TOPIC C-RATES REASONABLE IN THEMSELVES.

§ 515. External standards of reasonableness.

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 something. 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 of the 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. These propositions, it is obvious, require the further discussion which they receive in the sections which follow.

516. The carrier is 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. Indeed, as has been seen, the conception of common carriage involves the receiving of compensation; and the presumption therefore is that the services of the common carrier are always for hire. This was said succinctly in the leading case of Bastard v. Bastard, the whole report of which follows: "Case against the defendant as a common carrier, for a box delivered to him to be carried to B. and lost by negligence. Williams moved in arrest of judgment,

12 Shower, 81 (1679).

for that there was no particular sum mentioned to be paid or promised for hire, but only pro mercede rationabili; resolved well enough, and judgment given pro plaintiff; for perhaps there was no particular agreement, and then the carrier might have a quantum meruit for his hire, and he is therefore as chargeable for the loss of the goods in the one case as the other."

§ 517. Current rates for other transportation.

It would seem that while not the legal measure of proper charge, the current rates for other transportation within the same territory by the company in question or by other companies performing similar services, is evidence which will furnish a test for the value of the particular services in question. This was one of the strongest arguments brought forward in the "Naval Stores Case," 2 to show that the Savannah rates were themselves unreasonable. A part of the language of Judge Speer on this point is quoted to show this method of testing the reasonableness of rates:

"The commission furnishes a tabulated statement which affords much light for the proper determination of the controversy. This shows the rates on uncompressed cotton between numerous points, not on the Pensacola & Atlantic, and Savannah and New Orleans, respectively. The distances vary from 425 miles, from La Grange to New Orleans, to 1,173 miles, from River Junction to New York. The rates in the tables vary from 45 to 65 cents per 100 pounds, and yet the rate from all stations on the Pensacola & Atlantic to Savannah is 66 cents. It is true that some of these rates are from competitive points, but many are from strictly local stations like those on the Pensacola & Atlantic. It also appears from this table that rates on the principal railway lines in the cotton region are materially less than the rates charged from Pensacola & Atlantic stations to Savannah. From 22 local stations in Ala

2 Interstate Com. Com. v. Louisville & N. Ry., 118 Fed. 613 (1902).

bama on the Louisville & Nashville the distances to New Orleans range from 265 miles to 411 miles, the rates range from 50 to 60 cents. From 19 stations on the Seaboard Air Line, in North Carolina, South Carolina, and Georgia, the distances to Norfolk range from 366 to 573 miles, and the rates range from 41 to 49 cents. From 13 stations on the Seaboard Air Line in Georgia the distances to Wilmington, N. C., range from 267 up to 413 miles, and the rates range from 38 to 48 cents. From 19 local stations on the Southern Railway in South Carolina, Georgia, Alabama, and Mississippi the distances to Norfolk range from 434 miles to 1,054 miles, and the rates range from 38 to 61 cents. This comparative statement might be extended. In every instance the average distance on the roads last mentioned to the point of destination is much greater than the average distance from Pensacola & Atlantic stations to Savannah, and yet the rate is invariably much less. We find that it costs more to ship cotton from River Junction to Savannah, 259 miles, than it does to ship cotton from Sneads, a station on the Pensacola & Atlantic, 6 miles from River Junction, to New York, a distance of 1,173 miles, or from the most distant point in Mississippi to Norfolk, 1,154 miles. The facts ascertained by the commission and herein set forth are of the highest significance. In the absence of satisfactory reply by the respondents, they must control the action of the court." 3

§ 518. Evidence inadmissible unless conditions are similar. This comparison cannot be made, however, without considering dissimilar conditions; and conditions may be so dissimilar that no comparison would be proper. Thus in the case of Hooper v. Chicago, Milwaukee and St. Paul Railway, Mr. Justice Kinne said: "Evidence was admitted as to the charges

3 See, also, Freight Bureau v. Cincinnati, N. O. & T. R. Ry., 6 I. C. C. Rep. 195 (1894); Evans v. Union Pacific Ry., 6 I. C. C. Rep. 521 (1896). 491 Iowa, 639, 60 N. W. 487 (1894).

made by defendant in other States, but the court excluded evidence as to rates charged by other companies in other States and other roads in this State. The questions asked touching these matters were very numerous, and cannot all be set out here. In each case, however, the offered testimony was properly excluded because it was not shown that the circumstances and conditions were substantially the same as to the road inquired about as in the case at bar. One or two questions will serve to illustrate: 'Will you state to the court the rates that were being charged at that time in the different States of the Northwest on the different roads? State what was the charge of the different roads in Iowa for the transportation of lime in 1888.' It requires no argument to show that the charges for carrying a like commodity on another road in Iowa or else where would have no tendency to show the reasonableness of defendant's charges for a shipment of lime from Maquoketa to Sioux City, Iowa, unless the circumstances which must be taken into consideration in fixing the rate inquired about are substantially the same as those applying to the road in controversy. The proper foundation for the introduction of such evidence, even if admissible, was not laid." 5

§ 519. Comparison of rates between different localities unjustifiable.

The rule and its limitation were well stated by the Interstate Commerce Commission when in a certain case 6 it was confronted by its finding in a previous proceeding. The Commission said: “In support of the allegation that the charges complained of were 'unjust, unreasonable, and extortionate,' complainant's counsel in their brief direct attention to the order of the Commission in the Food Products case, investigated in

5 Compare Interstate Com. Com. v. Louisville & N. Ry., 73 Fed. 409 (1896).

6 Morrell v. Union Pac. Ry. et al., 6 I. C. C. Rep. 121 (1891).

7 Food Product Case, 3 Int. Com. Rep. 93, 4 I. C. C. Rep. 48 (1890).

1890 by this Commission and to the rate of charges in force over the Northern Pacific lines from Pendleton, Oregon, to Seattle, Washington. The Food Products case involved charges on freight carried from Kansas and Nebraska points to Chicago. The conditions upon which these charges are based are so unlike the conditions affecting transportation in Oregon and Washington that the reasonableness of the grain rate from Kansas or Nebraska to Chicago affords no safe criterion for charges between Pullman, Washington, and Portland, Oregon. Transportation rates in force on lines of rival companies or on different branches or lines of the same company have a bearing upon and are entitled to consideration in connection with the question of reasonable charges for transportation services rendered under like conditions.

§ 520. Discussion of Cotting v. Kansas City Stock Yards Company.

There is a certain opposition to the views put forward in this chapter shown in the dicta in the opinion of Justice. Brewer when he delivered the judgment of the court in Cotting v. Kansas City Stock Yards Company. This was a bill in equity to enjoin the enforcement of a statutory rate for the use of the defendant's stock-yards. The court said:

"The State's regulation of his charges is not to be measured by the aggregate of his profits, determined by the volume of business, but by the question whether any particular charge to an individual dealing with him is, considering the service rendered, an unreasonable exaction. In other words, if he has a thousand transactions a day, and his charges in each are but a reasonable compensation for the benefit received by the party dealing with him, such charges do not become unreasonable because by reason of the multitude the aggregate of his profits is large. The question is not how much he makes out of his volume

8 183 U. S. 79, 46 L. Ed. 92, 22 Sup. Ct. 30, B. & W. 316 (1901).