An interstate carrier may not charge a different rate for the
transportation of railroad fuel coal to a given point than for the
transportation of commercial coal to the same point. It would be an
illegal preference or discrimination under §3 of Act to
Regulate Commerce.
Tariffs are but forms of words, and the Interstate Commerce
Commission, in the exercise of its powers to administer the Act to
Regulate Commerce, can look beyond the forms to what caused them
and what they are intended to, and do, cause.
Page 225 U. S. 327
A railroad company cannot be made a favored shipper and given a
lower rate on the same commodity to the same point than other
persons.
A railroad company is not to be put on the same basis as a
locality and entitled to preferential rates to accommodate
competitive conditions.
The Import Rate Case, 162 U.
S. 197, distinguished.
The question in the case is whether railroad companies may
charge a different rate for the transportation of coal to a given
point to railroads than to other shippers, the coal being intended
for the use of the railroads as fuel.
The Interstate Commerce Commission held that a charge of a
different rate was an unlawful discrimination against other
shippers, and made an order requiring a cessation of such charge.
The execution of the order was enjoined by the Commerce Court.
A number of railroads are petitioners, and we shall refer to
them as the companies.
The companies attack in their petition the order of the
Interstate Commerce Commission on several grounds, which may be
summarized as follows: the movement of coal traffic from the point
of origin to the point or points of junction to receiving carriers
is different from the movement of coal to be delivered locally at
such junction points.
The traffic is not governed by the rates published under the Act
to Regulate Commerce, which apply to the traffic in coal not
intended for use by consuming railroads, because the charges go to
the carrier itself. If the coal be shipped under a through rate
applicable to other coal, the actual rate upon which it moves to
the rails of the consuming road is the division of the through rate
going to the roads over which the traffic moves to the junction
point with the rails of the consuming road. The division of the
rate beyond that point goes to the consuming road itself.
Page 225 U. S. 328
All but an inconsiderable part of such coal is necessary and
intended for use as fuel in locomotives. The fueling stations are
often many, and are located at convenient points along the line at
varying distances from the junction points, and it is not possible
at the time of shipment to tell at what point a carload of coal
will be needed. If made on a through rate, they must be billed and
transported to a point to which the through rate is published. Even
if a centrally located distributing yard for fuel be established,
and all shipments billed on a through rate to that yard, there must
be a reverse movement of the coal between that point and the point
of junction.
The fact that fuel coal on the line of a consuming carrier is
not governed by the published rates makes the commercial
competitive conditions different between such coal and other coal.
The value to the shipper is not the same or measured by the same
conditions. There is no competition between the fuel coal and other
coal.
Because of the circumstances and conditions differentiating the
traffic in fuel coal, the companies have for a number of years past
published and filed, as required by law, separate tariffs of the
rates to be charged and received by them for the transportation of
such coal from points of origin to the junction point of delivery
to the consuming carrier. The tariffs vary in their definitions or
descriptions of the traffic to which the rates apply, but in each
case the traffic is such that it would move in reality, not under
the published through rates, but would move under the special
conditions which have been stated. Some of the tariffs apply only
to coal intended for use and used for locomotive fuel. The rates
named in the tariffs are open and available to all producers and
shippers, if the shipments be made under the special conditions
stated.
On January 4, 1910, the Interstate Commerce Commission, of its
own motion, instituted an inquiry under an
Page 225 U. S. 329
order of that date entitled, "In the Matter of Restrictive
Rates," Docket No. 3053, making the Baltimore & Ohio and the
Pennsylvania Railroad Companies parties to the proceeding. The
other companies from time to time were admitted as interveners.
Testimony was taken, argument heard, and the Commission entered the
order complained of in which the Commission required the companies
to cease and desist, on or before May 15, 1911, and for a period of
two years to abstain from using the tariffs on fuel coal
stated.
The Commission erred in its construction of the Act to Regulate
Commerce in that it held the facts and circumstances found by it
did not distinguish fuel coal from other coal, and that the
different conditions of their transportation were not in law
circumstances and conditions necessary or proper to be considered
in applying the provisions of § 2 of the act.
The Commission erred in holding that the rates on fuel coal
under § 2 should be no more nor less than rates for the
shipment of other coal from the same point of origin for local
delivery at the junction point, the circumstances and conditions
showing conclusively that the services done in the transportation
of them, respectively, are not alike nor substantially similar,
within the meaning of the Act to Regulate Commerce.
