Texas & Pacific Railway Co. v. United States ( 1933 )

Mr. Justice Roberts

delivered the opinion of the Court.

The Galveston Commercial Association complained to the Interstate Commerce Commission that carload commodity rates on import, export and coastwise traffic between a portion of western classification térritory and Galvéston were unreasonable, arid their relationship with those tó and from Houston, Texas City, Beauriiont, Port Arthur, and Orange, Texas, and New Orleans, Ua., was unduly pre judical to Galveston.¹ The claim of urireásonableness was abandoned as was also the assertion of discrimination in favor of the other Texas ports. The latter intervened and prayed the same relief as might be accorded Galveston in respect of rate relationship with New Orleans. The issue was therefore narrowed • to one of prejudice to them and preference of New Orleans. Railroads serving the Texas ports and various shippers and commercial bodies intervened in.support of the complaint; interests connected with the port of New Orleans and shippers intervened in opposition.

The Commission found that export and import rates on fourteen commodities from or to points in Arkansas, Texas, Oklahoma, southern Kansas, and Louisiana west of the Mississippi River, were unduly prejudicial to Galveston. and unduly preferential of New Orleans. In all instances where the distance to Galveston is less than the distance to New Orleans by not over one hundred miles it permitted equal rates; but for differences in distance exceeding one hundred miles it prescribed certain named minimum differentials in favor of Galveston.²

On rehearing the prior decision was modified by including the other Texas ports with Galveston in the finding of undue prejudice; substituting a twenty-five per cent, difference in distance for the 100-mile basis; exempting from the scope of the order rates to or from points on the Texas & Pacific and the Louisiana Railroad & Navigation Company;³ exempting rates on petroleum and its products; and making certain other changes not here material.⁴

The proceeding was later reopened for the purpose of deciding whether the Texas & Pacific and the L. R. & N. should continue to be exempted. The Commission reversed its previous finding and included them within its orders.⁵ Both carriers filed bills in the District Court to enjoin the enforcement of all the orders except in so far as the second exempted them from the finding of preference and prejudice. The cases were consolidated, and upon final hearing before three judges the bills were dismissed.⁶ The plaintiffs, Texas & Pacific and L. R. & N., and also the State of Louisiana, the New Orleans Traffic Bureau and other intervenors appealed.

The Texas ports are served by some half dozen lines which either themselves or through their connections reach the areas of origin or destination embraced in the Commission’s order. Generally speaking their routes trend north rather than east of Galveston. The Southern Pacific is the only carrier serving both Galveston and New Orleans. Texas is also connected with New Orleans by the Gulf Coast Lines, by the Texas & Pacific, extending east from El Paso through Dallas and Port Worth to Shreveport, La., and thence southeast to New Orleans, and by the L. R. & N., which connects eastern Texas and western Louisiana with that port. Several other lines extend between New Orleans and western Louisiana, Arkansas, Kansas, and Oklahoma.

With minor - and immaterial exceptions the carriers serving the Texas ports and New Orleans have for many years equalized the import and export commodity car-load rates between the territory embraced in the Commission’s orders, and Galveston and New Orleans. The gravamen of the complaint is that in many instances the distance to New Orleans is so much greater than that to .the Texas ports, and the increased haul so important a part of the service rendered, that this factor should be reflected in a fixed differential in rates. The Commission’s order prescribing differentials is challenged only in so far as it compels the Texas & Pacific and the L. R. & N. to establish rates to New Orleans higher by the amount of the fixed differentials than those charged between the same interior points and the Texas ports. Inasmuch as the assertion of unreasonableness was withdrawn and the Commission made no finding that the Galveston rates were unreasonable, the prohibitions of § 1 of the Act to regulate commerce, as amended, are not involved.⁷ The evidence failed to show that the rates of the Texas & Pacific and the L. R. & N. on export and import shipments to and from New Orleans were not compensatory. The Commission refused to find that they were so low as to cast a burden on other traffic. There was therefore no basis for an order fixing minimum reasonable rates under § 15 (1) of the. Act.⁸ The parties agree that authority for the order must be found in § 3 (1), which is:

“ It shall be unlawful for any common carrier . . . to make or give any undue or unreasonable preference or advantage to any particular person, company, firm, corporation, or locality, or any particular description of traffic, in any respect whatsoever, or to subject any particular person, company, firm, corporation, or locality, or any particular description of traffic, to any undue or unreasonable prejudice or disadvantage in any respect whatsoever.”⁹

The appellants contend that in the circumstances disclosed the ports as such are not localities preferred or prejudiced, but that if they may be so denominated the Texas & Pacific and the L. R. & N. can not be held responsible for any undue prejudice to the Texas ports, since they do not reach those ports with their own lines or. control the rates to or from them. They also assert that the orders violate Article I, § 9, of the Constitution, which prohibits any regulation of commerce giving preference to ports of one State over those of another; are without support in the evidence, and arbitrary.

The cause has been twice argued; it was first presented at the October Term, 1931, and on account of the importance of the questions involved a reargument was ordered and was had at the October Term, 1932.¹⁰ ‘ Statement of certain facts and settled principles will tend to clarify and define the issues presented.

