Portland Railway Light Power Company v. Railroad Commission of Oregon/Opinion of the Court

The contentions of violation of Federal right alleged to have been set up and denied in the state court, and therefore to be reviewable here, arise under the 14th Amendment to the Constitution, securing due process of law and equal protection of the laws as against state action.

The statute under which the railroad commission acted in this case provides:

'The term 'railroad' as used herein shall mean and embrace all corporations. . . that now, or may hereafter, own, operate by. . . electric. . . power, manage or control, any. . . interurban railroad. . . as a common carrier in this state.' Laws of Oregon, 1907, chap. 53, § 11.

'Upon complaint of any. . . municipal organization, that any of the. . . fares. . . are in any respect unreasonable or unjustly discriminatory,. . . the commission may notify the railroad complained of that complaint has been made, and ten days after such notice has been given, the commission may proceed to investigate the same. . . . If, upon such investigation, the. . . fares. . . complained of shall be found to be unreasonable or unjustly discriminatory,. . . the commission shall have power to fix and order substituted therefor such. . . fares,. . . as it shall have determined to be just and reasonable, and which shall be charged, imposed, and followed in the future.' Id. § 28.

'Whenever, upon an investigation made under the provisions of this act, the commission shall find any existing. . . fares,. . . are unreasonable or unjustly discriminatory,. . . it shall determine and by order fix a reasonable. . . . fare. . . to be imposed, observed, and followed in the future in lieu of that found to be unreasonable or unjustly discriminatory.' Id. § 30.

'It shall be unlawful for any railroad to demand, charge, collect, or receive from any person, firm, or corporation a less compensation for. . . any service rendered or to be rendered by said railroad, in consideration of said person, firm, or corporation furnishing any part of the facilities incident thereto.' Id. § 48.

'If any railroad shall make or give any undue or unreasonable preference or advantage to any particular person, firm, or corporation, or shall subject any particular person, firm, or corporation. . . to any undue or unreasonable prejudice or disadvantage in any respect whatsoever, such railroad shall be deemed guilty of unjust discrimination.' Id. § 49.

'The provisions of this act shall be liberally construed with a view to the public welfare, efficient transportation facilities, and substantial justice between. . . passengers and railroads.' Id. § 59.

'The duties and liabilities of the railroads, defined in § 11 of this act, shall be the same as are prescribed by the common law, and the remedies against them the same, except where otherwise provided by the Constitution or statutes of this state, and the provisions of this act are cumulative thereto.' Id. § 61.

Section 32 of the act provides that the railroad or the other party interested in any order of the commission fixing fares may commence a suit in the circuit court of Marion county against the commission, to vacate any such order, on the ground that the fares fixed are unlawful. Provision is made for the service of summons, the filing of an answer by the commission, and precedence of such a case, and that it shall be tried and determined as a suit in equity.

By § 34, if different or additional evidence is introduced by the plaintiff upon the trial, the court, before rendering judgment, is required, unless the parties stipulate otherwise, to transmit a copy of the evidence to the commission, which may alter, modify, amend, or rescind its order and report its action to the court. If the order is rescinded, the suit shall be dismissed; if it is changed, judgment shall be rendered on the modified order; and if it is not changed, judgment shall be rendered upon the original order.

Section 35 authorizes an appeal by either party to the supreme court, where also such a case shall have precedence.

The supreme court of Oregon held that the statute applied to localities as well as individuals, and that fares that were unreasonable or unjustly discriminatory as against a given locality came within its terms. This construction of the statute is binding upon this court, and it is to be considered as thus construed by the supreme court of Oregon.

The authority of the states to control by appropriate legislation the rates of fare to be charged by street railway companies and other common carriers wholly within their borders and subject to their laws is unquestionable. In the legitimate exercise of such authority we see no reason why a state may not, consistently with due process of law, prohibit any unjust discrimination by a domestic railroad company against certain localities upon its lines.

If the state may not thus legislate as to its domestic corporations, they, by merely arbitrary action, may so exercise their ratefixing power as to build up one community and destroy another, and prevent that equality of treatment which it has been the object of many statutes of this kind, passed under state and Federal authority, to secure. The statute does not define unjust discrimination, but leaves it to the commission, upon hearing, to determine what rates are unjust and discriminatory, and to make orders for other fares, which, in its judgment, are not open to such objection. The statute expressly provides for a judicial review by the courts of the orders of the commission to test the lawfulness of the fares fixed and the reasonableness of regulations prescribed by the commission. We find nothing in the 14th Amendment which prevents a state from making provision for such relief to communities unjustly discriminated against by companies subject to the laws of the state in which they operate, and from which they derive their powers as common carriers and public-service corporations.

