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penalties. Prosecutions for such offenses are, under the act, conducted by the regular prosecuting officers of the United States courts. Our only connection with such infractions of the law is to turn over to the proper officers whatever information we may be able to obtain.
Section 4 provides that no greater charge shall be made for the shorter than is made for the longer haul. We have at the present time a good many cases for violations of this section. This is accounted for, however, by the fact that the law of that section is not yet settled. The section prohibits the charging more for the short than for the long haul when the service is rendered under substantially similar circumstances and conditions. Carriers in certain parts of the country insist that competition between railways subject to the act necessarily creates dissimilar circumstances and conditions, while the Commission holds that it does not. That question is before the Supreme Court of the United States and will probably be decided before long. Whatever the decision, that class of cases must, for the most part, drop out when it is made. If the court sustains the contention of the railways, the section will cease to exist; and if the contention of the Commission is sustained, cases under it will cease to arise.
It is apparent, therefore, that practically all the cases which this Commission can be called upon to hear and formally determine in the future will be those arising under either the first or third section. If we have the power to entertain and decide them, these cases will necessarily be numerous and important. The amount of money involved will be much greater than that involved in the decisions of any trial court in the United States. The results will usually be of more consequence to the litigants than those of any such court.. We feel that the Commission should be given by additional legislation the power in these respects which it was supposed to have at the outset.
DIVISIONS OF JOINT RATES.
There is one other thing which ought, perhaps, to be called to your attention in connection with the third section. That section, in addition to providing that the carriers shall not discriminate between their patrons or the subjects of traffic, also provides that they shall not discriminate between connecting lines, but shall afford to all lines proper and equal facilities for the interchange of business.
Giving this provision the most limited construction possible, it was evidently intended to compel carriers to make the same through arrange ments with one connecting line that it made with others. It was probably the intent to go further still and compel carriers subject to the act to make "proper" through arrangements with all their connections. It has been impossible to give any effect whatever to it, for the reason that no means are provided by which, in the case of disagreement between the carriers, it can be determined what a suitable arrangement is.
To what extent the Commission should have power to make a through route and a through rate is considered in another part of this report, and will not be referred to here further than to say that in one class of cases, in order to be able to enforce an order fixing a maximum or a minimum rate, the Commission should have power to determine the proportions of the rate to which each carrier shall be entitled. An illustration will make plain what is meant.
We have before us at the present time a complaint which alleges that the rate from Chicago, Ill., to Kearney, Nebr.; is discriminating and unlawful. The rate is made in this way: There is an interstate rate from Chicago to Omaha. The rate from Omaha to Kearney is fixed by the Railroad Commission of the State of Nebraska. The through rate from Chicago to Kearney is made by adding to the through rate to Omaha the local rate from Omaha to Kearney. Merchandise is transported by continuous shipment upon through bills of lading from Chicago to Kearney at this rate. The merchants of Kearney insist that this manner of making the rate discriminates against them in favor of the merchants at Omaha; that it is not properly a thorough rate at all. Now, if we should be of the opinion that this contention is well taken and that Kearney is entitled to a lower through rate, our only power, as we have hitherto interpreted the act, would be over the entire through rate. We might order a reduction of the whole rate, but we could not determine how that reduction should be shared by the different carriers. If the carriers refused to agree about that, it is difficult to see how the order could be enforced. Clearly, to make and enforce such an order, we must have power to determine the divisions of this through rate between the different roads making up the joint line.
Kearney is but one of thousands of places to which the through rate is made upon this same plan. A large part of interstate rates are joint rates, in reference to which the same thing would be true. It is believed that hitherto this objection has not been taken by the carriers. If the Commission has power to overcome it, it probably never will be taken. If the power is not given, the difficulty will arise at the most inopportune moment. We suggest that if it seems wise to invest this Commission with any authority whatever, that authority be made. complete as far as it goes.
HOW SHALL ORDERS OF COMMISSION BE ENFORCED?
In case the Commission is invested with the power to fix a rate, the question arises, How are its orders in that respect to be given effect, and what is to be the attitude of the courts toward such orders? It is said that the fixing of a rate is a legislative function. Under the Constitution of the United States the judicial and legislative departments are entirely distinct, and the powers of the one can not be exercised by the other. This being so, it is suggested that the courts can have nothing to do with an order of the Commission which prescribes a rate;
that such proceedings must be made conclusive, and that the only remedy of the carrier is to attack by an independent proceeding the oper ation of the order upon the ground that its enforcement will deprive the carrier of its property without due process of law. If this is cor rect, the order of the Commission can not be made in the first instance subject to review by the courts.
We do not, however, apprehend that such is the meaning and fair import of the various decisions upon that subject. The fixing of the rate in the first instance is a legislative function, but whether that rate, when fixed, is reasonable is a judicial question.
This was the exact point passed upon in Chicago, etc., Ry. Co. v. Minnesota (134 U. S., 418). The State of Minnesota had created a railroad commission, with authority, if it found the rates prescribed by the railroad companies of that State unreasonable, to determine what rates were reasonable, and, in case the carrier declined to put in the rates recommended by the commission, to compel it to do so by resort to the courts. The Minnesota commission determined that certain milk rates were unreasonable, and ordered the Chicago, Milwaukee and St. Paul Railway Company to put in a rate established by it as reasonable. This the railway company declined to do, and thereupon the commission applied to the Minnesota courts for a writ of mandamus, as it might under the act creating the commission, to compel this company to accept the established rate. The Minnesota court held that the application to it for a mandamus was a proper one; that the determination of the railroad commission as to what was a reasonable rate was final and conclusive, and not subject to review in the courts, and that the only function of the court was to compel, by its mandatory writ, an obedience to the order of the commission.
