§ 757. Reasonableness of rate per se immaterial under statute. Under the provisions of such a statute as the Interstate Commerce Act, the fact that a rate is per se reasonable does not disprove the charge that it is unlawful. A rate may be relatively unreasonable and yet contain none of the elements of absolute unreasonableness. 28 If rates are relatively unjust, so that undue preference is afforded to one locality or undue prejudice results to another, the law is violated and its penalties incurred, although the higher rate is not in itself excessive.29 The right of one locality in that regard is not increased, nor is the equal right of a competing locality diminished, by municipal subscriptions which were advanced for the building of the road. 30 Topic B. General Principles of Statutory Regulation § 758. What discrimination is not unlawful. It is impossible to have a rate adjustment which places all towns and cities upon an exact equality.31 The Act clearly recognizes that some discrimination, either slight in extent or the result of dissimilar conditions or circumstances beyond the carrier's control, may be permitted. Only such as is undue or unreasonable is forbidden and declared unlawful.32 Discriminations covered by sections 28 New Pittsburgh Coal Co. v. H. V. Ry., 26 I. C. C. 121. 29 Knapp, Com., in Board of Trade of Lynchburg v. Old Dominion S. S. Co., 6 I. C. C. Rep. 632; Stacy Mercantile Co. v. M., St. P. & S. St. M. Ry., 18 I. C. C. 550; Morgan Grain Co. v. A. C. L. R. R. Co., 19 I. C. C. 460. 30 Lincoln Board of Trade V. Burlington & M. R. R. R., 2 Int. Com. Rep. 95, 2 I. C. C. Rep. 147. 31 Kindel v. N. Y., N. H. & H. Ry., 15 I. C. C. 555. 32 New York Produce Exchange v. B. & O. Ry., 7 I. C. C. Rep. 612; Commercial & Industrial Ass'n of Union Springs v. L. & N. Ry., 12 I. C. C. 372; Indianapolis Freight Bureau v. C., C., C. & St. L. Ry., 15 I. C. C. 504; Herbeck-Demer Co. v. B. & O. Ry., 17 I. C. C. 88; Loch Lynn Construction Co. v. B. & O. Ry., 17 I. C. C. 396; Railroad Commission of Nevada v. So. Pac. Ry., 21 I. C. C. 329; In re Advances in Demurrage Charges, 25 I. C. C. 314; Louisiana Sugar Planters' Ass'n v. I. C. Ry., 31 I. C. C. 311; Eagle Distillery v. L. H. & St. L. Ry, 32 33 3 and 4 of the Act, in so far as they result from the bona fide action of the carrier in meeting circumstances and conditions not of its own creation and which are reasonably necessary, do not of necessity fall under the condemnation of the law. It is recognized that within certain limits a carrier is bound to protect its territory and make rates which will foster enterprises upon its system, even though the result is to discriminate against other enterprises of a similar nature elsewhere. But such discrimination must not be undue.34 For instance, a carrier may not go so far as to refuse to carry the products of competing industries on connecting lines. 35 Whether it is undue is a question of fact, not of law,36 in the determination of which the Commission is not clothed with arbitrary power.37 Each case must be judged upon its own merits, 38 but the Commission has held that in general any preference which is conferred upon a city by the mere policy of the carrier and not because of actual difference in conditions is undue.39 But if the prejudice arising out of it against one person is not a cause of advantage to another it is not undue. 40 In passing upon the question, it is not only I. C. C. 195. "Under the Interstate Commerce Act, differential and discriminative rates are allowable so long as they are not unjust and do not operate unfairly, and the essence of the Act is that, whatever the rate, it shall be the same to all persons similarly situated." Pittsburgh, etc., Ry. v. Mitchell, 175 Ind. 196, 91 N. E. 735. See also Cincinnati, N. O. & T. P. Ry. v. Interstate Commerce Commission, 162 U. S. 184, 40 L. ed. 935, 16 Sup. Ct. 700, and Interstate Commerce Commission v. Alabama Midland Ry., 168 U. S. 144, 42 L. ed. 414, 18 Sup. Ct. 45. 33 Pittsburg Plate Glass Co. v. P., C., C. & St. L. Ry., 13 I. C. C. 87. 34 Reliance Textile & Dye Works v. Southern Ry., 13 I. C. C. 48; Re ceivers and Shippers' Ass'n of Cincinnati v. C., N. O. & T. P. Ry., 18 I. C. C. 440. 35 Standard Lime & Stone Co. v. Cumberland Valley Ry., 15 I. C. C. 620. 36 United States v. Tozer, 37 Fed. 369, 2 Int. Com. Rep. 597; State v. Adams Express Co., 171 Ind. 138, 85 N. E. 337; Merchants' Cotton Press & Storage Co. v. I. C. Ry., 17 I. C. C. 98. 37 Railroad Commission of Nevada v. So. Pac. Ry., 21 I. C. C. 329. 38 Chamber of Commerce of Newport News v. So. Ry., 23 I. C. C. 345. 39 In re Application of Southern Pacific, 22 I. C. C. 366. 40 Chicago Board of Trade v. A., T. & S. F. Ry., 29 I. C. C. 438. legitimate, but necessary, to take into consideration, besides the mere differences in charges, various elements, such as the convenience of the public, the fair interest of the carrier, the relative quantities or volume of the traffic involved, the relative cost of the services and profit to the company, and the situation and circumstances of the respective customers with reference to each other.41 Discrimination which might be unlawful under section 3 may in some cases be justified because made in order to avoid a violation of section 4.42 § 759. Discrimination which is not undue. Discrimination cannot be considered undue within the meaning of the Act unless it has some appreciable effect. There may be some disproportion in rates for which the carrier is responsible, and which possibly results in some benefits to a given community as against its