The trafile with which we are concerned does not move on through bills of lading, but the movement is, nevertheless, from points of origin to a foreign or coastal destination, or vice versa, and is, therefore, essentially through transportation. Compare Binderup v. Bathe Exchange, 263 U.S. 291, 309. As the Commission said in this case, “A port is neither thé destination nor the origin of traffic passing through it. It levies toll on the traffic, in substantially the same manner as do common Carriers, in its charges for the .use of its facilities in the transfer of traffic between the rail and water carriers.” Although the shipper in the first instance consigns the commodity to the port and a separate contract is made for ocean carriage, the through rate none the less consists of the rail rate to the port, plus the ocean freight, which is the same from all Gulf ports.¹¹

The choice of route is determined solely by the rail rates from or to the ports. If these are equalized the shipper has an option; but if they are disparate the route through the port taking the higher rate is necessarily excluded. A very slight differential in the rail rate, in some instances as little as a fraction of a cent per hundred pounds, will divert the traffic through the port so advantaged. The application of a distance scale to the rail ratq automatically precludes shipment through the more distant port.

Long prior to the passage of the Act to regulate commerce the railroads,- recognizing this situation, and desiring to hold to their own lines the traffic running to ports which they served, equalized rates through the ports reached by their own lines with those maintained by their rivals to other ports, or established differentials in favor of their own ports in order to retain a portion of the competitive export business. And a carrier serving two ports has for like reason fixed an equal or lower rate to the more distant of the two, solely to meet the competition of rivals who reached it by more direct routes. These practices have not been indulged either to aid or to harm a port as such, but solely to obtain or retain business for the carrier’s own line.¹² With the abstract -fairness of such adjustment neither the Commission nor the courts have any concern. This is not to say, however, that the rates promulgated are beyond the Commission’s jurisdiction. While that body has no control over the ocean rate, it has power to compel a. reasonable charge for the rail. haul. Compare Armour Packing Co. v. United States, 153 Fed. 1; News Syndicate Co. v. New York Central R. Co., 275 U. S. 179, 186-7.¹³ As the carriers are in competition for the business they may, within the zone of reasonableness,¹⁴ prescribed by the statute, adjust their rates so as to obtain or retain the desired traffic for their own lines. Interstate Commerce Comm’n v. Alabama Midland Ry. Co., 74 Fed. 715, 723-4; 168 U.S. 144, 172-3; Skinner & Eddy Corp. v. United States, 249 U.S. 557, 564; United States v. Illinois Central R. Co., 263 U.S. 515, 522.

The theory of the Act is that the carriers in initiating rates may adjust them to competitive conditions, and that such action does not amount to undue discrimination; Texas & Pacific Ry. Co. v. Interstate Commerce Comm’n, 162 U.S. 197. There the charging of rates on import traffic moving from a port on through bills of lading, much lower than those fixed for domestic transportation, was-held'not to amount as matter of law to discrimination forbidden by § 3. The carrier showed, in justification of the lower rates on import traffic, that unless these were permitted water and rail-and-water competition would divert the traffic away from the port of New Orleans and the.carrier’s lines extending from that port. Since that decision it has been recognized- that export and import shipments, although not made on through bills, might lawfully be transported at rates below those charged for domestic traffic between* the same points.¹⁵ The same purpose not to .stifle competition justifies relief under § 4 from the prohibition against charging the same or less for a longer than for a shorter haul. Interstate Commerce Comm’n v. Baltimore & Ohio R. Co., 145 U.S. 263, 276; Interstate Commerce Comm’n v. Alabama Midland Ry. Co., 168 U.S. 144, 164; Louisville <& N. R. Co. v. Behlmer, 175 U.S. 648, 671; Intermountain Rate Cases, 234 U.S. 476, 483-485, And relief under the Fourth Section has been granted on this ground in respect of export and import fates. Export and Import Rates, 169 I.C.C. 13.

While the carriers may, therefore, meet competition by equalizing rates or maintaining differentials both to interior points and to ports, they may not adjust their rates with the motive of injuring or aiding a shipper, a particular kind of traffic, or a locality, for so to do is to depart from the transportation standard, conformity to which the Act contemplates, and substitute others which are prohibited; A tariff published for the purpose of destroying a market or building up one, of diverting traffic from a particular place to the injury of that place, or in aid of some other, is unlawful; and obviously, what the carrier may not lawfully do, the Commission may not compel. Southern Pac. Co. v. Interstate Commerce Comm’n, 219 U.S. 433, 444; Interstate Commerce Comm’n v. Diffenbaugh, 222 U.S. 42, 46; Ellis v. Interstate Commerce Comm’n, 237 U.S. 434, 445; United States v. Illinois Central R. Co., 263 U.S. 515, 524; Atchison T. & S. F. Ry. v. Interstate Commerce Comm’n, 190 Fed. 591) Anchor Coal Co. v. United States, 25 F. (2d) 462, 471.¹⁶

In the light of the facts exhibited by the record and the principles underlying the Act, are ports, in respect of export, import and coastwise traffic, localities susceptible of undue preference or prejudice within the meaning of § 3? The purpose of §§ 2, 3 and 4, as exhibited by committee reports and explained by those in charge of the bill in Congress, was to prevent unjust discrimination resulting from existing practices. Similar commodities were, without reason or excuse, carried at different rates. Shippers similarly situated were put on unequal terms. Producers and consumers at points of origin and destination were prejudiced by unequal treatment in the matter of rates or service. Obviously localities of origin or destination might also be prejudiced by undue discrimination. One of the most prevalent and reprehensible practices at which the Act was aimed was the charging of a less or an equal rate for a longer haul upon the same line or route. The Act was passed for the protection of those who pay or bear the rates. The standards it establishes are transportation standards, not criteria of general welfare. The word “localities,” therefore, has its proper office as denoting the origin or destination of traffic and the shipping, producing, and consuming areas affected by rates and practices of carriers. The term was, however, not intended to cover a junction, a way station, a gateway, or a port, as respects traffic passing through it.

