The general rule is that the appellate court will not interfere
with the decision of the Chancellor refusing an interlocutory
injunction unless abuse of discretion clearly appears; where,
however, the order sought to be enjoined operates to reduce
revenue, the Chancellor's discretion should be influenced by the
fact that the decree, though interlocutory, may be the equivalent
of a final decree.
The fact that irreparable injury might result from orders of the
Interstate Commerce Commission, unless interlocutory injunctions
might be granted restraining their enforcement, undoubtedly
influenced Congress to enact the provision in the Act of October
22, 1913, for a direct appeal to this Court from an order granting
or denying, after notice and hearing, an interlocutory
injunction.
Where appellants are able to concede that there was evidence
which, although conflicting, tended to support the findings of the
Commission, the practice of omitting the testimony and simply
insisting in this Court that the findings are insufficient to
support the orders is commendable, not only as a saving of expense
of printing the record, but also of eliminating such testimony, as
is necessarily immaterial in an appellate court which cannot
reverse findings if supported by any substantial evidence, even
though the evidence be conflicting.
The new Equity Rules (75, 76, 77) call for a winnowing out of
the useless;
Page 238 U. S. 2
the presentation of only relevant evidence and exhibits; the
elimination of reduplications of oral and written evidence and
condensation into narrative form of what is material to the issue
before the court.
Where an existing freight rate is attacked, the burden is on
complainant to show that it is unreasonable in fact; this rule
especially applies when the rate has been in force for a long
period, during which the traffic has greatly increased in
volume.
Market price of property and work is affected by so many and
varying factors that it is impossible to lay down fixed rules for
ascertaining actual value; a common measure, however, is by
comparison with amounts charged for the same article by different
persons. This applies to some extent to freight charges by
carriers.
Mere distance is not necessarily a determining factor in fixing
freight rates; competition by water and rail and in the markets
largely enter into such determination.
While mere comparison of rates does not necessarily tend to
establish reasonableness of either, the finding of one of many
rates to be higher than all the others may give rise to the
presumption that the single rate is high, and if some of the lower
rates had been prescribed by the Interstate Commerce Commission,
there is a
prima facie standard for testing the
reasonableness of the rate under investigation.
The Interstate Commerce Commission having in this case, after
consideration of much and varied evidence as to the rates charged
on coal to Nashville, fixed the amount of the rate in light of the
findings made on such testimony, and as the rate fixed is not
claimed to be confiscatory, this Court holds that the findings
support the order fixing the rate.
An order in this case requiring a carrier to extend to
connecting carriers, as to competitive business, the same switching
facilities that it extends to some of the other connecting
carriers, in regard to the same class of business, is not violative
of the due process provision of the Fifth Amendment, nor does it
violate the provision in § 15 of the Commerce Act that a
carrier shall not be required to give the use of its tracks or
terminals to another carrier engaged in like business.
Pennsylvania v. United States, 236 U.
S. 351.
216 F. 672 affirmed.
The facts, which involve the validity of orders of the
Interstate Commerce Commission establishing rates on coal and also
requiring the carrier to furnish certain switching facilities to
connecting carriers, are stated in the opinion.
Page 238 U. S. 9
MR. JUSTICE LAMAR delivered the opinion of the Court.
The Traffic Bureau of Nashville instituted proceedings before
the Commerce Commission against the Louisville & Nashville,
Nashville, Chattanooga, & St. Louis, Tennessee Central,
Illinois Central R. Co. Companies, and the Nashville Terminal
Company, seeking (1) a reduction of the $1 rate on coal and (2) to
require a discontinuance of what was alleged to be a discriminatory
switching practice in the yard at Nashville. After an elaborate
hearing, in which volumes of testimony were taken, the Commission
found that the $1 coal rate was unreasonable, and established an 80
cent rate. It also passed an order requiring the railroad companies
to discontinue the discrimination in furnishing switching
facilities. Thereupon the two railroad companies first named,
appellants herein, filed a bill in the District Court for the
Middle District of Tennessee against the United States, the
Commerce Commission, and others attacking the validity of these two
orders. The application for a temporary injunction having been
denied, the case was appealed to this Court.
1. On the argument here, the appellants insisted that, under the
decisions in
Florida East Coast Ry. v. United States,
234 U. S. 167;
Int. Com. Comm. v. Un. Pac. R. Co., 222 U.
S. 541;
Int. Com. Comm. v. Louis. & Nash. R.
