Opinion — Davis v. Portland Seed Co.

Reversed.

DAVIS, AS AGENT, ETC. v. PORTLAND SEED

COMPANY.

CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE

NINTH CIRCUIT.

SAN FRANCISCO & PORTLAND STEAMSHIP COM-

PANY v. PARRINGTON.

DAVIS, AGENT UNITED STATES RATLROAD AD-

MINISTRATION, v. PARRINGTON.

ERROR TO THE CIRCUIT COURT OF APPEALS FOR THE NINTH

CIRCUIT.

GREAT NORTHERN RAILWAY COMPANY v. Mc-

CAULL-DINSMORE COMPANY.

CERTIORARI TO THE SUPREME COURT OF THE STATE OF

MINNESOTA.

Nos. 114, 122, 123, 209. Argued February 20, 1924.—Decided April

7, 1924,

1. The long and short haul provision of the Interstate Commerce

Act (§ 4) is violated, and the carrier incurs, prima facie at least,

the penalties prescribed by § 10, by publishing, without authority

from the Commission, a rate for a longer haul lower than that

scheduled for a shorter haul of the same kind of property over

the same line or route in the same direction. P. 424.

2. In such case a shipper who is charged the higher rate for the

shorter haul is entitled, under § 8, to the full amount of his resulting

damages, with reasonable counsel fees, but not to collect from the

pee PARE RNS DOR SIME .

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404 OCTOBER TERM, 1923.

Statement of the Case. 264 U.S.

carrier the difference between the rate paid and the lower rate

published for the longer haul upon the theory that the latter was

the only legal rate and the difference an illegal exaction recoverable

without proof of damages or regard to the intrinsic reasonableness

of the rate. Pennsylvania R. R. Co. v. International Coal Co.,

230 U.S. 184. Pp. 415, 424.

3. The ruling in Kansas City Southern Ry. Co. v. Wolf, 261 U. 8.

133, that actions of this kind are subject to the two year limitation

(Act to Regulate Commerce, §§ 9 and 16,) is adhered to. P. 426.

281 Fed. 10; and 154 Minn. 28, reversed.

Review of four judgments recovered by shippers as

overcharges alleged to have been exacted by the respec-

tive defendant carriers in violation of the “long and short

haul clause” of the Interstate Commerce Act.

No. 114 was an action in the District Court for the

difference between the freight paid durirg federal control

on a shipment of alfalfa seed to Walla Walla, Washington,

from Roswell, New Mexico, and the amount that would

have been paid if a lower rate scheduled from a more

distant point over the same route had been applied.

Nos. 122 and 123 were like actions in the District Court,

upon claims assigned by various shippers, in respect of

sugar transported by the above-named steamship com-

pany, wholly by water, from San Francisco, California, to

Portland and Astoria, Oregon, partly while that company

and its northern rail connection, the Oregon-Washington

Railroad & Navigation Company, were under federal con-

trol, and at times when the joint rate of these carriers

from San Francisco to North Portland, a greater distance,

as it was claimed, was less than the local rate paid for

the water carriage to Portland and Astoria. In these

three cases the judgments for the plaintiffs were affirmed

by the Circuit Court of Appeals; and its judgments were

brought here by error and certiorari.

In No. 209, here by certiorari, the Supreme Court of

Minnesota affirmed a like judgment in favor of a shipper

whose shipments of wheat, from Benchland, Montana, to

FPR TEU OGRE WRG OST ARIE ABM, SED UTT DD oNet

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DAVIS v. PORTLAND SEED CO. 405

403 Argument for Petr. and Pitfis. in Error.

Minneapolis and Duluth, Minnesota, were charged for

by the carrier at a published tariff rate higher than the

published rate to the same destination from Billings, a

more distant point.

Mr. John F. Finerty and Mr. Arthur C. Spencer, with

whom Mr. Henry W. Clark, Mr. C. E. Cochran and Mr.

John F. Reilly were on the briefs, for petitioner in No. 114

and plaintiffs in error in Nos. 122 and 123. See post,p. 601.

The District Court was without jurisdiction, exclusive

original jurisdiction being lodged in the Interstate Com-

merce Commission. Texas & Pac. Ry. Co. v. Abilene Co.,

204 U. S. 426; Balt. & Ohio R. R. Co. v. Pitcairn Coal

Co., 215 U. S. 481; Robinson v. Balt. & Ohio R. R. Co.,

222 U. S. 506; Mitchell Coal Co. v. Pennsylvania R. R.

Co., 230 U. S. 247; Morrisdale Coal Co. v. Pennsylvania

R. R. Co., 230 U.S. 304; Texas & Pac. Ry. Co. v. Ameri-

can Tie Co., 234 U. S. 188; Northern Pac. Ry. Co. v.

Solum, 247 U. 8. 477; Director General v. Viscose Co.,

254 U. 8. 498; Pennsylvania R. R. Co. v. International

Coal Co., 230 U. S. 184; Same v. Puritan Coal Co., 237

U. S. 121; Same v. Sonman Coal Co., 242 U. S. 120;

St. Louis, etc., Ry. Co. v. Hasty & Sons, 255 U. 8. 252.

Section 4 of the Commerce Act (the long and short

haul clause), is a statute relating to a form of discrimina-

tion and not one merely declaring the intermediate rate

unlawful. Parsons v. Chicago & N. W. Ry. Co., 167

U. S. 447.

Discrimination may be removed either by raising one

rate, lowering the other, or changing both, and the fact

that a rate discriminates against one locality in favor of

another one does not in itself entitle the first locality to the

same rate as the tariff provides for the second. American

Exp. Co. v. Caldwell, 244 U. 8. 617; St. Louis S. W. Ry.

