Illinois Central Railroad v. People

12 N.E. 670, 121 Ill. 304, 1887 Ill. LEXIS 928

• Court: Illinois Supreme Court
• Decided: June 17, 1887
• Status: Published

Opinion

Mr. Justice Soholfield

delivered the opinion of the Court:

This is an action of debt for unjust discrimination, under the 3d section of the act to prevent extortion and unjust discrimination, approved May 2, 1873. (2 Starr & Curtis, 1962.) So much of the section as is pertinent to the question before us, reads as follows: “If any * * * railroad corporation shall charge, collect or receive, for the transportation of any passenger or freight, of any description, upon its railroad,, any distance within this State, the same or a greater amount of toll or compensation than is at the same, time charged, collected or received for the transportation, in the same direction, of any passenger or like quantity of freight of the same class, over a greater distance of the same railroad, * * * all such discriminating rates, charges, collections or receipts * * * shall be deemed and taken against such railroad corporation as prima facie evidence of the unjust discriminations prohibited by the provisions of this act; and it shall not be deemed a sufficient excuse or justification of such discriminations on the part of such railroad corporation, that the railway station or point at which it shall charge, collect or receive the same or less rates of toll or compensation, * * * for the greater distance than for the shorter distance, is a railway station or point at which there exists competition with any other railroad or means of transportation. ”

The alleged unjust discrimination is, that appellant, on the 5th day of February, 1884, carried over its railroad, from Chicago to Mattoon, a distance of one hundred and seventy-two miles, two sacks of green coffee for Patrick Hennessey, and charged and collected for such carriage, the sum of twenty-seven cents,—being at the rate of ten cents per one hundred pounds; and that, at the same time, appellant carried in the same direction, and over that part of its same railroad, from Chicago to Kankakee, a distance of fifty-six miles, two other sacks of green -coffee, of like weight, of the same ■class and quality of freight, for C. C. Harrington, and charged .and collected from him, for such carriage, the sum of forty-five cents,—being at the rate of sixteen cents per one hundred pounds for such carriage. Appellant gave evidence proving that there was no competition between Mattoon and Kankakee in the retail grocery trade, and that Harrington knew nothing, at the time, of the rate charged Hennessey, and that he was not personally injured by it.

The first question, then, to be considered is, was it incumbent upon appellee to prove a personal discrimination and a personal injury, as between individuals of a class, or was it sufficient merely to prove a discrimination as between localities, omitting specific evidence of its effect upon different individuals ?

The clause quoted, it will be observed, does not mention persons. It is, in effect, directed against discriminations between localities, through unequal charges for the same transportation, in the same direction, over equal parts of its road, and, obviously, it is as certainly violated when all are compelled to pay for transportation for the shorter distance a rate equal to or greater than that charged for the same transportation, in the same direction, for the longer distance, as where one or a few individuals are compelled to do so. Another clause of the same section is directed against discriminations between individuals, and for the present argument it may be conceded that to recover under that clause it is ■essential to show a personal injury.

Counsel refer to section 6 of the act, as sustaining their •contention that it was essential to a recovery, here, that it ■should have been proved that some person was injured by the discrimination of which complaint is made. But that section simply gives a right of action against the railroad company to any person or corporation which has paid to a railroad company extortionate charges, or charges for receiving <or handling freight in violation of the provisions of the act, and which has therefore been unjustly discriminated against by such railroad company in its charges, for three times the amount of damages sustained by the party aggrieved. It has nothing to do with suits by the State, and its manifest purpose is to afford a personal indemnity in cases of personal injury, without any regard to suits by the State 'for the statutory ■ penalty. This suit is for the penalty prescribed by section 4 of -the act. The language of that section is broader and more comprehensive than that of section 6. It is: “Any such railroad corporation guilty of extortion, or of making any unjust discrimination as to passenger or freight rates, * * * shall, upon conviction thereof, be fined in any sum not less than $1000 nor more than $5000, for the first offence.” There being nothing qualifying or limiting the words “guilty * * * of making any unjust discrimination as to passenger or freight rates, ” they, manifestly, comprehend discriminations, in these respects, on account of localities.

