CASES ADJUDGED

IN THE

SUPREME COURT OF THE UNITED STATES,

AT

OCTOBER TERM, 1900.

EAST TENNESSEE, VIRGINIA AND GEORGIA RAILWAY COMPANY v. INTERSTATE

COMMISSION.

COMMERCE

APPEAL FROM THE CIRCUIT COURT OF APPEALS FOR THE SIXTH

CIRCUIT.

No. 175. Argued February 26, 27, 1900.-Decided April 8, 1901.

Although the Interstate Commerce Commission found as a fact that the competition at Nashville, which forms the basis of the contention in this case, was of such a preponderating nature that the carriers must either continue to charge a lesser rate for a longer haul to Nashville than was asked for the shorter haul to Chattanooga, or to abandon all Nashville traffic, nevertheless they were forbidden by the Act of February 4, 1887, c. 104, 24 Stat. 379, to make the lesser charge for the longer haul; but since that ruling of the commission was made it has been settled by this court in Louisville & Nashville Railroad Company v. Behlmer, 175 U. S. 648, and other cases cited, that competition which is controlling on traffic and rates produces in and of itself the dissimilarity of circumstance and condition described in the statute, and that where this condition exists a carrier has a right of his own motion to take it into view in fixing rates to the competitive point; and it follows that the construction affixed by the commission to the statute upon which its entire action in this case was predicated was wrong.

The only principle by which it is possible to enforce the whole statute is the construction adopted by the previous opinions of this court; that is, that (1)

VOL. CLXXXI-1

Statement of the Case.

a competition which is real and substantial, and exercises a potential influence on rates to a particular point, brings into play the dissimilarity of circumstance and condition provided by the statute, and justifies the lesser charge to the more distant and competitive point than to the nearer and non-competitive place, and that this right is not destroyed by the mere fact that, incidentally, the lesser charge to the competitive point may seemingly give a preference to that point, and the greater rate to the non-competitive point may apparently engender a discrimination against

it.

It is plain that all the premises of fact upon which the propositions of law decided by the Circuit Court of Appeals rest, are at variance with the propositions of fact found by the commission, in so far as that body passed upon the facts, and this court accordingly reversed the decree of that court, and ordered the case remanded to the Circuit Court with instructions to set aside its decree adjudging that the order of the commission be enforced, and to dismiss the application made for that purpose with costs, the whole to be without prejudice to the right of the commission to proceed upon the evidence already introduced before it, or upon such further pleadings and evidence as it may allow to be made or introduced and to hear and determine the controversy according to law.

THE Board of Trade of Chattanooga, Tennessee, a chartered corporation, petitioned the Interstate Commerce Commission for relief under the act to regulate commerce. The defendants, the East Tennessee, Virginia and Georgia Railway, and numerous other rail and steamship companies, were alleged to be common carriers subject to the act to regulate commerce, and engaged in the transportation of passengers and freight by all rail or partly by rail and water from Boston, New York, Philadelphia, Baltimore and other places on the eastern seaboard to Chattanooga, Nashville and Memphis in the State of Tennessee.

It was alleged that the defendants conveyed freight from the eastern seaboard through and beyond Chattanooga to the cities of Nashville and Memphis for a lesser rate to such long distance points than was charged by them for like freight to Chattanooga, the shorter distance. This it was averred was a violation of section 4 of the act, prohibiting a greater charge for the shorter than for the longer haul, under substantially similar circumstances and conditions. And the disregard of the statute in the particular just stated, it was asserted, necessarily gave rise to violations of other provisions of the act to

Counsel for Parties.

regulate commerce, viz., of section 1, which forbids unjust and unreasonable charges, and of section 3, making unlawful the giving of undue or unreasonable preferences.

It is unnecessary to consider the complaint of the lesser charge to Memphis, the longer, than to Chattanooga, the shorter, distance, since this grievance was in effect held by the commission to be without substantial merit; and its conclusion on this subject was not reviewed by either of the courts below, and it is not now seriously, if at all, questioned. After hearing, the commission made elaborate findings of fact, and stated the legal conclusions which were deduced therefrom. 4 Inters. Com. Rep. 213; 5 I. C. C. Rep. 546. An order was made forbidding the defendant carriers from charging a greater compensation for the transportation for the shorter distance to Chattanooga than was demanded to Nashville, the longer distance. The execution, however, of this order, was suspended until a date named, so that the carriers might have opportunity to apply to the commission to be relieved from the operation of the order. No application to be exempted having been made, and the carriers not having conformed to the behests of the commission, this proceeding to compel obedience was commenced in the Circuit Court. In that court additional testimony was taken, but it was all merely cumulative of that which had been adduced before the commission. The Circuit Court, 85 Fed. Rep. 107, whilst not approving the reasoning by which the commission had sustained the order by it entered, nevertheless on other grounds affirmed the command of the commission. The Circuit Court of Appeals for the Sixth Circuit, to which the case was taken, whilst it held that the commission had misapplied the law, and although it did not approve of the reasoning given by the Circuit Court for its decree, nevertheless affirmed the action of that court. 99 Fed. Rep. 52.

Mr. Edward Baxter for appellant.

Mr. L. A. Shaver for appellee. Mr. Assistant Attorney General Boyd was on his brief.

Opinion of the Court.

MR. JUSTICE WHITE, after making the foregoing statement of the case, delivered the opinion of the court.

To comprehend the contentions which are made on this record it is essential to give a summary of the condition as depicted in the findings of the commission, and upon which the relief which it granted was based.

The state of affairs was as follows: Freight from the eastern seaboard to Cincinnati and other western points, north of the Ohio River, was controlled by the classification and tariff of rates prevailing in what was denominated as the northern or Trunk Line territory. On the other hand, the area south of the Ohio River, which was denominated the southern territory, was governed by the classification and tariff of rates prevailing in that territory; such classification and tariff giving rise in most instances to a higher charge than that which prevailed in the northern territory. This general difference between the rates in the northern and those in the southern territory the commission found arose from inherent causes, and although they might in some aspects disadvantageously influence traffic in the southern territory, were yet the result of such essentially normal conditions as to give rise to no just cause of complaint. On this subject the commission said:

"There may be some disadvantage to Chattanooga from this circumstance, since an article of a given class under the firstnamed system may be in a lower class under the other system, but the injury, if any, resulting from differences of that character is not believed to be serious.

"The general range of rates in the territory covered by the Southern Railway and Steamship Association is materially higher than in the territory of the Trunk Line Association, the difference resulting mainly from the much greater volume of traffic in the latter section; and it is inevitable that difficulties should exist and complaints arise along the line of division between varying systems of classification and like methods of traffic construction."

The grievance alleged arose in this wise: Where freight destined to a point in the southern territory instead of being sent