Co., 227 U. S. 88, this
Court will determine whether the facts found do, as a matter of
law, support the order of the Commission. The government, on the
other hand, contended that the case should be disposed of in
conformity with the principle that an appellate court will not
interfere with the decision of a chancellor refusing to grant an
interlocutory injunction unless it clearly appears that there has
been an abuse of discretion. There can, of course, be no doubt that
such is the general rule. But where the order of the Commission
operates to reduce revenue, it is manifest that the chancellor's
discretion should be influenced by the
Page 238 U. S. 10
fact that, though the application is for an interlocutory
injunction, the decision thereon may, in many respects, be the
equivalent of a final decree. On such a hearing, the court should
therefore consider that fact with all others, and grant the
injunction, grant it on terms, or refuse it, as the equity of the
case may warrant.
It was no doubt because of the limited time in which orders of
the Commission would be operative, and that there might be cases in
which irreparable injury would result if an interlocutory
injunction was not granted, that Congress, by the Act of October
22, 1913 (38 Stat. 220), provided that
"
an appeal may be taken direct to the Supreme Court of the
United States from the order granting or denying, after notice and
hearing, an interlocutory injunction. . . ."
This clause and the reasons above mentioned were evidently taken
into consideration by the three judges who heard this case. For, in
passing upon the application, the court made a full statement of
the facts, delivered a carefully prepared opinion discussing the
various contentions of the complainants, and then made a decision
on the merits of the case as submitted.
2. The facts involved have been so fully stated by the
Commission (28 I.C.C. 533) and by the court below (216 F. 672) that
it is unnecessary here to repeat them. The railroad companies did
not offer all of the evidence which was considered by the
Commission, and on this appeal they do not include in the record
all of the hundreds of pages of testimony which had been submitted
to the Commission, but, conceding that the evidence was conflicting
and tended to support the findings of the Commission, they insist
that the facts found were insufficient in law to sustain the orders
which were made. This most commendable practice not only saved the
expense of printing many volumes of testimony, but saved the
substantial points in the case from being submerged in a flood
Page 238 U. S. 11
of testimony, much of which was explanatory before the
Commission and most of which was wholly immaterial in an appellate
court which cannot reverse findings when supported by substantial,
though conflicting, evidence. The practice is also in compliance
with the spirit of the new Equity Rules (75-77) which call for just
such a winnowing out of the useless; the presentation of only the
relevant parts of exhibits, documents, tables, and reports, the
elimination of all reduplications in written and oral testimony,
and a condensation into narrative form of what is material to the
then issue before the court.
3. By virtue of this conformity to the rules, we are in a
position to consider the sharp-cut issue as to whether, as a matter
of law, the Commission's findings of fact sustain its order, and
shall discuss first the rate on coal, which, being treated as
typical, was principally argued by counsel.
Where an existing freight rate is attacked, the burden is on the
complainant to establish that it is unreasonable in fact. This is
especially so where, as here, the rate has been in force for a long
period during which time the traffic greatly increased in volume.
In order to carry this burden in the present case, the Traffic
Bureau, while alleging that the rate was unreasonable, in itself
and by comparison with other like rates, does not seem to have
attempted to prove the cost or value of the carrier's service, but
apparently relied largely on proof showing that the Nashville rate
was higher than that charged for a similar haul to other
points.
While some elements of value are fixed, the market price of
property and work is affected by so many and such varying factors
as to make it impossible to lay down a rule by which to determine
what any article or service is worth. But one of the most common
measures by which to value the property or service of A is to
compare it with the amount charged for the same thing by B, C, and
D. But
Page 238 U. S. 12
this method, if made the sole basis for ascertaining values, may
often lead to improper results. For B, C, and D may charge too
much, or they may have been forced to charge too little. The same
is true of determining, by comparison, the reasonableness of
freight charges. Until some standard is adopted, they may prove
nothing, even where the two hauls are over the same mileage. For
the rate attacked may tend to show that the others are too low,
while they in turn might be relied on to prove that the first is
too high. Both may be unreasonably high, or too low because
compelled by conditions over which the carrier had no control.
Water competition, rail competition, and competition of markets,
enter so largely into the establishment of rates that mere distance
is not necessarily a determining factor; indeed, the statute itself
recognizes that there may be circumstances under which it is lawful
to charge less for a long haul than for a short haul over the same
road. But, while all this be true, it is nevertheless a fact that a
comparison of rates between two points on the same road, or with
the charges on other roads, may furnish evidence of probative
value.
In the present case, the Commission pointed out that many facts
had to be considered in applying the evidence offered for the
purpose of showing that the $1 rate to Nashville was high by
comparison with the charge made to other points. It found that coal
was shipped over the Louisville & Nashville R. Co. from
Kentucky mines to Nashville, Memphis, and Louisville. It also found
that there was no substantial dissimilarity in the conditions at
those three points, and instituted a special comparison between the
rates to those three cities. The result may be indicated by the
following tabulation:
From mines --
To Nashville via L. & N., 109 miles, $1 per ton, or 9.2
mills p.m.
