1. Where the state law prescribes freight rates through a Board
but allows a shipper who has paid at a rate so fixed an action for
overcharges when the Board, afterwards, on his complaint and on
sufficient evidence, finds such rate excessive and lowers it for
the future, judgment for the shipper does not impair any federal
right of the railroad, since the law, making the rate thus
tentative, was the basis of the contract of shipment. Pp.
287 U. S.
360-361.
2. The result is the same whether the tentative character of the
rate, and the right of recovery, are expressed in the words of the
statute or were attached to it by a construction of the state
supreme court before the parties contracted. P.
287 U. S.
362.
3. If a statute as construed by the state court does not impair
a party's federal right, a decision applying the construction to
him on the ground of
stare decisis but rejecting it for
future cases cannot do so. P.
287 U. S.
363.
4. It is for the state courts to decide whether changes in their
views of the common or statutory law shall apply to intermediate
transactions. P.
287 U. S.
364.
5. A federal claim first raised by petition for rehearing in a
state court is in time, for purposes of review, if the occasion for
it arose unexpectedly from the grounds of the state court's
decision. P.
287 U. S.
366.
91 Mont. 216, 7 P.2d 927, affirmed.
Certiorari to review the affirmance of a judgment against the
railway company in a suit for overcharges.
Page 287 U. S. 359
MR. JUSTICE CARDOZO delivered the opinion of the Court.
Sunburst Oil & Refining Company, the respondent, brought
suit against petitioner, Great Northern Railway Company, to recover
payments claimed to be overcharges for freight. The charges were in
conformity with a tariff schedule approved by the Railroad
Commission of Montana for intrastate traffic. After payment had
been made, the same commission which had approved the schedule
held, upon a complaint by the shipper, that the rates so approved
were excessive and unreasonable. In this action to recover the
excess so paid, the shipper recovered a judgment which was affirmed
upon appeal. 7 P.2d 927. The question, broadly stated, is whether
the annulment by retroaction of rates valid when exacted is an
unlawful taking of property within the Fourteenth Amendment. A writ
of certiorari brings the case here.
By a statute of Montana, the Board of Railroad Commissioners is
empowered to fix rates of carriage for intrastate shipments. The
rates thereby established are not beyond recall. They may be
changed by the board itself, on the complaint either of shipper or
of carrier, if found to be unreasonable. Revised Codes of Montana,
§ 3796. In an action against the board, they may be set aside upon
a like showing by a judgment of the court. §§ 3809, 3810. Until
changed or set aside, they "shall
prima facie be deemed to
be just, reasonable, and proper." § 3810.
The meaning of the statute was considered by the Supreme Court
of Montana in a cause determined in May, 1921.
Doney v.
Northern Pacific Ry. Co., 60 Mont. 209, 199 P. 432. A shipper
of lumber brought suit against a carrier to recover transportation
charges which were alleged to be unreasonable, though they were in
accordance
Page 287 U. S. 360
with the published tariff. He did this without a preliminary
application to the board to modify the schedule. He did it without
a preliminary suit in which the board, being brought into court as
a defendant, would have opportunity to sustain the schedule and
resist the change. The court held that, until one of these
preliminary conditions had been satisfied, no action for
restitution could be maintained against the carrier. It coupled
that decision with the statement that, upon compliance with one or
other of the conditions, the excess, thus ascertained, might be the
subject of recovery.
The procedure there outlined was followed by this respondent. It
filed a complaint with the board to the effect that the existing
tariff for the carriage of crude petroleum distillate was excessive
and unreasonable, in that the rate of 20 1/2 cents was based upon
an estimated weight of 7.4 pounds per gallon, whereas the actual
weight is not more than 6.6 pounds per gallon. The board sustained
the complaint. In doing so, it ruled, in conformity with the
decision in the
Doney case, that the published schedule
prescribed the minimum and the maximum to which carrier and shipper
were required to adhere while the schedule was in force, but that,
by the true construction of the statute, the duty of adherence was
subject to a condition or proviso whereby annulment or modification
would give a right of reparation for the excess or the deficiency.
The revision of the tariff was followed by this suit against the
carrier, and later by a judgment for the shipper which is now
before us for review.