From this decision the railroad company took a writ of error to the Supreme Court of the United States, claiming that its effect was to deprive that company of its property without due process of law, and that it was not thereby afforded equal protection under the law. The Supreme Court of the United States sustained this contention, and held that the act of Minnesota, as interpreted by the supreme court of Minnesota, was unconstitutional, for the reason that it did not give an opportunity to determine by judicial investigation whether the rate fixed by the railroad commission was or was not reasonable.
It will be seen, therefore, that in this case the court, instead of holding that the question was not a proper one for judicial determination, distinctly ruled that opportunity must be given for a trial of that very question in the courts. This case was decided in 1889. We are not aware that its correctness has ever been questioned. Judge Miller said in a concurring opinion in that case that the better practice was to attack a rate established as this had been by a bill in equity, and that method was followed in the case of Reagan v. The Farmers' Loan and Trust Company (154 U. S., 362). In the latter case the rates established
by the Texas railroad commission were drawn in question. By the law creating that commission, it was given power to establish a tariff of charges, which were obligatory upon the different carriers within the State, and the commissioners, acting under the provisions of the law, had done so. The Farmers' Loan and Trust Company, as trustee for certain mortgage bondholders, brought suit against the Texas commissione s and the attorney-general to enjoin them from putting in force the rates and collecting the penalties against the International and Great Northern Railroad Company, upon the ground that the rates established were unjust and unreasonable, and deprived the petitioners of their property without due process of law.
The court sustained the petition and enjoined the rates in question. It should be noticed, however, that the Texas act expressly provided that in case a party affected was aggrieved by the action of the Commission he might apply to any proper court within a particular county for a review of the decision, and one of the grounds upon which the court took jurisdiction was that the act itself permitted a judicial review of the reasonableness of the rates established by the Commission. Certainly there is nothing in the opinion which intimates or indicates that the question whether the action of the Texas commission in the establishment of a rate was just and reasonable would not be a judicial question. Upon the other hand, the language of the opinion from first to last is that while the legislature may prescribe the rate, the justice and reasonableness of that rate when prescribed is for the courts. What may finally be held to be the test of a just and reasonable rate is a different matter.
It should be carefully observed, however, that the Supreme Court in the Reagan case held that while the court could determine that the schedule of rates under consideration was not a just and reasonable one, it could not prescribe rates which would be just and reasonable. In a certain sense the court, by enjoining the putting in of those rates, did determine what would be just and reasonable for the future. A schedule of tariffs which yielded a suitable income in 1892, might have yielded nothing at all over and above the cost of operation within five years, and vice versa. This right to forecast the future is of necessity often exercised by courts of equity in the granting of injunctions, and even by juries in the assessment of damages, and is not objectionable so long as the thing attained is the enforcement of a present right, for that is a judicial function.
It is significant that in every State, with one exception, where the rates are fixed by the Government, whether by direct legislative action or through the intervention of a commission, an opportunity is given for a judicial inquiry as to the reasonableness of the rates prescribed. The exception is the State of California, whose constitution makes the act of its commission conclusive. This provision in the State constitution has been held to be in contravention of the Constitution of the
United States (Southern Pacific Co. v. Commission, 78 Fed. Rep., 236).
We believe that at the present time upon the decisions of the Federal courts these three propositions can be safely affirmed:
1. Congress may fix interstate rates, either directly or through the agency of a commission.
2. Whether those rates when fixed are just and reasonable, is a judicial question. The carrier can not be deprived of the right to raise that question at some time and in some form.
3. Under the Constitution of the United States the power of the Federal courts is confined strictly to determining whether the rate is reasonable. They can not go further and determine what would be reasonable. If the rate is fixed by a commission, the right of judicial inquiry may be secured by proceedings to directly review the order fixing the rate.
Most of these decisions have been rendered since the act to regulate commerce was enacted. In view of them, and in further view of the practical operation of that act, what should be the status of the orders of the Commission; how far should they be subject to review in the courts, and how should they be enforced? In determining that it will be well to have in mind the present condition in that respect.
PROCEDURE BEFORE COMMISSION.
The act provides in its various parts that when complaint is made to the Commission of the violation of any of its provisions by a common carrier subject to it, that carrier shall be notified and given an oppor tunity to answer the charge, and that the Commission, upon an inspection of its answer, shall proceed, if it thinks advisable, to investigate the complaint. The Commission is authorized to make proper rules and regulations for the government of its procedure, which are to conform as nearly as may be to those in force in the United States courts in similar cases. If, after a hearing, the Commission determines that the carrier is acting in violation of any of the provisions of this act, it is required to make an order directing the carrier to desist from further violating the act, and, in case money damages are due the complainant, further directing the carrier to make payment of such damages. Under the power conferred the Commission has made and promulgated rules of procedure.
The practical course of a complaint is this: The complainant files with the Commission a statement of his alleged grievance, under oath. A copy of this complaint is forwarded by the Commission to the carrier, with an order that answer be made, also under oath, on or before a certain date. Either party may take testimony by deposition, to be used on the hearing, as could be done in a court. Ordinarily, however, the testimony is either taken by a single Commissioner or the case is heard before a majority of the Commission, who are a quorum, upon