To Memphis via L. & N., 276 miles, $1.10 per ton, or 4 mills
per mile.
To Louisville via L. & N. 142 miles, 65 cents per ton, or
4.5 miles per mile.
Page 238 U. S. 13
The defendants insisted that its $1.10 rate to Memphis did not
furnish a fair criterion, because it had been made low and reduced
in order to meet competition. The Commission, however, found that
the river rate to Memphis was $1.40 per ton, so that the
appellant's "not unreasonable" (26 I.C.C. 402) rate of $1.10 was
not compelled by water competition. It further found that the rail
competition at Memphis was not compelling. On these facts, and
after giving a history of the increase and decrease in that rate
(26 I.C.C. 402), the Commission seems to have treated the $1.10
rate, for 276 miles to Memphis as in the nature of a voluntary
charge, which would tend to indicate that the $1 rate for 109 miles
to Nashville was too high. A similar view was taken of the
situation at Louisville, where water competition existed and where
the 60-cent rate from the mine to Louisville, 142 miles, was
practically the same as that of the Illinois Central, which charged
the same rate for a haul of 125 miles to Louisville.
Of course, competition by rail as well as by water may compel
such a reduction in rates as altogether to destroy their value for
purposes of comparison. But, as we understand, the Commission held
that, while there should be no parity between these cities, the
rate of $.60 charged by the Illinois Central for a haul of 125
miles to Louisville was, in view of all of the facts, some
indication of what a road like the Louisville & Nashville
should charge on a haul of 109 miles to Nashville.
Among many other details briefly discussed in the report, the
Commission dealt with the question of the earnings on the coal
business to Nashville. It found that the Louisville &
Nashville's coal cars had an average capacity of 41 tons, so that,
on shipments from the mines to Nashville there was a car revenue of
$41, or a per-car-mile earning of 37.78 cents. If the car was
returned empty, there would be a per-car-mile earning
Page 238 U. S. 14
of 18.87 cents. With this as a basis, there was a comparison of
the Nashville coal earnings with those on all traffic over the
other roads entering that city. It showed:
cents
L. & N. $1 rate on coal to Nashville, per car-mile earnings
. . . 37.78
N., C. & St.L., coal to Nashville, per car-mile earnings. .
. . . 24.64
Illinois Central on coal to Nashville, per car-mile earnings. .
. 24.00
Average of
all traffic, loaded and unloaded:
L. & N., per car-mile earnings, 10.54
N., C. & St.L., car-mile earnings . . . . . . . . . . . . .
. . . 10.08
Illinois Central car-mile earnings. . . . . . . . . . . . . . .
. 7.78
Tennessee Central car-mile earnings . . . . . . . . . . . . . .
. 16.43
In addition to these comparisons of coal rates and average
earning on all traffic, loaded and empty, the Commission found
that, while the $1 rate to Nashville had been in force many years,
the carrying capacity of the cars had increased from 16 to 41 tons
and the tractive power of engines from 660 to 1,165 tons. This
practically doubled the earning capacity of fully loaded trains,
and if, as argued, there has been a much larger increase in cost of
labor, material, taxes, and operating expenses, no proof of that
fact was made to the Commission, for it found that "there was
little more than a suggestion in the record as to the increased
cost of labor and material, and no attempt . . . to show operating
cost." At the hearing of the application for a temporary
injunction, an affidavit was offered to show that the increase in
cost of operation had largely exceeded the increase in earning
capacity. But such evidence, important in itself and on the issue
of reasonableness, cannot be considered here for the reason that it
shifts the issue, for the case was submitted to the district court
not to pass on the facts, but on the theory
Page 238 U. S. 15
that, though the conflicting evidence might sustain the finding,
the
facts found did not, as matter of law, sustain the
order.
It further appeared in the report and finding of the Commission
that the Nashville Bureau
* had offered
innumerable exhibits comparing on ton- and car-mile bases the
Nashville rate with that to points in the southeast and on the Ohio
and Mississippi Rivers.
Among these were certain rates which
the Commission had prescribed. There was also a general
comparison on the Nashville rate with the charge for coal and other
commodities to Nashville and other destinations. This evidence
showed that "
in all these instances, the Nashville rate yields
the greatest earnings."
