Railroad Commission of Wisconsin v. Chicago, Burlington, & Quincy Railroad Company

The proceeding out of which this case has grown, known as the 'Wisconsin Passenger Fares,' began in an investigation by the Interstate Commerce Commission, under paragraphs 3 and 4 of section 13 of the Interstate Commerce Act as amended by section 416 of the Transportation Act of 1920 (41 Stat. 484), into alleged undue and unreasonable discrimination against interstate commerce arising out of intrastate railroad rates in Wisconsin. The interstate carriers by steam railroad of the state were made respondents, and the Governor and State Railroad Commission were duly notified. The Interstate Commerce Commission made its report and order November 27, 1920. Wisconsin Passenger Fares, 59 Interest. Com. Comn. R. 391.

The Commission had investigated the interstate rates of carriers in the United States, in a proceeding known as Ex parte 74, Increased Rates, 58 Interst. Com. Comn. R. 220, for the purpose of complying with section 15a of the Interstate Commerce Act as amended by section 422 of the Transportation Act of 1920 (41 Stat. 488). That section requires that the Commission so adjust rates that the revenues of the carriers shall enable them as a whole or by groups to earn a fixed net income on their railway property. The Commission ordered an increase for the carriers in the group of which the Wisconsin carriers were a part, of 35 per cent. in interstate freight tates, and 20 per cent. in interstate passenger fares and excess baggage charges, and a surcharge upon passengers in sleeping cars amounting to 50 per cent. of the charge for space in such cars to accrue to the rail carriers. Thereupon the carriers applied to the Wisconsin Railroad Commission for corresponding increases in intrastate rates. The state commission granted increases in intrastate freight rates of 35 per cent., but denied any in intrastate passenger fares and charges on the sole ground that a state statute prescribed a maximum for passengers of 2 cents a mile.

In the Wisconsin Passenger Fares, the Interstate Commerce Commission found that all of the respondent carriers of Wisconsin transported both intrastate and interstate passengers on the same train, with the same service and accommodations; that the state passenger paying the lower rate rode on the same train, in the same car, and perhaps in the same seat with the interstate passenger who paid the higher rate; that the circumstances and conditions were substantially similar for interstate as for intrastate passenger service in Wisconsin; that travelers destined to, or coming from, points outside the state, found it cheaper to pay the intrastate fare within Wisconsin and the interstate fare beyond the border than to pay the through interstate fare; that undue preference and prejudice were shown by the falling off of sales of tickets from border line points in Minnesota and Michigan to stations in Wisconsin, and by a marked increase in sales of local tickets from corresponding border line points in Wisconsin to stations in Wisconsin; that the evidence as to the practice with respect to passenger fares applied in like manner to the surcharge upon passengers in sleeping and parlor cars and to excess baggage charges.

The Commission further found that the fare necessary to fulfill the requirement as to net income of this interstate railroad group under section 15a was 3.6 cents per mile, and that this was reasonable, that the direct revenue loss to the Wisconsin carriers, due to their failure to secure the 20 per cent. increase in intrastate fares, would approximate $2,400,000 per year if the 3-cent fare fixed by the President under federal war control were continued, and $6,000,000 per year if the 2-cent fare named in the state statute should become effective.

The Commission found that there was undue, unreasonable and unjust discrimination against persons traveling in interstate commerce and against interstate commerce as a whole; and ordered that the undue discrimination should be removed by increases in all intrastate passenger fares and excess baggage charges and by surcharges corresponding with the increases and surcharges ordered in interstate business.

The order was made without prejudice to the right of the authorities of the state or of any other party in interest to apply in the proper manner for a modification of the order as to any specified intrastate fares or charges if the latter were not related to the interstate fares or charges in such a way as to contravene the provisions of the Interstate Commerce Act (24 Stat. 379).

The carriers filed bills in equity, of which the present is one, in the District Court to enjoin the State Railroad Commission and other state officials from interfering with the maintenance of the fares thus ordered and published.

Application for interlocutory injunction was made to the District Court under section 266 of the Judicial Code (Comp. St. § 1243). After a hearing before three judges, they granted an interlocutory injunction from which this appeal was taken.

Messrs. M. B. Olbrich and Ralph M. Hoyt, both of Madison, Wis., for appellants.

[Argument of Counsel from pages 567-572 intentionally omitted]

Messrs. Robert Bruce Scott, of Chicago, Ill., Alfred P. Thom, of Washington, D. C., and Kenneth F. Burgess, of Chicago, Ill., for appellee.

[Argument of Counsel from pages 573-578 intentionally omitted]

Mr. John E. Benton, of Washington, D. C., for 45 States, amici curiae.

Mr. Patrick J. Farrell, of Washington, D. C., for Interstate Commerce Commission.

Mr. Chief Justice TAFT, after stating the case, delivered the opinion of the Court.