Considered as points of origin or destination any or all of these are localities within the.purview of the section. All of them may, moreover, though not considered as localities served, be involved in acts of discrimination. The situation here presented furnishes a close analogy to proportional rates or combination rates, and with respect to either of these the charge on shipments through a given gateway or port may discriminate against traffic passing through another so as to deprive a shipper of his right of choice of route through either.¹⁷ In such case, however, the discrimination operates upon the shipper, not upon the port. There are through rates, proportional rates, and combination rates, applicable to traffic routed through river crossings and gateways. It seems too plain for argument that the Commission has no authority, upon a showing by a gateway that under an existing tariff too much traffic passes through another, or too little through it, to readjust the rates and prescribe differentials so as to divert traffic through the complaining gateway. The interests and industries of a gateway are not entitled thus to obtain a benefit reflected from additional traffic which would be diverted by such action of the Commission. We perceive no difference in principle as to export or import traffic routed through ports.

The legislative history of the Act demonstrates that. Congress did not intend to forbid the equalization of export or import rates by lines serving several ports in order to meet competition. These rates, it was said, were hot to be proportioned to the respective distances between inland origins or destinations and the ports.¹⁸ Both equalizations and differentials had for some time been maintained in the rates to various Atlantic ports. Congress was aware’ of this, and had no intention of interfering with the maintenance of these rate adjustments.

Appellees say, however, that the Commission has always treated ports as localities within the meaning of § 3, arid exercised the power to abate discrimination by prescribing differentials in export rates. They add that though the Act has been several times amended, this section has been retairied in its original form and Congress has . thus sanctionéd the Commission’s interpretation. Where a statutory body has assumed a power plainly not granted, no amount of such interpretation is binding upon the courts. Interstate Commerce Comm’n v. C., N. O. & T. P. Ry. Co., 167 U.S. 479, 510. This we think is the "situation here presented, for, as we have said, the word localities is used with reference to places of origin and destination; its employment is not intended to permit the Commission, in its discretion, to favor or hamper a community having no such relation to the service of transportation.

Moreover we do not find that any such settled construction had been adopted or that Congress intended to sanction it. With few and occasional exceptions the Commission has not until a recent date essayed to prescribe differentials in export rates. Prior to the Hepburn Amendment in 1906, port differentials were considered in three cases.¹⁹ In the first certain carriers applied for leave to equalize their export rates to Boston with those charged to New York. The petitions were dismissed on the ground that the Commission should not authorize what the carriers might lawfully do without permission. In the second, a New York trade association complained that the maintenance of differentials in export rates to Philadelphia and Baltimore voluntarily established by the carriers worked undue prejudice against New York. The Commission found they did not result in undue prejudice; though it treated the ports as localities which would be entitled to relief under- a proper showing. In the third case shippers and carriers serving, north Atlantic ports submitted to the Commission the question of the fairness of the current differentials, and that body acted merely as an arbitrator and hot in its official capacity.

The legislative' history of the'Hepburn amendment discloses a clear intent not to confer power to circumscribe the adjustment of e^ort and import rates by the carriers to meet competition.²⁰ The expressionsiised disclose no thought that -the Commission had held the contrary.²¹

. Between the dates of the Hepburn amendment and the Transportation Act, 1920, the Commission had before it two cases relevant to the power to prescribe port differentials.²² In the first the Commission recognized its lack of power.to deal with the relationship of the rates.²³ In the second the complaint was that Astoria was prejudiced by exaction of higher export rates from origin territory than those to Seattle and Tacoma. Though the haul to Astoria was longer, the Commission required equalization. The Commission in this case asserted its authority to deal wi-^h export rate relationship solely in the interests of the affected ports. Whether the order made was. within the competence of that body or not, the important fact is that it did not prescribe differentials, but in the interest of competition opened the three ports to. export shipment on equal terms.²⁴

We think that at the date of the passage of the Transportation Act, no such administrative practice had been established as to require the conclusion that in failing to amend § 3 the Congress approved any asserted power to adjust export and import rates in the interests of the ports alone.

It remains to determine whether since 1920 there has been such a uniform and repeated assertion of this authority as would constrain us to adopt the principle. The instances in which the Commission has considered export and import traffic fall into several classes: First, where shippers’ complaints concerning port differentials established by carriers were dismissed,²⁵. Or were found justified and prejudice ordered removed;²⁶ secondly, where, on shippers’ complaint against differentials, equalization of rates was ordered;²⁷ thirdly, where on complaint by a port differentials voluntarily established by the carriers were altered.²⁸ These are not relevant to the present controversy. In two decisions rendered prior to the instant one the Commission, on complaint of port interests, exercised the supposed power to compel the establishment of differentials as between ports.²⁹ But we are not persuaded these rulings form a body of administrative action sufficient to overthrow the evident purpose of § 3.

