Alabama & Vicksburg Railway Co. v. Railroad Commission

86 Miss. 667

• Court: Mississippi Supreme Court
• Decided: April 15, 1905
• Status: Published

Opinion

Tbuly, J.,

delivered the opinion of the court.

Many important questions are pressed on our consideration which, in view of our conclusion, we have found it unnecessary to discuss or decide.

' The facts which are decisive of this controversy are very few, and a statement of them eliminates from consideration many of the more difficult questions urged' by counsel. On December 13, 1902, the hoard of trade of Meridian presented to the railroad commission of Mississippi a petition praying that the projiortionate rate of three and one-half cents then in effect from Vicksburg to Meridian he made an open rate, subject to use of all shippers from Vicksburg. The rate referred to in the petition was a rate on grain and grain products handled in car-load lots. This class of freight, under the guise of a “re-billing rate,” was transported from Vicksburg to1 Meridian at the rate of three and one-half cents per hundredweight.

After full investigation, the railroad commission, on November 16, 1903, passed an order directing the Alabama & Vicksburg Railway Company “to put in effect over its line of road from Vicksburg, Mississippi, to Meridian, Mississippi, inclusive of both of said cities, from and after December 8, 1903, a flat rate of three and one-half cents per hundred pounds on! grain and grain products, and no.more;”, the general terms of this order being limited, however, to grain and grain products handled in car-load lots, this being the extent of the prayer of the petition filed with the commission. Against the enforcerment of this order the appellant procured an injunction. On final Rearing on bill, answer, exhibits, and proofs, the injunction was dissolved, and a decree rendered dismissing the bill of complaint, and from that decree this appeal is prosecuted.

