BEHLMER v. LOUISVILLE & N. R. CO. et al., 83 F. 898

GOFF, Circuit Judge.

On the 27th day of June, 1894, the interstate commerce commission entered an order requiring the appellees to cease and desist on or before the 15th day of July, 1894, and thenceforth abstain, from charging, demanding, collecting, or receiving any greater compensation in the aggregate for the transportation of hay or other commodities carried, by and under the circumstances and conditions similar to those appearing in this case, from Memphis, in the state of Tennessee, to Summerville, in the state of South Carolina, than that contemporaneously charged and received for the transportation of hay and such other commodities for the longer distance from Memphis aforesaid to Charleston, in the state of South Carolina.

Such order was entered as the- result of the hearing of the petition that had been theretofore filed before such commission by the appellant, Henry W. Behlmer. .Tn his complaint so filed he alleged, in behalf of himself and other merchants and residents of Summerville: That the defendants were charging an unreasonable and excessive rate, of 28 cents per 100 pounds, on hay in car-load lots, from Memphis to Summerville.

That Summerville is an incorporated town, of considerable size and importance, situated on the South Carolina Railway, in the state of South Carolina, and 22 miles inland from the city of Charleston, and that said rate of 28 cents per 100 pounds is 9 cents per 100 pounds greater than the defendants charge and receive for transporting hay in car loads from Memphis, through Summerville, to Charleston, and that such greater charge constituted a violation of the long and short haul clause of the interstate commerce act.

That said rale of 28 cents to Summerville was equal to the rate of 19 cents in force on hay in car loads from Memphis, through Summerville, to Charleston, with the local rate of 9 cents per 100 pounds charged over the South Carolina Railway for carrying hay from Charleston back to Summerville, and that the 9-cent local rale which the complainant was forced to pay, in addition to the through Charleston rate, in order to get hay transported from Memphis to Summer-ville, was unreasonable and excessive.

That the petitioner carried on a wholesale hay and grain business in said town of Summer-ville, and was thus 22 miles nearer than Charleston to the Western points where grain shipments originated.

That the petitioner received at Summerville two car loads of hay ordered hv him, and shipped to him, from Memphis, Tenn., which hay was so transported to him from Memphis to Chattanooga, 310 miles, by and over the lines of the Memphis & Charleston Railroad; thence to Atlanta, Ga., 152 miles, by the lines of the East Tennessee, Virginia & Georgia Railroad; thence to Augusta, Ga., 171 miles, over the lines of the Georgia Railroad; thence to Summerville, 115 miles, over the lines of the South Carolina Railway Company.

That the defendants were common carriers, under a common control and management, for continuous carriage or shipment, and were engaged in the transportation of passengers and property wholly by railroad, between the points mentioned.

Also, that the two car loads of hay referred to were hauled from Memphis to Summerville over the same line, in the same direction as Charleston, and under substantially similar circumstances and conditions as was the Charleston traffic; that the haul from Memphis to Summerville was 22 miles shorter than the haul from Memphis to Charleston, and that such shorter distance was included in the longer distance; that the petitioner was forced to pay 28 cents per 100 pounds on said shipment to Summerville, the shorter distance, when the rate to Charleston, the longer distance, was 19 cents per 100 pounds; that the petitioner was thereby obliged to pay $56, in the aggregate, as freight on the two car loads of hay from Memphis to Summerville, when the same shipment would have been made by the same roads, over the same rails, in the same direction, to Charleston, a greater distance of 22 miles, for a less sum, to wit, $38, in the aggregate.

The petitioner further alleged that the local rate of 9 cents per 100 pounds for 22 miles, as also the aggregate charge of 28 cents per 100 pounds from Memphis to Summerville, was excessive and unreasonable, and therefore in violation of the act to regulate commerce.

It was further alleged by the petitioner that all of the railway lines mentioned in the petition, and made defendants in said proceedings, were members of the Southern Railway & Steamship Association, and that the discrimination and excessive rates against Summerville existed, not only on hay, but on all other articles of interstate commerce coming to that place, greatly to the detriment and disadvantage of that town, and to tlie business of its merchants.

