O'Keefe v. United States

delivered the opinion of the court.

This is an appeal from a decree dismissing a bill filed by appellant, as Receiver of the New Orleans, Texas and Mexico Railroad Company, against the United States and the Interstate Commerce Commission, praying the annulment of an order of the Commission, dated July 29, 1914, made in the Tap Line Cases, following the decision of this court reported in 234 U. S. 1 . The order required certain trunk line railway companies, including the New Orleans, Texas & Mexico, to reopen through routes and publish joint rates to interstate destinations with certain tap lines, including Louisiana and Pacific Railway Company, with which appellant’s road' had and has a connection, and prohibited any of the line carriers from making, to any of the tap lines an allowance or division out of. the joint rates in excess of maximum amounts prescribed as follows:

“For switching a distance of 1 mile or less from the' junction, $2 per car; over 1 mile and up to 3 miles from the junction, $3 per car; on shipments from points over 3 miles and not more than 6 miles from the junction 1]A¡ cents per 100 pounds; over 6 miles and not more than 10 miles from the junction, 2 cents per . 100 pounds; over 10 miles and not more than 20 miles from.the junction,

21/2 cents per 100 pounds; over 20 miles and not more than 30 miles from the junction, 3 cents per 100 pounds; over 30 miles and not more than 40 miles from the junction, 3J^ cents per 100 pounds; over 40 miles from the junction, 4 cents per 100 pounds.”

The following is an outline of the history of the case. After the supplemental report of the Commission in Star Grain & Lumber Co. v. Atchison, Top. & Santa Fe Ry., 14 I. C. C. 364 , 372; 17 I. C. C. 338 , in which the making of allowances and divisions to tap lines for the. traffic of proprietary mills was condemned, although no formal order was entered, the trunk lines, including the New Orleans, Texas & Mexico, filed cancellation of tariffs theretofore filed providing for joint rates with various tap lines, including the Louisiana & Pacific. Certain of the tap lines filed complaints /with the Commission requesting that through routes and joint rates with trunk linés be enforced. The Commission thereupon investigated the tap line situation with reference to lumber operations in the States of Arkansas, Missouri, Louisiana, and Texas. Pending this investigation, the cancellation of joint rates was suspended from time to time. On April 23, 1912, the Commission filed its report, and on May 14, 1912, its supplemental report ( 23 I. C. C. 277 , 549) and in orders dated May 14 and October 30, 1912, based upon these reports, it found that the tracks and equipment of the tap lines with respect to the industry of the proprietary lumber companies were plant facilities, and the service performed for the proprietary companies in moving logs to the mill and mill products to the trunk line was not a transportation service by a common carrier railroad, but a plant service by a plant facility, and that any allowance or division out of the rate on account thelreof was unlawful and resulted in undue and unreasonable preferences and unjust discriminations; and the order of October 30 required the trunk lines, including the

“It is doubtless true, as the Commission amply shows in it's full report and supplemental report in these eases, that abuses exist in the conduct and practice of these lines and in their dealings-with other carriers which have resulted in unfair advantages to the owners of some tap lines and (to) discriminations against the owners of others. Because we reach the conclusion that the tap lines involved in these appeals are common carriers, as well of proprietary as non-proprietary traffic, and as such entitled to participate in joint rates with other common carriers, that determination falls far short of deciding, indeed does not at all decide, that the division of such joint rates may be made at the will of the carriers involved and without any power of the Commission to control. That body has the authority and it is its duty to reach all unlawful discriminatory practices resulting in favoritism and unfair advantages to particular shippers or carriers. It is not only within its power,’but the law makes it the duty of the Commission to make orders which shall nullify such practices resulting in rebating or preferences, whatever form they take and in' whatsoever guise .they may appear. If the divisions qf jqint rates are such as tq amount to rebates qr discriminations in favor of the owners of the tap lines because of their disproportionate amount in view of the

service rendered, it is within the province of the Commission to reduce the amount so that a tap line shall receive just compensation only for what it actually does.”

After this decision, the Commission, after a rehearing and further argument but without taking further testimony, and upon the same record on which its orders of May 14 and October 30, 1912, had been entered, made further findings ( 31 I. C. C. 490 ), upon which was based the order of July 29, 1914, now under attack.