The appeal to the Supreme Court of Montana was heard at the same
time as an appeal in another cause involving a like question, and
the two were decided together, though with separate opinions.
Montana Horse Products Co. v. Great Northern Ry. Co., 7
P.2d 919;
Sunburst Oil & Refining Co. v. Great
Page 287 U. S. 361
Northern Ry. Co., 7 P.2d 927. The court held that the
ruling in the
Doney case was erroneous, and would not be
followed in the future; that a rate established by the commission
had the same effect as one established by the legislature; that the
statute giving power to the Commission or the court to declare a
rate unreasonable was not to be read as meaning that a declaration
of invalidity should apply to intermediate transactions; but
nonetheless that the ruling in the
Doney case was law
until reversed, and would constitute the governing principle for
shippers and carriers who, during the period of its reign, had
acted on the faith of it. An opinion handed down upon a motion for
rehearing restates the rationale of the decision, and perhaps with
greater clearness. 7 P.2d 927, 929. We are thus brought to the
inquiry whether the judgment thus rendered does violence to any
right secured to the petitioner by the federal Constitution.
The subject is likely to be clarified if we divide it into two
branches. Was a federal right infringed by the action of the trial
court in adhering to the rule imposed upon it in the
Doney
case by the highest court of the state? If there was no
infringement then, did one come about later when the Supreme Court
of Montana disavowed the rule of the
Doney case for the
future, but applied it to the past?
1. The trial court did not impair a federal right by giving to a
statute of the state the meaning that had been ascribed to it by
the highest court of the state, unless such impairment would have
resulted if the meaning had been written into the statute by the
legislature itself. But plainly no such consequence would have
followed if that course had been pursued. The
Doney case
was decided, as we have seen, in 1921. The transactions complained
of occurred between August, 1926, and August, 1928. Carrier and
shipper understood at that time that
Page 287 U. S. 362
the rates established by the commission as the delegate of the
legislature were provisional and tentative. Valid for the time
being the rates indubitably were, a prop for conduct while they
stood, but the prop might be removed, and charges, past as well as
present, would go down at the same time. By implication of law,
there had been written into the statute a notice to all concerned
that payments exacted by a carrier in conformity with a published
tariff were subject to be refunded if found thereafter, upon
sufficient evidence, to be excessive and unreasonable. The
Constitution of the United States would have nothing to say about
the validity of a notice of that tenor written in so many words
into the body of the act. Carrier and shipper would be presumed to
bargain with each other on the basis of existing law.
Coombes
v. Getz, 285 U. S. 434. The
validity of the notice is no less because it was written into the
act by a process of construction.
Supreme Lodge, Knights of
Pythias v. Meyer, 265 U. S. 30,
265 U. S. 32.
The inquiry is irrelevant whether we would construe the statute in
the same way if the duty of construction were ours, and not
another's.
Supreme Lodge, Knights of Pythias v. Meyer,
supra, p.
265 U. S. 33.
Enough for us that the construction, whether we view it as wise or
unwise, does not expose the court that made it to the reproach of
withholding from the carrier the privileges and immunities
established by the Constitution of the nation.
Arizona Grocery Co. v. Atchison, T. & S.F. Ry. Co.,
284 U. S. 370,
holds nothing to the contrary. This Court, in disposing of that
case, was not dealing with any question of constitutional law. It
was construing a federal statute. Congress had delegated to the
Interstate Commerce Commission the power to fix rates and to revoke
them. The holding was that the grant of power to revoke did not
include by fair intendment a power to invalidate by relation the
rates established in the past. The opinion of the court does not
speak of the Constitution, but
Page 287 U. S. 363
plants itself upon the statute, and from that source and no
other derives its energy. In none of its pages is there a hint,
much less a holding, that a denial of due process would result from
the declaration of provisional rates if the will to make them
provisional had been written into the Interstate Commerce Act, and
written there in advance of carriage and of payment. The essence of
such a system is that, under it, rates can be "experimentally laid
down and experimentally tried out." Hutcheson, J., in
Eagle
Cotton Oil Co. v. Southern Ry. Co., 51 F.2d 443, 447. The
statute of Montana differs in many ways from the act considered by
this Court. We do not need to ask ourselves the question whether
the differences, to our thinking, are important or trivial. There
might be no differences at all, and still the meaning of the
Montana statute would be a problem for the Montana courts, and not
one for us after they had had their say.