The petitioner prayed that the notice required in such cases issue to said railroad, and that the interstate commerce commission would order that the defendants cease from violations of the law in the particulars mentioned, and for such other and further relief as the commission might think proper. The notice issued, and the defendants duly appeared and filed their answers.

The joint answer of the receivers of the East Tennessee, Virginia & Georgia Railway Company and of the Memphis & Charleston Railroad Company admits that such companies are subject to the act to regulate commerce, and, in effect, that the shipment of hay took place as set forth in the petition; but it was not admitted1 therein that the rates specified constituted a violation of the law, and proof of the same was demanded. The answer of the lessees of the Georgia Railroad, as also the answer of the receivers of the South Carolina Railway Company, are, in substance, the same.

Concerning the petitioner’s allegations of a violation of the fourth

section of the interstate commerce act, the answers make the following averments, in substance: That the Georgia Railroad Company and the other carriers complained against have no joint through tariff from Memphis to Summerville, and that, therefore, they have no “line,” in the sense of said section, from Memphis to Summerville, on which that

section can operate; that the transportation of the two car loads of hay from Memphis to Summerville was not done under substantially similar circumstances and conditions as the transportation of like property from Memphis to Charleston, for the reason that Summerville is a local station on the South Carolina Railway, not on any water route, and that enterprise and capital has not constructed more than one railroad to it; that consequently it has not the advantage of competition of carriers, as the said railroad on which it is located is not compelled by competition to choose between a reasonable rate and a rate which is much below what is reasonable; and that at Charleston there exists competition with numerous other all-rail routes between Memphis and that city, eight of which are mentioned by name, and the lines composing the same set forth in detail.

The claim was made by the defendants in their answers that all such lines were actual competitors for business from Memphis to Charleston; that Charleston was a port on the Atlantic Coast, easy of access for vessels from Baltimore, Philadelphia, New York, Boston, and other Eastern ports from which hay is shipped by water; that if the railroads running' from Memphis to Charleston charged rates to all places as high as the rate to Summerville, although the latter rate is in itself reasonable, no hay would be shipped from Memphis to Charleston, but the latter city would be supplied with hay from the North Atlantic ports, and said railroads would not only be deprived of such business, but that Memphis would lose the hay market; that the rates on Western produce to Charleston and other coast cities are made with, a view to actual existing water competition; that Western produce, such as grain and hay, can be shipped from Chicago to Charleston, through the ports of New York, Philadelphia, or Baltimore, over continuous water routes, by the lakes and canal, or over combined rail and water routes; that the all-rail lines seeking to do business between Chicago, Charleston, and the coast cines are compelled to make fluir rates approximate those offered by the continuous water route, or the combined rail and water routes; that the all-rail routes make their rates as much higher as the difference in services will permit, and those rates are correspondingly adjusted from all Western points, such as Evansville, Cairo, St Louis, and Memphis, the l>resent all-rail rates on hay per 100 pounds being as follows: From Chicago, 33 cents; from St Louis, 28 cents; from Louisville, Evansville, and Cairo, 23 cents; from Memphis, 19 cents.

The defendants claimed, therefore, that the rate from Memphis to Charleston on hay was forced upon their lines by actual existing water competition, as well as by other additional competition beyond their control; that, the controlling element in said competition is the lake, canal, and ocean transportation between Chicago and Charleston, or the lake transportation from Chicago to Buffalo, or other lake ports, thence by rail to New York, and thence by ocean to Charleston, or rail transportation from Chicago to Baltimore, Philadelphia, or New York, and thence by ocean to Charleston.

The case being at issue upon the complaint and answers (the testimony having been duly taken), the same was, after argument by counsel, duly submitted to the commission, which directed the order to the appellees hereinbefore referred to; and, as required by law, it caused a properly authenticated copv of its report, and of its findings of fact and conclusions thereon, together with a copy of said order, to be delivered.to each and all of the parties to said cause, their receivers and successors in operation.