We conclude that ports as such are not localities with respect to export and import traffic routed through them, susceptible of undue preference or prejudice within the intent of the Act.

While the Commission’s jurisdiction of port rate relation was fully- argued, the appellees seek to support the orders under the power to abate discrimination between persons and shippers. The argument is based upon averments of the complaint as to prejudice of persons at Galveston. . There is, however, no allegation that shippers or consignees in the interior, are prejudiced or preferred by the equalization of the New Orleans rates with those to the Texas ports, and the Commission made no finding of preference or prejudice of shippers or consignees, or localities of .origin and destination.³⁰ It compared at great length the facilitiesref' the ports, their volume of traffic, the relative growth-of their export and import business, .their respective steamship facilities, and reached the conclusion that though relative distance is not conclusive and competitive conditions are to be regarded, the Texas ports are entitled to an advantage in rate consequent upon the shorter haul to and from the interior territory. The Commission’s three reports abound with statements that a differential in favor of the Texas ports will divert traffic running to New Orleans and send it through the Texas ports. Petroleum is one of the commodities as to which complaint was made. There is no transportation difference discoverable in the record between this traffic and that of the other freights affected by the order. But the Commission concluded that New Orleans was not receiving more than its fair share of this business, and that a differential advantage would be of little benefit to the Texas ports by diverting this commodity, to them, and therefore refused to make any order respecting the rates on petroleum and its products.³¹ It has since, apparently upon similar considerations, refused to prescribe differentials in the rates on blackstrap molasses.³² The actual basis of the decision is, moreover,'avowed by the Commission. In the first report it said:

“We find that the present relationships of the assailed rates on export, import, and coastwise traffic, . . . are unduly prejudicial to Galveston and unduly preferential of New Orleans.” (1Ó0 I.C.C. 122.)

In its second report it stated:

“We find that the present, parity of rates as between the Texas and Louisiana ports . . . does not result in substantial injury to the Texás ports in respect of petroleum and its products, but does result in substantial injury to and prejudice against the Texas ports in respect of the other commodities considered.” (128 I.C.C. 388.)

And finally:

“ Upon further consideration we now find . . . that the present relationships of the assailed carload rates on export, import and coastwise traffic . . . are, and for the future will be, unduly prejudicial to Galveston and the other Texas ports taking the same rates, and unduly preferential of New Orleans.” (-160 I.C.C. 369.)

The action of the Commission cannot be justified upon any theory that it was protecting shippers and consignees, who would naturally desire all possible routes for foreign shipment. On the contrary, the orders prohibited a practice bom of competition, and not proved to involve a loss of revenue to the appellants. The plain purpose of the orders was to build up the Texas ports by diverting export and import traffic to .them. As we have shown, § 3 grants no such power.

The Commission’s action is challenged for another, and wholly independent reason, which, if sustained, also requires a reversal of the decree. By its second order the Commission excluded the Texas & Pacific and the L. R. & N. from its findings of undue preference and prejudice and exempted them from the requirement as to differentials. The Texas & Pacific had been included by the first order on the theory that it was part of the Missouri Pacific system which served both New Orleans and the Texas ports. Upon reheáring the conclusion was that the line was independently operated. Exemption was therefipon granted both appellants pursuant to a rule which the Commission had consistently followed since its organization: namely, that a carrier may not be held responsible for undue prejudice or preference unless both of the localities affected are upon its lines, or it effectively participates in the rates to both. In the final report these roads wére denied exemption under the belief that this court had held the principle inapplicable in the circumstances here disclosed. The appellants insist the rule is a reasonable one, consonant with the purposes of the Act, and that our decisions have not narrowed it so as to exclude this case from its scope.

The line of the Texas & Pacific in Texas is intersected at intervals of about 40 miles by north-and-south lines directly or indirectly serving the Texas ports. The population of these junction points is over ten times as great as that of all other open stations on this appellant’s line in Texas, and the greater volume of export and import traffic originates and- terminates at the junctions.³³ Thus the question is whether the Texas & Pacific may continue to participate in the handling of the traffic moving through the ports to and from points on its own rails, on an equality of rates with competing lines which extend to the Texas ports, or may be forbidden so to do because it is a party with the competing carriers to joint rates from stations on its own line to the Texas ports. The same issue is presented with respect to the L. R. & N: Neither of the appellants controls the rates to the Texas ports and the Commission so finds.³⁴ Though the Texas port lines can reduce their rates to and from those ports without the concurrence of the New Orleans lines, no'reductions can be made in those rates by the New Orleans lines, even from or to their local stations, without the concurrence of one or more lines reaching the Texas ports. Clearly the New Orleans carriers have no effective control over the rates between their junction points and the Texas ports. As respects local stations, their participation in joint rates with the lines to Texas ports is required by § 1 (4) of the Act; but such rates may not be higher than reasonable maxima fixed by national or state authority nor lower than the amount agreed to by their connections to the Texas ports. The appellants insist that their compulsory participation in rates to and from the Texas ports has no legal significance, and the question remains whether they in fact exercise effective control over those rates.

