mission has never accepted the theory that if traffic moves freely under a given rate, that is the best test of reasonableness of rate; still it has always deemed the state of an industry a pertinent fact in considering reasonableness of its rates. § 440. Treating the schedule as a whole. The Commission has said that it has no authority to establish a general schedule of rates, but must deal with the interstate rates of this country, although they have not been established upon any consistent theory, as it finds them. What the Commission takes off in one place it cannot add in another, treating railways of the country as one system. Unless, therefore, the general result of all rates of the company in question is to yield an undue revenue to the carrier, the Commission should not reduce a particular rate simply because it might think, if establishing that rate de novo as part of the general scheme, that it ought to be somewhat lower or somewhat higher in proportion to others, 10 The rate attacked must be so out of proportion as to be unreasonable, or must so discriminate as to be undue, or must be unlawful for some other special reason. Certainly an unreasonable rate cannot be permitted, simply because the entire result of company's operations might not be as favorable as would otherwise be proper. 12 And no change will be made by the Commission if the rate involved appears already to be paying its due share of the value of the service. 13 A just and reasonable rate must be one which respects alike the carrier's deserts and the character of the traffic. The words "just and rea 11 8 In re Transportation of Wool, Hides, and Pelts, 23 I. C. C. 151. 9 Advance in Rates Cases of 1910, 20 I. C. C. 243, 306. 10 Five Per Cent Cases of 1914, Aug. 2 and Dec. 18, 1914. 11 Commercial Club of Salt Lake City v. A., T. & S. F. Ry., 19 I. C. C. 218. 12 In re Advances in Rates, Western Case, 20 I. C. C. 307. 13 In re Investigation of Advances in Rates on Cement, 20 I. C. C. R. 588. sonable" imply the implication of good faith and fairness, of common sense and a sense of justice to a given condition of facts. They are not fixed, unalterable, mathematical terms; their meaning implies the exercise of judgment. 14 § 441. Doctrine hardly applicable to passenger fares. Charging what the traffic will bear has obviously very little scope in justifying differences in passenger fares. Plainly rich men cannot be charged more than poor, nor men with important engagements more than people who have no business interests; but then these would be forbidden as personal discriminations. However, the principle has some operation in making up a schedule of passenger fares for a railroad system. Thus suburban fares for a considerable zone around a large city are placed at considerably lower rates per mile than for long distance runs. The real reason is that a heavy passenger traffic to suburban points could not be developed at the average mileage rate for the system. So long as this is a remunerative business it would seem that it is better for the whole traffic that these concessions should be made. In one case before the Commission 15 it was said: "The granting of commutation rates for suburban travel is quite general and such rates are defensible on various grounds. They tend to benefit the public by permitting and inducing residence at considerable distance from the place of occupation, thus aiding the territorial growth of cities and relieving their congested districts. So far as they have that effect such rates in turn benefit the railways by securing business that otherwise would not exist and revenue not otherwise obtainable." 16 14 Advances on Coal to Lake Ports, 22 I. C. C. 604. 15 Sprigg v. Baltimore & O. Ry., 8 I. C. C. Rep. 443; see Washington Suburban Rates, 26 I. C. C. 398 and cases cited. 16 See the later Commutation Rate Cases, 21 I. C. C. 428 (New York City-New Jersey) and 27 I. C. C. 549 (New York City-Connecticut). Topic B. Rates Reasonable Per Se § 442. Carrier entitled to reasonable compensation. The carrier is entitled to reasonable compensation for his services; and if there is no agreement as to the amount he may recover what the services are worth. To a certain extent there are external standards as to what constitutes a fair rate in that community for a given service, so that it might often be possible to say of a particular rate demanded by a particular public service company that it was reasonable or unreasonable in itself. Where there are such standards the rate which the company has established to meet its own policies or necessities must yield somewhat. But does it follow that if the rates of a certain company are no higher than these standard rates that it may justify any profits, however large, which may result from its business? It would seem that this is a situation where one or the other fundamental limitations upon a public service company must be applied, since the public is entitled to protection in either case. Thus no public service company, whatever its necessities, can charge the public more than reasonable rates; while if it is making exorbitant dividends it is not open to it to urge that its rates are not above the ordinary. Reasonable compensation for the service actually rendered is all that a common carrier is permitted to exact. This is the upper limit of his charge, as the Commission has pointed out; on the other hand, he is entitled to no more than a reasonable and fair return for his labor and his capital invested. 