Page 225 U. S. 330
The Commission erred in holding that fuel coal should be
transported under through rates, as other coal, and that it was
unlawful for carriers to publish or charge any rates other than the
through rates agreed upon going to the line of the terminal
carrier, to be used by it in its business as a common carrier. And
that, as the charges on such terminal carrier's line must be borne
by it, the Commission erred in holding that such circumstance did
not differentiate the traffic in such coal from the traffic in
other coal, and did not constitute a substantial difference under
§ 2 in the conditions of transportation.
The commission erred in holding, further, that any difference in
the tariff for fuel coal, and not applicable to all other coal, was
unjustly discriminatory, in violation of § 3.
It appears on the face of the report of the Commission, it is
alleged, that it proceeded in making the order upon its view of
§§ 2 and 3; that it did not find it necessary to consider
any specific tariff or tariffs or the rates named thereby; that the
difference in conditions affecting the respective tariffs could not
be considered as distinguishing them. And it is alleged that the
findings of the Commission are findings of law, as well in regard
to the violation of the third section of the act as in regard to
violation of the second section. Irreparable damages is alleged,
and the alternatives presented of desisting from the carriage of
fuel coal at the expense of the loss of large and valuable
revenues, or accepting divisions of through rates, on both fuel
coal and other coal, which will give the companies, as originating
or intermediate carriers, a much lower compensation for both
classes of traffic than they are now receiving and would continue
to receive but for the order of the Commission.
In either case, the loss will amount to many thousand dollars.
There will be loss, it is alleged, to the producers of fuel coal
who have sold coal under contracts for future delivery at junction
points, and loss also to producers and shippers who depend on the
railroad fuel business to enable them to operate their mines at
all.
A final decree is prayed for the annulment of the order and a
temporary injunction enjoining and suspending it pending final
hearing and determination.
The petition was supported by affidavits made by a number of
coal producers and shippers.
The answer of the Interstate Commerce Commission is directed
principally at the third paragraph of the petition, and charges
against it as follows: its allegations relate to
Page 225 U. S. 331
comparisons between coal, on the one hand, consigned to a
railroad company, and coal, on the other hand, consigned to some
other party. The former is called railroad fuel coal, the latter is
known as commercial coal. In each instance, however, regardless of
the consignee, the point of origin and the point of destination of
the shipments are the same, but the rate charged for transporting
fuel coal is much less than the rate exacted for the transportation
of commercial coal over the same line, in the same direction, and
between the same points. Schedules or tariffs providing for such
differences in rates have been heretofore established and put in
force and are now maintained and enforced by the companies.
Where the destination is a junction which is a point of
connection between the lines of two or more of the companies, the
movement of coal, fuel and commercial, is the same, except that at
such destination the cars containing fuel coal are ordinarily
placed upon what is called an exchange track, which is used in
common by the connecting carriers, while the cars containing
commercial coal are usually placed upon the side track of the
delivering carrier. The cost of delivering both kinds of coal is
practically the same, depending upon the nature of the delivery
facilities furnished by the companies. Therefore, the cost of
delivering fuel coal may be and is less than the cost of delivering
the commercial coal, but the reverse is sometimes the case. It is
alleged, however, that such differences are similar to differences
pertaining to some shipments of commercial coal compared with other
shipments.
Generally what is called "free time" is allowed by the companies
-- that is to say, a certain period of time for unloading the coal
is allowed. If the coal is unloaded within that time, no charge is
made for the use of the car. If that time be exceeded, a charge of
$1.00 for each day or fraction of a day in excess of the "free
time," known as a demurrage charge, is exacted by the companies,
while the
Page 225 U. S. 332
compensation paid by one carrier to another carrier for the use
of a car owned by the latter is twenty-five cents a day. Where the
coal transported is fuel coal, no "free time" is allowed, nor is
such demurrage charge exacted or collected. These differences,
however, are offset, and much more than offset, by the differences
in the rates of transportation between the different coals.
Where the destination of the shipment of coal is not a point of
connection between the lines of two or more of the companies, the
circumstances and conditions pertaining to the transportation and
delivery of coal are the same as above described, except that at
such destination there are no exchange tracks used in common by two
or more of the companies. Where the shipment passes over more than
one line of railway to such destination, delivery by one of the
companies to another is made in the same way and under similar
circumstances and conditions regardless of whether the coal be fuel
or commercial.
The lower rates established by the companies and applied by them
to the transportation of fuel coal are not open alike to all
shippers, but are, by reason of the schedules and tariffs above
mentioned and by reason of the practices of the companies, confined
to shippers of fuel coal, and denied to shippers of all other coal,
including commercial coal.
