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WHEN CARRIER MAY DESIGNATE ROUTE.
were competing ones among themselves.” v. Interstate Com. Co., 200 U. S. 536.)
§ 17. Discrimination — When Denial of Right of Shipper to Designate Route Is Not.- Where the initial carrier gives a guaranteed through rate on citrus fruits from California to the Atlantic seaboard, it may make a rule reserving the right to route the goods beyond their own terminals, and such routing by the initial carrier which gives such carrier the right to select over what lines it would transport the goods beyond its own line, would not constitute an unjust discrimination against the shipper, nor a pooling as prohibited by section 5 of the Interstate Commerce Act. The Supreme Court reversed Interstate Com. Co. v. Southern Pacific Ry. Co., 123 Fed. Rep. 597, and dissolved the injunction granted by the Circuit Court, restraining the initial carriers from designating the routes beyond the lines of such carriers on the ground that the Commerce Act had not been violated by the carrier. (Southern Pacific Ry. Co. v. Interstate Com. Co., 200 U. S. 536; Southern California Ry. Co. v. Interstate Com. Co., 200 U. S. 536; Atchison, Topeka & Santa Fé Ry. Co. v. Interstate Com. Co., 200 U. S. 536; Santa Fé Pacific Ry. Co. v. Interstate Com. Co., 200 U. S. 536.)
Joint through rates are the subject of agreement between the companies under their control, and there is nothing in the Interstate Commerce Act to prevent an initial carrier guaranteed a through rate, and to reserve in its public notice thereof the right to route the goods beyond its own terminal. A carrier cannot be compelled to make a through rate if it does not see fit to do so beyond its own line. If, however, the carrier and other connecting lines of road make an agreement whereby an initial carrier may make a joint through rate over its own line and over other connecting lines, the initial carrier may select the connecting lines over which it will transport the goods and may reserve this right when it guarantees a through rate. It cannot be said that such a transaction is an unlawful designation within the meaning of the Interstate Commerce Act, if the business and the character of the freight is of a special nature like the fruit business, having nothing in common with other freight.
The court observed that before the rule was promulgated by the initial carrier forbidding the shipper to designate the route beyond that of the initial carrier, it had been customary for the shipper to select his own route, and to collect rebates for the routing from the connecting carriers. The carriers claimed that they were obliged to adopt the rule so as to prevent the shipper from collecting unlawful rebates. In the trial of the case, the court said that there was nothing in the testimony taken before the Interstate Commerce Commission to show that the practice of collecting rebates to be paid to the shipper had been resumed after the rule had been adopted forbidding him to select his route, and this for the obvious reason that the shipper could not control the route, and hence it would be useless for the eastern railway companies to pay the shipper or the car-line companies rebates on freight which said eastern company was not receiving, and which the initial carrier alone had the routing of. As soon as the routing was agreed upon and the through tariff rates fixed, the eastern connections had to do business with the initial carrier, instead of the car company owning the cars in which the fruit was packed or the shipper. The shippers prepay or guarantee freight charges to destination. The initial carrier does not assume liability for damage resulting from negligence of any connecting line. The Circuit Court based its ruling upon the theory that the connecting carriers were rival and competing transportation lines and assumed that between these lines there did exist, but for the routing agreement, a competition for the fruit transportation which could not be extinguished by any agreement as to routing, as a condition for making through tariff rates, and that as competition was destroyed by the rule, it was idle to say that such result was not maintained by the defendant, and the court concluded that the carrying out of the routing agreement was a violation of the Commerce Act. The Supreme Court, however, concluded that the various eastern roads were not, as matter of law,
REBATES — DISCRIMINATION — FREIGHT CLASSIFICATION. 61
to be regarded as competing roads within the meaning of section 5 of the Commerce Act, because the carriers had a right under the act to agree upon and provide for the publication of joint through tariff rates between continuous roads, provided such through rates were reasonable and no discrimination was practiced. That the initial carrier had the right to enter into an agreement for joint through rates with all or any one of the connecting companies, though such companies were competing among themselves, and such agreement could be made upon such terms as the various companies might think expedient, provided they were not in violation of any other provision of the Commerce Act. (Southern Pacific Ry. Co. v. Interstate Com. Co., 200 U. S. 536.)
For fuller report of this case see “pooling,” ante, page 55.