Co. v. United States, 245 U.S. 144; Hillsborough Mills

v. Boston & Maine R. R., 269 Fed. 816.

DROLET EEL DEAE DDN be ah ae

406 OCTOBER TERM, 1923.

Argument for Petr. and Pitffs. in Error. 264 U.S.

Section 6 of the Commerce Act requires carriers to col-

lect the rates published in their tariffs and forbids trans-

portation except when an applicable rate is contained in

a published tariff. In view of this section the carriers

were compelled to collect their published rates or refuse

to accept the commodities for shipment. Commerce Act,

§§ 4, 6.

Under § 6 the carriers must collect their published

rates, even though they are violative of other sections of

the act. Armour Co. v. United States, 209 U. S. 56;

Pittsburgh, etc., Ry. Co. v. Fink, 250 U. S. 577; Keogh

v. Chicago & N. W. Ry. Co., 260 U. S. 156; Pennsylvania

R. R. Co. v. International Coal Co., 230 U. S. 184; Poor

Grain Co. v. C. B. & Q. Ry. Co., 12 I. C. C. 418; Inter-

state Remedy Co. v. American Exp. Co., 16 I. C. C. 436;

Crescent Coal Co. v. C. & E. I. Ry. Co., 24 1. C. C. 149.

Under plaintiff’s theory that the rate from Roswell was

not a legally published rate, there was no legally pub-

lished rate at all—the transportation must therefore have

been unlawful, and the courts will not aid shippers in col-

lecting any part of the charges which they paid. Payne

v. Bassett, 235 S. W. 917.

The mere fact that a rate is violative of the long and

short haul clause, does not entitle shippers to an inter-

mediate point to recover the excess over the rate to the

more distant point. Parsons v. Chicago & N. W. Ry. Co.,

167 U. S. 447; International Coal Co. v. Pennsylvania

R. R. Co., 230 U. S. 184; Iten Biscuit Co. v. C. B. &

Q. R. R. Co., 58 I. C. C. 729; Topeka Banana Dealers’

Assn. v. St. Louis, etc., R. R. Co., 13 I. C. C. 620.

The long line of decisions of the Interstate Commerce

Commission in Fourth Section violation cases holding

that mere proof of the difference in the rates is no evi-

dence of damage, should be followed by this Court, be-

cause not manifestly incorrect. Heath v. Wallace, 138

U.S. 573; United States v. Cerecedo, 209 U. S. 337.

PRA E R BNBE teEE AS SE BN A CIE NIT Ti ty IO RE POS BA A Oh hh NIMC L ALN is SON tate NN

DAVIS v. PORTLAND SEED CO. 407

403 Argument for Petr. and Pltfis. in Error.

The Federal Control Act, § 10, and Transportation

Act, 1920, § 206 (c), lodged exclusive original jurisdic-

tion of cases against the Director General involving viola-

tions of the Commerce Act in the Interstate Commerce

Commission. Northern Pac. Ry. Co. v. North Dakota,

250 U. 8. 135; Alabama, etc., Ry. Co. v. Journey, 257

U.S. 111; 25 R. C. L. 1010; Phillips Co. v. Grand Trunk

Ry. Co., 236 U. S. 662; Kansas City So. Ry. Co. v. Wolf,

261 U. 8S. 133; Missouri Pac. R. R. Co. v. Ault, 256 U.S.

554.

No violation of the Fourth Section was proved, be-

cause the evidence showed that there was no transporta-

tion from the more distant point, the rate being merely

a paper rate. Parsons v. Chicago & N. W. Ry. Co., 167

U. S. 447; Judson, Interstate Commerce, 3d ed., p. 529;

Topeka Banana Dealers’ Assn. v. St. Louis, etc., R. R. Co.,

13 I. C. C. 620; Anaconda Copper Co. v. Director General,

64 I. C. C. 1386; Lehigh Valley R. R. Co. v. Rainey, 112

Fed. 487.

During federal control rates were initiated and main-

tained under order of the President, and the Fourth

Section was therefore inapplicable to them. Federal

Control Act, § 10; Northern Pac. Ry. Co. v. North Dakota,

250 U.S. 135; Missouri Pac. R. R. Co. v. Ault, 256 U.S.

554; Alabama, etc., Ry. Co. v. Journey, 257 U.S. 111.

If there was a departure from the Fourth Section it

was covered by appropriate orders of the Commission.

The measure of damages in Fourth Section cases is not

the difference between rates. Parsons v. Chicago &

N. W. Ry. Co., 167 U.S. 447; Pennsylvania R. R. Co. v.

International Coal Co., 230 U.S. 184; Hillsborough Mills

v. Boston & Maine R. R., 269 Fed. 816; Homestead Co.

v. Des Moines Elec. Cc., 226 Fed. 49; Atchison, etc. Ry.

Co. v. Spiller, 246 Fed. 1; Clark Bros. Coal Co. v. Penn-

sylvania R. R. Co., 238 Fed. 642; Lehigh Valley R. R. Co.

v. American Hay Co., 219 Fed. 539.

408 OCTOBER TERM, 1923.

Argument for Petr. and Pitffs. in Error. 264 U.S.

Under § 15 of the Commerce Act, as amended in 1910

and 1920, transportation wholly by water is not subject

to the act, notwithstanding the provisions of the Panama

Canal Act. Commerce Act, § 15, 36 Stat. 552; Transpor-

tation Act 1920, §§ 408, 412, 413, 418; 41 Stat. 482, 483,

485; Fed. Stats. Anno., 1920, Supp., pp. 104-106; Panama

Canal Act, 37 Stat. 560, 566; Knickerbocker Ice Co. v.