The Commission denies the errors attributed to it, and alleges
that its report shows as follows:
"We have never held that the local rate to the junction point
must be paid on shipments that are going beyond that point. What we
have said is that the local rate to the junction point shall be the
same for all shippers to that point, and that the through charges
on shipments going beyond the junction point shall be alike for all
shippers to the same destination."
The Commission alleges (somewhat singularly, on information and
belief) that it considered all facts, circumstances,
Page 225 U. S. 333
and conditions pertinent to the subject matter of the order,
including degrees of difference and distinction, and each and all
of the tariffs and rates of the companies which are affected by the
order, and did not entertain the opinion attributed to it, that the
facts, circumstances, and conditions affecting the particular
traffic could not be lawfully considered by it as distinguishing
the traffic in railroad fuel coal from the traffic in other
coal.
It is alleged that the traffic is interstate, and that fuel
coal, as compared with other coal, including commercial coal, is a
like kind of traffic; that the services performed by the companies
in connection with the transportation of fuel coal, as compared to
the services performed by them in connection with the
transportation of other coal, including commercial coal, are alike
and contemporaneous, and are performed under substantially similar
circumstances and conditions. It is hence alleged that the
companies are violating §§ 2 and 3 of the Interstate
Commerce Act.
The final allegation of the Commission is that the matters are
within its jurisdiction, and that therefore the correctness of its
findings is not open to review in the Commerce Court or any other
court.
Page 225 U. S. 339
MR. JUSTICE McKENNA, after stating the case as above, delivered
the opinion of the Court.
The case involves the consideration of §§ 2 and 3 of
the Interstate Commerce Act. Section 2 provides that, if any common
carrier shall directly or indirectly charge or receive from any
person or persons a greater or less compensation than it charges or
receives from any other person or persons
"for doing for him or them a like and contemporaneous service in
the transportation of a like kind of traffic, under substantially
similar circumstances and conditions, such common carrier shall be
deemed guilty of unjust discrimination. . . ."
Section 3 is directed against giving preferences or advantages
to persons, localities, or descriptions of traffic in any respect
whatsoever, and subjecting any person, locality, or traffic "to any
undue or unreasonable prejudice or disadvantage in any respect
whatsoever."
The companies contend that the Commission applied these sections
to the facts found by the Commission, none of them being disputed,
and that therefore the findings of the Commission are conclusions
of law. On the other hand, the Commission charges that its findings
are those of fact, and exclusively within its jurisdiction and not
open to review by the Commerce Court or any court. Many of its
assignments of error are expressions of this view. The other
assignments assert in various ways and with many shades of
particularity that the Commerce Court erred in disagreeing with the
Commission in regard to the traffics in the different coals, not
only in its decision, as indicated in its injunction, in the
matters affecting such traffic, but in substituting its judgment
for that of the Commission.
The facts are certainly undisputed -- or, to put it differently,
the circumstances and conditions which determined the order are
certainly not in controversy -- and while certain general
inferences are disputed which may be
Page 225 U. S. 340
called inferences of fact, yet we think "power to make the
order, and not the mere expediency of having made it, is the
question" presented.
Int. Com. Comm. v. Illinois Cent. R.
Co., 215 U. S. 452,
215 U. S. 470.
In other words, that the question presented by the petition is that
the order of the Commission was not merely administrative, but
proceeded from a construction of §§ 2 and 3 as applicable
to the conditions which affected the traffic in the different kinds
of coal, and that the different charges for transportation
constituted violations of those sections. The Commerce Court
therefore had jurisdiction of the petition and jurisdiction to
enjoin the order of the Commission if the court considered that the
order would cause irreparable injury. Section 3 of the act creating
the Commerce Court gives that court the power to "enjoin, set
aside, annul, or suspend any order of the Interstate Commerce
Commission, in a suit brought in the court against the United
States." Whether the court erred in its judgment is now to be
inquired into.
In its most abstract form the simple statement of the
controversy is whether the companies may charge a different rate
for the transportation of fuel coal to a given point than for the
transportation of commercial coal to the same point. But when we
depart from the abstract, complexities appear and attention is
carried beyond the consideration of points equally distant,
shippers equally circumstanced, and traffic affected by similar
circumstances and conditions. It is asserted that there are
disparities between the traffics and qualifying circumstances which
the Commission disregarded, and, in error, held that traffic in
fuel coal could not be distinguished from the traffic in commercial
coal.
