharfage charge in
the tariffs of the Galveston, Harrisburg, & San Antonio Railway
Company and all other railways entering Galveston. Such tariffs do
not show that any exception is made as to the docks occupied by E.
H. Young, as hereinafter shown, but, as a fact, the wharfage charge
is not imposed by the terminal company on the cottonseed meal and
cake handled over the dock of E. H. Young, other than as the same
may be included in the general lease or contract price fixed as
hereinafter indicated.
The terminal company was a party to numerous circulars issued by
the Southern Pacific Companies, known as the "Sunset Route," so
termed, principally for advertising purposes. The circular of May
24, 1907, shows terminal charges (other than storage and
switching). At the port of Galveston, the circulars show a charge
of one cent per 100 pounds on cottonseed cake and meal.
The terminal company has on its property two piers, known as
pier A and pier B, and has erected on them all facilities for
handling imported and exported freight, and all freight which may
come to or pass over its
Page 219 U. S. 504
wharves, and it has abundant land under water upon which to
erect other piers if they should become necessary.
It charges a fixed wharfage for all freight passing over its
piers to or from vessels berthed thereat. The Galveston Wharf
Company affords similar public wharfage facilities at the port of
Galveston, having a number of piers. If the facilities of the
Galveston Wharf Company should be destroyed, those of the terminal
company would become inadequate for handling the import and export
and coastwise business. Ships to and from foreign ports, and
coastwise ships other than those of the Southern Pacific Company,
berth at piers A and B, and there receive and deliver freight, and
at these piers the terminal company carries on its general wharfage
business.
In the building of pier B, it was necessary to dredge a slip
west of it, where ships could berth, and in order that the soil,
through the action of storm and wave, should not drift into the
slip, a bulkhead was built. To the westward of the slip, the lands
of the terminal company were lying idle and useless, they not being
needed by it; and in pursuance of negotiations with Young, the
company proceeded to construct a pier, known as pier C, for the use
of Young, and to erect thereon a warehouse, shed, and platform for
his use, the original construction and subsequent enlargement of
which cost the company about $65,000. At this time, the pier is 300
feet wide at its widest part, and about 1,400 feet in length.
The negotiations terminated in a lease under which Young is to
pay the terminal company a yearly rental of $15,000, payable
monthly from the 1st day of November, 1906. And he agrees that he
will route all shipments of cotton seed and cottonseed products
purchased or shipped by him "over the lines of said terminal
company and its connections, according to the instructions of said
terminal company from time to time," and that he will insist upon
and enforce such routing, except where the
Page 219 U. S. 505
enforcement will prevent him from purchasing such products or
from obtaining shipments which will be ready to move immediately
and for which cars cannot be procured for the routing required. It
is provided, however, that Young shall not be bound by these
provisions if the rates be not equal to or lower than those of
other competing lines, or the service be not as adequate, but
notice is to be given of such lower rates and service, and an
option to meet them.
The business of Young is that of a merchant and manufacturer,
engaged in buying, selling, and converting cottonseed cake and meal
for his own account. He took possession of pier C and the
improvements erected thereon by the terminal company under his
contract with the latter company, paying the price stipulated in
the contract, and has placed thereon cake, sacking and grinding
machines, representing an investment of $50,000. Young's business
consists in buying cottonseed cake in the interior, shipping it to
himself by carloads at pier C, there grinding it into meal, sacking
it, and loading it into steamships berthed at pier C for
export.
All cottonseed-meal cake passing over piers A and B pays a
wharfage of 20 cents per short ton. Young pays no wharfage or
storage charge other than as the same may be included in the rental
of $15,000 per year. If any exporter handles cottonseed meal or
cake over pier C, the wharfage of 20 cents per ton is paid by him
to Young.
Young has certain advantages by reason of his contract with the
terminal company, which are enumerated in the agreed statement of
facts, and the result of which is stated as follows:
"He makes a sum equal to 30 or 40 cents per ton more than he
would receive if he handled his export product under methods in
existence before he established his plant on pier C and adopted the
method of business he follows. This 30 to 40 cents per ton is in
addition to the ordinary buying and selling profit."
He
Page 219 U. S. 506
at times pays more for cottonseed cake than his competitors can
afford to pay, and at times he can undersell them in European
markets; and since he commenced business some of the exporters who
were engaged in business when he commenced have ceased exporting. A
comparison of his business with that of all other exporters of
cottonseed cake shows that, from September 1, 1906, to September 1,
1907, he exported 105,000 tons of cottonseed cake and about the
same amount of cotton seed-meal; they, 50,000 tons of both
products.