The question whether it was competent for the General Assembly to prohibit unjust discriminations in charges for the transportation of persons and freights on account of localities, was settled in the affirmative in Chicago and Alton Railroad Co. v. People ex rel. 67 Ill. 11. That case was under the act in force July 1, 1871, which prohibited only such discrimination, as was expressly ruled in Indianapolis, Decatur and Springfield Railroad Co. v. Ervin, 118 Ill. 250. The information sought a forfeiture of the company’s charter, because the company had, in violation of the act of 1871, “repeatedly charged and received for transporting lumber from Ghicago to Lexington, a distance of one hundred and ten miles, the sum of $5.65 per one thousand feet, while, at the same time, it had only charged for transportation of like lumber from Chicago to Bloomington, a distance of one hundred and twenty-six miles, the sum of five dollars per one thousand feet.” There was no charge of individual injury. The constitutionality of the act of 1871 was discussed by counsel in the argument of the case, and the court, in the published opinion, after stating the respective contentions on that question, said: “Conceding, for the purposes of this appeal, all that is claimed by counsel for appellant in regard to the inviolability of railroad charters, regarded in the light of contracts, we are still of opinion that -the legislature has the clearest right to pass an act for the purpose of preventing an unjust discrimination in railway freights, whether as between individuals or communities, and to enforce its observance by appropriate penalties.” The opinion then shows why the legislature has the right to pass an act for the purpose of preventing an unjust discrimination between individuals, after which it proceeds thus: -“If, then, an unjust discrimination is not to be permitted, as between individuals, in regard to freights, is it any more permissible as between different communities or localities ? We are wholly at a loss to discover the slightest difference, in reason or principle. If a farmer, living three miles from the Springfield station, upon this company’s road, is charged fifteen cents per bushel for shipping his corn to Chicago, is it just that the farmer who lives twenty miles nearer Chicago should be charged a higher sum ? Certainly not, unless the railway company can show a peculiar state of affairs to justify the discrimination, and this must be something more than the mere fact that there are competing lines at one point and not at the other. The discrimination, in such a case, is as much a discrimination between individuals as it would be in reference to two persons living in the same locality and shipping at the same station, unless, as before stated, a satisfactory reason can be given for discrimination between the points of shipment,—and such a reason, in the case supposed, it is not very easy to conceive. ”

But the question occurs, does the fact that Kankakee and Mattoon are one hundred and seventeen miles apart, and that there is no competition between them in the retail grocery trade, show that this discrimination is not unjust? In ihe illustration quoted from Chicago and Alton Railroad Co. v. People, supra, we do not understand that the injustice to the farmer living twenty miles nearer to Chicago in being ■charged the higher sum, is affected by the circumstance that their respective stations are competing points for the grain trade to Chicago, but that the illustration would have been ns apropos had the farmers lived near the same railroad, hut the one more than a hundred miles nearer to Chicago than the other. The injustice spoken of is not that resulting from the destruction of local competition, but that resulting .from overcharging. Undoubtedly, injustice may result to a .given locality, and thus to every individual interested in its business, by giving rates to a fairly competing point, which will enable that point to take the business away from the .given locality. That, however, is not the only way by which .a given locality and its citizens may be injured by unjust •discrimination. It can hardly be necessary to argue that a discrimination against a given locality, where there is charged for the transportation of freights to or from it an amount which the law does not allow, is unjust, no matter whether ■other localities are only charged what the law allows, or are charged less than the law allows; and it must also be equally ■obvious, that in a case of this kind each individual shipper is, in fact, injured to the amount of the excess which he is xequired to pay beyond the amount which the law allows, .although he may, in fact, be ignorant at the time that the amount which he is required to pay is beyond the amount .allowed by law... The effect falls, in the first instance, upon him, although it is true that he may ultimately indemnify Mmself by charging the amount up to the purchasers of that which is shipped; but then it falls upon them, and is an unjust discrimination to their injury.

We are, in determining whether, in a given case, the amount charged by the railroad company is allowed by law, to keep in mind that it may not, like a qnivate individual, in the pursuit of his private business, exercise an unlimited discretion in this respect, but that, exercising a franchise of a public character, it is limited by the amount of. a reasonable remuneration. Now, in the present case, the remuneration exacted by the carrier and paid by the shipper, was sixteen cents per one hundred pounds .for carrying from Chicago to Kankakee, and ten cents per one hundred pounds for carrying from Chicago to Mattoon, a distance of one hundred and seventeen miles greater. The presumption is that the higher charge is not reasonable. Messenger v. Pennsylvania Railroad Co. 36 N. J. (7 Vroom,) 407. And this is in accordance with the reasoning in Chicago and Alton Railroad Co. v. People, supra. It was, further along in the opinion in that case than our former quotation, said: “The only issue to be made under a law properly framed would be, whether there was an unjust discrimination or not. If, on the trial of ;such an issue, the prosecutor proves a permanently established •discrimination, like, that disclosed by the present record, and rihe company can show no other reason for it than the exist•ence of a competing line at the favored point, the defence must he held unsatisfactory, notwithstanding witnesses may testify that they believe, as a matter of theoretical opinion, ihat the rates to Lexington are reasonable. They can not ¡be reasonable, and the discrimination must be unjust, if the .’lesser rates for the greater distance have been established -merely because, the company has ceased to exercise at that ;point a practical monopoly. It can not be supposed that •either of the competing lines would establish a permanent :rate of charges upon a scale that would not furnish a remunerative profit. The rates at Bloornington would be established under the influence of a fair competition, which, by the ■ordinary laws that govern commerce, might be relied upon as establishing a rate not unreasonably low. At Lexington, the rates would be established by the uncontrolled discretion of the company, and it should not cause surprise if they were fixed unreasonably high. If the rates are not unreasonably low at Bloomington, they are unreasonably high at Lexington. If they are unreasonably low at Bloomington and at all other points touched by competing lines, is it not certain that the company will indemnify itself by charging at the stations, where there is no competition, a rate unnecessarily high?”