The New Orleans, Texas & Mexico Railroad Company operates, directly and through stock ownership of other companies, a system of railroad extending from New Orleans across the States of Louisiana and Texas. The Louisiana & Pacific Railway Company, incorporated under the laws of the State of Louisiana, owns' and operates a tap line within that State, including approximately 80 miles of main and branch lines, its main line extending from De Ridder southerly to Lake Charles, approximately 45 miles, crossing, and forming a junction with the main line of the New Orleans, Texas & Mexico at Fulton, which is about 25 miles from De Ridder and 19 miles from Lake Charles. The Louisiana & Pacific connects also with the following trunk lines: At De Ridder, with the Gulf, Colorado & Santa Fe and the Kansas City Southern; at Bon Ami (near De Ridder), with the Kansas City Southern; and at Lake Charles, with the Louisiana & Western (Southern Pacific Company), the Kansas City Southern, and the St. Louis, Iron Mountain & Southern. Located along the line of the Louisiana & Pacific are certain lumber mills, which are called proprietary mills because controlled by the same interests which own the stock' of the Louisiana & Pacific. Some of these are at, De Ridder, Bon Ami, and Longville, all of which points are north of Fulton, while .one is at Gossport, near Lake Charles. At Bannister and Ragley, on the line of the Louisiana & Pacific, north of Fulton, there are non-proprietary mills.

It is insisted by appellant that the Commission was ■without power to prescribe maximum diyisions, as was done by the order of July 29, 1914, because no joint rate was fixed, either by the Commission or by the parties, and they had not been afforded an opportunity to agree in respect to the division. This is based upon the view that § 15 of the Commerce Act as amended (Act of June 18, 1910, c. 309, §.12, 36 Stat. 539 , 551), contains only two provisions dealing expressly with the division of rates, the first being applicable where the carriers fail to agree among themselves upon the division, the other where the carriers have refused or neglected to establish through routes of joint rates voluntarily. Without stopping to consider.whether the circumstances of this case bring it within either of these provisions, we deem it clear that to regard these only is to take too narrow a view of the scope of the section. The first part of the same section enacts — “That whenever ... the commission, shall be of opinion that any individual or joint rates

In the case in 234 U. S. 1 , this court did not ignore, but fully recognized, the significance of the community of interest between the lumber company and the tap line. It was pointed out (p. 27) that timber and its manufactured products were exempted from the absolute prohibition of the Commodity Clause of the Hepburn Act (of June 29, 1906, ch. 3591, 34 Stat. 584 , 585). But this was regarded as one of the circumstances rendering it important that the Commission should deal with the abuses

We are clear that the Commission had jurisdiction to make the order of July 29, 1914.

Next it is insisted that the Commission applied • erroneous principles of law, in that it excluded from consideration competitive conditions as an element in determining whether a division is just and reasonable or unlawfully discriminatory. The order is not open to this criticism. It not only takes, competitive conditions into consideration, but establishes the maximum divisions for the very purpose of preventing preferences, discriminations, and rebates, as methods of competition.

It is insisted that there was no evidence before the Commission to sustain its finding to the effect -that any allowance or division in excess of the limits prescribed would result in undue preference and unjust discrimination. This, of course, is to be tested by a consideration of the evidence that was before the Commission. The report and supplemental report of April 23 and May 14, and the orders of May 14 and October 30, 1912, and the

The final contention, which is that the Commission’s order in effect deprives the New Orleans, Texas & Mexico of its property without due process of law, by denying to it the right to contract and compete for traffic originating on the line of the Louisiana & Pacific, is transparently unsound. The trunk line has no constitutional right to build up its business by paying bonuses or rebates that have been forbidden by act of Congress for considerations affecting the public welfare.

We are not to be understood as conceding that appellant, is in a legal sense aggrieved by the action of the Commission in limiting the allowance to the tap line. The case is singular, in that neither this tap line nor any tap line is complaining that the allowance is too small; nor is any trunk line complaining that it is too great. The real basis . of appellant’s complaint, representing a trunk line carrier, is that the allowance to the tap line is too small. It is questionable whether it lies in the mouth of the line carrier to object on this ground.

We recognize the exceptional situation in which appellant’s road is placed, and the hardship that results to it from the application of the order of July 29, 1914, to the traffic originating upon the line of the Louisiana & Pacific. After that order, the New Orleans, Texas & Mexico and the Louisiana & Pacific undertook to agree upon through routes and joint rates, with divisions not greater than those allowed by the Commission, but said to be equalized so as to enable the New Orleans, Texas & Mexico.to com

Decree affirmed.

Mr. Justice McReynolds took no part in the consideration or decision of this case.