TOPIC D-CONCESSIONS FOR SPECIAL KINDS OF BUSINESS.

§ 762. Different rates for goods used for different purposes.

763. Such rates allowed by some cases.

764. Such differences held illegal discrimination by other cases. 765. Rates to certain classes of shippers.

766. When commodities are of different character.

767. Special classes of passengers.

8741. The same rate for substantially similar services.

In the preceding chapter the general principles as to discrimination were set forth, and the conclusion was reached that if two shippers asked the same service under the same conditions they ought to be given the same rate. In this chapter it is proposed to describe what substantially identical services are, and various cases are discussed where the contention has been made that the conditions were different. In most of the cases in this list it will be seen upon examination that the services are not dissimilar. Whenever a railroad initiates a policy which will get it more business or enable it to hold the business that it has, it is prone to claim that the differing conditions in the particular case justify making a lower rate to one shipper or class of shippers, while maintaining higher rates for other shippers. But in many such cases it will be found that what the railroad is doing is in the face of the principal rule forbidding personal discrimination.

TOPIC A-CONCESSIONS TO GET COMPETITIVE BUSINESS.

8742. Whether concessions may be made in competition.

The idea runs through certain cases that it is justifiable to make reductions to certain shippers where business cannot be obtained without it. This principle, as has been seen, has some scope in permitting the rates to stations where there is competition to be made lower relatively than the rates to stations which have no competitive rates. But it may well be doubted whether it has any operation in justifying a difference in rates between two persons shipping from the same station; for this would seem to

be personal discrimination since these two shippers are asking the same service. But to some courts it has seemed otherwise, these courts holding that if concessions are necessary to get more business by inducing a shipper who is now employing a rival route to give up his present connections, this necessity justifies the reductions. This argument apparently disregards the law of public service which, of course, governs this whole question.1

743. Competitive conditions do not justify making discriminations.

It must be insisted upon at the outset that competitive conditions in themselves do not justify the making of personal discriminations between shippers, giving a lower rate to those to whom it is necessary to make concessions. This is forbidden both by the English courts and by the United States courts under their respective acts forbidding discrimination, but permitting reasonable concessions when the conditions are dissimilar. Thus in the leading case of London and Northwestern Railroad v. Evershed,2 it was said: "We think that a railway company cannot, merely for the sake of increasing their traffic, reduce their rates in favor of individual customers, unless, at all events,

1 Concessions to get competitive business have been justified in some cases even if they involve discrimination. Johnson v. Pensacola & P. R. R., 16 Fla. 623, 26 Am. Rep. 731 (1878); Chicago & A. R. R. v. Coal Co., 79 Ill. 121 (1875); Lough v. Outerbridge, 143 N. Y. 271, 38 N. E. 292, 42 Am. St. Rep. 712, 25 L. R. A. 674, B. & W. 380 (1894); Avinger v. So. Car. R. R., 29 S. C. 265, 7 S. E. 493, 13 Am. St. Rep. 716 (1888); Ragan & Buffet v. Aiken, 9 Lea (77 Tenn.), 609 (1882).

But by the better view such concessions are held unjustifiable when they involve discrimination: Wight v. United States, 167 U. S. 512, 42 L. Ed. 258, 17 Sup. Ct. 822; Menacho v. Ward, 27 Fed. 529, B. & W. 372 (1886); Messenger v. Pennsylvania R. R., 7 Vroom (36 N. J. L.), 407, 13 Am. Rep. 457, 8 Vroom (37 N. J. L.), 531, 18 Am. Rep. 754, B. & W. 357 (1874); Brundred v. Rice, 49 Ohio St. 640, 32 N. E. 169, 34 Am. St. Rep. 589 (1892); Fitzgerald v. Grand Trunk Ry., 63 Vt. 169, 22 Atl. 76, 13 L. R. A. 70 (1891).

2 L. R. 3 App. Cas. 1029 (1878).

there is a sufficient consideration for the reduction which shall lessen the cost to the company of the conveyance of their traffic, or some other or equivalent or other services are rendered to them by such individuals in relation to such traffic."

And in the important case of Interstate Commerce Commission v. Texas and Pacific Railroad Company, it was said: "The Interstate Commerce Act would be emasculated in its remedial efficacy, if not practically nullified, if a carrier can justify a discrimination in rates merely upon the ground that unless it is given, the traffic obtained by giving it would go to a competing carrier. A shipper having a choice between competing carriers would only have to refuse to send his goods by one of them unless given exceptional rates to justify that one in making a discrimination in his favor on the ground of the necessity of the situation."