This argument, it is true, assumes that the discrimination is permanently established; but we think that affects only the-strength of the presumption,—that, until explained, a temporary discrimination is equally within the logic of the reason.. Under ordinary circumstances, compensation is proportional to labor with reference to kind, quality and quantity, and the-kind and quality being in all respects the same, the greater compensation belongs to the greater quantity,—and hence, presumably, in ordinary cases, the longer carriage of the same-freight deserves the higher remuneration; but if, in any case, it is alleged that by reason of- exceptional circumstances the. fact is otherwise, the party so alleging must show it.

But it is contended, these facts which appellant proved, show that the discrimination is not unjust, namefy: “Mattoon. is a central interior point, one hundred and seventyrtwo miles from Chicago, with which it is directly connected by the Illinois Central railroad. Until just before February 5, 1884,. (the date of the alleged discrimination,) from the superiority of Chicago as a point of supply for green coffee and other fourth-class goods, the Illinois Central, on account of its direct connection, had a large and profitable business between Chicago and Mattoon, in the transportation of these goods,, at the rate of twenty-five cents per one hundred pounds, being the reasonable maximum rate fixed by the Railroad and Warehouse Commissioners. Prior to this date certain other-railroads which centered at Mattoon, had secretly made a. ‘cut’ rate of ten cents per one hundred pounds on fourth-class freight from Chicago to Mattoon, hauling such freight, a greater-distance than did the Central. The Indianapolis, and St. Louis railway, which connects Mattoon with St. Louis* a distance of one hundred and thirty-two miles, and with Indianapolis, one hundred and twenty-eight miles, and Terre Haute, fifty-seven miles, had, at the same time, made a ‘cut’ rate of ten cents per hundred from St. Louis and Indianapolis, and of six cents from Terre Haute. The Peoria, Decatur and Evansville railway, 'which connects Mattoon with Peoria, a distance of one hundred and twenty-one miles, had made a ■‘cut’ rate of six cents per hundred from Peoria. All these cities are points of supply of green coffee and other fourth-class goods, for the Mattoon market. The effect of these rates made by the railroads mentioned, was to divert the trade from Chicago to the other points of supply mentioned, •and, by consequence, to divert the traffic from the Illinois Central to the other railroad companies. As a result of these .low rates, merchants bought at Indianapolis, Terre Haute, St. Louis and Peoria, and the volume of business from Chicago was greatly diminished. The cut rate of the Illinois Central at Mattoon, from twenty-five cents to ten cents per .hundred pounds, wras made under the influence of these facts. ” But does this, in effect, amount to more than saying that Mattoon is, in the language of the statute, “a railway station ■at which there exists competition with * * * other railroads?” It would seem not. Webster’s definition of “competition” is, “The act of seeking or endeavoring to gain what ■another is endeavoring to gain at the same time; common strife for the same object.” Here, the details of the strife,— the competing acts,—are stated; but the gist is, simply, that the reduced or “cut” rate was made because of the competition with the other railroads,—precisely what the statute says “shall not be deemed a sufficient excuse or justification of ■such discrimination. ” These facts do not show that the reasonable cost or expense to the company of the carriage of goods from Chicago to Mattoon, was, at that time, temporarily, less than it was to Kankakee.

