Baltimore & Ohio Railroad Company v. United States (345 U.S. 146)/Opinion of the Court

The appellant railroads brought this action in a United States District Court to set aside a rate order of the Interstate Commerce Commission. The order prescribed maximum carload rates for carrying certain kinds of fresh vegetables. The rates were charged to be 'confiscatory' and therefore in violation of the Due Process Clause of the Fifth Amendment. The sole basis for this charge was an allegation that if put in effect the rates would produce less money than it would cost the railroads to carry the particular vegetables covered by each rate. Denying that a commodity rate violates due process merely because it is noncompensatory, the Commission moved to dismiss the complaint on the ground that proof of everything the complaint alleged would not justify invalidation of the order. On this ground, and without reaching another Commission contention on which the District Court relied, we hold that the case was properly dismissed by that court.

There is and has been no claim that the challenged rates will make any one of the complaining railroads operate its entire business at a loss, or even carry all fresh vegetables at a loss. The carload rates prescribed are but minor alterations in a vast, complex network of rates that apply to fresh-vegetable shipments throughout the Nation. One of the two rates applies only to carload shipments of carrots with tops, the other to carload shipments of a limited group of other fresh vegetables such as string beans, lettuce and parsnips. And both rates relate only to shipments from points in Texas to points in some but not all of the other states.

Such adjustments of rates among vegetables as the Commission here made would appear to be but normal, run-of-the-mine regulations and the fixing of a cheaper transportation rate for one vegetable than for another may well serve an important public need. So long as a railroad is not caused by such regulations to lose money on its over-all business, it is hard to think that it could successfully charge that its property was being taken for public use 'without just compensation.' And apparently the railroads rely not on the just compensation but on the Due Process provision of the Fifth Amendment. This appears from their complaint and the cases cited to support their contention. Chief reliance is placed on Northern Pacific R. Co. v. North Dakota, 236 U.S. 585, 35 S.Ct. 429, 59 L.Ed. 735, and a companion case decided the same day, Norfolk & W.R. Co. v. West Virginia, 236 U.S. 605, 35 S.Ct. 437, 59 L.Ed. 745. Both cases involved state statutes fixing railroad rates, one on coal and one on passengers. Both were found to be noncompensatory. Both were held violative of the Due Process Clause of the Fourteenth Amendment. In both the ground was that the rates were 'unreasonable' and 'arbitrary.' The Court was careful to point out and emphasize that there was nothing in the records of those cases to show that there were 'reasonable' grounds on which to justify imposing noncompensatory rates on the railroads. It would not be possible to hold that the vegetable rates here challenged are the result of unreasonable or arbitrary Commission action.

The history of regulation of fresh vegetable transportation rates from the south and southwest shows the difficulties the Commission has had in that field. Much of that history can be found in the Commission reports cited below. Not only has the Commission had to consider conflicting rate claims as between shippers and carriers; it has also had to resolve disputes over such questions among the carriers themselves. The present rate order is but one of a long series of Commission orders designed to correct defects and injustices that develop from time to time in the general fresh vegetable rate pattern. Among the factors considered by the Commission in fixing these rates have been these: value of the vegetable; comparison of vegetable values; comparisons with rates on the same vegetables in different sections of the country; comparisons with rates on commodities other than vegetables; special characteristics of some vegetables that add to or subtract from expense of transportation; perishability; claim hazards of the carrier as between different vegetables; competing truck rates; and possible harmful effects of rates on vegetable prices and sales.

This mere sample of factors that have to be considered in rate cases demonstrates the absolute necessity for considerable flexibility in rate making. For not only are fair decisions as to vegetable rates vital to the welfare of farmers and whole sections of the country; the health and well-being of the Nation are involved. Moreover, Commission power to adjust rates to meet public needs is implicit in the congressional plan for a nationally integrated railroad system. United States v. Lowden, 308 U.S. 225, 230, 60 S.Ct. 248, 84 L.Ed. 208; The New England Divisions Case (Akron, C. & Y.R. Co. v. U.S.) 261 U.S. 184, 43 S.Ct. 270, 67 L.Ed. 605; Railroad Commission of Wisconsin v. Chicago B. & Q.R. Co., 257 U.S. 563, 583-586, 42 S.Ct. 232, 236, 66 L.Ed. 371. And so long as rates as a whole afford railroads just compensation for their over-all services to the public the Due Process Clause should not be construed as a bar to the fixing of noncompensatory rates for carrying some commodities when the public interest is thereby served.

Affirmed.

Mr. Justice CLARK took no part in the consideration or decision of this case.

Mr. Justice DOUGLAS, with whom The CHIEF JUSTICE concurs, dissenting.