Giving the widest possible effect to the fact that mere
comparison between rates does not necessarily tend to establish the
reasonableness of either, it is still true that, when one of many
rates is found to be higher than all others, there may arise a
presumption that the single rate is high. And when to that is added
the fact that some of the comparative and lower rates had been
prescribed by the Commission, there was at least a
prima
facie standard,
Page 238 U. S. 16
which, after allowing for dissimilarity in conditions, might be
used along with all the other evidence in order to test the
reasonableness of the Nashville rate. No one of those facts was
conclusive, for the character of the country through which the two
roads had been built might differ. One might run through a level,
thickly populated territory -- the other might have steep grades,
long tunnels and a roadway expensive to maintain. The capital
invested, the traffic hauled, the cost of operation, and the
earnings might differ, but nevertheless what was shown to be a
reasonable rate on one, might, after allowing for the dissimilarity
in conditions, earnings, and cost, be a factor in determining the
reasonableness of the rate on the other. The report in this case
shows that the ratemaking body had before it much and varied
evidence of this character. After considering it as a whole, the
Commission found that the $1 rate on coal shipped from the Kentucky
mines to Nashville was unreasonable. In the light of these
findings, we cannot say that the facts set out in the report do not
support the order. And since there is no contention at this time
that the reduced rate is confiscatory, we can but repeat what was
said in
Int. Com. Comm. v. Louis. & Nash. R. Co.,
227 U. S. 88:
"The pleadings charged that the new rates were unjust in
themselves and by comparison with others. This was denied by the
carrier. The Commission considered evidence and made findings
relating to rates which the carrier insists had been compelled by
competition, and were not a proper standard by which to measure
those here involved. The value of such evidence necessarily varies
according to circumstances, but the weight to be given it is
peculiarly for the body experienced in such matters and familiar
with the complexities, intricacies, and history of ratemaking in
each section of the country."
5. In its complaint before the Commission, the Traffic
Page 238 U. S. 17
Bureau also attacked the practice of the appellants by which,
under filed tariffs, each made a charge of $3 per car for switching
noncompetitive business between industries within the terminal
limits and in conjunction with the Tennessee Central.
The Bureau insisted that this practice was discriminatory, and
designed to prevent the switching of coal between the Tennessee
Central and private industries, located on sidings and reached
through the terminals. The defendants admitted the practice and the
intention, but insisted that the yards had never been thrown open
to such business. They claimed that they had the right to the
exclusive use of their own terminals, and could not be required to
switch cars loaded with "coal or competitive freight" to and from
the Tennessee Central.
In considering this branch of the case, the Commission found
that the Louisville & Nashville and the Nashville, Chattanooga,
& St. Louis, by reason of indorsements on bonds and by an
agreement to pay 4 percent on the capital stock of the Nashville
Terminal Company, had leased the yards for 999 years, the rental
being paid by the two lessees in proportion to the business done by
each. That, while the Louisville & Nashville owned 70 percent
of the stock of the Nashville, Chattanooga, & St. Louis, the
two roads were not only separate corporate entities, but were
competitors at Nashville -- particularly in the transportation of
coal. It found that each switched for the other and both switched
for the Tennessee Central, except as to "coal and competitive
business." It found that such a switching practice was unreasonable
and unjustly discriminatory, and that a "reasonable practice would
permit the switching of coal from the interchange of each carrier
to industries on the rails of each other." It thereupon issued an
order requiring appellants to cease the discrimination found to
exist and to maintain "a practice which will permit the
interswitching of such
Page 238 U. S. 18
shipments from and to the lines of each and every defendant,"
including Tennessee Central.
The appellants attack this order as being void because (1) it
compels them to admit the Tennessee Central into an arrangement for
operating joint terminals at Nashville under a contract guarantying
interest on bonds and prorating operating expenses; (2) takes their
property in the yards without due process of law; (3) violates
§ 15 of the Commerce Act (34 Stat. 589) in compelling them, in
effect, to make through routes and joint rates with the Tennessee
Central when the appellants themselves have already established "a
reasonable and satisfactory through route," and (4) violates §
3 of the same act, which, after requiring carriers to afford equal
facilities for the interchange of traffic, declares that the
section
"shall not be construed as requiring any such common carrier to
give the use of its tracks or terminal facilities to another
carrier engaged in like business."
These objections treat the order as being broader than its
terms. The Commission did not, as in Waverly Oil Works Co. v.
Pennsylvania R. Co., 28 I.C.C. 626, 627, pass upon the question as
to what was a proper switching charge as affected by the rental of
the yard and the cost of operation. Neither did it direct the
appellants to establish a joint rate and a through route with the
Tennessee Central. Neither did it order the appellants to give the
use of their terminals to the Tennessee Central, but only required
them to render to the latter the same service that each of the
appellants furnishes the other in switching cars to industries
located in and near the yard.