In reviewing the action of the railroad commission in promulgating the order in question, it is necessary, to determine the justice and correctness of their action and their power and authority in the premises, to note the exact condition of affairs as they existed at and before the filing of the petition by the Meridian board of trade. Vicksburg and Meridian, one hundred and forty miles distant one from the other, are the termini of the Alabama & Vicksburg Railway. Vicksburg, situated on the Mississippi river, has the advantage of both railroad and river competition; Meridian is a railroad center of considerable importance. In both cities there are many jobbers and wholesale dealers handling grain and grain products in large quantities, and doing an extensive business, both locally, by wagon trade, and over the railroads, with adjacent towns. The authorized all-rail interstate rate on grain and grain products in car-load lots from the chief market in the west to Vicksburg is twelve cents, to Meridian is fourteen cents. On account of the material advantage due to river competition, Vicksburg handles a portion of its business in grain and grain products by barge, and gets the cheaper rate incident to water transportation during some seasons of the year, the minimum river or barge rate being admittedly lower than the all-rail rate. In July, 1902, the Alabama & Vicksburg Railway Company put into effect a so-called “rebilling” rate of three and one-half cents per one hundred pounds on grain and grain products, effective from Vicksburg to Meridian. A true rebilling rate is one in which goods received in unbroken car-load lots over one line of railway can be rebilled over the same or another line, completing one continuous trip of the same commodity, simply changing the consignee and altering the destination of the identical shipment, without unloading or handling of freight. What is denominated a “rebill-ing rate” in this record does not, as actually employed, comply with the definition above given in several most important particulars. In the first place, the rate is not applied to consignments arriving oyer all connecting lines, but is.only available to those receiving freight over the Vicksburg, Shreveport & Pacific Railway. In the second place, the freight reconsigned over the Alabama & Vicksbnrg Railway line did not complete one continuous trip, without handling or unloading, and was not necessarily, or even generally, the identical shipment which was originally consigned to the merchant in Vicksburg; the custom being that dealers in Vicksburg handling freight over the Vicksburg, Shreveport & Pacific Railway could save their “expense bills” (or receipts showing the amount of freight which they had received over that line), and be granted the privilege, within ninety days from date of such receipts, of shipping freight of .an equal quantity over the line of the appellant at the “rebilling” rate of three and one-half cents per hundredweight. Thus, a merchant receiving a car load of oats over the Vicksburg, Shreveport & Pacific Railway could, within ninety days of that date, ship- over appellant’s line a car load of corn or other grain product without regard to the source from which it was procured. The result of this was that the merchant in Vicksburg who patronized the Vicksburg, Shreveport & Pacific Railway Company could receive any amount of grain product by barge or otherwise, and keep it stored in his warehouse, with the full assurance that he could, at any time within the period stated, have the advantage of this cheap rate over appellant’s line, whereas the merchant not dealing with this specially favored “associated line” was denied the same rate; the only condition precedent to the enjoyment of the rebilling rate being that the consignor must first have received an equal quantity of freight over the line of the Vicksburg, Shreveport & Pacific Railway. The effect of this custom was, as developed by the uncontradicted evidence, that, while the Vicksburg dealer could not deliver grain products at the city of Meridian any cheaper than could the Meridian dealer, he could undersell and make prompter delivery in the towns adjacent to Meridian and by natural location within its territory, being able, by operation of this arrangement, to reach Laurel or Hattiesburg three cents pér hundredweight cheaper than conld the Meridian dealer. So a dealer in Vicksburg, receiving a barge of corn by river, could ship' it, under the guise of rebilling, over appellant’s road at three and onedialf cents per one hundred pounds, while the Meridian dealer, who might also receive a barge of corn at Vicksburg, could only ship over the appellant’s road by paying the prohibitive local rate of ten cents per one hundred pounds. This statement, brief as it is, is sufficient to demonstrate that the practical working of the so-called “rebilling rate” was to give a very great advantage 'to those receiving freight over the Vicksburg, Shreveport & Pacific Railway and to unjustly discriminate against all but this specially favored class; the result being that the Vicksburg dealer could with impunity invade the territory adjacent to Meridian, and undersell its dealers at points more distant from Vicksburg, and to reach which it was necessary to pass through Meridian. That this was the inevitable result of the arrangement in question is practically confessed by the appellant, but the-force of the admission is sought to be avoided in two ways: Hirst, it is said that the¡ establishing of the rebilling rate Was not a voluntary act on the part of the appellant, but that the plan was inaugurated under compulsion by reason of the “threat” and “menace” of the railroad commission to put into effect a flat rate of three and one-half cents if appellant declined to adopt the rebilling arrangement herein referred to; that the appellant, while realizing that the rate was unreasonably low, deemed it wiser to endure that ill rather than face other evils which it apprehended might be inflicted by the railroad commission. While this is.the distinct statement of the witnesses for appellant, we are constrained to hold, in the absence of record proof showing any official action by the railroad commission, that tbe putting in force of the rebilling rate in- question was a voluntary act of the appellant. We are strengthened in this view by the un-controverted statement in the record that, at periods prior to the establishing of the present arrangement, other rates had been in force under which the appellant received no more for its services than it would under a uniform flat rate of three and one-half cents. Again, we do not recognize it as a possibility tinder any contingency that the railroad commission of Mississippi would or need employ threat or menace to protect the rights of the public from the aggression or extortion of corporations. We rebuke the intimation as an unwarranted aspersion of the railroad commission. A state, tribunal charged with the duty of exercising “a watchful and careful supervision over the tariffs of charges of every railroad,” and of revising “the same from time to time as justice to the public and the railroad may require,” is clothed by law with necessary power to achieve the purposes of its existence, without resorting to menace or threat to extort from- any corporation subject to its lawful supervision an unreasonable reduction of rates. Kor do we admit that the necessity can ever exist for appellant or any other corporation to submit to unjust or unauthorized regulations by the railroad commission of Mississippi, when the courts of the land stand ever open, able, and willing to protect them from any oppressive action. If in fact it be true that the so-called “rebilling rate” establishes an unreasonably low compensation for the transportation of grain and grain products, and the same was inaugurated by order of the commission, then the appellant had a complete and adequate remedy by contesting in a legal way the reasonableness of the rate and the power of the railroad commission to enforce it. We express no opinion, because not involved necessarily in the determination of this particular suit, as to whether the railroad commission would have had the authority to establish in the first instance the rebilling arrangement now in force. This record does not show that the rate was established in pursuance of any official order or action on the part of the railroad commission. We deal with facts as we find them.

