Bear Brothers Mercantile Company v. Denver & Rio Grande Railroad Company/Opinion of the Court

In proceedings before the Commerce Commission the plaintiff secured an order requiring the defendant to pay it $3,438.27 as reparation for unreasonable freight rates charged and collected, the fixing of a new and just rate being left for future decision. The carrier failed to make the payment required, and the plaintiff thereupon brought suit and recovered judgment for the sum awarded, together with interest and attorneys' fees. This judgment was reversed by the circuit court of appeals, which held that the order was void on its face, and could not be the basis of a recovery for the reason that, while reparation had been awarded on the ground that the old rate was unreasonable, the Commission had not fixed a new and just rate for the future.

1. That the two subjects of reparation and rates may be dealt with in one order is undoubtedly true. Texas & P. R. Co. v. Abilene Cotton Oil Co. 204 U.S. 446, 51 L. ed. 561, 27 Sup. Ct. Rep. 350, 9 Ann. Cas. 1075; Robinson v. Baltimore & O. R. Co. 222 U.S. 509, 56 L. ed. 289, 32 Sup. Ct. Rep. 114. But awarding reparation for the past and fixing rates for the future involve the determination of matters essentially different. One is in its nature private and the other public. One is made by the Commission in its quasi judicial capacity to measure past injuries sustained by a private shipper; the other, in its quasi legislative capacity, to prevent future injury to the public. But testimony showing the unreasonableness of a past rate may also furnish information on which to fix a reasonable future rate, and both subjects can be, and often are, disposed of by the same order. This, however, is not necessarily so. Indeed, under the original commerce act, the two matters could not possibly be combined in a single order for the reason that, while at that time the Commission could order the carrier to desist from unreasonable practices and award damages, it could not fix rates. This brought about an anomalous state of affairs. For if the shipper obtained his order of reparation because of unreasonable charges which the railroad company was ordered to discontinue, a slightly different, but still unreasonable, rate might be put in for the future, which the shipper had to pay and again institute proceedings for reparation. 24 Stat. at L. 384, § 15, chap. 104, U.S.C.omp. Stat. 1901, p. 3165.

2. This situation was dealt with by the Hepburn act, which, in addition to the existing power to make reparation conferred upon the Commission the new power to make rates for the future. But the two matters were treated as different subjects and were dealt with in separate sections. Section 4 conferred the power of making rates. Section 5 gave the Commission power to make reparation orders. 34 Stat. at L. 589, 590, §§ 4, 5, chap. 3591, U.S.C.omp. Stat. Supp. 1911, pp. 1297, 1301. Not only were the two functions separately treated, but an analysis of the act shows that there is no such necessary connection between them as to make the quasi judicial order for reparation depend for its validity upon being joined with a quasi legislative order fixing rates. Persons entitled to one may have no interest in the other. Persons interested in both may be entitled to reparation, and not to a new rate; or to a new rate, and not to reparation. For example, § 13 permits 'any mercantile, agricultural, or manufacturing society or any body politic or municipal organization to make complaints against the carrier.' On the application of such bodies, old rates might be declared unjust and new rates established; but, of course, no reparation would be given, for the reason that such complainants were not shippers, and therefore not entitled to an award of pecuniary damages. Cf. Louisville & N. R. Co. v. Interstate Commerce Commission, 227 U.S. 89, 57 L. ed. 431, 33 Sup. Ct. Rep. 185. Then, too, there are cases in which a rate, reasonable when made, becomes unreasonable as the result of a gradual change in conditions, so that no reparation is ordered even though a new rate be established for the future. Anadarko Cotton Oil Co. v. Atchison, T. & S. F. R. Co. 20 Inters. Com. Rep. 43. Conversely, there may be cases where what was an unreasonable rate in the past is found to be reasonable at the date of the hearing. In such a case reparation would be awarded for past unreasonable charges collected, but no new rate would be established for the future.

3. It may, however, be said that even in such a case, the order, while condemning the rate for the past, should contain a provision validating it for the future. But while this consideration might show that it was erroneous not to name the new rate, it would not follow that the order awarding reparation was void. The Hepburn act treats the two subjects as related, but independent. The grounds of complaint may be joint or separate, and the very fact that they may sometimes be separate shows that the presence of both is not jurisdictional, and that the absence of a provision for one need not operate to invalidate an order as to the other.