Stewart, 253 U. S. 149; 2 Lewis’ Sutherland Statutory

Constr., 2d ed., p. 667.

Assignments of claims against the Director General not

complying with § 3477, Rev. Stats., are void. Spoffard v.

Kirk, 97 U.S. 484; National Bank v. Downie, 218 U. 8.

345; Missouri Pac. R. R. Co. v. Ault, 256 U. S. 554;

Seaboard Air Line Ry. v. United States, 256 U.S. 655.

No liability can attach either to the Steamship Com-

pany or the Director General on shipments moving during

the time the Steamship Company’s vessels were being

operated by the Shipping Board. Missouri Pac. R. R.

Co. v. Ault, 256 U.S. 554; Davis v. Zirkle, 138 N. E. 266.

There was further no violation of the Fourth Section

because the rates to Portland and Astoria were local rates

and the paper rates to North Pertland were joint rates.

Chicago & N. W. Ry. Co. v. Osborne, 52 Fed. 912; United

States v. Mellen, 53 Fed. 229; Interstate Commerce

Comm. v. Cincinnati, etc., Ry. Co., 56 Fed. 925; 162 U.S.

184; Allen & Lewis Co. v. Oregon Ry. & Nav. Co., 98

Fed. 16; Parsons v. Chicago & N. W. Ry. Co., 167 U.S.

447,

The carriers were required during the first six months

after federal control to collect the rates which they found

in the Director General’s tariffs, whether they conformed

to the Fourth Section or not. “Transportation Act,

§ 208 (a); Wasatch Coal Co. v. Baldwin, 60 Utah, 397;

Public Service Comm. v. New York Cent R. R. Co., 185

N. Y. 8S. 267.

All claims antedating February 12, 1919, are barred

because not brought within two years. Commerce Act,

Oe,

OS: SEEMS LIE LOY AIS MO TR NR aie OER EEK POU aR Oe POUT CE 2 OEE

DAVIS v. PORTLAND SEED CO. 409

403 Argument for Respdt. and Deft. in Error.

$ 16; Phillips Co. v. Grand Trunk Ry. Co., 236 U.S. 662;

Kansas City So. Ry. Co. v. Wolf, 261 U. 8. 133; Trans-

portation Act, § 206 (f); Eberhart v. United States, 204

Fed. 884.

Mr. F. G. Dorety, with whom Mr. R. J. Hagman was

on the brief, for petitioner in No. 209.

Mr. James G. Wilson for respondent in No. 114 and

defendant in error in Nos, 122 and 123.

The District Court had jurisdiction.

Where the practice is directly prohibited by statute,

the person injured thereby need not go originally to the

Commission but may sue directly in court. Pennsylvania

Rr. R. Co. v. International Coal Co., 230 U. 8. 184; Same

v. Puritan Coal Co., 237 U. S. 121; Same v. Sonman

Coal Co., 242 U.S. 120; Mitchell Coal Co. v. Pennsylvania

R. R. Co., 230 U. 8. 247; Morrisdale Coal Co. v. Same,

230 U. S. 304; St. Louis, etc., Ry. Co. v. Hasty & Sons,

255 U. S. 252; Great Northern Ry. Co. v. Merchants

Elevator Co., 259 U. S. 285; Commerce Act, §§ 8, 9.

The transportation (in Nos. 122 and 123), though

wholly by water, was subject to the Interstate Commerce

Act.

The question whether the assignment of the claims

against the Director General to the defendant in error (in

No. 123) was void because not complying with § 3477,

Rev. Stats., is not before this Court, it not having been

raised in the lower court. Claims of this character may

be sued upon by an assignee. Spiller v. Atchison, etc.,

Ry. Co., 253 U. 8. 134; Missouri Pac. R. R. Co. v. Ault,

256 U. S. 559; Parrington v. Davis, 285 Fed. 741; Sea-

board Air Line Ry. v. United States, 256 U. S. 655.

Carriers (in Nos. 122 and 123) are liable notwithstand-

ing certain of the boats on which part of the sugar was

handled were under requisition of the United States

Shipping Board for a portion of the period.

ET PE SIE AE, INR OER NR AS re PAR EE Si he REN RRR AS IES

410 OCTOBER TERM, 1923.

Argument for Respdt. and Deft. in Error. 264 U.S.

North Portland and Portland are on the same route,

Portland being intermediate, on shipments from San

Francisco to North Portland.

The actual showing that shipments have been made to

North Portland as a condition to recovery is not neces-

sary. United States v. Louisville & Nashville R. R. Co.

235 U. S. 322; California Adjustment Co. v. Atchison,

etc. Ry. Co., 179 Cal. 140.

The objection that certain of the claims sued on in

Nos. 122 and 123 are barred by the statute of limitations,

for the reason that the action was not commenced within

two years was not properly made in the lower court, ex-

cept as to those claims prior to January 1, 1918, in the

case against the Steamship Company.

Reliance is had on Kansas City So. Ry. v. Wolf, 261

U.S. 133. That case had not been decided in this Court

at the time the present cases were decided. The decision

in that case in the lower court was to the contrary, as

was the decision in the present cases. The Commerce

Act itself does not specifically prescribe the limitation

period for actions commenced by shippers before the

court. The act does, by §§ 8 and 9, give a choice of forum

either before the Commission or the District Court of

the United States, but the act only specifically places

a limitation upon proceedings before the Commission.