In the next place, it is urged by the appellant that the re-billing arrangement operates uniformly as to all shippers occupying similar positions; that, if discrimination results, it is not on account of the rate itself, but because of differences in the natural advantages incident to location which one shipper has over another. It is insisted that the appellant denies to no one, who will comply with its conditions, the right to avail, himself to the fullest extent of the advantage of the same rate which is granted to other dealers; that if the Meridian dealer will receive freight over the Vicksburg, Shreveport & Pacific Railway consigned to him at Vicksburg, he can thereafter, within ninety days, also rebill freight to an equal amount over, appellant’s line at the same rate given the Vicksburg dealer.And this, it is urged, is a granting of the same privileges to all, and that therefore appellant is not guilty of unjustly discriminating against one, or unfairly favoring another, class of shippers. But the condition prerequisite to the enjoyment of the rebilling rate is, in and of itself, a discrimination. Ho- one is granted the rate who has not first received an equal amount of freight over the Vicksburg, Shreveport & Pacific Railway and who can produce “expense bills” paid within ninety days of the proposed shipment; the necessary result being that the Meridian dealer, having no means of disposing of- the freight arriving over the Vicksburg, Shreveport & Pacific Railway, cannot accumulate the “expense- bills” demanded. Hence such shipper can only rebill the identical commodity and car originally consigned to him, which goes forward and completes one continuous journey. This is a “rebilling” in its true meaning, and no one could justly complain if this plan was strictly enforced and uniformly adhered to. But, as hereinbefore pointed out, the plan now in vogue between the appellant and the Vicksburg, Shreveport & Pacific Railway Company does not operate fairly* or -uniformly in this: The Vicksburg dealer, having disposed locally of the original shipments received by him over the Vicksburg, Shreveport & Pacific Railway, presents his accumulated “expense bills,” and “rebills” freight received by him by barge or over the Yazoo & Mississippi Valley Railroad, under a rate cheaper than that granted the general public, to points by location naturally tributary commercially to Meridian. The statement of appellant that if the Meridian dealer will comply with certain required conditions he can enjoy the same privileges, while phrased with specious fairness, is in truth but making an offer of which stress of known and insuperable circumstances prevents acceptance or enjoyment. It is simply tantamount to saying that, if he will become a Vicksburg dealer, then he can have the same rate that other dealers so situate enjoy. This is the one thing that makes the operation of the rule a discrimination in favor of a Vicksburg dealer, and the only fact that gives the Meridian dealer the right to complain.

A “rebilling” rate, to receive the sanction of law, must operate uniformly and fairly, and must be open to all alike. It cannot lawfully be restricted to shippers who live in a certain locality and who previously receive freight over a certain other favored associated carrier. This consideration alone furnishes conclusive proof that the plan, in this record, courteously termed a “rebilling arrangement,” is, in truth, but a flimsy disguise for a plan which operates to the benefit primarily of the Vicksburg, Shreveport & Pacific Railway Company; secondarily, and perhaps incidentally, to the advantage of the Vicksburg dealer; and ultimately, but inevitably,^to the marked damage of the Meridian dealer. In a vague and shadowy way this arrangement is sought to be justified by the officials of the appellant by showing that, in consideration thereof, appellant is granted an extra proportion of freight and certain special privileges as to the use of cars by the Vicksburg, Shreveport & Pacific Railway Company. It is not shown that the same privileges could not have been obtained from the Yazoo & Mississippi Valley Railroad 'Company. ISTor, except in a most insubstantial manner, is it shown how a car received and unloaded on- one day can be utilized in the hauling of another shipment made, perchance, ninety days thereafter, or how it can benefit the appellant, especially in view of the fact that the demand for empty cars must necessarily vary daily according to the pressure of trafile, and it is impossible to foretell what the demand may be at any stated future time. But if these facts be granted, and the moving considerations such as would stand the test as a permissible interstate traffic arrangement, still the incurable vice in the arrangement is in the urn-fair and discriminatory manner in which it is enforced, and the special privileges enjoyed by one, but from which another class of shippers is debarred.