We recognize the right of railroad companies to offer special, inducements to shippers to obtain carriage of their freight; but such inducements, in our opinion, must not only be uniform to all in like situation, but also be reasonably justified by the expenses of the carriage to the company, and the anticipated profits resulting to the company from the carriage, presently and prospectively, in view of all the circumstances-affecting those questions. We concede that, as a matter of fact, there must be slightly less expense to a railroad company in carrying goods of the same quality and quantity by a • single continuous carriage, than by several disconnected and wholly independent carriages aggregating the same distance, because of the additional expense by reason of the more often loading and unloading, and of the additional labor and the-wear and breakage of cars and machinery by the more often switching and stopping and starting of cars, etc., in the latter-instance ; and we also concede that, as a matter of fact, where • a railroad company has full loads for its cars in each direction, it may carry the same freight more cheaply than where-it is obliged to run its cars empty or only partially loaded, in one direction, or only partially loaded in both directions,— and that, for these and other like reasons affecting the actual expense of carriage to a railroad company, it may afford to-carry the longer distance to or from the competitive point more cheaply, pro rata, than it can afford to carry the shorter • distance to or from the non-competitive point. Discriminations made in good faith, because of such differences in.' expense of carriage, and proportioned with reference thereto, are undoubtedly just, and not within the purview of the-statute. But it devolves upon the railroad company, relying - upon such facts as a defence to a suit for unjust discrimination, to prove them to the satisfaction of the court. A. reduced or “cut” rate of a railroad company simply to meet-a reduced or “cut” rate of a rival railroad company, is manifestly not necessarily controlled or materially affected by any of these considerations.

It is evident, first, if this reduced or “cut” rate is not below the point of reasonable remuneration, there being no proof that the proportionate expense of carrying the same goods toKankakee is so much greater than that of carrying them to Mattoon as to necessitate the greater charge therefor, the-charge of carrying them to Kankakee is above a reasonable-remuneration point, and the discrimination is therefore unjust ; and second, if it is below the point of reasonable remuneration, it must work injustice to the stockholders of the-corporation, and can not therefore be just.

This reduced or “cut” rate being but temporary, it is to be-assumed that its purpose is to compel its rival to return to-former rates; but we think, since the question concerns the-public as well as these corporations, it must be held that any reduced or “cut” rate by either of the roads, merely for the-purpose of coercing the action or obtaining an undue advantage over the other, is unjustifiable, and when it is found such rates are below the rates at non-competitive points, they are evidence of unjust discrimination, within the statute. If the reduced or “cut” rate of the rival road was below the point-of reasonable remuneration, it was unjust; but its injustice-affords no excuse for the appellants retaliating with another like injustice. Undoubtedly the public are benefited by competition in carriage, but it must be a healthy competition. A. competition carried on below a reasonably remunerative point,, it is obvious, must, sooner or later, end in the bankruptcy of some or all of the parties. The public are, in the end, injured instead of being benefited by this, for if some of the parties are bankrupted, those not bankrupted thereafter have a monopoly, and if all are bankrupted, the business is destroyed. A temporary reduction in prices below a reasonably remunerative point, manifestly must tend to unsettle values, and by producing a feeling of uncertainty and insecurity, injure trade affected by it, far more than it benefits it. But the tendency of a temporary reduction below a remunerative point is to be followed by a corresponding increase above that point, and since, in the very nature of things, it is impossible that this can fall equally upon the public affected by it, it works injustice. Some have had carriage for less than they ought to have had it, and others, in like situation, have had to pay more for carriage than it is worth.

It is contended, however, that the language of the clause under consideration, “that it shall not be deemed a sufficient excuse or justification of such discrimination on the part of such railroad corporation that the railway station or point at which it shall charge the same or less rates of toll or compensation for the transportation of such * * * freight * * * the greater distance than for the shorter distance, is a railway station or point at which there exists competition with any other railroad or means of transportation, ” has reference to that kind of rivalry which competes for a common business to a common market. But that is not the language employed. If the competition is for the carriage of the same freight, what possible difference can it make to the person having to bear the burden of paying for the carriage, and who is discriminated against, whether the markets are the same or not ? The fact that there is competition between different markets, has no tendency to prove that there is no competition in carriage between roads terminating at the different markets. It is, on the contrary, manifest that the competition in carriage between roads having different termini, is quite as great as that between different markets for the same commodity, and must often itself determine the market to be sought; and we feel authorized to take notice, as a part of the history of the times, that the discriminations because of competition at railroad crossings, had quite as much, if not more, influence in inducing the enactment of the statute under consideration, than discriminations because of the competition of parallel lines of railways, and this without regard to whether the respective roads had the same or different termini. The injury relieved against is that resulting by reason of the discrimination in the cost or price of carriage generally, and not solely that resulting by reason of the discrimination in carriage to the same identical market.

We have,'with much care, considered the able arguments on behalf of appellant, and while we have not herein noticed all the objections therein urged, in the same order, the views we have expressed necessarily lead to an affirmance of the judgment. It is therefore affirmed.

Judgment affirmed.