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and that it was no defense that such discrimination resulted from the orders of the Texas Commission.251 An appeal was taken from the Commerce Court to the Supreme Court,252 and the order of the Commission was sustained in an opinion written by Mr. Justice Hughes. The opinion was based upon the right of Congress "to keep the highways of interstate communication open to interstate traffic upon fair and equal terms." The opinion of the court is so clear and cogent that its correctness can but be acknowledged. To permit states to prescribe interstate rates under which citizens of the states may exclude from competition with themselves, shippers located in other states from whose locations the transportation conditions are similar to those from points in the state, would be to effectuate the purposes to prevent which was the principal object of the Constitution of the United States. Not only is the decision of the Supreme Court in this case, which is commonly known as the Shreveport case, in accord with the federal Constitution, but any other rule would result in endless confusion and frequent injustice.2

253

The principle announced in the Shreveport Case, supra, has been followed by the Commission and the courts and there has been a constantly-increasing recognition of the propriety of the decision.254 So far is this true that the Act of 1920 makes statutory the court's construction of the original Commerce Act,255 going somewhat further, however, than the court had gone.

251 Texas & P. R. C. v. United States, Commerce Court Reports No. 68, p. 655, 205 Fed. 380.

252 Houston E. & W. T. Ry. Co. v. U. S., 234 U. S. 342, 58 L. Ed. 1341, 34 Sup. Ct. 833.

253 Corporation Com. of Okla. v. A. T. & S. F. Ry. Co., 31 I. C. C. 532; Trier v. C., St. P. M. & O. Ry. Co., 30 I. C. C. 352, 707; Rates on Beer, 31 I. C. C. 544; Freight Rates from Minnesota Points, 32 I. C. C. 361; Merchants Exchange of St. Louis, Mo. v. B. & O. R. Co., 34 I. C. C. 341.

254 Secs. 194, 401, post.

255 For a general discussion of the question see Federal v. State Regulations of Railroads by the author hereof, Case & Comment, Vol. 23, No. 5, Page 372, et cet. Subsequent developments of the Shreveport case are shown in Railroad Com. of La. v. A. H. T. Ry. Co., 41 I. C. C. 83; 43 I. C. C. 45; Eastern Tex. R. Co. v. Railroad Com. of Texas, 242 Fed. 300; Looney v. Eastern Tex. R. Co. 247 U. S. 214, 62 L. Ed. 1084, 38 Sup. Ct. 460. The rule was applied to express

§ 45. Limitations on the Power of States to Regulate Intrastate Rates. When private property is devoted to a public use, organized society has the right to regulate the charges for such use. This right may be exercised by or under the authority of state laws when the use is within the state, and subject to the further limitation that the regulation does not extend to a taking of private property without due process of law or without fair compensation. This principle, as we have seen (Section 36, ante), is old, but the need in this country for its application is comparatively recent. The first of the important applications of the principle was made in Munn v. Illinois and the other Granger cases,256 decided by the Supreme Court of the United States in 1877. Then follow: The Railroad Commission cases of 1886,257 Dow v. Beidelman of 1888,258 the Minnesota case259 of 1890, the Texas Commission

rates: Traffic Bureau v. American Exp. Co. 39 I. C. C. 703; Amer. Exp. Co. v. South Dakota, 244 U. S. 617, 61 L. Ed. 1352, 37 Sup. Ct. 656. To Passenger Fares: Business Men's League of St. Louis v. A. T. & S. F. R. Co., 41 I. C. C. 13, 503; Illinois C. R. Co. v. Fublic Utilities Com. of Ill. 245 U. S. 493, 62 L. Ed. 425, 38 Sup. Ct. 170; Business Men's League v. A. T. & S. F. R. Co., 49 I. C. C. 713. For other cases see: Merchant's Exchange v. B. & O. R. Co., 34 I. C. C. 341; The Missouri River-Nebraska Cases, 40 I. C. C. 201; Memphis v. Chicago R. I. & P. Ry. 43 I. C. C. 121; Texarkana Frt. Bureau v. St. L. I. M. & S. Ry. Co., 43 I. C. C. 224; Memphis Merchants Exchange v. I. C. R. Co. 43 I. C. C. 378; Business Men's League v. A. T. & S. F. Ry. Co., 44 I. C. C. 308; LaCrosse Shippers Assn. v. C. & N. W. Ry. Co., 44 I. C. C. 512; Royster Guano Co. v. A. C. L. Ry. Co., 50 I. C. C. 34; Landon v. Public Utilities Com. of Kansas 234 Fed. 152, 242 Fed. 658, 245 Fed. 950; Railroad Commis