The classical case of discrimination in rates is presented where a single carrier serving two points approximately equidistant from a common origin on the carrier’s line, exacts unequal rates for the two hauls. Not only is the prejudice obvious, but equally so the ability of the carrier to abate it by raising the rates to the point enjoying the lower rates, or decreasing those to the point subject to the higher charge. The principle comprehends, as well, instances of joint rates where the same carriers participate in the rates to both points,³⁵ and where the originating (or delivering) carriers are different, but the delivering (or originating) carriers are the same.³⁶ So, too, a carrier may be responsible for preference or prejudice where it participates in one of several through routes between point of origin and the prejudiced destinations, although its own line may reach only one or neither of the latter, St. Louis S. W. Ry. v. United States, 245 U.S. 136, for the discrimination is brought about by the disparity of rates, and the order requiring its abatement necessarily runs against all the carriers parties to them. If one or more of the railroads whose lines make up the through route should refuse, upon an order to equalize rates, to afford one of the others a proper division of the rate, the latter may obtain redress from the Commission under § 15 (6). Where, however, a carrier whose lines reach, or which controls the fate to, one of the destinations, is a party to a joint rate to the other but cannot make or control the latter rate, or though it were to withdraw as a party thereto, or to cancel the rate, the discrimination would still continue — it cannot be held responsible, nor can any order to remove the prejudice run against it.³⁷ This rule has been consistently applied in respect of export and import rates to the ports.³⁸ The reason for the doctrine is that preference or prejudice can be found only by a comparison of two rates. If these are the rate of one carrier to point A and that of another to point B while a relationship of one to the other may be determined neither the first nor the second carrier alone can be held to have created the relation. Assuming that neither rate is unreasonable, the one carrier cannot be compelled to alter its rate, because the other's is higher or lower for the same service. A carrier or group of carriers must be the common source of the discrimination — must effectively participate in both rates, if an order for correction of the disparity is to run against it or them. Where an order i; made under § 3 an alternative must be afforded.³⁹ The offender or offenders may abate the discrimination by raising one rate, lowering the other, or altering both. Compare American Express Co. v. Caldwell, 244 U.S. 617, 624; United States v. Penna. R. Co., 266 U.S. 191; Chicago, I. & L. Ry. Co. v. United States, 270 U.S. 287, 292; Minneapolis & St. L. R. Co. v. Peoria & Pekin U. R. Co., 270 U.S. 580, 582. The situation must be such that the-carrier or carriers if given an option have an actual alternative.

The principle has been approved in decisions of this court with respect to practices, Interstate Commerce Comm’n v. Diffenbaugh, 222 U.S. 42; Central Railroad of New Jersey v. United States, 257 U.S. 247, and rates, East Tenn. V. & G. Ry. Co. v. Interstate Commerce Comm’n, 181 U.S. 1; Penn Refining Co. v. Western N.Y. & P. R. Co., 208 U.S. 208, 221.

In the Central Railroad case it was said (p. 259): “ But participation merely in joint rates does not make connecting carriers partners. They can be held jointly and severally responsible for unjust discrimination only if each carrier has participated in some way in that which causes. the unjust discrimination; as where a lower joint rate is given to one locality than to another similarly situated. (Citing cases.) If this were not so, the legality or illegality of a carrier’s practice would depend, not oil its own act, but on the acts of its connecting carriers . . .. What Congress sought to prevent by that section [3], as originally enacted, was not differences between localities.. in transportation rates, facilities and privileges, but unjust discrimination between them by the same carrier or carriers.” While this language was used with respect to circumstances differing from those here disclosed, it applies to the situation of appellants, who are by the Commission’s order held responsible for what is not and cannot be the result of their own acts, — the level of the rates to the Texas ports.

In the East Tennessee case the court said (p. 18):

“ The prohibition of the third section, when that section is considered in its proper, relation, is directed against unjust discrimination or undue preference arising from the voluntary and wrongful act of the carriers complained of as having given undue preference, and does not relate to acts the result of conditions wholly beyond the control of such carriers.”

The appellees contend, however, and the Commission concluded that in later cases the court has held the principle inapplicable in circumstances so like those here exhibited that it should not control our decision in the instant case. One of these is St. Louis S. W. Ry. Co. v. United States, 245 U.S. 136, cited for the proposition that the Commission has power to prevent carriers which participate in rates from blanket territory from discriminating against a particular destination, although one of them does not with its own lines reach such destination, but bills through traffic to it over connecting lines. The order there under review was for the establishment of a reasonable joint rate, or in the alternative new through rou+es with joint rates, under § 15 of the Act, and was held by this .court- to be primarily an order under that section, and not under § 3. The statement with respect to the possibility of unjust discrimination by all the participating carriers, even though the rails of some did not reach the locality prejudiced, is clearly sound, but is beside the point here in issue; for in that case no question as to the control of the rate to both points by any. carrier affected by the order w,as raised or decided.