This conclusion is strengthened by considering the hardships that would result from nullifying a reparation order for error in omitting a provision for the future rate. It would punish the shipper for the failure of the Commission. It would deprive him of his award of damages for his private injury, because of the Commission's omission to make a rate for the benefit of the public. The shipper might or might not intend to remain in business. He might or he might not be interested in future rates. He might have been able to prove unreasonableness as to the past without being able to furnish evidence as to what would be reasonable for the future. Or, the Commission might be in position to say with certainty that the rates had been unreasonable, and award reparation accordingly, but it might require a protracted and lengthy hearing to establish what would be just for the future. To make the shipper wait on such a finding, and deprive him of his present right to reparation, until the determination of an independent question, would work a hardship not contemplated by the act and not required by any of its provisions.

The present case illustrates some of these features. The plaintiff's petition asked for reparation and that the Commission would establish just rates. On the hearing it appeared that there was no through route or joint rate, and that the established local charge of one of the carriers was just, while that of the other had not been established or included in a filed tariff and was also unjust. The evidence was sufficient to sustain a finding of damages against such carrier, but it did not show how the through rate should be divided between the two companies, one of which hauled 923 miles and the other 160 miles. The carriers did not ask for an extension of the time within which the reparation should be paid. The fact that they were given an opportunity to agree on a through rate and how it should be divided ought not to deprive plaintiff of its rights to damages for the past, under a reparation order which could not, by any possibility, be changed by any subsequent finding as to rates for the future.

The report and order gave the plaintiff no preference over other shippers, since they showed that 15 cents of the rate charged by the Denver & Rio Grande was unreasonable. If such a finding of unreasonableness was not sufficiently general to inure to the benefit of all other shippers, they could, on application, have secured such a modification as to enable them to maintain a suit for the recovery of damages for unjust charges and collections in the past. So far as the future operation of the order was concerned, all shippers were left in the same position, where, from the necessity of the case, the old rate had to be paid until the time had elapsed within which a new and just through rate could be put into effect. But, however desirable it may have been to deal with the entire matter at one time, the joinder of the two subjects was not jurisdictional. There was no such necessary connection between the two as to make the order of reparation void because of the absence of a concurrent provision establishing a rate for the future.

This conclusion makes it necessary to consider what judgment should have been entered by the circuit court of appeals (Baker v. Warner, 231 U.S. 588, 58 L. ed. --, 34 Sup. Ct. Rep. 175). That necessitates an examination of the other assignments of error relied on by the railroad company.

4. The Denver & Rio Grande claimed in the record in the court of appeals that the order was void on its face for the reason that the Commission was without jurisdiction to pass upon the reasonableness of the rate from Pueblo, Colorado, to Leadville, Colorado. But while there was no through rate and no through route, there was in fact a through shipment from St. Louis, Missouri, to Leadville, Colorado. Its interstate character could not be destroyed by ignoring the points of origin and destination, separating the rate into its component parts, and by charging local rates and issuing local waybills, attempting to convert an interstate shipment into intrastate transportation.

For where goods shipped 'from a point in one state to a point in another are received in transit by a state common carrier, under a conventional division of the charges, such carrier must be deemed to have subjected its road to an arrangement for a continuous carriage or shipment within the meaning of the act to regulate commerce.' Cincinnati, N. O. & T. P. R. Co. v. Interstate Commerce Commission, 162 U.S. 193, 40 L. ed. 938, 5 Inters. Com. Rep. 391, 16 Sup. Ct. Rep. 700. This common arrangement does not depend upon the establishment of a through route or the issue and recognition of a through bill of lading, but may be otherwise manifested. Ibid.

That there was a common arrangement between the two carriers here was shown by the long-continued course in dealing, and the division of the freight, with the knowledge that it had been paid as compensation for the single haul. If there had been a failure on the part of one of the carriers to file the tariffs, that did not defeat the jurisdiction of the Commission to award reparation against that same carrier, when it was shown that its unreasonable charge of 45 cents per cwt. formed a part of the total rate of 90 cents per cwt. actually paid by the Baer Company.

5. The dismissal of the suit brought in 1906, for the recovery of damages for collecting unreasonable freight rates, was not a bar to this proceeding for the reason that a voluntary dismissal of an action at law is in the nature of a nonsuit, and does not operate as a judgment on the merits. Haldeman v. United States, 91 U.S. 584, 23 L. ed. 433; Jacobs v. Marks, 182 U.S. 583, 591, 45 L. ed. 1241, 1246, 21 Sup. Ct. Rep. 865.

There were other assignments of error in the circuit court of appeals, but as they are not discussed in the brief for the railroad company, they may be treated as abandoned here.

The judgment of the Circuit Court of appeals is reversed and that of the Circuit Court affirmed.