744. Reductions to get competitive business illegal.

Such reductions to get business from a rival line are regarded as personal discrimination in most cases, however complicated the facts. This is a matter upon which the English cases have been particularly strong in holding that it is not sufficient that the railway company merely desires to attract the traffic from another line to itself, especially where the favor thus shown to a few is prejudicial to many others in the same trade as the favored persons. Thus the fact that one shipper can go by another route and will probably do so if charged as much as the charge made to the complaining party, is not a circumstance justifying an unequal charge; nor will the fact that those charged a less rate are seeking to develop a new trade. For the lowering of rates for the purpose of developing business is an undue prefer

3 52 Fed. 187 (1892).

4 Thompson v. London, etc., R. Co., 2 Nev. & Mac. 115.

5 Denaby Main Colliery Co. v. Manchester, S. & L. R. Co., L. R. 11 App. Cas. 97.

ence; and so is making a lower rate in consequence of a threat. from the owner of a colliery to construct another railway, by which traffic would be diverted.7

745. Concessions allowed by some cases to get shipments from outlying territory.

8

It has been seen that some courts permit any difference in the situation to be seized upon as a reason for making a discrimination. Thus in Ragan & Buffet v. Aiken, where a bill in equity was filed by merchants at a station on the defendant's railway who were charged a twenty-five-cent rate, who alleged that other shippers who brought their goods from an outlying district were charged only a fifteen-cent rate, the court sustained a demurrer to the bill, taking the ground that there was a difference shown in the circumstances. The argument of Mr. Justice Cooper in writing the opinion of the court was:

"In determining whether or not a company has given undue preference to a particular person, the court may look to the interests of the company.13 In other words, if the charge on the goods of the party complaining is reasonable, and such as the company would be required to adhere to as to all persons in like condition, it may, nevertheless, lower the charge to another person if it be to the advantage of the company, not inconsistent with the public interest, and based on a sufficient reason. It is obvious that the intention of the defendant, in this instance, was not to discriminate against the complainants in favor of any person of the same place, and in the same condition. His object was to get business for his road from persons at a distance from its terminus, which otherwise would reach their destination by a differ

6 Oxlade v. North Eastern R. Co., 1 C. B. N. S. 454, S. C. 26 L. J. C. P. 129, 1 Nev. & Mac. 72.

7 Harris v. Cockermouth & W. R. Co., 3 C. B. N. S. 693, S. C. 27 L. J. C. P. 162, 1 Nev. & Mac. 97.

89 Lea (77 Tenn.), 609 (1882).

13 Citing Ransome v. Eastern Counties Ry., 1 C. B. N. S. 437 (1855).

ent route. Under these circumstances we cannot see that the contracts complained of are against public policy, or that the complainants have been damaged, if the charges on their goods were reasonable. The bill contains no allegation that the charges made against, and paid by the complainants, were unreasonable. Without such an averment, there has been no damage. The third ground of demurrer was, therefore, well taken." 14

§ 746. Such concessions forbidden by later cases.

But such concessions are forbidden by the later cases as illegal discrimination. Thus in one proceeding before the Interstate Commerce Commission, 15 the facts shown were that a higher rate was charged to goods brought to one terminus for consumption there than for goods which were to be carted beyond to another district. In declaring this illegal, Commissioner Morrison said: "In collecting more from complainants and others for carrying goods to Eureka Springs, not to be forwarded, than they accept for carrying goods of the same classes from the same places to Eureka Springs to be forwarded to points in said Harrison transportation district, the defendants receive greater compensation from complainants than from other persons for a like and contemporaneous service in the transportation of a like kind of traffic under substantially similar circumstances and conditions,' and are guilty of unjust discrimination; and in thus denying to complainants and other shippers of articles to Eureka Springs, for use there or for distribution from that place, the same transportation charges which they accord to shippers and and receivers of like articles there to be forwarded to Harrison and other places for distribution, the defendants subject the complainants, the business in which they are engaged, and the city of Eureka Springs to unreasonable disadvantage and give

14 In the important case of Johnson v. Pensacola & P. R. R., 16 Fla. 623, 26 Am. Rep. 731 (1878), the facts and the decision were the same. 15 Cary v. Eureka Springs Ry., 7 I. C. C. Rep. 286 (1897).