The Traffic Bureau of Nashville instituted proceedings before the Commerce Commission against the Louisville & Nashville, Nashville, Chattanooga & St. Louis, Tennessee Central, Illinois Central R.R. 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.R., 222 U.S. 541; Int. Com. Comm. v. Louis. & Nash. R.R., 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
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 Fed. Rep. 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
3. By virtue of this conformity to the rules, we are in a position to consider the sharp-cut issue as to whether, as 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
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.R. 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 Nash., via L. & N., 109 m., $1 p. ton, or 9.2 mills p.m. Memphis, " " " " 276 " 1.10 " 4. " " " Louisville, " " " " 142 " .65 " 4.5 " " "
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 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
cents L. & N. $1 rate on coal to N'ville, per car-mile earnings 37.78 N., C. & St. L., " " " " 24.64 Illinois Central " " " " 24.00
Average of all traffic, loaded and unloaded:
cents L. & N., per car-mile earnings .......................... 10.54 N., C. & St. L., " " .......................... 10.08 Illinois Central " " .......................... 7.78 Tennessee Central " " .......................... 16.43
In addition to these comparisons of coal rates and average earnings 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
It further appeared in the Report and Finding of the Commission that the Nashville Bureau
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
"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 the 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 rate-making in each section of the country."
5. In its complaint before the Commission the Traffic
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 endorsements on bonds, and by an agreement to pay 4 per cent. 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 per cent. 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
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 guaranteeing interest on bonds and pro-rating 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 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. Penna. R.R., 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.
"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 Section 3 of the Act to Regulate Commerce, or constitute an appropriation of
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"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. 318, recently decided. The appellants, however, insist 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
MR. JUSTICE PITNEY concurs in the result.
MR. JUSTICE McREYNOLDS took no part in the consideration and decision of this case.