"Some of the cottonseed cake producers at interior mills in the
state complain that Young is able to dominate the Texas market, and
that his method of conducting business at Galveston enables him to
command the foreign trade, and may become a detriment to the
cottonseed cake and meal industry, in that Young might acquire a
monopoly. Others entertain a contrary opinion. They all agree that
if there was a general establishment of plants in Galveston, so
that a monopoly could not be acquired, it would be of great benefit
to the cottonseed industry."
"
* * * *"
"On the present constructed docks of the Galveston Wharf Company
and the terminal company, with the structures as now located
thereon, there is not space enough to furnish all exporters doing
business at Galveston with space for erecting machinery and
handling export business in the same manner as is done by
Young."
This proceeding was instituted September 11, 1907, by Carl
Eichenberg, an exporter of cotton seed and its products from the
port of Galveston, by filing his complaint or petition before the
Interstate Commerce Commission against the Southern Pacific Company
and the terminal company, complaining that the companies, by the
arrangement with Young, were violating § 3 of the act to regulate
commerce by giving him an undue and
Page 219 U. S. 507
unreasonable preference and advantage over his competitors.
By order of the Commission the Galveston, Harrisburg & San
Antonio Railway Company and other railroad companies entering
Galveston were made parties defendant.
Answers were filed and full hearing was had by the Commission,
which on June 24, 1908, made its report and order.
No rehearing was asked by defendant before the Interstate
Commerce Commission. Young was not made a party to the proceedings
before the Commission, but he appeared and testified as a witness
for the terminal company, and his counsel was present at the
hearing when the testimony was taken, and engaged in the
examination of witnesses. Young was also present when the case was
argued and submitted.
Page 219 U. S. 514
MR. JUSTICE McKENNA, after stating the facts as above, delivered
the opinion of the court:
It will be observed that the order of the Commission required
appellants to cease and desist from granting Young the alleged
undue preference for a period of not less than two years from
September 1, 1908 (subsequently extended to November 15). It is
hence contended that the order of the Commission has expired, and
that, the case having thereby become moot, the appeal should be
dismissed.
This court has said a number of times that it will only decide
actual controversies, and if, pending an appeal, something occurs,
without any fault of the defendant, which renders it impossible, if
our decision should be in favor of the plaintiff, to grant him
effectual relief, the appeal will be dismissed.
Jones v.
Montague, 194 U. S. 147, and
Richardson v. McChesney, decided November 28 of this term,
218 U. S. 487.
But, in those cases, the acts sought to be enjoined had been
completely executed, and
Page 219 U. S. 515
there was nothing that the judgment of the court, if the suits
had been entertained, could have affected. The case at bar comes
within the rule announced in
United States v. Trans-Missouri
Freight Ass'n, 166 U. S. 290,
166 U. S. 308,
and
Boise City Irrig. & Land Co. v. Clark (C. C. App.
9th Cir.), 131 Fed. 415.
In the case at bar, the order of the Commission may to some
extent (the exact extent it is unnecessary to define) be the basis
of further proceedings. But there is a broader consideration. The
question involved in the orders of the Interstate Commerce
Commission are usually continuing (as are manifestly those in the
case at bar), and these considerations ought not to be, as they
might be, defeated, by short-term orders, capable of repetition,
yet evading review, and at one time the government, and at another
time the carriers, have their rights determined by the Commission
without a chance of redress.
In
United States v. Trans-Missouri Freight Ass'n supra,
the object of the suit was to obtain the judgment of the court on
the legality of an agreement between railroads, alleged to be in
violation of the Sherman law. In the case at bar, the object of the
suit is to have declared illegal an order of the Interstate
Commerce Commission. In that case there was an attempt to defeat
the purposes of the suit by a voluntary dissolution of the
agreement, and of the attempt, the court said:
"The mere dissolution of the association is not the most
important object of this litigation. The judgment of the court is
sought upon the question of the legality of the agreement itself
for the carrying out of which the association was formed, and if
such agreement be declared to be illegal the court is asked not
only to dissolve the association named in the bill, but that the
defendants should be enjoined for the future. . . . Private parties
may settle their controversies at any time, and rights which a
plaintiff may have had at the time of the commencement of the
action may terminate before
Page 219 U. S. 516
judgment is obtained, or while the case is on appeal, and in any
such case, the court, being informed of the facts, will proceed no
further in the action. Here, however, there has been no
extinguishment of the rights (whatever they are) of the public, the
enforcement of which the government has endeavored to procure by a
judgment of a court under the provisions of the act of Congress
above recited. The defendants cannot foreclose those rights, nor
prevent the assertion thereof by the government as a substantial
trustee for the public under the act of Congress, by any such
action as has been taken in this case."
