Lough v. Outerbridge — 49 N.Y. St. Rep. 504

Majority

p. 504

George F. Lough et al., Resp’ts, v. A. Emilius Outerbridge et al., App’lts.

(Supreme Court, General Term, First Department,

Filed November 18, 1892.)

Headnote

Carriers—Discrimination—Injunction.

In proceedings to obtain an injunction, it appeared that the freight rate of the defendant steamship company of forty cents per barrel between certain places was reasonable; that a steamer called “E.” was able, by reason of certain concessions from the government, to carry freight between the same places for thirty cents per barrel, and that defendant, in order to compete with “E.,” offered to carry freight during the week on which “E.” sailed, for twenty-five cents per barrel, providing the shippers would stipulate to give defendant their exclusive shipments during such week. Defendant refused to take plaintiffs’ freight at twenty-five cents unless they would make the stipulation, and plaintiffs obtained an injunction restraining defendant from exacting the same. Held, that it was error to grant the injunction, the defendant having offered the same terms to all shippers.

Appeal from an order continuing a preliminary injunction in an action to restrain the Quebec Steamship Company and A. _E. Outerbridge & Company, its agents, from exacting from plaintiffs a greater rate of freight than twenty-five cents per barrel upon about 1,700 barrels of merchandise to be transported from New York to Barbadoes.

p. 505

Butler, Stillman & Hubbard (Wilhelmus Mynderse, of counsel), for appl’t; Evarts, Choate & Beaman, (Henry W. Hardon and Tread well Cleveland, of counsel), for resp’ts.

The Quebec Steamship Company is a foreign corporation, and the firm of Outerbridge & Co., the other defendants, have for several years been its agents in New York. This company has for many years been engaged in trading between New York and the Windward islands, and has maintained a fleet of steamers engaged in the transportation of passengers and merchandise, sailing periodically. Up to December, 1891, the standard rate of freight to Barbadoes was on a basis of fifty cents per dry barrel; at which time the standard rate of freight was reduced to forty cents, which rate the defendants claim is fair and just, and affords but a bare subsistence to the steamers engaged in that traffic. This rate has ever since been maintained upon all sailings and for all shippers, except as hereinafter stated. The plaintiffs were engaged in the export business to the Windward islands to a considerable extent, and claim that from time to time they have been obliged to and have chartered steamers not belonging to the defendants to transport merchandise to their correspondents in the Windward islands, and that such employment has interfered with the monopoly which the defendants have hitherto enjoyed. The defendants, upon the other hand, claim that the plaintiffs did not transport any cargo by ship under charter to them, but that a steamer called the “ El Callao,” engaged in trade between New York and Venezuela, making sailings at intervals of about five weeks, under concessions from the Venezuelan government, which concessions enabled her to maintain the service between New York and Venezuela, offered herself for cargo, and has received and carried cargo, from New York to Barbadoes; that her sailings have been regularly advertised to the trade by the agents of the steamship in New York, who were not the plaintiffs ; that said steamer El Callao was seldom full of cargo which she had to carry between New York and Venezuela, and as, in the regular course of her voyage, she ran near Barbadoes, she was able to carry as freight to Barbadoes, in spaces which would otherwise have been empty, merchandise at rates at which vessels engaged in the regular trade to the Windward islands could not maintain themselves; that the defendant company accordingly, when one of its steamers has sailed from New York at the same time with El Callao, offered in trade competition, with and for the purpose of retaining custom which had been built up by them, to carry freight at the rate of twenty-five cents per barrel for shippers who would give their shipments for that week exclusively to the ship of the defendant company in preference to the El Callao ; and that the rate of thirty cents fixed by the El Callao is one upon which vessels engaged in the regular trade could not maintain themselves. The defendants having refused to receive freight from the plaintiffs at a less rate than forty cents per barrel at the time they were shipping by the El Callao, and having of-

p. 506

fered to take freight at the rate of twenty-five cents, provided they would stipulate not to ship to Barbadoes by steamers other than those of the defendants, the plaintiffs brought this action for an injunction restraining them from exacting from the plaintiffs, for the transportation of some 1,700 barrels by a particular steamer, a greater rate of freight than twenty-five cents per barrel, without further conditions. The plaintiffs obtained a preliminary injunction, which was made permanent, and from the order thereupon entered this appeal was taken.

We do not think this preliminary order should have been granted, as the plaintiffs did not present a case entitling them to relief in a court of equity. It is claimed upon the part of the plaintiffs that they would have suffered irreparable damage were an injunction not issued. It is difficult to see how the impossibility of obtaining redress exists, in view of the fact that, if improper rates of freight were charged and paid by them, the excess might have been recovered in a proper action brought for that purpose. But, further, we are unable to see that any unjust discrimination has been made by the defendants against the plaintiffs. They have offered to the plaintiffs precisely the same terms which they have done to everybody else ; and we have not been able to find any rule obtaining in the case of simple common carriers which prevents them from protecting themselves against their rivals or competitors in trade, so long as substantially the same terms are offered to all. The mere fact that it may be more inconvenient to one to accept the terms than to others does not constitute discrimination. The plaintiffs are studying entirely their own interests, and the defendants have some right to protect theirs.