The defendants to said proceeding before the interstate commerce commission having failed and refused to obey such order, the said Henry W, Behliner filed his petition, as he was authorized by the interstate commerce law to do, in the circuit court of the United States for the district: of South Carolina, in which the action had before the commission was fully set out, and the refusal of the defendants therein to comply with what he charged to be the lawful order of the commission was alleged; and the prayer was made that an order be entered granting to tbe petitioner a writ of injunction restraining the defendants, their officers, servants, and attorneys, from continuing in their violation and disobedience to said order of the interstate commerce commission, and that finally an order and decree be issued restraining the said defendants, and each of them, and their officers, servants, and attorneys, from further violating or disobeying the requirements of said order of the commission, and decreeing permanent obedience to the same, together with such further and additional orders as are usually entered under such circumstances.

The court below on the 2d day of November, 189.4, directed that the defendants appear and answer said petition, and show cause, if any they could, why the prayer of the same should not be granted.

In the same order it was provided that the defendants be restrained and enjoined, until the further order of the court, from charging^ collecting, or receiving any greater compensation in the aggregate for the transportation of hay or other commodities carried by them, under circumstances and conditions similar to those in this case, from Memphis, in the state of Tennessee, to Summerville, in the state of South Carolina, than that contemporaneously charged and received for the transportation of hay and such other commodities, respectively, for the longer distance from Memphis to Charleston; and also the South Carolina & Georgia Railroad Company was restrained and enjoined from imposing, charging, and collecting the added local rate of 9 cents in addition to the through rate of 19 cents to Charleston.

The case was duly matured, and came on to be finally heard on the 11th day of December, 1895, when, after argument, the court took the same under advisement, and afterwards, on the 22d day of January, 1896, entered a decree dismissing the bill. Prom this decree the petitioner appealed. At the time of the institution of the proceedings before the interstate commerce commission, the South Carolina Railway Company was represented by Daniel H. Chamberlain, its receiver, who was made a defendant, and who filed his answer to the petition.

The proceedings were instituted in December, 1892, and the order of the commission issued on the 27th dav of June, 1894; but prior thereto, on April 12, 1894, the South Carolina Railway Company was sold by virtue of a decree of the circuit court of the United States for the district of South Carolina, entered in the cause of Bound v. South Carolina Railway Co. et al., in which said cause the said Daniel H. Chamberlain had been appointed such receiver.

On the 12th day of May, 1894, the purchaser of said property under said foreclosure sale conveyed the same to the South Carolina & Georgia Railroad Company, a defendant herein. That company moved the court below to dismiss these proceedings, so far as it was concerned, for the reason that there was no evidence before the court of any notice to, or service of the same upon, said company, of the institution of this action before the interstate commerce commission, nor any evidence of any refusal or neglect by it to obey the order of the commission.

The court below was of opinion that there was no evidence of the sendee of the cornmission's order on the South Carolina & Georgia Railway Company, nor of its refusal or neglect to obey (he same; but as there were other defendants, as to whom it was necessary to dispose of the .questions raised, the court proceeded to a decree concerning the same.

The petition filed in the court: below avers that the findings and conclusions of the commission in the matter of the petition filed before it by the appellant, together with a copy of the order and notice, were delivered to each and all of the parties to the cause, their receivers and. successors in operation. We think the evidence sufficiently sustains these allegations.

The South Carolina Railway Company had due notice of the proceedings before the commission, and filed its answer, through its receiver; and it plainly appears that a registered letter was sent from the office of the secretary of the commission in July, 1894, and duly delivered at Charleston to the successor of said South Carolina Railway Company (the South Carolina & Georgia Railroad Company), which contained a copy of the opinion and order of the interstate commerce commission made and filed in the matter of said petition.