Chicago, I. & L. Ry. Co. v. United States, 270 U.S. 287, is relied upon because of the statement in the opinion [p. 293] that “ Wherever discrimination is,- in fact, practiced, an order to remove it may issue; and the order may extend to every carrier who participates in inflicting the injury.” This was said with respect to a mandate to three carriers serving Michigan City, each of which had refused to enter into interchange arrangements with an electric railroad. Their lines did not connect directly with the electric line, but required for interchange the service ofc an intermediate switching carrier. The order of the Commission was held proper because each deféndant railroad was solely responsible for the prejudice resulting from its own refusal to maintain interchange arrangements with the electric line, and for the preference of maintaining such arrangements with other carriers at Michigan City. Each could, without reference to the conduct of any other, correct the unjust discrimination which it individually practiced. The very question here is whether the New Orleans lines in fact control' the rates to the Texas ports and the Commission has answered.it in the negative.

Principal reliance is placed upon United States v. Illinois Central R. Co., and Wyoming Ry. Co. v. United States, 263 U.S. 515. In the first it appeared that the Illinois Central equalized rates on. lumber to certain destinations from, all -its main .and branch line ■.points in blanket origin territory, and.from points on certain independent short lines within the blanket area, but refused to extend similar blanket rates to producing points on the Fernwood & Gulf, an independent short line serving the same area. The Illinois Central’s excuse was that it could not afford to shrink its earnings by larger divisions to the Fernwood & Gulf. The complaint before the Commission was against both carriers and the Commission required that both should abate the unjust discrimination.⁴⁰

In the second case it was shown that the Burlington published a blanket rate on lumber to destinations on a portion of its main line and to points located on its branch lines, but refused to join in an equal rate to a point on an independent branch line connected with the blanketed portion of the main line. The service to the latter point at the higher combination rate was less than was rendered to points on the Burlington’s branch lines. The Commission ordered both carriers to abolish the undue preference and prejudice.⁴¹

It will be noted that in the one case the Illinois Central and in the other the Burlington made the one rate and was a party to the other. Not only so, but in each case -the trunk line carrier controlled the joint or combination rate to of from the prejudiced locality. Quite clearly the independent line could not equalize that rate with the one in force to the preferred locality without the concurrence of the trunk line. Both railroads joined in the bill to enjoin enforcement of the order in the Illinois Central case, but only the independent carrier filed the bill in the Burlington case.

The appellees insist that as the orders ran against the independent road as well as the trunk line,, and this court refused to set them aside, it necessarily follows that a carrier may be liable for unjust discrimination by virtue of its mere participation in one of the rates whether or not it controls that rate. The argument ignores the substance and basis of the decision. The trunk line controlled both rates, and by its action alone could the disparity be corrected. But the short line was a party to one of the rates which created the illegal relation; and was therefore properly joined in the order. Compare Virginian Ry. Co. v. United States, 272 U.S. 658, 665. The fact, however, that the order included the short line is entirely insignificant on the question whether the same carrier in fact controlled both rates and was, in fact, responsible for the undue preference and prejudice. The contention of the short line that it did not participate in the discrimination because it did not join in the lower rates to the preferred locality maintained by the Illinois Central, and could not, therefore, by its own act, remove the discrimination, was properly overruled. As said by the court, that carrier, in joining the Illinois Central in establishing the prejudicial through rate, was as much a party to the discrimination as if it had also joined in the lower rates to the other points alleged to be unduly preferred. If Fernwood & Gulf could not persuade the Illinois Central to join in a néw non-discriminatory rate and accord it a proper division, it had a plain remedy under § 15 of the Act. To make the decision a precedent for the instant case it would have to be found that the New Orleans carriers effectively controlled both the rates to New Orleans and those to the Texas ports. If they did, obviously an order might run not only against the New Orleans carriers but against their connections to the Texas ports, albeit the latter did not control those rates.

We find nothing in any of the decisions which renders inapplicable the principle upon which the Commission has acted, with the approval of this court, for more than forty years.in the administration of § 3, and conclude that the New Orleans lines could not properly be held guilty of unjust discrimination against the Texas ports in the absence of a finding of effective participation in the rates to them.

The conclusions announced render it unnecessary to consider the other questions pressed by the appellants.

The judgment must be reversed and the cause remanded to the District Court for further proceedings in conformity with this opinion.

Reversed.

1 The complaint also-attacked Tates to arid frórn a portion of the State of Illinois and the port of Mobile, Ala. The Commission, ’hbwever, did not deal with these, and the averments of the complaint in this respect are immaterial to the decision of the case.

2 100 I.C.C. 110.

3 The Louisiana Railroad & Navigation Company was at the time of the earlier hearings operated under a single ownership with the Louisiana Railway and Navigation Company of Texas; and the two are referred to by the Commission as the L. R. & N. System. Prior to the institution of suit in the court below both lines -were acquired by the Louisiana & Arkansas Railway Company. The latter joined with the other two as plaintiffs in the District Court! In the opinion the System will for convenience be called the L. R. & N.

4 128 I.C.C. 349.

5 160 I.C.C. 345.

6 42 F. (2d) 281.