This Court, in the Wolf Case, bases its decision en-

tirely upon its former decision in Phillips Co. v. Grand

Trunk Ry. Co., 236 U. S. 662; but that was a case on

a claim which admittedly had to be commenced originally

before the Commission. Such a case had been com-

menced before the Commission, not by the plaintiff in

the Phillips Case, but by another plaintiff on a similar

claim. The Commission had established the right to re-

cover and the plaintiff in the Phillips Case commenced

his action in court based upon the proceedings before the

Commission, and the Court properly held that the per-

ates sree PEE IESE IT PRE EIT” SH ENE IEA

DAVIS v. PORTLAND SEED CO. 411

403 Argument for Respdt. and Deft. in Error.

son commencing in the court could not have a different

veriod of limitation than that before the Commission.

In the Wolf Case this Court holds that the same prin-

ciple applies. We respectfully ask for a reconsideration

of this ruling. The Court in the Phillips Case says that

in those cases where the statute reads as does the Com-

merce Act, to-wit: that the proceeding shall be com-

menced within two years from the time the cause of

action accrues and not after, the liability is destroyed.

If this is the case, then we submit that the same rule

should apply to all questions of damages in any case

which might have been submitted to the Commission,

whether it may be sued upon in the state court, the

United States court, or before the Commission; and this

Court has in several cases since the Phillips Case per-

mitted recoveries in cases involving interstate traffic which

could have been submitted to the Commission, but were

commenced in the state courts, and recovery was per-

mitted for periods considerably in excess of two years.

Pennsylvania R. R. Co. v. Puritan Coal Co., 237 U. S.

121; Same v. Sonman Coal Co., 242 U. S. 120; Same v.

Stineman Coal Co., 242 U.S. 300.

This contention is further confirmed by consideration

of Morrisdale Coal Co. v. Pennsylvania R. R. Co., 230

U. S. 304; in connection with Pennsylvania R. R. Co. v.

Puritan Coal Co., supra; and Same v. Sonman Coal Co.,

supra.

We respectfully submit that the rule should only be

enforced as to those cases in which primary action must

be brought before the Commission.

The Fourth Section order of the Interstate Chinsinane

Commission, made in connection with the general advance

in rates, can have no bearing in these cases, for the reason

that it is not pleaded or relied on in the court below.

Robinson v. Balt. & Ohio R. R. Co., 222 U.S. 511. Fur-

thermore, the order had not the general carry-all effect

that opposing counsel contends for it.

ee ae

412 OCTOBER TERM, 1923.

Argument for Respdt. and Deft. in Error. 264 U.S.

As for the measure of damages, under the law the lower

rate is the only rate which can be applied, as the higher

rate did not exist. United States v. Louisville & Nash-

ville R. R. Co., 235 U. S. 314; California Adjustment

Co. v. Atchison, etc., Ry. Co., 179 Cal. 140; Louisville

& Nashville R. R. Co. v. Walker, 110 Ky. 961.

It is true that the Interstate Commerce Commission has

refused to follow this rule, basing its decisions upon Penn-

sylvania R. R. Co. v. International Coal Co., 230 U. S.

184. That case, however, was not one for recovery of

damages which were specifically provided by statute, but

was an action for damage by one person who had been

receiving a rebate on account of the fact that another

shipper had received a greater rebate than he, and it was

claimed that his measure of damages was the difference

in the two rebates; but the Court held that, as neither

person was claiming under a legal rate, he could only

recover such damages as he could prove by reason of

the fact that the other shipper had received a greater

rebate. See Southern Pacific Co. v. California Adjust-

ment Co., 237 Fed. 965; Southern Pacific Co. v. Darnell-

Taenzer Co., 245 U. 8. 534.

In the present cases the plaintiffs have paid out of

pocket an amount which the statute said should not be

exacted of them, and their damages are definitely fixed

by the statute.

The effect of § 10 of the Federal Control Act and an

order made in 1918 increasing then existing rates, was

not raised or relied on in the court below. Further-

more, the violations in question were not thus validated.

Missouri Pac. R. R. Co. v. Ault, 256 U. 8. 560; Johnston

v. Atchison, etc., Ry. Co., 511. C. C. 356; Rice Potato Co.

v. Balt. & Ohio R. R. Co., 51 I. C. C. 365.

Transportation Act of 1920, § 206, did not transfer the

jurisdiction of these matters from the court to the Com-

mission, but shows the intention of Congress that the

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rr et int » a " ‘

ithaianemntentethidininiea leet eae a re

DAVIS v. PORTLAND SEED CO. 413

403 Opinion of the Court.

jurisdiction of all controversies remain in the same courts

or tribunals as before or during federal control.

It is not necessary to prove actual shipments from

the more distant point. United States v. Louisville &

Nashville R. R. Co., 235 U. 8. 322; California Adjust-

ment Co. v. Atchison, etc., Ry. Co., 179 Cal. 140; Beeghly

v. Public Util. Comm., 104 Oh. St. 158.

Mr. Frederick M. Miner, Mr. John P. Devaney, Mr.

Dewitt Clinton Edwards and Mr. Walter W. Patterson

filed a brief on behalf of the respondent in No. 209, re-

sisting the petition for a writ of certiorari.

Mr. Frank R. Wehe and Mr. Alfred J. Harwood, by

leave of Court, filed a brief as amici curiae in Nos. 122

and 123.

Mr. John F. Finerty, by leave of Court, filed a brief as

amicus curiae, on behalf of the Director General of Rail-

roads, in No. 209.

Mr. Justice McReynoups delivered the opinion of the

Court.