· § 18. Rebates — Discrimination - Freight Classification,
– One method resorted to by the carrier to hide rebates, and to discriminate against certain kinds of freight, is in the manipulation of freight classification. Rates and charges may be raised, and certain kinds of commodities discriminated against, by taking certain goods from the classification which entitle them to be carried for a certain amount, and placing them in another classification which will require the shipper to pay a higher rate of freight. An instance of this kind will be found in what is known as the Hay case (134 Fed. Rep. 142). Hay and straw in carloads were classed by the carrier in what was known as sixth-class freight. Commodities in this class are carried cheaper than commodities rated in the fifth class. In order to raise the freight on hay and straw, the carrier, on the 1st of January, 1900, took hay and straw out of sixth-class freight and classified it as fifth class, thus compelling the shipper to pay the higher rate.
Upon complaint of the shipper, testimony was taken before the Interstate Commerce Commission, which resulted in an order made by the commission, directing the carriers to cease and desist from charging fifth-class rates on hay and straw, based upon findings that such rates were unreasonable. The commission also found that the whole advance was unreasonable, and that the advance and consequent placing of hay and straw in the fifth class unjustly discriminated against that commodity in favor of other articles furnishing less total tonnage to the carriers. The order of the commission further directed the carrier to cease and desist from failing or neglecting to apply sixth-class rates to shipments of hay and straw. The carrier failed to comply with the order, and the commission brought suit in the Circuit Court of the United States, northern district of Ohio, to secure the enforcement of its order. The court dismissed the petition upon the ground that the direction of the commission as to how freights should be classified was, in effect, exercising the power to fix rates, and that since the Commerce Act did not give the commission such power, its order was unlawful. (Interstate Com. Co. v. Lake Shore & Michigan R. R. Co., 134 Fed. Rep. 140.)
On and after August 28, 1906, the objection that the Interstate Commerce Commission has no power to fix rates will have no application, as section 15 of the act as amended expressly confers such power.
§ 19. Discrimination - Transportation of Troops.- A difference in rates does not necessarily constitute an unjust discrimination. The government, in the transportation of troops in squads of ten or more, does not financially, or in any other way, come into competition with the reduced tenparty rate given to “theatrical, operatic, or concert companies, hunting and fishing parties, glee clubs, brass or string bands, boat, basc ball, or tennis clubs, football teams, and other parties of like character, which is authorized by section 22 of the Commerce Act, providing for excursion rates, commutation rates, and the like. The government claimed the benefit of the “ten-party-rate schedule" in transporting its troops in squads of ten or more. Held, that the government was not entitled to claim the reduced rate. (United States v. Chicago & Northwestern R. R. Co., 127 Fed. Rep.
CARRIER CANNOT BE DEALER.
See also, same ruling as to railroad running partly over tracks of railroad which received land grants from government under act of July 2, 1864. (United States v. Astoria & Columbia River R. R. Co., 131 Fed. Rep. 1006.)
IV. COMMERCE ACT — CARRIER CANNOT BE A DEALER.
§ 20. Carriers Cannot Deal in Commodities which They Transport.- The Supreme Court of the United States in a decision rendered on the 19th of February, 1905, in what is known as the Chesapeake & Ohio Case, announced the doctrine that dealing in coal by a railway company was illegal, because incompatible with its duties as a public carrier, and calculated to inflict an injury upon the public. That any contract or arrangement entered into by a common carrier or permitting such carrier to engage in business as a dealer in the commodities which it transported was contrary to public policy and void. The court observed that “if a carrier may become a dealer, buy property for transportation to a market and eliminate the cost of transportation to such market, a faculty possessed by no other owner of the commodity, it must result that the carrier would be in a position where no other person could ship the commodity on equal terms with the carrier, in its capacity as dealer. No other person owning the commodity, being thus able to ship on equal terms, it would result that the owners of such commodity would not be able to ship, but would be compelled to sell to the carrier.” (New Haven R. R. Co. v. Interstate Com. Co., 200 U. S. 361; Interstate Com. Co. v. Chesapeake & Ohio R. R. Co., 200 U. S. 361.)
The court, in support of the proposition, that to allow a carrier to deal in property which it transported was contrary to public policy, cited an authority by Vice-Chancellor Kindersley (Attorney-General v. Great Northern Ry. Co., 29 Law Jour. N. S. Equity, 794), in which the English chancellor held that dealing in coal by a railway company was illegal, because incompatible with the duties of the railway as a public carrier and calculated to inflict an