The Commission insists upon the simplicity of the problem, and
contends that there is nothing in the conditions of the traffic
which dispenses with the clear legal duty of the companies under
the Interstate Commerce Act to
Page 225 U. S. 341
carry for all shippers alike. The Commission says:
"We have never held that the local rate to the junction point
must be paid on shipments that are going beyond that point. What we
have said is that the local rate to the junction point shall be the
same for all shippers to that point, and that the through charges
on shipments going beyond the junction point shall be alike for all
shippers to the same destination."
Its position, thus expressed, the Commission has supplemented,
we are told by the companies, by its Conference Ruling No. 324,
published June 19, 1911, as follows:
"Division on company coal. -- Upon inquiry, Held that it is
unlawful for carriers to make special and discriminatory divisions
of joint rates upon locomotive fuel as between an originating or
participating carrier and a purchasing carrier. In the division of
joint rates, a railroad must be treated precisely as any other
shipper is treated, and the Commission will regard any special
division as a device to defeat the published rate. All divisions
upon fuel coal must be made in good faith without respect to the
fact that one of the carriers is the purchaser of such coal."
The issue of principle between the Commission and the companies
is very accurately presented, and we come to consider whether there
are differences in the traffic of fuel coal which distinguish it
from traffic in commercial coal, and which, as contended by the
companies, make the traffic dissimilar in circumstances and
conditions, or whether the opposite is true, as decided by the
Commission.
The circumstances and conditions which may so far be considered
as distinguishing traffics so as to take from different
transportation charges the vice of preference have been described
by this Court. In
Wight v. United States, 167 U.
S. 512,
167 U. S. 518, it
is said:
"It was the purpose of the section [2] to enforce equality
between shippers, and it prohibits any rebate or other device by
which two shippers, shipping over the same line, the same distance,
under
Page 225 U. S. 342
the same circumstances of carriage, are compelled to pay
different prices therefor."
These words are given more precision by the declaration
"that the phrase, 'under substantially similar circumstances and
conditions,' as found in § 2, refers to matters of carriage,
and does not include competition."
And this was repeated in
Interstate Commerce Commission v.
Alabama Midland Ry. Co., 168 U. S. 161,
168 U. S. 166.
The facts in both cases give significance to the rulings. In the
first case, the charges to the shippers were the same, but one was
given extra facilities; in the second case, the extraneous effect
of competition was excluded as an element in the application of the
section. There is also example in
Interstate Commerce
Commission v. Delaware, L. & W. R. Co., 220 U.
S. 235. It was there held that a carrier could not look
beyond goods tendered to it for transportation in carload lots "to
the ownership of the shipment" as the basis for determining the
application of its established rates. Do the circumstances and
conditions in this case give a greater power of discrimination and
justify the lower charge to railroad fuel coal? It is admitted that
the fact that a railroad is the shipper or consumer is not a
circumstance or condition that affects the carriage, nor can the
different uses to which the coal may be put, and it would seem
necessarily that any other extraneous condition or circumstance
could have no greater potency. Once depart from the clear
directness of what relates to the carriage only, and we may let in
considerations which may become a cover for preferences. May a
carrier look beyond the service it is called upon to render to the
attitude and interest of the shippers before, or their attitude and
interest after, transportation? It must be kept in mind that it is
not the relation of one railroad to another with which we have any
concern, but the relation of a railroad to its patrons, who are
entitled to equality of charges.
See Pennsylvania R. Co. v.
International Coal Mining Co., 173 F. 1.
Page 225 U. S. 343
But what are the differences in the traffics which are asserted
by the companies? We have already condensed them from the
pleadings, but we may use the expression of their ultimate elements
by the companies, omitting, for the time being, the physical
differences in facilities. They say:
"When the railroad fuel coal is consigned to the junction point,
as provided in the present system of tariffs, the circumstances and
conditions that differentiate this traffic from the traffic in
commercial coal consigned to the same point are:"
"1. The fuel coal so shipped is not in competition with the
commercial coal consigned to the same point."
"2. It is in competition with other coals coming upon the line
of the consuming road at other points with which the commercial
coal is not in competition."
"3. The transportation service is different in that commercial
coal at the junction point has reached the point of use, while
railroad fuel coal reaching the consuming railroad at the junction
point is still subject to a transportation service before reaching
the point of use -- a transportation under the 'commodities
clause,' and not under tariff."