The courts below affirmed judgments fer the plaintiffs

in four separate actions brought to recover alleged over-

charges on freight said to have been demanded by the

respective carriers in violation of the long and short haul

clause, Fourth Section, Interstate Commerce Act, c. 104,

24 Stat. 379, 380; c. 309, 36 Stat. 539, 547; c. 91, 41 Stat.

456, 480, which declares—

“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 trans-

portation of passengers, or of like kind of property, for

a shorter than for a longer distance over the same line or

route in the same direction, the shorter being included

within the longer distance, or to charge any greater com-

414 OCTOBER TERM, 1923.

Opinion of the Court. 264 U.S.

pensation as a through rate than the aggregate of the

intermediate rates subject to the provisions of this Act,

but this shall not be construed as authorizing any com-

mon carrier within the terms of this Act to charge or

receive as great compensation for a shorter as for a longer

distance: Provided, That upon application to the Com-

mission such common carrier may in special cases, after

investigation, be authorized by the Commission to charge

less for longer than for shorter distances for the transpor-

tation 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; [The Transportation Act, 1920,

added] but in exercising the authority conferred upon it

in this proviso the Commission shall not permit the estab-

lishment of any charge to or from the more distant point

that is not reasonably compensatory for the service per-

formed. .. .”

All the cases involve the same fundamental question

of law. The essential charge is that the carrier demanded

and received greater compensation for transporting freight

for a shorter distance than its published rate for trans-

porting like property for a longer distance over the same

route and in the same direction.

It will suffice to state the salient facts and issues dis-

closed by record No. 114—Davis, Agent, v. Portland Seed

Company. They are typical.

Pecos is in Western Texas, 160 miles south of Roswell,

N. M. A line of the Atchison, Topeka & Santa Fe Rail-

way system joins these points and extends northward to

Denver, Colorado, where it connects with the Union

Pacific System which leads into the Northwest. January

4, 1919, the carrier received a car of alfalfa seed at Ros-

well for transportation to Walla Walla, Washington, by

way of Denver. Three weeks later respondent Portland

Seed Company received this car at destination and paid

AIPA RET TSG

DAVIS v. PORTLAND SEED CO. 415

403 Opinion of the Court.

freight charges reckoned at $2.44 per hundred pounds—-

the scheduled rate from Roswell. During all of January,

1919, the initial carrier’s published schedule specified

$1.515 per hundred pounds as the rate for transporting

alfalfa seed from Pecos to Walla Walla through Roswell

and Denver; and no application had been made to the

Interstate Commerce Commission for permission to

charge less for the longer than for the shorter haul. The

Seed Company demanded judgment for the excess above

the Pecos rate, as an overcharge illegally exacted and

recoverable as money had and received.

The insistence is that under the long and short haul

clause the lower published rate from Pecos became the

maximum which the carrier could charge for the ship-

ment from Roswell, notwithstanding the higher pub-

lished rate therefor; that the sum charged above the

Pecos rate amounted to an illegal exaction, recoverable

without other proof of actual damage and without regard

to the intrinsic reasonableness of either rate.

Relying on Pennsylvania R. R. Co. v. International

Coal Co., 230 U. S. 184, the Interstate Commerce Com-

mission has definitely rejected respondent’s theory by

many opinions, and holds that while a charge prohibited

by the long and short haul clause, § 4, may subject the

carrier to prosecution by the Government it does not

afford adequate basis for reparation where there is no

other proof of pecuniary damage. Nix & Co. v. Southern

Ry. Co. (1914), 31 I. C. C. 145; S. J. Greenbaum Co.

v. Southern Ry. Co., 38 I. C. C. 715; Chattanooga Imple-

ment & Mfg. Co. v. Louisville & Nashville R. R. Co., 40

I. C. C. 146; LaCrosse Shippers’ Assn. v. C. I. & L. Ry.

Co., 43 I. C. C. 520; Oregon Fruit Co. v. Southern Pa-

cific Co., 50 I. C. C. 719; Iten Biscuit Co. v. C. B. &

Q. R. R. Co., 53 I. C. C. 729; Illinois Brick Co. v. Direc-

tor General (1920), 57 I. C. C. 320, 323.

Counsel insist that under § 4 it was unlawful to charge

compensation above the published Pecos rate for the

416 OCTOBER TERM, 1923.

Opinion of the Court. 264 U.S.

transportation from Roswell to Walla Walla. Therefore,

the published Roswell rate being unlawful, non-existent

indeed, the Pecos rate became the only one in force.

United States v. Louisville & Nashville R. R. Co., 235

U. S. 314, 322, 323, is relied upon; and it is said that the

opinion there interprets the long and short haul clause

as “ absolutely prohibiting the existence ” of higher rates

for shorter hauls unless approved by the Commission.

Read with the real issue in mind, the opinion gives no

support to respondent’s argument. The Interstate Com-

merce Commission held that certain reshipping privileges

granted to Nashville but refused to Atlanta amounted

to unreasonable preference under § 3 and ordered the car-

rier to discontinue them. The Commerce Court re-

strained the enforcement of this order. This Court de-

clared that the challenged privileges were prohibited by

the long and short haul clause; that § 4 controlled the

right to grant them; that they had not been authorized

by the Commission; and therefore it would be unlawful

to continue them. Accordingly, the order to desist was

approved and the decree of the Commerce Court re-

versed. No disagreement with Pennsylvania R. R. Co.

v. International Coal Co. was suggested. The Court

said—

(322-3) “ The express or implied statutory recognition

of the authority on the part of carriers to primarily deter-

mine for themselves the existence of substantially similar

circumstances and conditions as a basis of charging a

higher rate for a shorter than for a longer distance within

the purview of § 4 of the Act to Regulate Commerce and

the right to make a rate accordingly to continue in force

until on complaint it was corrected in the manner pointed

out by statute, ceased to exist after the adoption of the

amendment to § 4 by the Act of June 18, 1910, ¢. 309,

36 Stat. 539, 547. This results from the fact that by the

amendment in question the original power to determine

oleh ain russe ine ARSE aan mea SP as Dan Tod bance eo. Satyret yee ea ens” doa toe bette eee ergy