That such copy was received by the South Carolina & Georgia Railroad Company is not doubted, and the point relied upon by (hat company in its motion to dismiss made in the court below was that the name of the South Carolina & Georgia Railroad Company is not mentioned in said order and opinion, and the further fact that said company was organized after the date when such order and opinion were made and filed. In our judgment, this position of the South Carolina & Georgia. Railroad Company is without merit.

So far as the questions involved in this controversy are concerned, we think it had sufficient notice, and in fact that it was bound by the notice' served upon, and the answer filed by, the receiver of the South Carolina Railway Company.

The petitioner, in his complaint lilt'd with the commission, charged the South Carolina Railway Company and its receiver with unlawfully charging an unreasonable rate of freight on certain articles transported over its line, and other lines with which it had traffic arrangements; and 1he commission, after full investigation, found that the petitioner’s allegation was true, and ordered that said road and the others connected with it cease, on or before July 15, 1894, to make such unlawful charges.

We are utterly unable to agree with the contention that such order of the commission was rendered absolutely nugatory, within a few days after it was issued, by the mere fact that the name of one of the railroads mentioned therein had in the meantime been changed, while the traffic arrangements theretofore in existence were still in force. To so hold would render it: impossible for any petitioner to obtain relief in cases similar to Ibis, and would in fact prevent the commission from enforcing its lawful orders. The supreme court: of the United States, in the case of U. S. v. Trans-Missouri Freight Ass’n, 166 U.

S. 290, 309, 17 Sup. Ct. 540, in effect decides this point: in the manner we have indicated, when it says, in substance, that if, by the mere dissolution of the association originally proceeded against, the suit abates, then defendants have thereby discovered an effectual means to prevent the judgment of the court being given on the question really involved in the case.

We do not think it essential to the decision of this case to further consider the argument of counsel relating to the pecuniary liability of the purchaser of property sold under foreclosure decree, nor of the responsibility of such purchaser for contracts made by the receiver prior to such sale, as in our judgment the propositions of law therein involved are not applicable to the facts and circumstances of this case.

We conclude that the court below had jurisdiction of the parties and of the subject-matter involved, and, such being the case, it was its duty, as a court of equity, to make both its jurisdiction and its remedy effectual for perfect relief, if it found the allegations of the petition to be true. This brings us to tbe real question in this case, and that is, have these defendants violated the provisions of the fourth

section of the act of congress approved February 4-, 1887, entitled “An act to regulate commerce”? 24 Stat. 379. That

section reads as follows: “Sec. 4.

That it shall be unlawful for any common carrier subject to the provisions of this act to charge or receive any greater compensation in the aggregate for the transportation of passengers or of like kind of property, under substantially similar circumstances and conditions, for a shorter than for a longer distance over the same line, in the same direction, the shorter being included within the longer distance; but this shall not be construed as authorizing any common carrier within the terms of this act to charge and receive as great compensation for a shorter as for a longer distance; provided, however, that upon application to the commission appointed under the provisions of this act, such common carrier may, in special cases, after investigation' by the commission, be authorized to charge less for longer than for shorter distances for the transportation of passengers or property; and the commission may from time to time prescribe the extent to which such designated common carrier may be relieved from the operation of this

section of this act.” We find this case, so far as the fourth

section is involved, to be quite similar to the case of Cincinnati, N. O. & T. P. R. Co. v. Interstate Commerce Commission, 162 U. S. 184, 16 Sup.

Ct. 700, commonly known as “The Social Circle Case.” That the appellees, in transporting the hay and other property mentioned in the petition filed in this cause, and in establishing the rates on the same from Memphis to Charleston and from Memphis to Summerville, were engaged in such transportation under a common management for continuous carriage or shipment, within the meaning of that language as used in the act to regulate commerce, is, we think, without doubt; and therefore it follows that it was within the jurisdiction of the interstate commerce commission to ascertain whether, in charging a higher rate for a shorter than for a longer distance over the same line in the same direction (the shorter being included within the longer distance), the appellees were transporting such property under substantially similar circumstances and conditions.