Nor do we understand the supreme court of Oregon to have construed the statute as permitting no consideration, in determining the question of discrimination, of the circumstances and conditions which may justify differences in rates, other than the number of miles which passengers are carried, as contended by the plaintiff in error. For, upon rehearing, this contention was noticed and the supreme court remarked that in the opinion in the case, notwithstanding it was said that the fares were not unreasonable when compared with the charges made by other railway companies for similar services, the court had held that the law extended to charges which were 'unreasonable or unjustly discriminatory;' and it was said:

'The fact that a rate is per se reasonable does not disprove the charge that it is unlawful,' say Messrs. Beale and Wyman in their work on Railroad Regulations, at § 839. 'If rates are relatively unjust, so that undue preference is afforded to one locality or undue prejudice results to another, the law is violated and its penalties incurred, although the higher rate is not in itself excessive.' The question presented for consideration is not the reasonableness per se of the charge, but its reasonableness considered in relation to charges made by plaintiff at other localities on its system for like and contemporaneous service; for the statute, as we have construed it, forbids undue preference or discrimination between localities. Circumstances, however, may so explain the difference between rates compared as to deprive the lower rate of any bearing on the higher, but the discrimination, without an excuse recognized by the law, would be in and of itself unjust and unreasonable. Beale & Wyman, § 838.'

In the light of this consideration of the statute, we will consider the contention that, in this particular case, there has been a deprivation of due process of law, within the meaning of the Federal Constitution.

Ordinarily, in cases which come before us for review, this court accepts the facts as found by the state supreme court. An examination of the record in this case convinces us that the conclusions reached by the court do not bring the case within that exceptional class where this court will reexamine the facts found, with a view to ascertaining the correctness of the conclusions reached. Kansas City Southern R. Co. v. Albers Commission Co. 223 U.S. 573, 56 L. ed. 556, 32 Sup. Ct. Rep. 316; Cedar Rapids Gaslight Co. v. Cedar Rapids, 223 U.S. 655, 56 L. ed. 594, 32 Sup. Ct. Rep. 389; Washington ex rel. Oregon R. & Nav. Co. v. Fairchild, 224 U.S. 510, 56 L. ed. 863, 32 Sup. Ct. Rep. 535; Creswill v. Grand Lodge, K. P. 225 U.S. 246, 56 L. ed. 1074, 32 Sup. Ct. Rep. 822; Wood v. Chesborough (decided May 26, 1913), 229 U.S. 672, 57 L. ed. --, 33 Sup. Ct. Rep. 706. In this case the facts found by the lower court and adopted in the supreme court are supported by competent testimony; and this court does not sit to retry issues of fact thus heard and determined by the properly constituted tribunals of the state having jurisdiction of the subject.

The findings show that the railway company carried passengers upon the Mt. Scott line between Portland and Lents for 5 cents each, and gave them a free transfer for carriage upon the lines of the Portland Railway Company in the city of Portland and the adjacent city of St. Johns, but charged a 10-cent fare to Milwaukie, and gave no transfers. The effect of such discrimination is found to have been the building up and development of Lents and the country along the line to Lents, and the retarding of the settlement and growth of the localities and communities situated upon the less favored division. Findings are made showing the conditions and circumstances under which transportation is made upon the divisions of the road, and the similarity of circumstances and conditions, except as to the charging of the different rates and the giving of transfer privileges to the one and the withholding of such privileges from the other. In view of these findings, based upon evidence, we cannot say that the determination of the commission, confirmed by the courts, that the rates of fare were discriminatory, was in deprivation of due process of law.

The contract set up by which the fares from Lents were required to be not greater than 5 cents cannot be held to justify the discrimination, as such centracts must be taken to have been made in view of the continuing power of the state to control the transportation rates of common carriers subject to its jurisdiction. Armour Packing Co. v. United States, 209 U.S. 56, 52 L. ed. 681, 28 Sup. Ct. Rep. 428; Louisville & N. R. Co. Mottley, 219 U.S. 467, 55 L. ed. 297, 34 L.R.A.(N.S.) 671, 31 Sup. Ct. Rep. 265.

It is also argued that the rates established by the order of the commission are such as to be of a confiscatory nature and therefore within the prohibitions of the 14th Amendment. Upon this branch of the case the circuit court found that there was not evidence sufficient to show the value of the property or its divisions used in the operation of the road, nor sufficient to show the income or expenditures, or profit or loss from the operation of the different divisions, or the cost of transporting passengers upon any such divisions. An examination of the testimony does not satisfy us that the court below was without substantial proof in reaching this conclusion. The supreme court of Oregon, in view of its findings upon the discriminatory character of the rates established, did not find it necessary to consider by itself the reasonableness of the charge, and the record before it did not present a case of confiscatory rates so clear that this court should interfere because of the protection afforded by the Federal Constitution.

We find no violation of the 14th Amendment in the judgment of the Supreme Court of Oregon.

Affirmed.