DAVIS v. PORTLAND SEED CO. 417

403 Opinion of the Court.

the existence of the conditions justifying the greater

charge for a shorter than was exacted for a longer dis-

tance, was taken from the carriers and primarily vested

in the Interstate Commerce Commission, and for the pur-

pose of making the prohibition efficacious it was enacted

that after a time fixed no existing rate of the character

provided for should continue in force unless the appli-

cation to sanction it had been made and granted. J/nter-

mountain Rate Cases, 234 U. S. 476. If then it be that

the rebilling privilege which is here in question, disre-

garding immaterial considerations of form and looking

at the substance of things, was, when originally estab-

lished, an exertion of the authority conferred or recog-

nized by § 4 of the act, as there is no pretense that per-

mission for its continuance had been applied for as

required by the amendment and the statutory period for

which it could be lawfully continued without such per-

mission had expired, it follows that its continued opera-

tion was manifestly unlawful and error was committed

in permitting its continuance under the shelter of the

injunction awarded by the court below.”

The opinion does not discuss the carrier’s liability to

shippers who had paid higher rates for the shorter hauls.

No doubt similar relief would have been granted by the

Commission if the situation here revealed had been

brought before it.

Respondent has not asked an injunction against illegal

rates. It seeks to secure something for itself without

proof of pecuniary loss consequent upon the unlawful act.

A similar effort failed in Pennsylvania R. R. Co. v. Inter-

national Coal Co., supra. The International Company

shipped 40,000 tons of coal from the Clearfield district,

paying full schedule rates. The carrier had allowed

other shippers from and to the same places at the same

time rebates ranging from five to thirty-five cents per

ton. Without alleging or proving pecuniary injury re-

N7851°—24——- 27

Tract aR SARUM WAR ALT AT A a AARON ARS

418 OCTOBER TERM, 1923.

Opinion of the Court. 264 U.S.

sulting to itself from this unlawful action, the Company

sought to recover like concessions upon all its shipments.

Through Mr. Justice Lamar, this Court said—

(196-7) “The published tariffs made no distinction

between contract coal and free coal, but named one rate

for all alike. That being true, only that single rate could

be charged. When collected, it was unlawful, under any

pretense or for any cause, however equitable or liberal,

to pay a part back to one shipper or to every shipper.

The statute required the carrier to abide absolutely by

the tariff. It did not permit the Company to decide

that it had charged too much and then make a corre-

sponding rebate; nor could it claim that it had charged

too little and insist upon a larger sum being paid by the

shipper. . . . The tariff, so long as it was of force,

was, in this respect, to be treated as though it had been

a statute, binding as such upon Railroad and shipper

alike. If, as a fact, the rates were unreasonable the

shipper was nevertheless bound to pay and the carrier

to retain what had been paid, leaving, however, to the

former the right to apply to the Commission for repa-

ration.”

(200) “Thodgh the Act has been held to be in many

respects highly penal, yet there was no fixed measure

of damage in favor of the plaintiff. But, as said in

Parsons v. Chicago & N. W. Railway, 167 U.S. 447, 460,

construing this section (8), ‘ before any party can recover

under the Act he must show not merely the wrong of the

carrier, but that that wrong has in fact operated to his

injury.’ Congress had not then and has not since given

any indication of an intent that persons not injured

might, nevertheless, recover what though called damages

would really be a penalty, in addition to the penalty

payable to the Government. On the contrary, and in an-

swer to the argument that damages might be a cover for

rebates, the Act of June 18, 1910 (36 Stat. 539, ¢. 309),

LIS SARIN LS IS fe BAD Na LER IS OS NS VN

DAVIS v. PORTLAND SEED CO. 419

403 Opinion of the Court.

provided that where a carrier misquotes a rate it should

pay a penalty of $250, not to the shipper, but to the

Government, recoverable by a civil action brought by

the United States. 35 Stat. 166. Congressional Record

(1910), 7569. The danger that payment of damages for

violations of the law might be used as a means of paying

rebates under the name of damages is also pointed out

by the Commission in 12 I. C. C. 418-421, 423; 14

I. C. C. 82.”

(200) “It is said, however, that it is impossible to

prove the damages occasioned one shipper by the payment

of rebates to another; and that if the plaintiff is not

entitled to recover as damages the same drawback that

was paid to its competitor, the statute not only gives no

remedy but deprives the plaintiff of a right it had at com-

mon law to recover this difference between the lawful

and the unlawful rate.”

(200-1) “ We are cited to no authority which shows

that there was any such ancient measure of damages,

and no case has been found in which damages were

awarded for such discrimination. Indeed, it is exceedingly

doubtful whether there was at common law any right

of action for any sort of damages in a case like this, while

this statute does give a clear, definite and positive right

to recover for unjust discrimination.”

(201-2) “Union Pacific R. R. v. Goodridge, 149 U. 8.

680, 709, involved the construction of the Colorado stat-

ute, which did not, as does the Commerce Act, compel

the carrier to adhere to published rates, but required the

railroad to make the same concessions and drawbacks to

all persons alike, and for a failure to do so made the car-

rier liable for three times the actual damage sustained or

overcharges paid by the party aggrieved. This distinction

is also to be noted in the English cases cited. The Act

of Parliament did not require the carrier to maintain its

published tariff but made the lowest rate the lawful rate.

420 OCTOBER TERM, 1923.

Opinion of the Court. 264 U.S.

