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56 views5 pagesNashville, C. & St. LR Co. v. Tennessee, 262 U.S. 318 (1923)
1) The US Supreme Court reviewed an Interstate Commerce Commission order that prohibited reduced intrastate freight rates on stone and gravel shipments for government highway projects in Tennessee.
2) The Commission found these reduced intrastate rates resulted in unjust discrimination against interstate commerce. However, the lower court held the Commission lacked jurisdiction due to a federal law permitting reduced rates for government shipments.
3) The Supreme Court reversed, finding that while the law allows reduced government rates, it does not prevent the Commission from prohibiting rates that cause undue prejudice to other shippers, localities, or interstate commerce, as the Commission found was the case in Tennessee.
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0% found this document useful (0 votes)
56 views5 pagesNashville, C. & St. LR Co. v. Tennessee, 262 U.S. 318 (1923)
1) The US Supreme Court reviewed an Interstate Commerce Commission order that prohibited reduced intrastate freight rates on stone and gravel shipments for government highway projects in Tennessee.
2) The Commission found these reduced intrastate rates resulted in unjust discrimination against interstate commerce. However, the lower court held the Commission lacked jurisdiction due to a federal law permitting reduced rates for government shipments.
3) The Supreme Court reversed, finding that while the law allows reduced government rates, it does not prevent the Commission from prohibiting rates that cause undue prejudice to other shippers, localities, or interstate commerce, as the Commission found was the case in Tennessee.
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/ 5
262 U.S.
318
43 S.Ct. 583
67 L.Ed. 999
NASHVILLE, C. & ST. L. RY. et al.
v.
STATES OF TENNESSEE et al. UNITED STATES v. SAME.
Nos. 396, 429.
Argued April 11 and 12, 1923.
Decided May 21, 1923.
[Syllabus from 318-319 intentionally omitted]
Mr. Blackburn Esterline, of Washington, D. C., for the United states.
Mr. J. Carter Fort, of Washington, D. C., for Interstate Commerce
Commission.
Mr. Wm. H. Swiggart, Jr., of Nashville, Tenn., for appellees.
Messrs. Fitzgerald Hall, of Nashville, Tenn., Charles N. Burch, of
Memphis, Tenn., and John B. Keeble, of Nashville, Tenn., for Nashville,
C. & St. L. Ry.
Mr. Justice BRANDEIS delivered the opinion of the Court.
Section 22 of the Act to Regulate Commerce, as amended by Act of March 2,
1889, c. 382, 9, 25 Stat. 855, 862 (Comp. St. 8595), provides, among other
things:
'That nothing in this act shall prevent the carriage, storage or handling of
property free or at reduced rates for the United States, state, or municipal
governments, or for charitable purposes, or to or from fairs and expositions for
exhibition thereat. * * *'1
Whether this section should be construed as denying to the Interstate
Commerce Commission power to prohibit such reduced rates, even where they
result in unjust discrimination or in undue prejudice to interstate commerce is
the main question for decision.
4
On July 29, 1920, the Interstate Commerce Commission authorized a general
increase, throughout Southern territory, of 25 per cent. in interstate freight rates.
Ex parte 74, Increased Rates, 1920, 58 Interst. Com. Com'n R. 220. Thereafter
the Railroad and Public Utilities Commission of Tennessee authorized, for that
state, a like increase of intrastate rates. But the following articles (among
others) were excluded from this increase: Carload shipments of stone and
gravel when for use in building public highways and consigned to federal, state,
county, and municipal authorities or their bona fide agents. To remove the
exception, carrier applied to the Interstate Commerce Commission, claiming
that the exception produced illegal discrimination against interstate commerce
and an undue prejudice to persons and localities engaged in such commerce.
The Commission found such discrimination; and ordered that the intrastate
rates on these commodities, also, be increased to the level of the interstate rates.