And, referring to the agreement as one claimed by the government
as illegal, it was further said: "That question the government has
the right to bring before the court and obtain its judgment
thereof." The interests there passed upon are no more of a public
character than those involved in the order of the Interstate
Commerce Commission in the case at bar, and there was no greater
necessity for continuing a jurisdiction which had properly
attached; and that the government is the respondent, not
complainant, does not lessen or change the character of the
interests involved in the controversy, or terminate its
questions.
In
Boise City Irrig. & Land Co. v. Clark, supra,
the period for which a municipal ordinance fixed a water rate
expired pending the litigation as to its legality, and it was
contended that the case had become moot. The court replied:
"But the courts have entertained and decided such cases
heretofore, partly because the rate, once fixed, continues in force
until changed as provided by law, and partly because of the
necessity or propriety of deciding some question of law presented
which might serve to guide the municipal body when again called
upon to act in the matter."
The motion to dismiss is denied.
Four errors are assigned in the action of the circuit
Page 219 U. S. 517
court in dismissing the bill of complaint: (1) The Interstate
Commerce Commission had no jurisdiction over the terminal company,
it not being a common carrier, and therefore not subject to the act
to regulate commerce. (2) The Commission had no power or authority
to declare the lease to Young illegal. (3) The lease does not
constitute an unlawful or undue preference or advantage within the
meaning of the act to regulate commerce. (4) The Commission by its
order assumed to control intrastate and foreign commerce, not
subject to the act to regulate commerce.
Two facts are prominent in the case: that the piers of the
terminal company are facilities of import and export traffic at the
port of Galveston, and that the arrangement of the terminal company
with Young has enabled him to largely and rapidly increase his
business until his exports of cottonseed products are more than
twice those of all other competitors, that he derives therefrom 30
to 40 cents per ton over the ordinary buying and selling profit,
and that some who were his competitors have ceased to export. A
direct advantage to Young is manifest. A direct detriment to other
exporters is equally manifest.
The situation challenges attention. Appellants find in it
nothing but the natural and legal result of the sagacity which
could see an opportunity for profit, and the enterprise which could
avail of it. It was the simple matter on the part of Young, it is
contended, of bringing his business to the ship's side and cutting
out intervening expenses. And it is said that the terminal company
had an equally lawful inducement. It had an idle property, it is
contended, over which it had absolute control, and which it turned
to use and profit by the arrangement with Young. And this, it is
insisted, was a simple exercise of ownership. If the elements of
the controversy are correctly stated, the justification may be
considered as made out.
Page 219 U. S. 518
Appellants make much of their title, and, assuming it to be
absolute, assert the right to an unrestrained use of the property.
But the assertion overlooks or underestimates the condition
expressed in the deed to Huntington, that from his estate to the
terminal company, in the ordinance of the city of Galveston, and in
the act of the legislature of the state of Texas. The condition
expressed in all of them was that terminal facilities should be
constructed upon the property for the use of the Southern Pacific
Railroad & Steamship Systems. The act of the legislature
declared that the property
"should be developed for shipping and transportation purposes,
and that the shipping facilities at the port of Galveston should be
thereby improved and enlarged in order to better accommodate the
commerce of the port and of the state."
And wharfage charges, except so far as they should be covered by
the freight rates, should be subject to regulation by the railroad
commission of the state.
It is clear, therefore, that it was the purpose of the ordinance
and of the act confirming it to secure shipping facilities for the
city, open, to public use; and necessarily so, for the property was
to be the terminal of a railroad and steamship system. It may be,
as it is contended, that there was no necessity for the
ordinance
"except for the purpose of a valid relinquishment of the
municipal right, often asserted by it, of opening streets through
the bay-front property and constructing wharves thereon."
The relinquishment was treated as valuable, and Huntington
pledged the property to a public use as a consideration for it.
And, as we have said, such use was also a condition expressed in
the act of the legislature. It was not discharged by the
expenditure of $150,000 and the erection of wharves by Huntington,
as seems to be the contention.
The case has no likeness whatever to
Louisville &c. R.R.