2. If the carrier did not suffer a denial of due process through
the action of the trial court in subjecting the published tariff to
the doctrine of the
Doney case, then standing unimpeached,
the petitioner, to prevail, must be able to show that a change was
brought about through something done or omitted by the Supreme
Court of Montana in deciding the appeal.
We think the posture of the case from the viewpoint of
constitutional law was the same after the decision of the appeal as
it was after the trial. There would certainly have been no denial
of due process if the court, in affirming the judgment, had
rendered no opinion, or had stated in its opinion that the
Doney case was approved. The petitioner is thus driven to
the position that the Constitution of the United States has been
infringed because the
Doney case was disapproved, and yet,
while disapproved, was followed. Adherence to precedent as
establishing a governing rule for the past in respect of the
meaning of a statute is said to be a denial
Page 287 U. S. 364
of due process when coupled with the declaration of an intention
to refuse to adhere to it in adjudicating any controversies growing
out of the transactions of the future.
We have no occasion to consider whether this division in time of
the effects of a decision is a sound or an unsound application of
the doctrine of
stare decisis as known to the common law.
Sound or unsound, there is involved in it no denial of a right
protected by the federal Constitution. This is not a case where a
court, in overruling an earlier decision, has given to the new
ruling a retroactive bearing, and thereby has made invalid what was
valid in the doing. Even that may often be done, though litigants
not infrequently have argued to the contrary.
Tidal Oil Co. v.
Flanagan, 263 U. S. 444,
263 U. S. 450;
Fleming v. Fleming, 264 U. S. 29;
Brinkerhoff-Faris Co. v. Hill, 281 U.
S. 673,
281 U. S. 680;
cf. Montana Bank v. Yellowstone County, 276 U.
S. 499,
276 U. S. 503.
This is a case where a court has refused to make its ruling
retroactive, and the novel stand is taken that the Constitution of
the United States is infringed by the refusal.
We think the Federal Constitution has no voice upon the subject.
A state, in defining the limits of adherence to precedent, may make
a choice for itself between the principle of forward operation and
that of relation backward. It may say that decisions of its highest
court, though later overruled, are law nonetheless for intermediate
transactions. Indeed, there are cases intimating, too broadly
(
cf. Tidal Oil Co. v. Flanagan, supra), that it must give
them that effect; but never has doubt been expressed that it may so
treat them if it pleases, whenever injustice or hardship will
thereby be averted.
Gelpcke v.
Dubuque, 1 Wall. 175;
Douglass v. County of
Pike, 101 U. S. 677,
101 U. S. 687;
Loeb v. Columbia Township Trustees, 179 U.
S. 472,
179 U. S. 492;
Harris v. Jex, 55 N.Y. 421;
Menges v. Dentler, 33
Pa. 495, 499;
Commonwealth v. Fidelity & Columbia Trust
Co., 185 Ky. 300, 215 S.W. 42;
Mason v. Cotton Co.,
148 N.C. 492, 510, 62 S.E. 625;
Hoven v.
Page 287 U. S. 365
McCarthy Bros. Co., 163 Minn. 339, 204 N.W. 29;
Farrior v. New England Mortgage Security Co., 92 Ala. 176,
9 So. 532;
Falconer v. Simmons, 51 W.Va. 172, 41 S.E. 193.
[
Footnote 1] On the other hand,
it may hold to the ancient dogma that the law declared by its
courts had a Platonic or ideal existence before the act of
declaration, in which event the discredited declaration will be
viewed as if it had never been, and the reconsidered declaration as
law from the beginning.
Tidal Oil Co. v. Flanagan, supra;
Fleming v. Fleming, supra; Central Land Co. v. Laidley,
159 U. S. 103,
159 U. S. 112;
see, however, Montana Bank v. Yellowstone County, supra.
[
Footnote 2] The alternative is
the same whether the subject of the new decision is common law
(
Tidal Oil Co. v. Flanagan, supra) or statute.