Disregarding the complication arising out of joint ownership and
the fact that each of the appellants switches for the other, it
will be seen that the Commission is not dealing with an original
proposition, but with a condition brought about by the appellants
themselves.
Page 238 U. S. 19
Under the provisions of the Commerce Act (24 Stat. 380), the
reciprocal arrangement between the two appellants would not give
them a right to discriminate against any person or "particular
description of traffic." For § 3 requires railroad companies
to furnish "equal facilities for the interchange of traffic between
their respective lines . . . ," provided that this should "not be
construed as requiring any such common carrier to give the use of
its tracks or terminal facilities to another carrier engaged in
like business." If the carrier, however, does not rest behind that
statutory shield, but chooses voluntarily to throw the terminals
open to many branches of traffic, it to that extent makes the yard
public. Having made the yard a facility for many purposes and to
many patrons, such railroad facility is within the provisions of
§ 3 of the statute which prohibits the facility from being
used in such manner as to discriminate against patrons and
commodities. The carriers cannot say that the yard is a facility
open for the switching of cotton and wheat and lumber, but cannot
be used as a facility for the switching of coal. Whatever may have
been the rights of the carriers in the first instance, whatever may
be the case if the yard was put back under the protection of the
proviso of § 3, the appellants cannot open the yard for most
switching purposes and then debar a particular shipper from a
privilege granted the great mass of the public. In substance, that
would be to discriminate not only against the tendering railroad,
but also against the commodity which is excluded from a service
performed for others. This feature of the case was thus dealt with
by the district court:
"We think it clear that this order does not require the
petitioners to give the use of their tracks and terminal facilities
to the Tennessee Central Railroad within the meaning of the proviso
contained in § 3 of the Act to Regulate Commerce, or
constitute an appropriation of
Page 238 U. S. 20
such tracks and terminals for the use of the Tennessee Central
Railroad."
"
* * * *"
"There is, furthermore, no evidence that the switching practices
prescribed will violate the constitutional provision against taking
property without due process of law.
See Grand Trunk Ry. v.
Michigan Commission, 231 U. S. 468. And it may
well be assumed that the petitioners will not themselves establish
a switching charge so low as to be confiscatory."
The question as to power of the Commission to make this part of
the order is settled by the decision in
Pennsylvania Company v.
United States, 236 U. S. 351,
recently decided. The appellants, however, insist that that case
did not involve switching, but transportation, and further, they
claim that the Pennsylvania road was there ordered to discontinue
discrimination -- while here, the appellants are required by an
affirmative order to devote their property to the use of a parallel
and competing carrier. But the alleged differences do not serve to
take the present case out of the principle announced in that just
cited. For in this order, the prohibition against the existing
practice and the requirement to furnish equal facilities come to
the same thing.
In this case, the controlling feature of the Commission's order
is the prohibition against discrimination. It was based upon the
fact that the appellants were at the present time furnishing
switching service to each other on all business, and to the
Tennessee Central on all except coal and competitive business. As
long as the yard remained open and was used as a facility for
switching purposes, the Commission had the power to pass an order
not only prohibiting discrimination, but requiring the appellants
to furnish equal facilities "to all persons and corporations
without undue preference to any particular class of persons." The
question as to what is a proper practice, the
Page 238 U. S. 21
amount of charge therefor, and the length of time such switching
service is to continue, are matters not presented for decision on
this record. The judgment of the district court is
Affirmed.
MR. JUSTICE PITNEY concurs in the result.
MR. JUSTICE McREYNOLDS took no part in the consideration and
decision of this case.
*
"In support of their contentions, complainants offered
innumerable exhibits comparing on ton-, car-, and train-mile bases
the Nashville rate with the rates on coal obtaining north of the
Ohio River; with rates to St. Louis, East St. Louis, Louisville,
Cincinnati, Memphis, and other points on the Ohio and Mississippi
Rivers from mines in Kentucky, Tennessee, and Virginia; with rates
on coal prescribed by this Commission in a number of cases; with
rates on coal to Chattanooga and to certain destinations in the
southeast; with rates on coal from other mines to Nashville; with
rates on other commodities to Nashville and to other destinations;
with the average per-ton- and per-car-mile rate received by
defendants and other carriers on all traffic. In all of these
instances, the Nashville rate yields the greatest earnings. In
elaborate detail, defendants sought to analyze and rebut these
comparisons in an endeavor to show that none was of any value in
determining the reasonableness of the rate in issue."