Co. v. West Coast Co., 198 U. S. 483. In
the latter case, there was no discrimination against the West Coast
Company
Page 219 U. S. 519
by the railroad company, or a preference given to any person.
The West Coast Company had the same privilege of using the wharves
of the railroad company as other shippers were given. It asserted
other privileges. It asserted the privilege of using the wharf for
the purpose of transferring goods into vessels which it might
arrange to take them; in other words, not into the vessels of the
railroad company or into those with which it had traffic
agreements. And we said, through Mr. Justice Peckham:
"In brief, the fact seems to be that the only complaint of the
plaintiff [West Coast Company] is that the defendant [the railroad
company] will not permit competing vessels to make use of its wharf
for the purpose of such competition."
It is true that there was a contention that the wharf was a
public one, but the contention was based only on the fact that the
wharf was built at the foot of a public street by authority from
the city of Pensacola and the state of Florida. That fact alone was
not considered sufficient to support the contention. And it was
said:
"The city or state authorities in granting the right to erect
such facilities might, of course, have attached such conditions as
they thought wise, but, in their absence, neither the public nor
this plaintiff, as the owner of goods, would have the right, on
this state of facts, to go to the wharf with vessels for the
purpose of continuing transportation of goods in competition with
defendant."
It is true it was said that the railroad company never became a
common carrier as to the wharf, in the sense that it was bound to
accord to the public or to the West Coast Company the right to use
it upon payment of compensation. But it was added that the railroad
company would be bound to carry the West Coast Company's goods on
the rails which led to the wharf, for the same purpose and upon the
same terms that it did for other,
viz., in order that it
might itself, or through others it had contracted with, forward
Page 219 U. S. 520
the goods beyond its own line. And it was further said that the
West Coast Company demanded more than this -- it demanded that the
railroad company should carry its goods in order that it might
itself forward them by vessels of its own selection, and that the
railroad company should surrender possession of enough of its wharf
to enable the other company to do so.
Nor is
Weems Steamboat Company v. People's Company,
214 U. S. 344,
applicable to the pending controversy. The contest there was
between two independent lines of steamboats, the one claiming a
right to use the wharves of the other, on the ground that the
wharves had been dedicated to the public. The fact was found
adversely to the contention, and the claim of right to the use of
the wharves denied. A review of the reasoning of the court is
unnecessary. There is great difference between competing carriers
claiming the right to use the facilities of one another, and the
patrons of the same carrier contending for equality of treatment.
In stating this, we assume that the wharves in the pending case are
the instruments of a common carrier. This is, however, denied, and
it is asserted that the terminal company is purely a wharfage
company, and "has no power under its charter to act as a common
carrier." The contention is based on a partial view of the
condition. The terminal company was incorporated to execute the
purposes expressed in the act of the legislature of the state of
Texas, that is, to construct terminal facilities for the Southern
Pacific Railroad & Steamship Systems, and to accommodate the
export and import traffic at Galveston; and, necessarily, as
instrumentalities of such traffic, wharves and piers are as
essential as steamships and railroads, and are, in fact, as they
were intended to be by the charter of their authorization, parts of
a system. The only track facilities for movement of cars to or from
the ships, from or to the tracks of the Southern Pacific Railway,
are on the terminal
Page 219 U. S. 521
company's lands, and are owned by it. To these tracks the
Galveston, Harrisburg, & San Antonio Railway switches cars for
other railroads, charging $1.75 per car, and the terminal company
receives a trackage charge of 50 cents per car. It is true that the
terminal company does a wharfage business and publishes a schedule
of its charges, which, while not filed with the Interstate Commerce
Commission, shows a charge of 20 cents a ton on cottonseed cake and
meal, and this appears as a wharfage charge in the tariffs of the
Galveston, Harrisburg, & San Antonio Railway Company and other
railways entering the city of Galveston. And, besides, the terminal
company was a party to numerous circulars issued by the Southern
Pacific Railway Company, and that effective May 23, 1905, was filed
with the Interstate Commerce Commission. These circulars gave
terminal charges at the port of Galveston. The charge on cottonseed
meal and cake was given at 1 cent per 100 pounds. Shipments on
through bills of lading include in the freight rate the wharfage
charge.