Gelpcke
v. Dubuque, supra; Fleming v. Fleming, supra. The choice for
any state may be determined by the juristic philosophy of the
judges of her courts, their conceptions of law, its origin and
nature. We review not the wisdom of their philosophies, but the
legality of their acts. The State of Montana has told us by the
voice of her highest court that, with these alternative methods
open to her, her preference is for the first. In making this
choice, she is declaring common law for those within her borders.
The common law as administered by her judges ascribes to the
decisions of her highest court a power to bind and loose that is
unextinguished, for intermediate transactions, by a decision
overruling them. As applied to such transactions, we may say of the
earlier decision that it has not been overruled at all. It has been
translated into a judgment of affirmance and recognized as law
anew.
Page 287 U. S. 366
Accompanying the recognition is a prophecy, which may or may not
be realized in conduct, that transactions arising in the future
will be governed by a different rule. If this is the common law
doctrine of adherence to precedent as understood and enforced by
the courts of Montana, we are not at liberty, for anything
contained in the Constitution of the United States, to thrust upon
those courts a different conception either of the binding force of
precedent or of the meaning of the judicial process.
There is still to be considered a question of jurisdiction which
has been reserved till this stage of the opinion, for the answer to
it becomes easier after a consideration of the merits has brought
into clear relief the challenge to the judgment. The first mention
of the Fourteenth Amendment to be found in the record is in the
petition for rehearing, where also there is a statement that the
constitutional question was presented on the first hearing of the
appeal, and is now renewed and amplified. The answer to the
petition for rehearing by counsel for the respondent is also in the
record, and contains what is in substance an admission that the
constitutional point had been duly made at the time and in the
manner stated by the moving party. The court, in denying the
application, did so by reference to its opinion on a similar motion
in a companion suit decided at the same time (
Montana Horse
Products Co. v. Great Northern Ry. Co., supra), and nowhere in
that opinion did it contest the statement of counsel that the
effect of the Fourteenth Amendment had been argued at every stage.
We have then in the record what is, in essence, the stipulation of
counsel followed by the acquiescence of the court. Whether this,
without more, avoids the application of the general rule that a
constitutional question is urged too late, if put forward for the
first time upon a petition for rehearing (
American Surety Co.
v. Baldwin, ante, p.
287 U. S. 156;
Godchaux Co. v. Estopinal, 251 U.
S. 179), we are not
Page 287 U. S. 367
required to determine, for here there is more, and that enough
to bring the case within a well recognized exception. The rule,
general as it is, does not extend to cases where the constitutional
question, however tardily raised, is considered and decided
(
Consolidated Turnpike Co. v. Norfolk & O.V. Ry. Co.,
228 U. S. 326,
228 U. S. 334;
Cumberland Coal Co. v. Board, 284 U. S.
23), nor does it apply where the grounds of the decision
supply a new and unexpected basis for a claim by the defeated party
of the denial of a federal right
(Brinkerhoff-Faris Trust &
Savings Co. v. Hill, 281 U. S. 673,
281 U. S. 678;
Missouri ex rel. Missouri Insurance Co. v. Gehner,
281 U. S. 313,
281 U. S. 320;
American Surety Co. v. Baldwin, supra). This case is
clearly within the second of these exceptions, if it is not also
within the first. We have seen that the assault upon the judgment
is made along two lines. The first is a challenge to the
constitutional validity of the ruling in the
Doney case,
and involves a misconception of the decision in
Arizona Grocery
Co. v. Atchison, T. & S.F. Ry. Co., supra. The second is a
challenge to the constitutional validity of the ruling in this case
whereby the statute is adjudged to mean one thing for some cases
and another thing for others. This latter objection the petitioner
could not make in advance of the event.
The judgment of the Supreme Court of Montana is accordingly
Affirmed.
[
Footnote 1]
Other cases have been collected in the writings of learned
authors: Von Moschzisker,
Stare Decisis in Courts of Last
Resort, 37 Harvard Law Review 409, 421; Freeman, Retroactive
Operation of Decisions, 18 Columbia Law Review 230; Carpenter,
Court Decisions and the Common Law, 17 Columbia Law Review 593;
also 29 Harvard Law Review 80.
[
Footnote 2]
Cf. Gray, Nature and Sources of the Law, §§ 535-550;
Holmes, J., in
Kuhn v. Fairmont Coal Co., 215 U.
S. 349,
215 U. S.
371.