sion of Wisconsin v. C., B. & Q. R. R. Co., 257 U. S. 563, 66 L. Ed. 371, 42 Sup. Ct. 232.

256 Munn v. Illinois, 94 U. S. (4 Otto.) 113, 24 L. Ed. 77; Chicago, B. & Q. R. Co. v. Iowa (v. Cutts), 94 U. S. 155, 24 L. Ed. 94; Peik v. Chicago & N. W. R. Co., 94 U. S. 164, 24 L. Ed. 97; Chicago, M. & St. P. R. Co. v. Ackley, 94 U. S. 179, 24 L. Ed. 99; Winona & St. Paul R. Co. V. Blake, 94 U. S. 180, 24 L. Ed. 99; Stone v. Wisconsin, 94 U. S. 181, 24 L. Ed. 102.

257 Stone V. Farmers' Loan & Trust Co., 116 U. S. 307, 29 L. Ed. 636, 6 Sup. Ct. 334, 1191; Stone v. Ill. Cent. R. Co., 116 U. S. 347, 29 L. Ed. 650, 6 Sup. Ct. 348; Stone v. New Orleans & N. E. R. Co., 116 U. S. 352, 29 L. Ed. 651, 6 Sup. Ct. 349, 391.

258 Dow v. Beidelman, 125 U. S. 680, 31 L. Ed. 841, 8 Sup. Ct. 1028.

259 Chicago, M. & St. Paul R. Co. v. Minnesota, 134 U. S. 418, 33 L. Ed. 970, 10 Sup. Ct. 462.

264

case of 1894,200 the Turnpike case261 in 1896, Smyth v. Ames202 in 1898, the National City case in 1899,263 the Stock Yard case in 1901 (cited in Note 266), the Water Rates cases of 1903,2 and the Water and Gas cases of 1909.265 These and other cases will be found in a note hereto.266

260 Reagan v. Farmers' Loan & Trust Co., 154 U. S. 362, 38 L. Ed. 1014, 14 Sup. Ct. 1047.

261 Covington & L. Turnpike R. Co. v. Sandford, 164 U. S. 578, 41 L. Ed. 561, 17 Sup. Ct. 198.

262 Smyth V. Ames, 169 U. S. 166, 42 L. Ed. 819, 18 Sup. Ct. 418; Freight Rates from Minnesota Co. v. National City, 174 U. S. 739, 43 L. Ed. 1154, 19 Sup. Ct. 804.

263 Cotting v. Godard, 183 U. S. 79, 46 L. Ed. 92, 22 Sup. Ct. 30.

264 Knoxville Water Co. v. Knoxville, 189 U. S. 434, 47 L. Ed. 887, 23 Sup. Ct. 531; San Diego Land & Town Co. v. Jasper, 189 U. S. 439, 47 L. Ed. 892, 23 Sup. Ct. 571.

265 Knoxville v. Knoxville Water Co., 212 U. S. 1, 53 L. Ed. 371, 29 Sup. Ct. 148; Wilcox v. Consolidated Gas Co., 212 U. S. 19, 53 L. Ed. 387, 29 Sup. Ct. 392.

