United States Commerce Court.

No. 7.-APRIL SESSION, 1911.

ATCHISON, TOPEKA & SANTA FE RAILWAY COMPANY et al., petitioners,

v.

INTERSTATE COMMERCE COMMISSION, RESPONDENT, The United States and Arlington Heights Fruit Company et al., interveners.

For opinion and order of the Interstate Commerce Commission see 19 I. C. C. Rep., 148.

Mr. Robert Dunlap, Mr. C. W. Durbrow, and Mr. H. A. Scandrett, with whom Mr. Gardiner Lathrop and Mr. T. J. Norton were on the brief, for the petitioners.

Mr. Blackburn Esterline, special assistant to the Attorney General, with whom Mr. James A. Fowler, Assistant Attorney General, was on the brief, for the United States of America.

Mr. William E. Lamb for the Interstate Commerce Commission.

Mr. Asa F. Call for the interveners.

Before KNAPP, Presiding Judge, and ARCHBALD, HUNT, CARLAND, and MACK, Judges.

MACK, Judge:

[October 5, 1911.]

The complaint made to the Interstate Commerce Commission by shippers that the carload rate of $1.15 per hundred pounds for oranges and lemons from California and other western points to the East prescribed by the railroads was unreasonably high, was dismissed by the commission as to oranges, but sustained as to lemons. These rates are so-called "blanket rates," covering transportation to practically the entire territory east of the Rocky Mountains, including New England. The rate for oranges had originally been $1.25 per hundred, but had been voluntarily reduced by the railroads in 1907 to $1.15, the present rate; while the rate for lemons from 1902 on had fluctuated between $1.25 and $1 per hundred, having been several times reduced to the latter figure and again advanced to the former; except for a brief interval, it was allowed to stand at $1 per hundred from January, 1904, to November, 1909, when it was advanced to $1.15, the same as on oranges. This is the rate now complained of. By the action of the commission the $1.15 rate on oranges was left undisturbed, but the rate on lemons was reduced to $1, the rate so fixed being conditioned on the same requirements with regard to minimum weights that had theretofore prevailed, and being extended without change to the same territory blanketed. So much of the complaint as had reference to the additional precooling and refrigerating charges

was held by the commission for further advisement and is not included in this proceeding. This case to enjoin the enforcement of the order prescribing the $1 lemon rate, was begun by bill filed in the Circuit Court of the United States for the District of Kansas. It was subsequently transferred to this court, and is now up for final disposition on the bill, answers, and testimony taken.

The first and decisive ground of attack is that the order "is without the scope of the delegated authority under which it purports to have been made" (I. C. C. v. Ill. Centr. R. R. Co., 215 U. S., 452, at 470) in this, that while in form holding the $1.15 rate unreasonable and prescribing the $1 rate as reasonable, in substance the commission did not determine the intrinsic reasonableness of either rate, but reduced the rate prescribed by the railroads in order that, and to a point at which, in its judgment, the California growers might successfully compete with their Sicilian competitors in a broader market than would otherwise be possible; in other words, that the commission acted upon the erroneous assumption that it had the power and the right, if not the duty, so to adjust railroad rates as would give to the American industry protection against foreign competition.

If complainants are right in their contention, the invalidity of the order necessarily follows. This has been clearly established by the decision rendered since the order herein was made in Southern Pacific Co. v. Interstate Commerce Commission (219 U. S.,

48250-S. Doc. 789, 62-2--14

433) reversing the decree of the Circuit Court and annulling an order of the commission, which had reduced a $5 lumber rate advanced from $3.10, the rate in force for over 10 years, to $3.40 and $3.65, respectively.

Chief Justice White, voicing the unanimous opinion of the Supreme Court, thus enunciated the principles which it is urged are controlling in the present case:

"The contention is that although the order made by the commission may have been couched in form which would cause it, superficially considered, to appear to be but the exercise of an authority to correct an unreasonable rate, yet if it plainly results from the record that the order of the commission was not the exercise of such an authority, but based upon the assumption by that body of the possession of a power not conferred by law, the mere form given by the commission to its action does not relieve the courts from the duty of reviewing and correcting an abuse of power. Applying these propositions, the insistence is that both in form and in substance the order of the commission is void, because it manifests that that body did not merely exert the power conferred by law to correct an unjust and unreasonable rate, but that it made the order which is complained of upon the theory that the power was possessed to set aside a just and reasonable rate lawfully fixed by a railroad whenever the commission deemed that it would be equitable to shippers in a particular district to put in force a reduced rate. That is

to say, the contention is that the order entered by the commission shows on its face that that body assumed that it had power not merely to prevent the charging of unjust and unreasonable rates, but also to regulate and control the general policy of the owners of railroads as to fixing rates, and consequently that there was authority to substitute for a just and reasonable rate one which in and of itself in a legal sense might be unjust and unreasonable, if the commission was satisfied that it was a wise policy to do so, or because a railroad had so conducted itself as to be estopped in the future from being entitled to receive a just and reasonable compensation for services rendered. On the other hand, the commission in the argument at bar does not contend that it possessed the indeed abnormal and extraordinary power which the railroads thus say was exerted. * * * While it is not denied on behalf of the commission that that body may have considered the prior rate prevailing in the Willamette Valley, the period during which it had been in force, and the effect upon the business situation in the valley of a change to a higher charge, all these things, it is insisted, were not made the basis of the power exerted, but were simply taken into consideration as some of the elements proper to be considered in the ultimate exertion of the lawful power to forbid an unjust and unreasonable rate and fix a reasonable one.

It is clear, therefore, as we have said at the outset, that the result of the contentions