Interstate Commerce Commission v. Baltimore O. Railroad Company

STATEMENT BY MR. JUSTICE BROWN.

This proceeding was originally instituted by the filing of a petition before the Interstate Commerce Commission by the Pittsburg, Cincinnati & St. Louis Railway Company against the Baltimore & Ohio Railroad Company, to compel the latter to withdraw from its lines of road, upon which business competitive with that of the petitioner was transacted, the so-called 'party rates,' and to decline to give such rates in future upon such lines of road; also for an order requiring said company to discontinue the practice of selling excursion tickets at less than the regular rate, unless such rates were posted in its offices, as required by law. The petition set forth that the two roads were competitors from Pittsburg westward; that the Baltimore & Ohio road had in operation upon its competing lines of road so-called 'party rates,' whereby 'parties of ten or more persons traveling together on one ticket will be transported over said lines of road between stations located thereon at two cents per mile per capita, which is less than the rate for a single person; said rate for a single person being about three cents per mile.'

There was another charge that the defendant was in the habit of selling excursion tickets without posting its rates for the same in its offices, but this charge was subsequently abandoned.

The answer of the Baltimore & Ohio Railroad Company admitted that it had at one time in effect the so-called 'party rates,' but prior to the filing of the complaint had withdrawn said rates, not that it believed that they were illegal, but because it was claimed by other companies that said rates were put into effect in violation of an agreement between companies belonging to a certain association of which defendant was a member. It further averred that said rates were in no way a violation of the act to regulate commerce, and were an accommodation to the public, necessary to the business of theatrical and other amusement companies, and that, when the legality of such rates was properly raised for decision, it was prepared to defend the legality of the same. The answer further denied the right of the complainant to institute the proceeding, and prayed that the complaint might be dismissed.

The cause was heard before the commission, which found 'that so-called 'party rate' tickets, sold at reduced rates, and entitling a number of persons to travel together on a single ticket or otherwise, are not commutation tickets, within the meaning of section 22 of the act to regulate commerce, and that, when the rate at which such tickets for parties are sold are lower for each member of the party than rates contemporaneously charged for the transportation of single passengers between the same points, they constitute unjust discrimination, and are therefore illegal.' It was ordered and adjudged 'that the defendant, the Baltimore and Ohio Railroad Company, do forth with wholly and immediately cease and desist from charging rates for the transportation over its lines of a number of persons traveling together in one party which are less for each person than rates contemporaneously charged by said defendant under schedules lawfully in effect for the transportation of single passengers between the same points.'

The defendant road having refused to obey this mandate, the commission, on May 1, 1890, pursuant to section 16 of the interstate commerce act, filed this bill in the circuit court of the United States for the southern district of Ohio for a writ of injunction to restrain the defendant from continuing in its violation of the order of the commission. The bill set up the proceedings which had theretofore been taken before the commission, and set forth as its gravamen that the defendant had wholly disregarded and set at naught the authority and order of the commission in that regard, and had willfully and knowingly disobeyed said order, and had not ceased and desisted from allowing party rates as it had been ordered to do, and had upon divers occasions since the service of said order charged rates for the transportation over its lines of a number of persons traveling together in one party which were less for each person than rates contemporaneously charged under schedules lawfully in effect between the same points for the transportation of persons, citing a number of instances of such disobedience.

The answer admitted the proceedings set forth in the bill, but denied that it had been made to appear to the commission that defendant had violated the provisions of the act to regulate commerce, or that the commission had duly and legally determined the matters and things in controversy and at issue between the parties; and averred that several of the conclusions of fact stated in the report of the commission were not true, or justified by the evidence produced at the hearing; and that the conclusions of law contained in the report, and the interpretation therein given to the act, were not correct. It admitted that it had not wholly ceased charging rates for transportation over its lines for a number of passengers traveling together in one party upon one ticket, which are less for each person than rates contemporaneously charged by it for the transportation of single passengers between the same points, and admitted a violation of the order of the commission.