commercial rival; but to be obnoxious to the law it must appear that the preference and advantage in the one case, and the corresponding prejudice and disadvantage in the other, are so appreciable and established with such a degree of certainty as to be justly declared unreasonable. In deciding whether the discrimination complained of is undue, the Commission cannot indulge in speculation as to the motives which actuated the carrier in fixing an adjustment of freight rates as between various points of origin, but can only determine upon the facts and conditions whether or not the rates in question are unreasonable or unjustly discriminatory.44 The fact that the complainant has been prosperous, although a matter to be considered, does not 41 Interstate Commerce Commission v. Baltimore & O. R. R., 145 U. S. 263, 36 L. ed. 699, 12 Sup. Ct. 844, 4 Int. Com. Rep. 92; Interstate Commerce Commission v. Chicago G. W. Ry., 141 Fed. 1003; Lincoln Board of Trade v. Missouri Pac. Ry., 2 Int. Com. Rep. 98, 2 I. C. C. 155; Tifton v. Louisville & N. R. R., 9 42 Atlanta Journal Co. v. S. A. L. Ry., 28 I. C. C. 186. 43 Knapp, Com., in Commercial Club of Omaha v. Chicago & N. R. R., 7 I. C. C. Rep. 386. 44 Grand Junction Mining & Fuel Co. v. C. M. Ry., 16 I. C. C. 452. conclusively show that defendant's rates are not discriminatory.45 Nor can discrimination be predicated upon the fact that complainant's competitors are able to undersell complainant.46 A discrimination between localities may be harmful and at the same time not constitute an undue discrimination because of other factors, such as railroad competition." The Commission has held that the most satisfactory test for ascertaining whether relative injustice is being done one section as compared with another is the relative earnings per car.48 Another way of showing undue prejudice and disadvantage under the third section is by showing unreasonableness in rate under the first section and then comparing it with rates to similarly located places.49 Comparisons between railroads are of little or no value as evidence of undue preference, 50 but the value of the commodity concerned may be an important factor. 51 § 760. Interdependence of rates to various localities. The theory upon which the Act is administered is that there is a certain interdependence in a schedule of rates, and that rates to various related localities should not be outrageously disproportionate. By this test it is not enough that the rate charged a particular locality is not unreasonable in itself; the requirement of the Act is that there shall be no undue preference or priority between locali 45 Hitchman Coal & Coke Co. v. B. & O. Ry., 16 I. C. C. 512. 46 Western Fruit Jobbers' Ass'n v. C., R. I. & P. Ry., 27 I. C. C. 417. Where rival mine operators have the same freight rates to an equally accessible territory, the failure of one of them to sell in the near-by markets must be due either to a difference in the quality of the coal, the cost of operating, or the aggressiveness of the respective selling forces. These are disadvantages which can be removed only by the complainant and do not constitute undue prejudice. North Fork Cannel Coal Co. v. A. A. Ry., 25 I. C. C. 241. 47 Gund & Co. v. C., B. & Q. Ry., 25 I. C. C. 326. 48 Ozark Fruit Growers' Ass'n v. St. L. & S. F. Ry., 16 I. C. C. 106: 49 Board of Trade of Carrollton v. C. of G. Ry., 28 I. C. C. 154. 50 Stonega Coal & Coke Co. v. L. & N. Ry., 23 I. C. C. 17. 51 Coke Producers' Ass'n of Connellsville v. B. & O. Ry., 27 I. C. C. 125. ties unless the circumstances and conditions are dissimilar. These elementary principles were well set forth by the Interstate Commerce Commission in applying the Act in a Minnesota case. 52 "It is said that the rate from St. Cloud is reasonable in and of itself. A rate can seldom be considered 'in and of itself.' It must be taken almost invariably in relation to and in connection with other rates. The freight rates of this country, both upon different commodities and between different localities, are largely interdependent, and it is the fact that they do not bear a proper relation to one another, rather than the fact that they are absolutely either too low or too high, which most often gives occasion for complaint, and which is the ground of complaint here. A rate of 12 cents per hundred pounds on flour from St. Cloud to Duluth may be reasonable when compared with a similar rate from Minneapolis. When compared with a rate of 52 cents from the latter place, it is certainly prima facie grossly unreasonable. Minneapolis and St. Cloud are competitors in the milling business, and when this defendant charges the St. Cloud miller 12 cents per hundred pounds for transporting his flour from St. Cloud to Duluth, while it charges the Minneapolis miller but 52 cents for identically the same service plus an additional haul of 60 miles, it is guilty of a discrimination against the St. Cloud shipper, which is not justified by the circumstances of this case." But in order to show undue preference, comparison is to be made between the different rates of the same carrier. No undue discrimination is proved by the fact that a carrier maintains lower rates from points on its line than other carriers maintain on the same traffic from near-by points on their lines. 53 § 761. No vested right in preferential rates. A rate which is unduly discriminatory should when discovered be removed. A community can never acquire a 52 George Tileston Mill Co. V. No. Pac. Ry., 8 I. C. C. 354. 53 Stonega Coal & Coke Co. v. L. & N. Ry., 23 I. C. C. 17. |