DTERSTA.TE COMyERCB .COMMISSION c/.
.. P. RT.oo.
187
INTERSTATE COMMERCE COMMISSION 11. TEXAS
& P. Ry. Co.
(Circuit Court, B. D. New York. October 4, 1892.) L
In proceedings under section 16 of the interstate commerce act (24 St. at Large. ..p. 384) against a carrier to an order of the commissioners, it is. not neces. sary that another carrier,making the forbidden rate jointly with defendant, be made a party to the suit. Freight rates from London and Liverpool to San Francisco are fixed by the competition of the water and rail route via the Isthmus of Panama and the water route around Cape Horn. A carrier by rail from .New Orleans to San. Francisco a much lower rate on goods shipped from London and Liverpool to San Francisco on through bUls of lading than from New York, Chicago, and other points to Sali Fran. cisco, On some cases. less than half the latter rate.) The rate complained of was Slightly remunerative to the carrier, and it would .lose the traftlc unless it carried at such low rate. BeZa, that under sections 2 and 3 of the interstate commerce act (24Bt. at Large, pp. 379, 380) the giving of such low rate is an unjust disoriminati6n, and a charging of one person more than another for a like service under substantially similar circumlltances and conditions. and an order·of the commissioners prohibiting it will be enforced.
bTERSTATE CoMMERCE COMMISSION-ENPORCEMENT OJ' ORDBB-PA.RTIEB.
.. SAME-UNJUST DISCRIMINA.TION-COMPETITIVE TRAFPIC.
Application by the Interstate Commerce Commission to enforce an order against the Texas & Pacific Railway Company. Petition granted. Edward Mitchell, (Simon Sterne and John D. KerniJIn, of counsel,) for complainant. Wi'l18low S. Pierce, (John F. Dillon, of counsel,) for defendant. WALLACE, Circuit Judge. This is an application to enforce an order of the interstate commerce commission, made January 29, 1891, in a proceeding instituted by the New York Board of Trade & Transporta. tion. The petition in that proceeding complained of unjust discrimina· tion made by various railway carriers. The defendant was duly notified of the complaint, and appeared in the proceeding, and submitted its rights. It was shown to the commission, as appears by the findings of fact in their report, that the defendant, in conjunction with the Southern Pacific Company, made joint rates from New Orleans to San Francisco covering carriage of traffic by the rails of the defendant from New Orleans to El Paso, and thence by the rails of the Southern Pacific Company to San Francisco, and also made joint rates with vessel owners in London and Liverpool covering carriage of traffic from those places to San Francisco via New Orleans. It was also shown that the ordinary tariff rates charged by the two companies upon traffic delivered to the defendant at New Orleans, and shipped at New York, Chicago, and other places in this country, for carriage from New Orleans to San Francisco, were somewhat more than double the rates charged for carriage of similar traffic sent from Liverpool or London by through bill of lading to San Francisco via New Orleans. To illustrate, it was shown that the rates made by the two companies, in conjunction with Liverpool vessel owners, by through bill of lading from Liverpool to San Francisco via the rails of the delEmdant from New Orleans to EI Paso, were, per 100 pounds, on books, on carpets, and on cutlery, f1.07,
I'EDERALREPORTEB,
vol. 52.
while the regular tariff rates of the two companies upon the articles when sent to New Orleans from other places in this country were, per 100 pounds, on books, $2.64, on carpets, $2.88, and on cutlery, $3.26; and that the rates ()n these articles, when shipped from Liverpool, were 80 cents perlOO,pounds for carriage from New Orleans to San Francisco. The defendant contended that it was justified in making the discrimthe foreign and domestic traffic, because, owing to the ination competition of sailing vessels and foreign carriers between Liverpool and San Francisco, it could not get any appreciable amount of foreign traffic witbout meeting the competitive rates by making the rates given. The commission, while conceding the facts to be as asserted by the defendant, ruled against thevaJidity of the excuse, and made an order which, in substance, required the defendant to desist from carrying any article of imported traffic, shipped from any foreign port upon through bills of lading, destined to anyplace within the United States, at any other than the same rates established by the inland tariff of the defendant for the carriage of other like kind of traffic. It is admitted by the answer of the defendant that since the order of the commission was made it has Dlaintained a substantially similar disparity in its transportation rates as well as in those for the transportation of numerous' other articles, depending upon the foreign or domestic ..' The 1efElndant insists that its action in this reorigin of the gard is not prollibited by the provisions of the interstate commerce act, find that, as it has not of any unjust discrimination, within the meaning tb'at ,act, the commission ought not to be enforced ... It also insists thatthe, proceeding is defective, because the SO,uthern :Pacific Oompanyisnot [)lade a party to the defense. If the,ordllr by commission was a lawful one, I see 'no not be .compelled. to obey it, notreason why, tIle defendant withstandl,ng'tbe Southerrl Pacific Company is not at present pursued. If isviolatlrig apj:-oper order of the commission, it should be restrained from doing so; it.. cannot escape upon the objection that another wrongdoeril:;l 'also 'y'iolating it. The real question, as it seems toUle, 'is whetqer the, of the peculiar facts which were UPQP before ,the by the defendant as an excuse fOf its discriminatiop jpstifies .. It must be conceded as true, for of tbepresentcase, the rates for the transportation of traffic from Liy",rpool and Lon90ri to San FranciscQ are, in effect, fi.xed anq controlled)y the of sailing vessels be'tween those ports, 4pd also by of steamships and s!tiling vessels in connecti()nwith railroads across the, Isthmus of Panama, none of which are resp,ect Bubject to act ,to regulate (lommerce. It must also be the, favorable to the foreign traffic are, for reato w4ich ,it is now, to advert, somewhat remunerative it mustals() be conceded thp.t the defendant would lose by reason of the competitil;m referred to, and the therefrom, unless it carries it at the lower rates; and by doing so it is" enabled to get part of it, which wduld otherwise go from
INTERSTATE COMMERCE COMMISSION "'. TEXAS &: P. RY. CO.