The appellees alleged, both before the commission and the court below, such substantial dissimilarity of circumstances and conditions as justified them in making the greater charge for the shorter haul complained of in the petition, and upon them was the burden of showing affirmatively that such circumstances and conditions were in fact substantially dissimilar. The commission, in ascertaining Hie facts, found against this claim of the railroad companies, and entered the order the enforcement of which was the object of the petition filed by the appellant.

The circuit court., however, on hearing the matters involved, sustained the claim of the appellees, and refused to enforce the order of the commission.

The appellees claim that the substantial dissimilarity in the circumstances and conditions under which they transport property from Memphis to Charleston and from Memphis to Summerville is created by (1) the competition of various markets for the trade of Charleston, such as New York, Boston, Philadelphia, Baltimore, Chicago, and other points which cau reach Charleston by all-water lines or by all-rail lines, or part-rail and part-water routes; (2) the competition of all-rail lines between Memphis and Charleston. The decisions of the interstate commerce commission concerning 1he proper construction of this fourth

section of the commerce act have not been uniformly sustained by the decrees of the courts of the United States iu cases instituted for the purpose of enforcing the orders of the commission concerning that section; and therefore», prior to the announcement of the opinion of the supreme court in Hie Social Circle Case, there was much confusion concerning the true meaning of the same. A careful reading of that opinion impels us to the conclusion that the construction given that

section by the interstate commerce commission in a number of cases decided by it prior to such decision is the proper one. In this connection may be cited the following: James & Mayer Buggy Co. v. Cincinnati, N. O. & T. P. R. Co., 3 Interst. Commerce Com. R. 682: Georgia R. Co. v. Clyde S. S. Co., 4 Interst. Commerce Com. R. 120; Chattanooga Board of Trade v. East Tennessee, V. & G. R. Co., Id. 213.

Such being our conclusions, we have now to determine whether or not the facts found by the commission are supported by the evidence taken in this case, or, in other words, whether or not the circumstances and conditions attending the transportation of hay from Memphis to Charleston and from Memphis to Summerville are so dissimilar as to justify the rates charged respectively.

Does the competition set up by the appellees as existing* by -water between Chicago and the North Atlantic ports, and the competition by rail between Memphis and Charleston, as also the competition of market with market, constitute substantial dissimilar circumstances and conditions, within the meaning of the said fourth

section of the act to regulate commerce?, Did such competition in fact affect: rates between Chicago, the North Atlantic ports, and Charleston? We are of the opinion that it was not of controlling force; that it was not such effectual competition as would constitute the dissimilar circumstances and conditions which would justify the commission, upon application to it, in authorizing the carrier to charge less for the longer than for the shorter haul.

We adopt the conclusion heretofore announced by the interstate commerce commission, which is, in substance, that, in order to justify the greater charge for the shorter distance because of water competition, the transportation as to which 'such competítion exists must be concerning freight to the longer-distance point, which, if not carried to such point by the road giving the rate complained of, could reach that point by wrater transportation, and also that the competition of one transportation line cannot be said to meet that of another for the carriage of traffic from any particular locality, unless one line could perform the service if the other did not.

Such we believe to be the true meaning of said fourth section, so far as the point we are now considering is involved.

We are also of opinion that the competition claimed by the appellees to exist between the different markets — particularly those of .Memphis, Chicago, and the North Atlantic ports — to supply the trade of Charleston in the products mentioned is not in reality the competition that affects rates from a particular locality, but is one that is regulated by the commercial circumstances existing at those points, applicable to business of that character, and not connected with the usual conditions under which transportation is conducted; nor does such competition, in our judgment, create the dissimilar circumstances and conditions referred to in the fourth

section of the act now under consideration.

And we further hold that competition between carriers subject to the requirements of said act does not produce such substantial dissimilarity in the circumstances and conditions under which transportation is performed as will justify such carriers in making a greater charge for the shorter than for the longer haul without an order to that effect from the commission, granted by it as provided for in the proviso to the fourth section.’ It is fair to presume that, if the facts in any given case justify departure from this rule, the commission will, on a proper showing, grant the relief asked for, and make such exceptions as the circumstances suggest as proper, and justice to the carrier as well as the shipper demands.