Anything in excess of such lowest rate was extortion and

might be recovered in an action at law as for an over-

charge. Denaby v. Manchester Ry., L. R. 11 App. Cases,

97,116. But the English courts make a clear distinction

between overcharge and damages, and the same is true

under the Commerce Act. For if the plaintiff here had

been required to pay more than the tariff rate it could

have recovered the excess, not as damages but as over-

charge, and while one count of the complaint asserted a

claim of this nature, the proof did not justify a verdict

thereon, for the plaintiff admitted that it had only paid

the lawful rates named in the tariff. Of course, no part

of such payment of lawful rates can be treated as an

overcharge or as an extortion.”

(202-3) “Having paid only the lawful rate plaintiff

was not overcharged, though the favored shipper was

illegally undercharged. For that violation of law, the

carrier was subject to the payment of a fine to the Gov-

ernment and, in addition, was liable for all damages it

thereby occasioned, the plaintiff or any other shipper.

But, under § 8, it was only liable for damages. Making

an illegal undercharge to one shipper did not license the

carrier to make a similar undercharge to other shippers,

and if having paid a rebate of 25 cents a ton to one cus-

tomer, the carrier in order to escape this suit had made

a similar undercharge or rebate to the plaintiff, it would

have been criminally liable, even though it may have been

done in order to equalize the two companies. For, under

the statute, it was not liable to the plaintiff for the

amount of the rebate paid on contract coal, but only for

the damages such illegal payment caused the plaintiff.

The measure of damages was the pecuniary loss inflicted

on the plaintiff as the result of the rebate paid. Those

damages might be the same as the rebate, or less than

the rebate, or many times greater than the rebate; but

unless they were proved they could not be recovered.

ERLE LE AIEEE EEO PELL ET BT IIE PLEA LEM LOST LIS OME LURES BLE MATE I Ay ss

ee ee ee

DAVIS v. PORTLAND SEED CO. 421

403 Opinion of the Court.

Whatever they were they could be recovered, because

$ 8 expressly declares that wherever the carrier did an

act prohibited or failed to do any act required, it should

be ‘liable to the person injured thereby for the full amount

of damages sustained in consequence of such violation,

. . . together with reasonable attorney’s fee.’ ”

(206) “To adopt such a rule and arbitrarily measure

damages by rebates would create a legalized, but endless,

chain of departures from the tariff; would extend the

effect of the original crime, would destroy the equality

and certainty of rates, and, contrary to the statute, would

make the carrier liable for damages beyond those inflicted

and to persons not injured. The limitation of liability

to the persons damaged and to an amount equal to the

injury suffered is not out of consideration for the carrier

who has violated the statute. On the contrary, the act

imposes heavy penalties, independent of the amount of

rebate paid, and as each shipment constitutes a separate

offense, the law in its measure of fine and punishment is

a terror to evil doers. But for the public wrong and for

the interference with the equal current of commerce these

penalties or fines were made payable to the Government.

If by the same act a private injury was inflicted a private

right of action was given. But the public wrong did not

necessarily cause private damage, and when it did, the

pecuniary loss varied with the character of the property,

the circumstances of the shipment and the state of the

market, so that instead of giving the shipper the right to

recover a penalty fixed in amount or measure, the statute

made the guilty carrier liable for the full amount of dam-

ages sustained,—whatever they might be and whether

greater or less than the rate of rebate paid.”

Southern Pacific Co. v. Darnell-Taenzer Co., 245 U. 8S.

531, presents no conflict with Pennsylvania R. R. v. In-

ternational Coal Co. There the shipper paid a published

rate which the Commission afterwards found to be unrea-

We REE Fe ke ea

422 OCTOBER TERM, 1923.

Opinion of the Court. 264 U.S.

sonable. This Court held he could recover, as the proxi-

mate damage of the unlawful demand, the excess above

the rate which the Commission had declared to be reason-

able. The opinion went no further. Certainly it did not

suggest that the unreasonable rate was non-existent for

any purpose because forbidden by law.

Section 6 of the Commerce Act directs—

“(1) That every common carrier subject to the pro-

visions of this act shall file with the Commission created

by this act and print and keep open to public inspection

schedules showing all the rates, fares, and charges for

transportation between different points on its own route

and between points on its own route and points on the

route of any other carrier by railroad, by pipe line, or by

water when a through route and joint rate have been

established. . . . (3) No change shall be made in the

rates, fares, and charges or joint rates, fares and charges

which have been filed and published by any common

carrier in compliance with the requirements of this sec-

tion, except after thirty days’ notice to the Commission.

. . . Provided, That the Commission may, in its discre-

tion and for good cause shown, allow changes upon less

than the notice herein specified. ... (7) No carrier,

unless otherwise provided by this Act, shall engage or

participate in the transportation of passengers or prop-

erty, as defined in this Act, unless the rates, fares, and

charges upon which the same are transported by said

carrier have been filed and published in accordance with

the provisions of this Act; nor shall any carrier charge or

demand or collect or receive a greater or less or differ-

ent compensation for such transportation of passengers

or property, or for any service in connection therewith,

between the points named in such tariffs than the rates,

fares, and charges which are specified in the tariff filed

and in effect at the time; nor shall any carrier refund

or remit in any manner or by any device any portion

DAVIS v. PORTLAND SEED CO. 423

403 Opinion of the Court.

of the rates, fares, and charges so specified, nor extend

to any shipper or person any privileges or facilities in

the transportation of passengers or property, except such

as are specified in such tariffs.”