189
London and Liverpool to San Franoisoo around the Horn or by the Isthmus of Panama. The oase presents a question of muoh interest and importanoe to the defendant and carrierR similarly situated, and also to our own merchants and manufacturers, who, in supplying the wants of consumers at places within the United States. have to meet the competition of foreign merchants and manufacturerA, and are placed at a serious disadvantage if they are compelled by the railway carriers to pay higher rates of transpor'ation upon their goods. The question does not, however, seem to be such a doubtful one as to require more than a brief statement of the conclusions reached. The second section of the interstate commerce act prohibits unjust discrimination, and declares that the common earrier charging a greater or less compensation for any services rendered in the transportation of passengers or property than it charges any other person for doing a like and contemporaneous service in the transportation of a "like kind of traffic under substantially similar circumstances and conditions" shall be deemed guilty of unjust discrimination. The third' section provides that itsha11 be unlawful for the carrier to make or giveapy undue or uDrE'asonable preference or advantage to any particular person, locality, or particular description of traffic in any respect whatsoever, or to subject any particular person or locality, or any particular description of traffic, to any undue and unreasonable preiudice or disadvantage in any respect whatsoever. The third section is substantially taken from the second section of the English act of parliament known as the "Railway & Canal Traffic Act of 1854." Either, sectioni8 sufficiently comprehensive in its terms to prohibit an interstate oarrier from making an unfair disorimination between different shippers in charges for a like and· contemporaneous service in the transportation of a like kind of traffic under substantially similar oircumstances and conditions. But neither section is intended to prohibit all disoriminations or preferences. In considering whether an undue discrimination bas been made, the fair interests of the carrier are to betaken into account, and, although lower rates are given to one shipper or olass of shippers than to ano'ther for carrying the same kind of traffic, the latter have no just ground. of complaint of unjust disorimination if the conditions of the service enable the carrier to take the traffic of the former at a less cost. Nor is! the discrimination unjust if made conformably to some agreement by whioh the favored shipper gives the carrier an adequate consideratio.n forthe reduoed rates. Upon this principle it was decided not to be ari unjust preference under the English act for a railway company to carry at a lower rate in oonsideration of a guaranty of large quantities and full train loads at regular periods, provided the real object of the company was to obtain thereby a greater remunerative profit by the diminished cost of carriage, although the effect might be to exclude from the lower rate those shippers who could not give suoh a guaranty. NichoLBon v. Great Western Ry. Co., 5 C. B. (N. S.) 366. The discrimination between different shippers is a lawful one if it is such as the carrier may fairly give because of the difference in cost, expense, or the
1900" .:';: ,},
'REPOllTEBj
voL 6.2./
,''-
exceptional: !lfthe:. service. . ,Ui S.' v ,'L.. ,k ,lV. R.' Co., 40 Fed. Rep. 101. ' .'. '.. the,fnterstate commerceaot cOUtts were QMbeopinion, that:discdminationshy rates of cbarged tosbappers, based solely on th!!l the, quantity ofdJreight shipped, without reference to any conditions tE!nding to decost.of:tr4t.Q8Portation, were contrary to sound, public policy, and}flQOnsistentwi.tli:carriers to public. John v. Pennsylwmw, Co., 12. Fed. Rep. 309; Burlington Co. ,v. NorthCo., Rep. 652. It might well bethat.shippers ,Q!!l.induced to ipcreasetbeir traffic with a carrier ,by the offer of sqcb;Q.isprimination,perhapsby withdrawing part of it from a rival carby still)plating shipper to enlarge his business operati9nf1; "a.ml thus the might be profitable to the carrier. in, cases arising under. the English traffic act, have given to particular shippers to induce them not to traffic.from tbecarrier, orto.induce them to transfer traffic to one carner go toal1other carrier,are unlawful,and C/lonnot. Pe,justified Ol,l t.be ground of profit to the carrier allowing them. IJarril v. Oockermouth9c Workington By. Co., 3 C. B. (N. S.) 693; ·EvtrBh£d V., ,London &;0 Nort1I,we8lem Ry. Co.,2 Q. B. Div. 254. In the first Qf cases the judges in their opinion pointed that, if they were to upon such reasons, a railw","y company might in ,grant a preference to 0lle person over another, provided it bcmft. fide .in that such a.course would be to its advantage;.;) III the second ca!lf the court,,in pronouncing against the validity of )u$tification, used this lallguage: , "We think that a mil way company cannot, merely:for the sake of lncreuof individual customers, unless, lngt)le.ir traffic,reducetheJr, rates in .t aI. event",there is su,fficient eonsider,tion for the reduction. which shall lee!,en the .cost totheooJPpany of the conveyance of their traffic, or some other eqUivalent or other services are rendered to them by such indlviduaI81n rtllatlon to lIuchtraftlc;" The interstate COtXunerce act would be emascula.ted in its remedial efficacy, if not practicallY,nullified, if a carrier eanjustify a discriminationin rates merely upon the ground that, unless it is given, the traffio obtained by giving it would go to a competing carrier. A shipper havinga choice earriers would only have to refuse to send his goods by oneo{them unless given exCeptional rates tojustify that one in making in his favor ODtha Iround of the necessity of the The order is granted.