If the carriers were permitted to determine such questions, the conflicting results produced by opposing interests would not only cause confusion, but work great injury in many cases to the shippers, to localities, and also to certain lines of business that would be affected thereby.

If the competition of markets or of carrying lines subject to the provisions of the commerce act justifies carriers in making greater short-haul and lower long-haul charges over the same line, without an order from the commission, issued after due investigation, then the unjust rates for transportation existing when that law was enacted, and which it was intended should be prohibited by it, will continue to be imposed and collected; and schedules will be made, announced, and maintained, to the prejudice of some localities and in favor of others, to the destruction of some shippers and to the profit of others.

This statute was intended to prevent any and all kinds of discrimination'in favor of localities, individuals, or corporations, and to put all shippers on the same footing, — that of perfect equality. The rate from Memphis to Charleston on hay and grain and like products is reasonable, and is shown by the evidence to be remunerative.

It is fair to presume that it would not have been made by the railroads unless those controlling them were satisfied that it would be. so;- and consequently, to justify the higher charge for tlie shorter haul to Summerville, which we have found was made under substantially similar circumstances and conditions, the commission, after application to it for that purpose, must find certain reasons for the same, after due investigation, that may in fact exist, but which, we are compelled to say, are not now disclosed by the record before us.

In the light, of the act to regulate commerce, and keeping- in view the theory upon which it was constructed, it is not difficult to understand why application was not made to lire commission for permission to charge less for the longer haul to Charleston than for the shorter haul to Summerville, when the rate proposed was 19 cents per 100 pounds for the longer and 28 cents per 100 pounds for the shorter. The appellees contend that the smaller charge for the greater distance is in this case of great importance to the city of Charleston, as well as to the

section of country adjacent: thereto, as by means thereof the merchants of that city are enabled to build up a trade that otherwise would he lost to them. That: may be true, hut is not the same argument applicable to Summerville and other interior cities along the lines of the roads operated by the api>ellees between Charleston and Memphis? In order to build up one locality, we should not tear down many others, and justice to one

section should not be purchased at the expense of another. It should be kept in mind that, (he petitioner does not ask that the rate from Memphis to Charleston be changed, — that it: shall be made less, and consequently unreiminerative, or increased, and thereby cause the loss of the traffic, — but only that the rate from Memphis to Summerville shall not he greater than the rate to Charleston.

Finding the facts to be as above indicated, — substantially as found by the interstate commerce commission in the proceedings instituted before it by the apjiellant, — and construing the law as we do, it follows that (be order issued by said commission to the appellees was a lawful order, of which they had: due notice, and which it was and is their duty to obey and respect.

We do not find it necessary to consider and dispose of the questions raised in the pleadings, and argued by counsel, concerning the Southern Kailway & Steamship Association, nor the matter of the added local charge1 of nine1 cents from Charleston to Summerville, otherwise than it. may be involved in the through rale to Summer-ville.

The decree of the court below dismissing the bill is reversed, and this cause1 is remanded te> saiel cemrt, with instructions to ente;r a decree imrein requiring the appellees, and each of them, to desist from charging, demanding, eolleu-ting, or receiving any greater compensation in the aggregate fe>r the transportation of hay or other e-omtnodiries carried by them, under circumslane-es and conditions similar to those1 set: out in the petition filed in this cause, from Memphis, in the state of Tennessee, to Huimnerville, in the state of South Carolina, than that contemporaneously charged and received for the transportatiem of hay and other commodities, respectively, for the longer distance from Memphis aforesaid, to Charleston, in the state* of Hearth Carolina.

Haid cemrt will also sen1 that the requirements of said decree are immediately carried into effect and enforced as provided for in said act to regulate commerce, and will further direct that the appellees pay all costs of this proceeding, and in addition thereto such reasonable fee to the appellant’s counsel as that court may, under the circumstances of this case, think proper and just Reversed and remanded.