The seventh and eighth paragraphs of the answer are the material ones, and are here given in full:

'(7) That for many years prior to the passage of the said 'act to regulate commerce,' all the railroad carriers in the United States had habitually made a rate of charge for passengers making frequent trips, trips for long distances, and trips in parties of ten or more, lower than the regular single fare charged between the same points, and such lower rates were universally made at the date of the passage of said act. To carry on this universal practice many forms of tickets were employed to enable different classes of passengers to enjoy these lower rates, and so stimulate travel. To meet the needs of the commercial traveler the thousand-mile ticket was used; to meet the needs of the suburban resident or frequent traveler, several forms of tickets were used, e. g., monthly or quarterly tickets, good for any number of trips within the specified time, and ten, twenty-five, or fifty trip tickets, good for the specified number of trips by one person, or for one trip by the specified number of persons; to accommodate parties of ten or more, a single ticket, one way or round trip, for the whole party, was made up by the agent on a skeleton form furnished for the purpose; to accommodate excursionists traveling in numbers too large to use a single ticket, special individual tickets were issued to each person. Tickets good for a specified number of trips were issued also between cities where travel was frequent. In short, it was an established principle of the business that whenever the amount of travel more than made up to the carrier for reduction of the charge per capita, then such reduction was reasonable and just in the interests both of the carrier and of the public. Long experience has proved the soundness of the principle. Under its application grew up the business of commercial travelers, the enormous suburban business, the constant travel between large cities, and the excursion business. Under its application has grown up also the business of traveling companies or parties, which has reached an aggregate of many hundreds of thousands of dollars, and which depends for its existence upon a continuance of the transportation rates under which it has grown up.

'(8) That since the passage of the said 'act to regulate commerce' this respondent has continued as theretofore the practice above stated of making a lower charge on passenger travel, in consideration of the amount and frequency of the travel, and with that purpose, and to accommodate the various classes of passengers, it has continued in use all the forms of ticket described in the next preceding section. That the charge fixed by it for the transportation of parties of ten or more, on a single ticket, has been two cents per mile per capita, which is the same rate charged on thousand-mile tickets, and is a higher rate than it charges on long distance passenger travel and excursion travel, and higher than its general rate for suburban travel on time or other suburban tickets. That the said charge for the transportation of parties on a single ticket is just and reasonable, affording a fair compensation to the carrier, and for the best interests both of the carrier and of the public, because any higher rate would destroy the business. That the business reasons, circumstances, and conditions which induced this respondent to make such lower charge for the transportation of parties as aforesaid, and that make it the interest of this respondent as a carrier to make such lower charge, are precisely the same reasons, circumstances, and conditions that induce it and make it its interest to fix a lower charge for the transportation of passengers buying mileage tickets, time or trip tickets, and excursionists. That while so-called 'party rate' tickets are used principally by traveling amusement companies, because no other form of ticket meets the requirement of such companies, yet this respondent has avoided confining such tickets to any class of business, by offering them on the same terms to the public at large. That this respondent has obviated the danger that such lower charge for parties might be taken advantage of by speculators or ticket brokers, by issuing only one ticket for the whole party. And respondent avers that as such tickets are now issued by it they are not and cannot be used for speculative purposes, and afford no opportunity for evading the law in the hands of ticket brokers. This respondent further avers that it may rightly and legally make a charge per capita for persons traveling on said party rate tickets, lower than its charge for a single passenger making one trip between the same points, the character, circumstances, and conditions of the service being substantially different; and that the making of such lower charge per capita to the member of the party makes or gives no undue or unreasonable preference or advantage to him, and subjects no person, company, firm, corporation, or locality, or particular deseription of traffic, to any undue or unreasonable prejudice or disadvantage in any respect whatsoever.'

The answer further averred the illegality of the order of the commission, and averred 'that by the true construction of the act the second section thereof requires the same charge for transportation service only in cases where the commercial circumstances and conditions are substantially similar, and the third section requires the same charge to be made only when a difference in charge would work a prejudice or disadvantage to some one without reason therefor; that the twenty-second section, so far from making exceptons to an otherwise absolute rule, was inserted merely as additional precaution to insure the giving to the second and third sections of the act the construction which congress intended; that the twenty-second section is a legislative declaration; that under the provisions of the second section of the act circumstances and conditions of a commercial nature are to be considered, and among such circumstances and conditions, in the case of passenger traffic, the amount of service purchased or contracted for, and the interest of the carrier in stimulating travel, are to be considered.'

Upon the hearing before the circuit court upon pleadings and proofs the bill was dismissed, separate opinions being delivered by Judges JACKSON and SAGE. 43 Fed. Rep. 37. From this decree the Interstate Commerce Commission appealed to this court. The provisions of the interstate commerce act, so far as the same are material to this case, are set forth in the margin.

S. Shellabarger, J. M. Wilson, and A. G. Safford, for appellant.

[Argument of Counsel from pages 270-275 intentionally omitted]

John K. Cowen and Hugh L. Bond, Jr., for appellee.

Mr. Justice BROWN, after stating the facts in the foregong language, delivered facts in the foregoing language, delivered