BANK ". SUTTON MANUF'G CO.
191 MANUF'O
F.A.BM:ERS' 'I
," ·. ,
NAT. BANK . , OF ,.
....,.
INn.,". SUTTbN
Co.
i;' I;
,;fCircuUi OOW11
fif AppeaZB, Sixth No. 31.
Circuit. October 11, 189S.}
L
CoN"PLIOT OJ' LAws-LEX LOCI CONTRACTUS-BILLS OJ'E:lOllA1flJII.
A btu of exchange drawn in Indiana, accepted hi 'Michigan, to be discounted In "IJl,dianalloUd paid,in, is an Indiana contract, and the liability thereon is to be determined by the law of that state. v. B/.(£ir, 21 Wall. 241. followed.
' .,
2.
NJlGOTIABJoE IXSTR'[)MENTS...,..PBovisION POR ATTORNEYS' FEES.
"An &Cdeptance of a bill 'of exchange with interest after maturity, and attorneys' f/¥lS, is aeon,tract to pay a suD:l certain at ,maturity, and is therefore negotiable,for the provisions as to interest and attorneys' fees become operative only after matu, rity. ' , pl'oVldi4g tbat all agreements iii' 8, bm of exchange or other 'Written eVIdence efindebtedness to pay attorneys', fees upon" any condition 'therein slit forth II are void, does nqtrender v,oid an, agreeQ}ent to pay attorneys' fees on tlie implied cOndition that they shall be payable 'only in case of dishonor. MarUm., MInd. 380, followed· How. ADI;!. St. Mich. c. 124, prOViding in general terms that it shall not belli.wful for any cotJj0ration to divert its operations to any other purpose that set forth in tAearticles of association! is merely declaratory of thl;l common law,andunder it a corporation accepting a olll of exchange without consideration, merely for the aooomDiodatioD of the drawee,is bwnd with respect to a bonafide indol'llee for value before maturity. ' , VIREs,-DECLARATORT ST,lTU'l'B,
a. , ··
I.
FEDERAL COUltTs-STA'l'B DECISION.
The 'rederal courts, when called upon to construe the general' commerel.ai law of Indiana in respect to a questionwbich i., a new one in the, federal courts, should give weight to the Indiana decisions, although they are not absolutely bound thereby. Burges8 v. Seligman. 2 Sup. Ct.Rep. 10, 107 U. S; 20, followed. '
In Error, to the CirouitCourt of the United for the Eastern District ofMiohigan. Action by the Farmers' National Bank of Valparaiso, Ind., against the SuttonMQ,nufacturingCompany to recover on sbill of exchange accepted by. Qle Judgment for defendant. Plaintiff brings error. Reversed. TAFT, Cirouit Judge: The action in the court below was in atl8Umpsit by the Farmers t Valparaiso. IJ;ld., as the indorsee ora bill of exchange theS.utton Manufacturing Company of Detroit, Mich., as acceptor of the bill for the amount of the biJI and interest. The bill was &8 follows: "&2,00(). OFFIOE OF HOPFER LUMBER & MANUFACTURING Co., 8OBllTO J. S. HOFPER & SONS, WnoLESALE LUMBER DEALERS. "MWITIGAN CITY, INDIANA, June 4,1890· . ,"Ninety days after date, pay to the order of Hopper Lumber &; ,Manufacturing Co. two,thou8Rnd dollars, with interest at the rate ,of eight per cent. peI: annum after ,maturity, and attorneys' fees, without any relief from vaIu_ti9n or appraisement laws., Value receiVed. and charge to account of "HOFPER LUMBER & MANUFACTURING Co. . "Per J. S. HOPPER, Pree. "To th, Button Manu,facturi1l11 00·· Room 40. Haagu Bu.ilding. P,trole, Ifich. ' ""Due Sept. 5tb.-