The practical operation of the plan being thus demonstrated as .causing a gross discrimination, the next question presented is whether the state railroad commission was vested with authority to pass the order, the enforcement of- which is now assailed, the effect of the order being simply to convert the then existing so-called “rebilling” rate into an open or flat rate, with the result that all dealers handling grain or grain products in car-load lots could enjoy the rate then in force from Vicksburg to Meridian. It will be noted that the rates then in existence were left undisturbed, the only change wrought by the order being to abolish the condition precedent, insisted on by appellant, restricting the rate to the exclusive benefit of such as had received previous and equal shipments over its associated line. The question propounded is easy of solution, in view of the provisions of Code 1892, § 4297. That section authorizes the commission to- docket, hear, and determine all complaints made of any tariff of rates, joint or several, made by any railroad or fixed or approved by the commission, on the ground' that the charges are for more than just compensation, or that such charges, or any of them, amount to, or operate so- as to effect, unjust discrimination. And when, by regular procedure and full investigation, and after hearing proof, the commission is satisfied of the truth of the statement and the justice of the complaint, it is given express authority to give notice to the railroads concerned of any change deemed proper, and to require compliance with such orders. That is the exact legal status of the order presented to us for review. A tariff or rate had been established by the voluntary action of the railroad company; that tariff operated to work unjust discrimination; complaint was made; the proof fully supports the justice and the truth of the grounds on which the complaint is based; that proof satisfied the chancellor, and it satisfies us, that the so-called “rebilling” arrangement was simply a cloak assumed to conceal an arrangement which, while ostensibly granted as a concession to the Vicksburg dealers, was, in truth, devised for the ulterior purpose of fostering the interests of the Vicksburg, Shreveport & Pacific Railway Company, and perhaps, as it is argued, to maintain present rates to Meridian for the benefit of an associated and connecting railroad at that point. In such state of case the power of the commission to make any change which justice may demand is unquestionably so well established that we deem any citation of authorities, further than a reference to the briefs of counsel, a work of supererogation. It is urged, however, by the appellant that, inasmuch as its intrastate business only yields a certain stated percentage, less than one-half, of its gross revenues, it does not in fact pay the expenses of maintaining and operating its road within the borders of the state, and therefore a reduction of existing rates is an indirect placing of a burden on interstate business, and this is expressly condemned as unlawful by the adjudication of the supreme court of the United States. To this argument it is replied by appellee that it is not shown with any degree of certainty the proportionate amount of the gross operating expenses of the railroad company incurred on account of the intrastate business, but this amount is only arrived at by estimation, and therefore this court cannot say as a matter of fact, in the ab-1 sence of positive proof, that the intrastate business of the Appellant does result in a net annual loss; and as the findings of the railroad commission are dealt with as being prima, facie correct, in the absence of direct proof of error this court will affirm its findings of facts.

Again, it is stated by the appellant that the hauling of grain and grain products at a flat or open, rate of three and one-half cents per hundred pounds would produce less than the actual cost of transporting the freight, so that the more business of this character the appellant handles, the greater its loss; that this, in effect, is the taking of the property of appellant without due process of law; wherefore the order is void, as being in contravention of the constitution of the United States. To this it is replied that the figures shown in the record do not prove that freight handled in the usual and customary course of 'business, as freight trains are ordinarily constructed, at the rate established, would result in a loss. Again, it is said, in further answer to this contention, that appellant is only entitled to fix such tariff of charges as will yield a fair compensation for the transportation and handling of freight, and assure that the net profits arising from appellant’s entire business, after payment of all operating expenses, will pay a reasonable interest on the value of its property; and, as the real value of the property is not disclosed by the record, the appellant has no ground of complaint on this score, and the court is furnished no definite proof to justify a finding of fact that the owners do not receive reasonable returns from their investment. We decline to enter upon a discussion of either question. Neither is necessarily involved in the decision of this case. It might be conceded that the intrastate business of the railroad results in a net loss, and might further be conceded that the trans-> porting and handling of grain and grain products at the rate established may not in actual operation bring a fair remuneration when limited to that one commodity; nevertheless, the rate having been established by the voluntary action of the appellant, it must not be so enforced as to operate as an unjust discrimination against any one. If the appellant chooses to establish as to a certain favored class of shippers a rate sc low as to be unremunerative, justice demands, and the law will require, that the rate be granted to all alike. “Special privileges to none” is the rule of action by which common carriers must measure their conduct.

The decree is affvt'med.