7 U.S.C. Tit. 49, § 1.

8 U.S.C. Tit. 49, § 15 (1).

9 U.S.C. Tit. 49, § 3 (1).

10 “This cause is restored to the docket for reargument upon all questions involved, and the attention of counsel is invited to the question whether the respective relations of the Louisiana ports and the Texas ports to the export, import, and coastwise traffic affected, and to the rates condemned, by the orders in controversy are such that the Louisiana ports may be regarded as localities unduly or unreasonably preferred by such rates within the sense and meaning of sections 3 (1) and 15 (1) of the interstate commerce act and that the Texas ports may be regarded as localities unduly or-unreasonably prejudiced by such rates within the sense and meaning of the same sections.” Journal, October Term, 1931, p. 342.

11 The evidence shows that the regulár steamship lines make 'the same rates to foreign destinations from all Gulf ports. Tramp steamers occasionally cut the conventional rate, but this -may happen at any port, -and the opportunity to obtain such a redüced rate does not depend 'upon the choice of port through which shipment shall bé made.

12 New York Produce Exchange v. B. & O. R. Co., -7 I.C.C. 612; In re Differential-Rates, 11 I.C.C. 13.

13 In Chamber of Commerce of New York v. N. Y. C. & H. R.R. Co., 24 I.C.C. 55, 74, the Commission said: “ We have no jurisdiction of the ocean rates and must deal with this question as though the ports were destinations instead of gateways.”

14 Since 1887, § 1 has forbidden that an export or import rate be unreasonably high; and since the Transportation Act, 1920, the Commission has been charged to see that the rate be not so low as to render the receipts of the business unremunerative.

15 New Orleans Board of Trade v. Illinois- Cent. R. Co., 23 I.C;C. 465; In re Import and Domestic Rates, 36 I.C.C. 389; In re Import and Domestic Rates — Clay, 39 I.C.C. 132.

16 The Commission has recognized the same principle. Ashland Fire Brick Co. v. Southern Ry. Co., 22 I.C.C. 115, 121; Chamber of Commerce of New York v. N. Y. C. & H. R.R. Co., 24 I.C.C. 55, 63, 70, 75; Maritime Assn. of Boston v. Ann Arbor R. Co., 95 I.C.C. 539, 565.

17 Mobile Chamber of Commerce v. Mobile & Ohio R. Co., 32 I.C.C. 272; Astoria v. Spokane, Portland & Seattle Ry. Co., 38 I.C.C. 16.

18 See the explanation of Sénator Cullom, chairman of the Committee having charge of the original bill, Cong. Rec., 49th Cong., 1st Sess., Vol. 17, Part 4, pp. 3471, 3472. House proceedings, Cong. Rec., Vol. 17, Part 7, pp. 7277, 7294, 7298. And see the Report of the Committee of the Senate, Report No,,46, 49th Cong., 1st Sess., p. 57, referring to the investigation by a committee of the British Parliament:

“ Other important conclusions were reached by the Committee a follows:

“ ‘ That a system of equal mileage rates, or charges in proportion to distance, was inexpedient and impracticable for the following reasons:

“ ‘ (a) It would prevent railway companies from lowering their fares and rates, so as to compete with traffic by sea, by canal, or by a shorter or otherwise cheaper railway, and would thus deprive the public of the benefit of competition, and the company of a legitimate source of profit. ^

“ ‘ In short, to injpoáe equal mileage on companies would be, to deprive the public óf the benefit of much of the competition which now exists, or has existed, to raise the charges on the public in many cases where the companies ~>ow find it to their interest to lower them, and to perpetuate monopolies in carriage, trade, and manufacture in favor of those rates' and places which are nearest or least expensive where the varying charges of the companies now create competition.’ ”

19 Export Trade of Boston, 1 I.C.C. 24 (1887); New York Produce Exchange v. B. & O..R. Co., 7 I.C.C. 612 (1898); In the Matter of Differential Rates, 11 I.C.C. 13 (1905).

20 Cong. Rec., 59th Cong., 1st Sess., Vol. 40, Part 2, pp. 1777, 1788; Part 3, pp. 2084, 2085, 2086, 2247, 2248; Part 4, p. 3792; Part 5, p. 4111; Part 7, p. 6683. Representative Mann, a member of the committee, said, m explaining the purposes of the bill before the House (Cong. Rec., Vol. 40, Part 3, p. 2247) :■ “. . . We do not give them the power to say which port shall be built up, which city shall be preferred; we leave open the Competitive forces of the railways. The old bills which we had sought to stifle competition; we leave competition in force. The railroads running south, west of the Mississippi, and the railroads, runing east, north of the Ohio, will have to fight out the question as to which road shall carry the grain for export abroad.”

And again: “It will'not give the Commission the power to determine differentials, the power to say whether grain from the Northwest shall be shipped for export by way of the Gulf ports or the north Atlantic ports, the rower to destroy the law of competition. . . .”

There is much more to the same effect.

21 Report No. 591, 59th Cong., 1st Sess., p. 3: “As but little complaint has been made to the committee concerning classification, it was not deemed wise at this time to suggest new legislation upon that subject. So, too, with the question of the relation of rates. The committee has not deemed it wise at this time to suggest new legislation to change existing law upon that subject. It is one of very great importance — interesting, however, as á rule, to certain particular communities rather than to the public at large. It involves conflicts between towns and cities rather than the public generally, and it relates more to the building up of certain local interests of a local nature rather -than to the interests of the people of the whole country.”