Another and important fact is the control of the properties by
the Southern Pacific Company through stock ownership. There is a
separation of the companies if we regard only their charters; there
is a union of them if we regard their control and operation through
the Southern Pacific Company. This control and operation are the
important facts to shippers. It is of no consequence that, by mere
charter declaration, the terminal company is a wharfage company, or
the Southern Pacific a holding company. Verbal declarations cannot
alter the facts. The control and operation of the Southern Pacific
Company of the railroads and the terminal company have united them
into a system of which all are necessary parts, the terminal
company as well as the railroad companies. As said by the
Interstate Commerce Commission, "the terminal company was organized
to furnish terminal
Page 219 U. S. 522
facilities for the system at the port of Galveston;" and it is
further said that
"through shipments on the railroad lines from and to points in
different states of the Union pass and repass over the docks of the
terminal company. It forms a link in this chain of transportation.
It is necessary to complete the avenue through which move shipments
over these lines owned by a single corporation."
And this unity of the railroad's lines and the terminal
facilities is recognized in the lease to Young. By it, he agrees to
route all of his shipments over "the lines of the terminal company
and its connections, according to the instructions of said terminal
company from time to time." And provision is made against the
possibility of other lines' bidding for the traffic by lower rates.
In such event, he must give notice to the terminal company, and
give it "the option of meeting such proposed rates," and, if the
company "elects to do so," then he "shall not divert such
shipments, but shall abide by the provisions" of his agreement. And
surely a system so constituted and used as an instrument of
interstate commerce may not escape regulation as such because one
of its constituents is a wharfage company and its dominating power
a holding company. As was well said by the Interstate Commerce
Commission:
"a corporation such as this terminal company, which has
'competing lines,' should not be permitted to defeat the
jurisdiction of this Commission by showing that it is not in fact
owned by any railroad company. . . . The terminal company is part
and parcel of the system engaged in the transportation of commerce,
and, to the extent that such commerce is interstate, the Commission
has jurisdiction to supervise and control it within statutory
limits. To hold otherwise would in effect permit carriers
generally, though the organization of separate corporations, to
exempt all of their terminals from our regulating authority."
The reasoning of the Commission is justified by the
Page 219 U. S. 523
statute. It includes in the term "railroad"
"all bridges and ferries used or operated in connection with any
railroad, and also all the roads in use by any corporation
operating a railroad, whether owned or operated under a contract,
agreement, or lease, and shall also include all switches, spurs,
tracks, and terminal facilities of every kind used or necessary in
the transportation of the persons or property designated herein,
and also all freight depots, yards, and grounds used or necessary
in the transportation or delivery of any of said property."
The property of the terminal company is "necessary in the
transportation or delivery" of the interstate and foreign freight
transported by the lines of the Southern Pacific system. It is the
only terminal for freight moving over the lines of such system the
rails of one of those lines, the Galveston, Harrisburg, & San
Antonio Railway Company, connecting with tracks upon the docks of
the terminal company. That the latter collects a trackage charge
from the former, and it a switching charge from the terminal
company, are, to quote the Commission, "but incidents of the
separate corporations."
In opposition to these views, appellants urge the legal
individuality of the different railroads and the terminal company,
and cite cases which establish, it is contended, that stock
ownership simply or through a holding company does not identify
them. We are not concerned to combat the proposition. The record
does not present a case of stock ownership merely, or of a holding
company which was content to hold. It presents a case, as we have
already said, of one actively managing and uniting the railroads
and the terminal company into an organized system. And it is with
the system that the law must deal, not with its elements. Such
elements may, indeed, be regarded from some standpoints as legal
entities; may have, in a sense, separate corporate operation; but
they are directed by the same paramount and combining power,
and
Page 219 U. S. 524
made single by it. In all transactions, it is treated as single.
In the ordinance of the City of Galveston, in the act of the
legislature of the state of 1899, and in public circulars and in
the lease of Young, it is the system which is dealt with, and not
its separate links. And, we have seen, the terminal facilities
which the terminal company was authorized to maintain were for the
system, not for the corporate elements considered separately.
It is next contended that the lease to Young, under the facts
proven, does not constitute an unlawful or undue preference under
the Interstate Commerce Act.