266 Budd v. New York, 143 U. S. 517, 36 L. Ed. 247, 4 I. C. R. 45, 12 Sup. Ct. 468; Brass v. North Dakota ex rel. Stoeser, 153 U. S. 391, 38 L. Ed. 757, 4 I. C. R. 670, 14 Sup. Ct. 857. See also the following cases in state and federal courts: People v. Budd, 117 N. Y. 1, 5 L. R. A. 599, 22 N. E. 670; Lake Shore & M. S. R. Co. v. Cincinnati, S. & C. R. Co., 30 Ohio St. 604; State ex rel. Attorney General v. Columbus Gaslight & Coke Co., 34 Ohio St. 572, 32 Am. Rep. 390; Davis v. State, 68 Ala. 58, 44 Am. Rep. 128; Baker v. State, 54 Wis. 368, 12 N. W. 12; Nash v. Page, 80 Ky. 539, 44 Am. Rep. 490; Girard Point Storage Co. v. Southwalk Foundry

Co., 105 Pa. 248; Sawyer v. Davis, 136 Mass. 239, 49 Am. Rep. 27; Brechbill v. Randall, 102 Ind. 528, 52 Am. Rep. 695, 1 N. E. 362; Delaware, L. & W. R. Co. v. Central Stock Yard & Transit Co., 45 N. J. Eq. 50, 6 L. R. A. 855, 17 Atl. 146; Spring Valley Waterworks v. Schottler, 110 U. S. 347, 28 L. Ed. 173, 4 Sup. Ct. 48; Railroad Commission Cases, 116 U. S. 307, sub. nom. Stone v. Farmers' Loan & Trust Co., 29 L. Ed. 636, 6 Sup. Ct. 334, 388, 1191; Wabash, St. L. & P. R. Co. v. Illinois, 118 U. S. 557, 30 L. Ed. 244, 1 I. C. R. 31, 7 Sup. Ct. 4; Dow v. Beidelman, 125 U. S. 680, 31 L. Ed. 841, 2 I. C. R. 56, 8 Sup. Ct. 1028; Chicago, M. & St. P. R. Co. v. Minnesota, 134 U. S. 418, 33 L. Ed. 970, 3 I. C. R. 209, 10 Sup. Ct. 462, 702; Chicago & G. T. R. Co. v. Wellman, 143 U. S. 339, 36 L. Ed. 176, 12 Sup. Ct. 400; Reagan v. Farmers' Loan & T. Co., 154 U. S. 362, 38 L. Ed. 1014, 4 I. C. R. 560, 14 Sup. Ct. 1047; St. Louis & S. F. R. Co. v. Gill, 156 U. S. 649, 39 L. Ed. 567, 15 Sup. Ct. 484; Covington & L. Turnpike Road Co. v. Sandford, 164 U. S. 578, 41 L. Ed. 560, 17 Sup. Ct. 198; Smyth v. Ames, 169 U. S. 466, 42 L. Ed. 819, 18 Sup. Ct. 418; San Diego Land & Town Co. v. National City, 174 U. S. 739, 43 L. Ed. 1154, 19 Sup. Ct. 804; Chicago, M. & St. P. R. Co. v. Tompkins, 176 U. S. 167, 44 L. Ed. 417, 20 Sup. Ct. 336; Atlantic C. L. R. Co. v. North Carolina Corp. Com., 206 U. S. 1, 51 L. Ed. 933, 27 Sup. Ct. 585, 11 Ann. Cas. 398; Oklahoma Operating Co. v. Love, 252 U. S. 331, 64 L. Ed.

In 1913,207 the Supreme Court, in a series of cases involving state-made rates relating to intrastate transportation, announced principles which are as important as those in the Granger and Railroad Commission cases, supra. These principles are but the logical application of prior decisions and Mr. Justice Hughes, in writing the opinions of the court, has ably and exhaustively discussed the question and vindicated the rights of the states to regulate rates and charges of public carriers within their respective borders. In the Minnesota Rate cases, the learned Justice said:

"If this authority of the state be restricted, it must be by virtue of the paramount power of Congress over interstate commerce and its instruments; and, in view of the nature of the subject, a limitation may not be implied because of a dormant federal power, that is, one which has not been exerted, but can only be found in the actual exercise of federal control in such measure as to exclude this action by the state which otherwise would clearly be within its province."