22 Chamber of Commerce of N. Y. v. N. Y. C. & H. R.R. Co.’ 24 I.C.C. 55; Astoria v. S. P. & S. Ry. Co., 38 I.C.C. 16.

23 It said (24 I.C.C. 75): “. . . the Boston interests join in the contention'that the railroads should so adjust their rates as to insure movement of a certain or substantial part of the traffic through those ports. Neither the. carriers nor’the Commission has any right to undertake to so apportion the traffic between rival ports or cities. ... the Pennsylvania and the Baltimore & Ohio have the lawful right to maintain lower rates to and from Baltimore and Philadelphia than they contemporaneously maintain to and from New York. They would probably also have the right to make these rates the same to and from all of those ports if they chose to do so. The Boston lines have an undoubted right to make such rates to and from Boston as their interests demand, subject only to the limitations that the rates must be reasonable; . . '

24 Compare, however, Galveston Commercial Assn. v. A. & S. Ry. Co., 109 I.C.C. 114, 125.

25 Cotton and Cotton Linters to Pacific Coast Ports, 69 I.C.C. 735; Sugar Cases, 1922, 81 I.C.C. 448.

26 Canned Goods, Iron & Steel from Gulf Ports, 91 I.C.C. 623.

27 Inland Empire Shippers League v. Director General, 59 I.C.C. 321.

28 Maritime Assn. v. Ann Arbor R. Co., 95 I.C.C. 539; 126 I.C.C. 199.

29 Coffee from Galveston and other Gulf Ports, 58 I.C.C. 716; 64 I.C.C. 26; Charleston Traffic Bureau v. Alabama G. S. R. Co., 89 I.C.C. 501. In a number of other cases the Commission has indicated a belief that it possessed such authority.

30 In a dissenting opinion Commissioner Hall said (128 I.C.C. 399): “In deciding this strife between Texas ports and Louisiana ports, confined as it is to import, export, and coastwise rates, the producers and shippers who pay those rates seem to have been lost from sight.”

31 See the Commission’s findings, 128 I.C.C. 366,372,374-376 and the . opinions of Commissioners McManamy and Taylor, 128 I.C.C. 399;

32 Blackstrap Molasses from Louisiana Points and Forts, 171 I.C.C., 583, 591.

33 The conditions on the L. R. & N., while differing in fact from those affecting the T. & P., present the same question and need not be separately stated.

34 The finding is: “The New Orleans carriers participate in a full line of joint commodity rates to and from Gulf ports from and to both the junction and local points on their lines. While, under the rules governing the southwestern carriers and their tariff-publishing agents, the New Orleans carriers-have the power to increase the rates from points served by them to the Texas ports without concurrence of their connections, a reduction in such rates would require the consent and concurrence of the participating Texas lines.” (160 I.C.C. 356.)

35 Southern Ry. Co. v. United States, 204 Fed. 465; Chicago, I. & L. Ry. v. United States, 270 U.§. 287; Rates on Grain Milled in Transit, 35 I.C.C. 27.

36 Lake Dock Coal Cases, 89 I.C.C. 170; Seneca Wire & Mfg. Co. v. B. & O. R. Co., 112 I.C.C. 95.

37 This doctrine has been applied by the Commission in at least forty-five cases, under varying circumstances containing tone or more of the elements mentioned. It was first announced soon after the organization of the Commission in Eau Claire Board of Trade v. C. M. & St. P. R. Co., 5 I.C.C. 264, was elaborated in Ashland Fire Brick Co. v. Southern Ry. Co., 22 I.C.C. 115, and has been referred to as the doctrine of the Ashland Fire Brick case since that time. For a reference to some of the decisions applying the rule see the dissenting .opinion of Commissioner Porter in Duluth Chamber of Commerce v. C. & N. W. Ry. Co., 156 I.C.C. 156, 173.

38 Chamber of Commerce of New York v. N. Y. C. & H. R.R. Co., 24 I.C.C. 55, 75; Molasses from Mobile, 28 I.C.C. 666, 669; Sugar Cases of 1922, 81 I.C.C. 448, 471; Valley Camp Coal Co. v. B. & O. R. Co., 88 I.C.C. 682, 686; Maritime Assn. of Boston v. Ann Arbor R. Co., 95 I.C.C. 539, 565, 572-3, 574, 575; id., 126 I.C.C. 215; Lake Cargo Coal Rates, 1925, 101 I.C.C. 513, 545; Mobile Chamber of Commerce v. M. S. B. & P. R. Co., 129 I.C.C. 419, 422; Bananas from Gulf Ports, 140 I.C.C. 682 (Eastman, Commissioner, concurring, at p. 684); Lake Charles Harbor & T. Dist. v. Brimstone R. & C. Co., 157 I.C.C. 720, 723.

39 This is not true of an order pursuant to § 15 (1), prescribing maximum or minimum or maximum and minimum rates; but the present orders were not issued under that section.

40 Swift Lumber Co. v. F. & G. R. Co., 61 I.C.C. 485.

41 Pioneer Lumber Co. v. Director General, 64 I.C.C. 485.