“Sec. 8. That in case any common carrier subject to

the provisions of this Act shall do, cause to be done, or

permit to be done any act, matter, or thing in this Act

prohibited or declared to be unlawful, or shall omit to

do any act, matter, or thing in this Act required to be

done, such common carrier shall be liable to the person

or persons injured thereby for the full amount of dam-

ages sustained in consequence of any such violation of

the provisions of this Act, together with a reasonable

counsel or attorney’s fee, to be fixed by the court in every

case of recovery, which attorney’s fee shall be taxed and

collected as part of the costs in the case.”

“See. 10 (1). That any common carrier subject to the

provisions of this Act, or, whenever such common carrier

is a corporation, any director or officer thereof, or any

receiver, trustee, lessee, agent, or person acting for or

employed by such corporation, who, alone or with any

other corporation, company, person, or party, shall will-

fully do or cause to be done, or shall willingly suffer or

permit to be done, any act, matter, or thing in this Act

prohibited or declared to be unlawful, or who shall aid

or abet therein, or shall willfully omit or fail to do any act,

matter, or thing in this Act required to be done, or shall

cause or willingly suffer or permit any act, matter, or

thing so directed or required by this Act to be done or

not to be so done, or shall aid or abet any such omission

or failure, or shall be guilty of any infraction of this Act

for which no penalty is otherwise provided, or who shall

aid or abet therein, shall be deemed guilty of a misde-

meanor, and shall, upon conviction thereof in any district

court of the United States within the jurisdiction of which

such offense was committed, be subject to a fine of not to

ar MS aa

424 OCTOBER TERM, 1923.

Opinion of the Court. 264 U.S.

‘exceed five thousand dollars for each offense: Provided,

That if the offense for which any person shall be convicted

as aforesaid shall be an unlawful discrimination in rates,

fares, or charges for the transportation of passengers or

property, such person shall, in addition to the fine here-

inbefore provided for, be liable to imprisonment in the

penitentiary for a term of not exceeding two years, or

both such fine and imprisonment, in the discretion of

the court.”

What liability did the carrier incur by publishing a

rate from Pecos lower than the scheduled one from Ros-

well without the Commission’s permission, and thereafter

imposing and collecting the higher rate upon the ship-

ment to Walla Walla?

Construing the words of § 4 literally, it is argued that

unless some property moved over the longer distance af

the lower rate before greater compensation was charged

for transporting like property over a shorter one, there

was no violation of law. We cannot accept this view. It

does not accord proper weight to imperative require-

ments concerning publication of rates and subsequent

observance of them. The Commission holds, for ex-

ample, that although the schedule contains a plain cleri-

eal error, nevertheless no other charge may be demanded

and the shipper may recover any excess. Lamb-Fish

Lumber Co. v. Y. & M. V. R. R. Co., 42 I. C. C. 470.

The record shows, we think, that the carrier violated

the statute by publishing the lower rate for the longer

haul without permission and, prima facie at least, incurred

the penalties of § 10. Also, it became “ liable to the

person or persons injured thereby for the full amount of

damages sustained in consequence of . . . such

violation,” together with reasonable counsel fees, as pro-

vided by § 8. But mere publication of the forbidden

lower rate did not wholly efface the higher intermediate

one from the schedule and substitute for all purposes the

AE AERIAL ONAN AE PME OR EVENING TTF OTITIS NL ete Oe AWN Cr EAD OR

DAVIS v. PORTLAND SEED CO. 425

403 Opinion of the Court.

lower one, as a supplement might have done, without

regard to the reasonableness or unreasonableness of

either.

With special knowledge of rate schedules and relying

on Pennsylvania R. R. Co. v. International Coal Co., the

Interstate Commerce Commission for ten years has re-

quired proof of financial loss as a prerequisite to repara-

tion for infractions of the Fourth Section. The rule is

firmly established. Congress has not shown disapproval.

The Transportation Act, 1920, with evident purpose to

conserve the carriers’ revenues, added the following to

the proviso which gives power to exempt from the long

and short haul clause: “ But in exercising the authority

conferred upon it in this proviso the Commission shall

not permit the establishment of any charge to or from the

more distant point that is not reasonably compensatory

for the service performed.” The rule adopted by the

Commission follows the logic of the opinion relied upon

and can be readily applied. The contrary view would not

harmonize with other provisions of the act; and, put into

practice, would produce unfortunate consequences.

The statute requires rigid observance of the tariff, with-

out regard to the inherent lawfulness of the rates specified.

It commanded adherence to the published rate from Ros-

well; § 6 forbade any other charge. Observance of the

lower rate from Pecos, put in without authorization,

might have been forbidden, as pointed out in United

States v. Louisville & Nashville R. R. Co., supra; but it

would be going too far to hold, as respondent insists, that

the unauthorized publication established the lower rate

as the maximum permissible charge from the interme-

diate point—the only rate therefrom which could be de-

manded.

If a lower rate published without authority becomes

the maximum which may be charged from any inter-

426 OCTOBER TERM, 1923.

Syllabus. 264 U.S.

mediate point, mistakes in schedules (and they are in-

evitable) may become disastrous. Suppose the rate from

an obscure point in Maine to San Francisco via Boston,

New York and Chicago should be printed at $15.00, in-

stead of $150, and the error remain undiscovered for

many months, could all who had paid more than $15.00

for passage along that route recover the excess without

proof of pecuniary loss?

After the challenged judgments were entered, Kansas

City Southern Ry. Co. v. Wolf, 261 U.S. 133, was decided.

We adhere to the ruling there announced, and in view

of it defenses in these causes based upon prescribed limi-

tations must be determined.

The judgments below are reversed. The causes will be

remanded with appropriate instructions for further pro-

ceedings.

Reversed.

Mk. Justice BRANDEIS dissents.

REET ROTA BEL pe OW ain TO