A large number of authorities have been cited by the counsel for the respondents to support the proposition that a common carrier is bound to accept all freight offered to it, at the same rates and with the same facilities. But an examination of those cases will show, with but one or two exceptions, that the common carrier was a corporation which had exercised the right of eminent domain, and had thereby become a public servant which had exercised the highest right known to the law for the purpose of affording facilities for the transportation of freight; and that, therefore, ithad no right to refuse or to make any terms or conditions in respect to transportation, except fixing the rate of freight, and if this rate discriminated, then they were not performing the public functions for the performance of which they had been allowed to exercise these extraordinary powers. Such stringency of rule does not obtain wheré no such rights have been exercised. Hence there is a manifest distinction between the duties to the public of that character of common carriers who have exercised the right of eminent domain because of their undertaking, and those who have not had conferred upon them any such powers. In the case at bar the defendants are ordinary common earners. They have offered ■to treat the plaintiffs upon precisely the same footing as the other shippers who-were their customers, and, therefore, there is no discrimination.

Concurrence

p. 507

If any .authority is needed to support what seems to be a self-evident proposition, the case of Steamship Go. v. McGregor, L. B., 21 Q. B. Div., 544, is one singularly in point, notwithstanding the claim upon the part of the respondent that the case at bar and the case cited have nothing in common. It seems to us that the principle which controlled that case was precisely the question which is involved in the case at bar. It is urged upon the part of the respondents that the English case was an action for conspiracy brought by one steamship company against others, alleging an unlawful combination to ruin the plaintiffs’ business, and that, in sustaining the judgment for the defendants entered by direction of the court, the appellate court decided merely that an unlawful conspiracy was not made out. And why ? Simply because no element of unlawfulness was found in the combination which was established. How, what was that combination ? It appears that the plaintiffs were a company of shipowners, trading between Australia and England, taking China by the way, and desirous of participating in the benefits of the transportation of tea during what is termed the “ tea harvest.” The defendants were a number of shipping companies and private partnerships, trading for the most part between England and China, and who, being desirous of keeping this valuable trade in their own hands, to prevent if they could the ruinous lowering of freight, which they contended would follow from absolutely unrestricted competition, entered into what they called a “ conference ” for the purpose of working the China tea trade, by offering a rebate of five per cent, upon all freights .paid by shippers to the conference vessels, such rebate not to be paid to any shipper who shipped tea in any vessels but those belonging to the conference. The plaintiffs in that action thereupon commenced the same, alleging a conspiracy to ruin their trade, to recover the damages alleged to have been sustained. It was held that, there being no element of unlawfulness in the combination mentioned, the action would not lie, and that the defendants had a right to combine with a view of keeping the trade in their own hands, such combination not being entered into with the intention of ruining the trade of the plaintiffs, nor through personal malice or ill-will towards them. It would seem, therefore, that a simple common carrier has the right to adopt such rules as are necessary to protect its trade, so long as those rules apply to all, and do not discriminate. The order should be reversed, with ten dollars costs and disbursements, and the motion for injunction denied, with ten dollars costs.

I concur in the result, but think that the court’s right t.o interfere is not dependent upon the question whether the corporation sought to be enjoined has received any franchise or authority from the state. As stated in Menacho v. Ward, 27 Fed. Rep., 533 , it is “ not alone because the business of common carriers is so largely controlled by corporations exercising under franchises the privileges which are held in trust for the public benefit that the courts have so strenuously resisted their attempts,

p. 508

by special contracts or unfair preferences, to discriminate between those whom it is their duty to serve impartially.”

This case, which is relied upon in the court below, I think, upon examination, will be found to support the conclusion arrived at by the presiding justice. The obligation upon a common carrier is well stated by Wallace, J., in that case as follows (at page 582): “ These decisions- proceed upon the ground that the carrier is entitled to take into consideration the question of his own profits and interests in determining what charges are reasonable. He may be able to carry a large quantity of goods, under some circumstances, at no greater expense than would be required to carry a smaller quantity. His fair compensation for carrying the smaller quantity might not be correctly measured by the rate per pound, per bushel, or per mile charged for the larger. If he is assured of regular shipments at given times, he may be able to make more economical arrangements for transportation. By extending special inducements to the public for patronage, he may be able to increase his business, without a corresponding increase of capital or expense in transacting it, and thus derive a larger profit. He is, therefore, justified in making discriminations by a scale of rates having reference to a standard of fair remuneration of all who patronize him. But it is impossible to maintain that any analogy exists between, a discrimination based upon the quantity of business furnished by different classes of shippers and one which altogether ignores this consideration, and has no relation to the profits or compensation which the carrier ought to derive for a given quantum of service.”

In this case it is not disputed but that the rate fixed by the defendants, and which they ask the plaintiffs to pay, is a fair and reasonable rate for the services to be rendered, and the fact that they have made, or propose to make, with one individual what is less than the fair and reasonable rate for the service is no reason why a court of equity should take out of the hands of the carriers the power to regulate their business, and to receive from those asking for the service such fair and reasonable rate as they have established, and require all to pay equally alike. I think the reasoning in the case of Steamship Co. v. McGregor, referred to by the presiding justice, is conclusive, upon the question presented by this appeal, in favor of the view contended for by appellants.