Tennessee Rates and Charges, 63 Interst. Com. Com'n R. 160, 172. On October
21, 1921, the state of Tennessee and its commission brought, in the federal
court for the Middle District of Tennessee, this suit against the United States to
have the order set aside. The Interstate Commerce Commission, the Nashville,
Chattanooga St. Louis Railway, and two other interstate carriers intervened as
defendants. The case was heard by three judges under the Act of October 22,
1913, c. 32, 38 Stat. 220 (Comp. St. 998). A final decree was entered,
declaring the order void, and enjoining its enforcement. 284 Fed. 371. The case
is here on two appeals. No. 396 is that of the carriers; No. 429, that of the
United States and the Interstate Commerce Commission.
Railroad Commission of Wisconsin v. Chicago, Burlington & Quincy R. R.
Co., 257 U. S. 563, 42 Sup. Ct. 232, 22 A. L. R. 1086, 66 L. Ed. 371, had been
decided by this court before entry of the judgment appealed from. But the
District Court considered that case inapplicable, and held that, by reason of
section 22, the Interstate Commerce Commission is 'without jurisdiction to
forbid the railroads from carrying freight for the public at a less price than it
charges individuals for the same carriage of the same freight'; that the section
'excludes this particular traffic from the rate structure which the Commission is
authorized to erect and control; in still other words, there is freedom of
discrimination.'
The argument is, in substance, this: An order of the Interstate Commerce
Commission, increasing intrastate rates to the level of interstate rates, must rest
upon a finding of illegal preference resulting from the relation of intrastate to
interstate rates. Preference to governmental shippers is expressly permitted by
section 22 of the act. Hence a grant of such preference cannot be held to be
unjust or unreasonable under sections 2 and 3 (Comp. St. 8564, 8565). There
was no finding that these lower intrastate rates resulted in failure of the
intrastate traffic to yield its proper share of the earnings of the carriers.
Consequently the order of the Commission is void.2 The argument is, in our
opinion, unsound.
7
Every rate which gives preference or advantage to certain persons,
commodities, localities or traffic is discriminatory; for such preference prevents
absolute equality of treatment among all shippers or all travelers. But
discrimination is not necessarily unlawful. The Act to Regulate Commerce
prohibits (by sections 2 and 3) only that discrimination which is unreasonable,
undue, or unjust. Texas & Pacific Ry. Co. v. Interstate Commerce Commission,
162 U. S. 197, 219, 220, 16 Sup. Ct. 666, 40 L. Ed. 940; Manufacturers
Railroad Co. v. United States, 246 U. S. 457, 481, 38 Sup. Ct. 383, 62 L. Ed.
831. Whether a preference or discrimination is undue, unreasonable, or unjust is
ordinarily left to the Commission for decision; and the determination is to be
made, as a question of fact, on the matters proved in the particular case.
Interstate Commerce Commission v. Alabama Midland Ry. Co., 168 U. S. 144,
170, 18 Sup. Ct. 45, 42 L. Ed. 414. The Commission may conclude that the
preference given is not unreasonable, undue or unjust, since it does not, in fact,
result in any prejudice or disadvantage to any other person, locality,
commodity, or class of traffic. On the other hand, preferential treatment of a
class, ordinarily harmless, may become undue, because, under the special
circumstances, it results in prejudice, or disadvantage to some other person,
commodity, or locality, or to interstate commerce.
Section 22 must in this matter, as in others, be read in connection with the rest
of the act, and be interpreted with due regard to its manifest purpose. Robinson
v. Baltimore & Ohio R. Co., 222 U. S. 506, 511, 32 Sup. Ct. 114, 56 L. Ed.
288.3 Congress did not intend, by this provision concerning reduced rates and
free transportation, to create an instrument, by which the carrier was authorized,
in its discretion, to subject interstate commerce to undue prejudice, or by which
the state was empowered to compel the carriers so to do. The object of the
section was to settle, beyond doubt, that the preferential treatment of certain
classes of shippers and travelers, in the matters therein recited is not necessarily
prohibited. And in this respect its provisions are illustrative, not exclusive. It
limits, or defines, the requirement of equality in treatment which is imposed in
other sections of the act. By so doing, it preserves the right of the carrier
theretofore enjoyed of granting, in its discretion, preferential treatment to
particular classes in certain cases. Only in this sense can it be said that the
section is permissive. It confers no right upon any shipper or traveler. Nor does
it confer any new right upon the carrier.