18 The question of the reasonableness of a rate is always one of fact.19 And this must be determined upon every complaint; for, as the Commission always insists, every shipper is entitled to reasonable rates. 20 Generally speaking the rate attacked 17 Coxe v. Lehigh R. R., 3 Int. Com. Rep. 460, 4 I. C. C. 535. 18 Brabham v. Atlantic C. L. Ry., 11 I. C. C. Rep. 464. 19 Kansas City Ass'n v. M. P. Ry., 14 I. C. C. 597. 20 Corn Belt Meat Producers' Ass'n v. C., B. & Q. Ry., 14 I. C. C. 376. must be so out of proportion as to be unreasonable, or must so discriminate as to be undue. 21 § 443. General principles as to reasonableness. A variety of practical considerations must enter into making of freight rates and determine to a great extent whether rates are reasonable.22 The earnings and expenses of operating, rates charged upon the same commodity upon other roads as nearly similarly situated as may be, the diversities between the railroad in question and such other roads, the relative amount of through and local business, the proportion borne by the commodity in question to the remainder of the local traffic, the market value of the commodity and its gradual reduction, the reductions made by the carrier upon other articles which are consumed and necessarily required by the producers of the article in question, and all other circumstances affecting the traffic of itself and as related to other considerations, enter into the charges of the carrier.23 All the surrounding circumstances must be considered as well as the rights of the shipper; and if these circumstances and conditions are so compulsory or imperious that they fairly and justly exercise any controlling influence in the making of the rate, they cannot be disregarded in a proceeding in which the reasonableness and justness of the rate is presented for determination.24 In passing upon the reasonableness or rates, the question whether they afford the carrier a proper return for the service rendered is to be considered, as well as the result of the business to the shipper or producer of the traffic. 25 Under no circumstances should they be so low as to impose a burden on other traffic.26 21 Hilton Lumber Co. v. Wilmington & W. R. R., 9 I. C. C. 17. 22 Gustin v. A. T. & S. F. Ry., 8 I. C. C. 277. 23 Evans v. Oregon Ry. & Nav. Co., 1 Int. Com. Rep. 641, 1 I. C. C. 325. 24 Business Men's Ass'n v. Chica go, S. P., M. & O. Ry., 2 Int. Com. Rep. 41, 2 I. C. C. 52. 25 Loud v. South Carolina Ry., 4 Int. Com. Rep. 205, 5 I. C. C. 529. 26 Re Rates and Charges on Food Products, 3 Int. Com. Rep. 93, 4 I. C. C. 48. But a railroad under the Act cannot be compelled to increase its rates, though they are so low as to be ruinous to itself or its rivals. The provision that all rates shall be just and reasonable, was intended for the protection of the general public, and not for that of the carrier against the action of its own officers or the action of rivals.27 The Commission is authorized to condemn an existing rate and prescribe a reasonable maximum rate to be charged in the future, only when upon consideration of all the facts, circumstances and conditions appearing, it is of the opinion that the rate complained of is unreasonable or unjust. 28 § 444. Customary rate presumably reasonable. A railroad company by putting in force and continuing in force a rate of charges, furnishes evidence that the rate is profitable, and if it increases a long-established rate, the new rate will be presumed to be unreasonably high.29 So where a certain rate had been long established for delivery in New York, and the railroad company changed its practice and made delivery in Jersey City, but charged the same rate, this rate, being for less service, was held prima facie unreasonable. 30 Where carrier voluntarily maintained a rate between certain points for a long period of time, the presumption is that such rate is reasonable; and where a long-established rate is raised for a short period, and then voluntarily reduced to the former point, the presumption is that the advanced rate is unreasonable.31 But a former special rate is not a fair test of the reason 27 Re Chicago, S. P. & K. C. Ry., 2 Int. Com. Rep. 137. 28 Marshall Oil Co. v. C. & N. W. Ry., 14 I. C. C. 210. 29 Re Rates and Charges on Food Products, 3 Int. Com. Rep. 93, 4 I. C. C. 48; Coxe v. Lehigh Valley R. R., 3 Int. Com. Rep. 460, 4 I. C. C. 535; Railroad Commission Savannah, F. & W. Ry., 3 Int. Com. V. Rep. 688, 5 I. C. C. 13; National 31 Sunderland Brothers Co. V. P. M. R. R., 16 I. C. C. 450. |