These elements the Commission disregarded, it is contended, and
that, while it found a similarity in the traffics, it did not
consider or discuss the two most important features of difference
-- "the two features" which make the traffic unlike, that is, that
railroad fuel coal "does not come into competition with the
commercial coal, and is in competition with coals coming on the
railroad's line at other points." But such features do not affect
the carriage, qualify or alter the essential service, which is to
get an article from one place to another. The greater or less
inducement to seek the service is not the service. Such competition
therefore is as extraneous to the transportation as the instances
in the cases cited. And equally so is the other "feature" that the
fuel coal may be destined for
Page 225 U. S. 344
consumption beyond the junction point. The circumstances do not
alter the fact that it and commercial coal go to the same point,
and are delivered at the same point. There is, it is true, a
difference in the manner of delivery, depending upon the difference
in the facilities possessed by the railroads and other
consignees.
The Commission, as we have seen, especially disclaimed holding
that the rate to the junction point must be paid on shipments going
beyond that point, and insisted that it only held that the charges
to that point should be the same to all shippers, and rates through
that point should also be the same to all shippers. And the
Commission said that the testimony established that the service as
to the coals was alike when they go beyond the junction point. The
Commission therefore considered alone the service, disregarding
circumstances and conditions which were mere accidents of it, and
had relation only to the respective shippers.
But the companies say, in criticism of the reasoning and order
of the Commission, they are permitted to do indirectly what they
want to do directly; that an easy way of evasion of the prohibiting
order is to make a joint rate from the point of origin of the fuel
coal to its points of consumption, and thereby be enabled "to
charge a lower rate for the fuel coal than for the commercial coal
between the same points." And further, in display of the easiness
with which this can be accomplished and "how readily the
Commission's order lends itself to manipulation of rates," they say
that they have only to publish a nominal delivery point beyond the
real delivery point, publish a rate to that point which they do not
intend to charge, and call their actual rate to the junction point,
based on the special circumstances and conditions, a "division."
They then ask if "the Commission can so easily juggle a rate for a
good purpose, will not ingenious traffic agents and coal operators
do the same for their own perverse ends?" If such a situation,
Page 225 U. S. 345
artfully produced, be used as a device for giving preferences,
the Commission might be able to find some means to defeat it. At
present, we must regard its possibility as relevant as exhibiting a
misconception of the Commission's purpose. The Commission has not
said what the rate should be, nor has it said, as we have seen,
that the local rate to the junction point should be the same as the
rate beyond that point. The Commission has ordered equality, and
struck down what it deemed to be preferential charges, even though
they were made under formal tariffs. If there may be legal or
illegal evasion of the order, we may wonder at the controversy. If
the difference between the effect of the order and what the
companies can do or want to do be, as is contended, a "question of
words" -- a "question of the nomenclature to be used in tariffs" --
the order of the Commission may still be valid. Tariffs are but
forms of words, and certainly the Commission, in the exercise of
its powers to administer the Interstate Commerce Act, can look
beyond the forms to what caused them and what they are intended to
cause and do cause.
There are other contentions, or rather phases of those that we
have considered, and which seek to further emphasize the strength
of competition as a circumstance or condition differentiating the
traffic. For instance, it is urged that the shipment of the fuel
coal to a particular railroad "for the use of that railroad" makes
special the traffic. And, further, that "a railroad is not a
person," but is "rather in the nature of a geographical division
and extends through long distances." Pushing the argument or
illustrations farther, it is urged that a railroad company may be
distinguished from the physical thing, the railroad itself, and may
be a locality where a commodity is used, like "a river, a county,
or a city," and be entitled to preferential rates to accommodate
competitive conditions. The
Import Rate Case, 162 U.
S. 197, is invoked as analogous.
Page 225 U. S. 346
We cannot accept the likeness nor the distinctions which are
said to establish it. The railroad company cannot be put out of
view as a favored shipper, and we see many differences between such
a shipper, receiving coal for use in its locomotives, and a nation,
as the destination of goods from other nations, for distribution
throughout its expanse, on through rates from points of origin.
The point is made that "the Commission's method of filing fuel
coal rates is illegal under § 6 of the Interstate Commerce Act
and under the Elkins Act," and the later act and § 6 are
quoted in illustration. The rather vague argument which is urged to
support the point lands in the proposition that the right to
violate the law as to preference in rates is justified by the law
in its requirement of the filing of schedules of rates. However,
counsel say that "it all goes back to the same principle" "dealt
with under point 1." We have sufficiently discussed point 1.
The decree of the Commerce Court is reversed and the case
remanded, with directions to dismiss the petition.