To a certain extent, we have considered this contention. An
absolute advantage to Young cannot be denied. A facility that has
enabled him to acquire practically all the export of cottonseed
products must have something in it of advantage which other
shippers do not receive, and it would seem to proclaim a power
working for his benefit which is not working for others. And yet it
is urged that there is a contrariety of opinion about it among
cottonseed cake producers, and as to whether Young is able to
dominate the Texas market and to command the foreign trade. The
facts, we think, put the matter beyond conjecture or opinion, and
demonstrate the potency of his situation. That it is a preference,
however, is denied; and it is urged that, by the agreed statement
of facts, all cottonseed cake producers "agree that if there was a
general establishment of plants in Galveston, so that a monopoly
could not be acquired" by Young, "it would be of great benefit to
the cottonseed industry." But it is also agreed that neither the
Galveston Wharf Company nor the terminal company has space enough
to afford facilities to "all exporters doing business at
Galveston," such as Young. And the Commission found that, as a
practical matter, other shippers could not be given the same
facilities on the same conditions as those granted to him, nor
could such facilities
Page 219 U. S. 525
be secured on the bay front. It was further found that the
terminal company had indicated that it is not willing to accord
shippers generally such facilities, and that the situation of its
docks with respect to space was generally such facilities, and that
there situation be willing. It may be contended that the patrons of
a railroad are not obliged to seek or compete for extraordinary
facilities in its terminals. But, be that as it may, all shippers
must be treated alike.
Appellants bring forward the same argument to support the
contention under consideration which they advance to support their
first contention, to-wit, the right, as owner of the property, to
make a lease of its "unused property," subject only to the
limitation that there shall be no interference "with the use of the
adjacent navigable waters." It would seem that, if the argument
have any force at all, it would extend the rights of ownership to
used as well as unused property, and be exercised in any form of
preference, even to the exclusion of some shippers from the
wharves. However, as appellants do not press the argument so far,
we need not dwell upon it, and will only add that the terminal
facilities contemplated by the ordinance of the city of Galveston
and the act of the legislature of Texas confirming it were public
terminal facilities, not those which might be granted or withheld
in preferences or discriminations.
The last contention advanced is that
"the order of the Commission transcends its jurisdiction, in
that it regulates commerce purely state and intrastate, and also
purely foreign commerce, neither of which is subject to its
authority."
In support of this contention, it is insisted that the evidence
shows the following facts: the cake and meal purchased by Young are
bought by him in Texas, Oklahoma, Louisiana, and Arkansas, but
chiefly in Texas, and shipped to him on bills of lading and way
bills, showing
Page 219 U. S. 526
the point of origin in those states and the destination at
Galveston. The purchases are made for export, there being no
consumption of the products at Galveston. His sales to foreign
countries are sometimes for immediate and sometimes for future
delivery, irrespective of whether he has the product on hand at
Galveston. At times, he has it on hand. At times, therefore, orders
must be filled from cake to be purchased in the interior or then in
transit to him. When the cake reaches Galveston, it is ground into
meal and sacked by Young, and for the meal thus ground and such
meal as has been brought to his customers, he takes out ships'
bills of lading made to his order.
This evidence establishes, appellants contend, that the transit
of the cake and meal is absolutely ended at the leased premises at
Galveston, and that it is "a final point of concentration and
manufacture, the cottonseed cake being there manufactured into meal
and sacked for export." But this does not distinguish between the
meal and the cake, nor between the meal that is purchased at points
outside of Texas and directly exported, from that so purchased and
manufactured on the wharves of the terminal company. Nor does it
take account of the fact that the wharves were intended for
shipping facilities, a means of transition from land carriage to
water carriage. It is manifest, as we have said, that to make the
wharves manufacturing or concentrating points for one shipper, and
not for all, is to give that shipper a preference. And, being a
preference, the traffic necessarily comes under the jurisdiction of
the Interstate Commerce Commission. In other words, the manufacture
or concentration on the wharves of the terminal company are but
incidents, under the circumstances presented by the record, in the
transhipment of the products in export trade, and their regulation
is within the power of the Interstate Commerce Commission. To hold
otherwise
Page 219 U. S. 527
would be to disregard, as the Commission said, the substance of
things, and make evasions of the act of Congress quite easy. It
makes no difference, therefore, that the shipments of the products
were not made on through bills of lading, or whether their initial
point was Galveston or some other place in Texas. They were all
destined for export, and, by their delivery to the Galveston,
Harrisburg, & San Antonio Railway, they must be considered as
having been delivered to a carrier for transportation to their
foreign destination, the terminal company being a part of the
railway for such purpose. The case, therefore, comes under
Coe
v. Errol, 116 U. S. 517,
where it is said that goods are in interstate, and necessarily as
well in foreign, commerce when they have "actually started in the
course of transportation to another state or been delivered to a
carrier for transportation." In
G., C. & S. F. R. Co. v.
Texas, 204 U. S. 403, the
facts are different, and the case is not apposite.
Decree affirmed.