9
The grant of a lower rate on road material to a government, engaged in highway
construction, may benefit the government without subjecting to prejudice any
person, locality of class of traffic. But a lower rate may result in giving to a
single quarry within the state all of the governmental business, so that
competing quarries and localities within or without the state, or interstate
traffic, would be prejudiced. That such undue discrimination does, and will,
result from the order of the Tennessee Commission was expressly found by the
Interstate Commerce Commission. Its findings are necessarily conclusive, since
the evidence on which it acted was not introduced in this suit. Louisiana & Pine
Bluff Railway Co. v. United States, 257 U. S. 114, 42 Sup. Ct. 25, 66 L. Ed.
156.
10
There is nothing in Interstate Commerce Commission v. Baltimore & Ohio R.
R. Co., 145 U. S. 263, 278, 12 Sup. Ct. 844, 36 L. Ed. 699, Lake Shore &
Michigan Southern Ry. Co. v. Smith, 173 U. S. 684, 19 Sup. Ct. 565, 43 L. Ed.
858, or Pennsylvania R. R. Co. v. Towers, 245 U. S. 6, 38 Sup. Ct. 2, 62 L. Ed.
117, L. R. A. 1918C, 475, inconsistent with the views expressed above. The
decisions made by the Interstate Commerce Commission are in substantial
harmoney with them.4
11
Reversed.
12
Mr. Justice SANFORD took no part in the consideration or decision of these
cases.
The first line of section 22, as originally enacted (24 Stat. 379, 387), read, 'That
nothing in this act shall apply to the carriage,' etc.
The order of the Interstate Commerce Commission was declared void 'to the
extent that the rates therein ordered to be established * * * apply to such
transportation, for the United States, state or municipal governments, of stone
and gravel, the title to which has passed to the government or is vested in it at
the point of the origin of its transportation.'
See, also, Texas & Pacific Ry. Co. v. Abilene Cotton Oil Co., 204 U. S. 426,
446, 27 Sup. Ct. 350, 51 L. Ed. 553, 9 Ann. Cas. 1075; Pennsylvania R. R. Co.
v. Puritan Coal Mining Co., 237 U. S. 121, 129, 130, 35 Sup. Ct. 484, 59 L. Ed.
867; Illinois Central R. R. Co. v. Mulberry Hill Co., 238 U. S. 275, 282, 35
Sup. Ct. 760, 59 L. Ed. 1306.
4
Section 22 has been construed by the Commission as conferring upon carriers
such permission to furnish transportation at reduced rates or free, in certain
cases; as not conferring upon any shipper or traveler a right to such
transportation; and, ordinarily, as not conferring upon the Commission power to
establish such exceptions to the normal rates and fares. Sprigg v. B. & O. R. R.
Co., 8 Interst. Com. Com'n, 443; Field v. Southern Ry. Co., 13 Interst. Com.
Com'n, 298; Metropolitan Paving Brick Co. v. Ann Arbor R. R. Co., 17 Interst.
Com. Com'n, 197, 204; Eschner v. Pennsylvania R. Co., 18 Interst. Com.
Com'n, 60, 63; Dairymen's Supply Co. v. Pennsylvania R. R. Co., 28 Interst.
Com. Com'n, 406; United States v. Union Pacific R. R. Co., 28 Interst. Com.
Com'n, 518, 524. See, also, C. B. Havens & Co. v. Chicago & Northwestern
Ry. Co., 20 Interst. Com. Com'n, 156. Compare Cator v. Southern Pacific Co.,
6 Interst. Com. Com'n, 113; Commutation Rate Case, 21 Interst. Com. Com'n,
428, 437; United States v. Alabama & Vicksburg Ry. Co., 40 Interst. Com.
Com'n, 405. Conference rulings provide, as to some reduced rates under section
22, that they must be filed and posted with the Commission, and as to others
that they need not be. See Conference Rulings, Issued Nov. 1, 1917, Nos. 33,
36, 208e, 218, 244, 311, 52.
