manufacturers, which term included gas, electric light, power, and ice companies, the rate was 30 per cent less than $1.50 per ton. Upon a review of the authorities cited in the note the court held that "it was allowable and proper for a railroad company to classify freight according to its quality or character and marketable value; and discrimination in charges for carrying different classes or kinds is not only universally recognized, but plainly authorized. And that this settled the question since it was admitted in the pleadings and shown by proof that the respective car loads of coal upon which this action was founded were wholly different both as to quality and marketable value."

§ 1338. Supply under different conditions.

Similarly when the arrangement by which the service is devoted to a different use is such that there may be said to be a difference in the service rendered a different rate may be justified. Thus gas supplied to manufacturers on the understanding that service may be curtailed in favor of other business in emergencies is obviously a different service from the domestic service which is being given priority; and a lower rate is perhaps justified.2 So when electric current is sold for power by day, as it costs less to so supply current at that part of the day when the equipment is largely idle than it would to take on new lighting contracts involving probably new equipment, it may be that the conditions of this service are so different as to justify a difference in rates.3

1 Louisville & N. R. R. Co. v. Com., 105 Ky. 179, 48 S. W. 416 (1898); Louisville & N. R. R. Co. v. Com., 108 Ky. 628, 57 S. W. 508 (1900).

2 Logansport & W. V. Gas Co. v. Ott, 30 Ind. App. 93, 65 N. E. 549 (1902).

3 Metropolitan Electric Co. v. Guider, 2 Ch. Div. 799 (1901).

CHAPTER XXXIX

JUSTIFIABLE DIFFERENCES

§ 1340. Propriety of proportionate rates.

Topic A. Actual Differences in Total Costs

§ 1341. Extent of the rule against discrimination. 1342. Differences in the cost.

1343. Economies in passenger transportation. 1344. Economies in freight transportation. 1345. Different charges for different service. 1346. Difference in the nature of the service. 1347. Both rates must be open to all.

Topic B. Service in More Convenient Units

§ 1348. Shipment in carloads.

1349. Shipments made in bulk.

1350. Comparison of bulk and package rates.

1351. Shipments in train loads.

1352. Regular shipments in large units.

1353. Units in passenger service.

1354. Operating units in supplying service.

1355. Such reductions apparently discriminatory.

Topic C. Facilities Furnished by Customers

§ 1356. Terminal facilities furnished by shippers. 1357. Transportation expenses paid by shipper. 1358. Rental paid for shipper's cars.

1359. Allowances for facilities closely scrutinized. 1360. Allowances for facilities still permissible.

Topic D. Independent Consideration for Reductions

§ 1361. When consideration is given for reduction. 1362. Indefinite considerations considered dangerous. 1363. Reductions for services rendered.

1364. Continuing obligations for past consideration.

§ 1365. Concessions to those with whom it deals. 1366. Rates adopted to foster its interests.

§ 1340. Propriety of proportionate rates.

In the last chapter it was seen that what is forbidden is any difference in the rate charged when the service asked is identical. It follows logically that when services which are really different are asked it is entirely proper to make the rate charged proportionally different. Thus it has already been explained that the railway company may classify freights and passengers and charge different rates for the different classes, if there are reasonable grounds for such discrimination in the difference of the cost of service, risk of carriage, in the accommodations furnished or the like. But it will constitute discrimination if different classification is given to like goods without justification. As a general rule a railway company is justified in carrying goods for one person at a less rate than that at which it carries goods for another only where there are circumstances which make the cost of carrying the former less than the cost of carrying the latter. And, to be exact, the difference in the rates between the different classifications of like articles must be proportionate to this difference in cost to the carrier of performing the service.

Topic A. Actual Differences in Total Cost

§ 1341. Extent of the rule against discrimination. When the services asked of the carrier are dissimilar, the rule against discrimination although apparently modified is in reality extended. It is rightly held that different rates may be made without discrimination when the cost of service is different. Indeed, to enforce equal rates under those circumstances would in reality be discriminatory under ordinary conditions. All this is seen even in

the most extreme case against personal discrimination, Messenger v. Pennsylvania Railroad Company.1 "It must not be inferred that a common carrier, in adjusting his price, cannot regard the peculiar circumstances of the particular transportation. Many considerations may properly enter into the agreement for carriage or the establishment of rates, such as the quantity carried, its nature, risks, the expense of carriage at different periods of time, and the like; but he has no right to give an exclusive advantage or preference, in that respect, to some over others, for carriage, in the course of his business. For a like service, the public are entitled to a like price.2

§ 1342. Differences in the cost.

There is no illegal discrimination unless the services compared are substantially the same. Thus a reasonable classification of commodities or passengers according to the nature of the goods or the accommodations furnished does not result in discrimination.3 "And for a like reason an inferior class of freight may be carried at a less rate than first-class merchandise of greater value and requiring more labor, care, and responsibility in the handling. It has been held that 20 separate parcels done up in one package, and consigned to the same person may be carried at a less rate per parcel than 20 parcels

17 Vroom (36 N. J. L.), 407, 13 Am. Rep. 457, 8 Vroom (37 N. J. L.), 531, 18 Am. Rep. 754 (1874).

See

2 For a late statement of the principle that the present law does not prohibit the giving of all preferences and advantages, but only those that are undue and unreasonable. Gamble-Robinson Com. Co. Chicago & N. W. R. Co., 168 Fed. 161, 94 C. C. A. 217, n., 21 L. R. A. (N. S.) 982 (1899).

V.

3 For this general principle see among other cases:

United States.-Brewer v. Central of Ga. Ry. Co., 84 Fed. 258 (1897). Illinois.-Wagner v. City of Rock Island, 146 Ill. 139 (1893).

Kentucky.-Louisville & N. Ry. Co. v. Com., 108 Ky. 628, 57 S. W: 508 (1900).

Pennsylvania.—Paine v. Pennsylvania Ry., 7 Kulp, 187.

of the same character consigned to as many different persons at the same destination, because it is supposed that it costs less to receive and deliver one package containing 20 parcels to one man, than it does to receive and deliver 20 different parcels to as many different consignees. Such are some of the numerous illustrations of the rule that might be given." 1

§ 1343. Economies in passenger transportation.

That there are differences in the cost of service by reason of ways in which traffic is handled is of course obvious, and in so far as these economies in conducting the transportation are real a proportionate reduction may be made for the service in question. This is as true of passenger carriage as of freight transportation. Passengers may be divided into different classes, and the price regulated in accordance with the accommodations furnished to each, because it costs less to carry an emigrant with the accommodations furnished to that class, than it does to carry an occupant of a palace car. It is justifiable to charge a higher rate when fare is paid upon the train than when tickets are bought at the office, the saving to the company thereby being sufficiently obvious. These are but two examples of many cases which could be put.

$1344. Economies in freight transportation.

Upon the principles now under discussion it will be plain why it is permissible to make differences in the rating of the same goods based on the nature and size of the package, large packages being given relatively lower rates than small packages.

1 The quotation is from Hays v. Pennsylvania R. R. Co., 12 Fed. 309 (1882).

2 See Hays v. Pennsylvania R. R. Co., 12 Fed. 309 (1882).

And likewise if the

See Nellis v. New York C. R. R. Co., 30 N. Y. 505 (1864).

For the general principle involved, see: Nicholson v. Gt. Western R. R. Co., 5 C. B. (N. S.) 366 (1858).