This right is, in all cases, subject to constitutional limitations, and there is a clear intimation, as shown in Section 7, ante, that the federal government has not exercised as yet all its powers under the commerce clause of the Constitution.

The right of Congress was stated by the Supreme Court in sustaining an order of a state commission prescribing a rate where, as said by the court: "It was proper for the Inter

596, 40 Sup. Ct. 338. Many other cases to the same general effect have followed these.

267 Minnesota Rate Cases, Simpson v. Shepard, 230 U. S. 352, 57 L. Ed. 1511, 33 Sup. Ct. 729; Missouri Rate Cases, Knott v. C. B. & Q. R. Co., 230 U. S. 474, 57 L. Ed. 1571, 33 Sup. Ct. 975; West Virginia Cases, Chesapeake & O. Ry. Co. v. Conley, 230 U. S. 513, 57 L. Ed. 1597, 33 Sup. Ct. 985; Oregon Cases, Oregon R. & N. Co. v. Campbell, 230 U. S. 525, 57 Fed. 1625, 33 Sup. Ct. 1011, 177 Fed. 318, 180 Fed. 253; Southern Pac. Co. v. Campbell, 230 U. S. 537; Arkansas

Cases, Allen v. St. Louis I. M. & S. Ry. Co., 230 U. S. 553, 57 L. Ed. 1625, 33 Sup. Ct. 1030; Indiana Rate Cases, Wood v. Vandalia R. Co., 231 U. S. 1, 58 L. Ed. 97, 34 Sup. Ct. 7; Kentucky Rate Case, Louisville & N. R. Co. v. Garrett, 231 U. S. 298, 58 L. Ed. 229, 34 Sup. Ct. 48; Cent. of Ga. R. Co. v. R. R. Com. of Ala. 209 Fed. 75, 79; Chicago & N. W. Ry. Co. v. Smith, 210 Fed. 632; Cent. of Ga. R. Co. v. Georgia R. R. Com., 215 Fed. 421. For a continuation of the Arkansas Cases see Boyle v. St. Louis & S. F. Ry. Co., 222 Fed. 539.

state Commerce Commission to consider the rate as part of a through rate from points outside of the state. It was equally proper for the State Commission to consider it as part of the intrastate haul, and we do not think the rates were so related as to exclude the exercise of jurisdiction by the State Commission. ''268 This statement would permit, for the same movement, one rate when the freight originated out of the state and another rate when the freight originated in the state—an anomalous situation which should be remedied. Congress, by the Transportation Act of 1920, regulated intrastate rates somewhat more than theretofore, but then did not go as far as it constitutionally might.269

§ 46. Property Basis for Returns.-Investors are entitled to a reasonable return on the fair value of the property devoted to the public use. Until there shall be an authoritative determination of the value of railroad property, commissions and courts must, as best they may, arrive at this value.

In applying the decisions of courts to the question, it is necessary to keep in mind the different functions performed by courts and by quasi-legislative tribunals.

The courts usually must determine the strictly legal question, Is the rate under investigation "so unreasonably low that the carriers are deprived of their property without due process of law and denied the equal protection of the law?"— Minnesota Rate cases, supra.

"The rate-making power is a legislative power and necessarily implies a range of legislative discretion; and the question to be determined by a tribunal to which this power has been delegated is, Is the rate just and reasonable?” (Id.) Obviously, a rate may be less than just and reasonable with

268 Chicago M. & St. P. R. Co. v. Public Utilities Com. of Ill. 242 U. S. 333, 61 L. Ed. 341, 37 Sup. Ct. 173. Dist. Judge Boot in Landon v. Public Utilities Com. of Kansas 242 Fed. 658 collates and intelligently discusses the cases wherein are stated the limitations of the powers of the states indirectly to affect interstate com

merce. These powers include the right to require a service as well as to fix a charge. Brooklyn Heights R. Co. v. Straus, 245 Fed. 132.

269 See Railroad Commission of Wisconsin v. C., B. & Q. R. R. Co., 257 U. S. 563, 66 L. Ed. 371, 42 Sup. Ct. 232.

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