Davis v. Portland Seed Company/Opinion of the Court
The courts below affirmed judgment for the plaintiffs in four separate actions brought to recover alleged overcharges on freight said to have been demanded by the respective carriers in violation of the long and short haul clause (Fourth Section, Interstate Commerce Act, c. 104, § 4, 24 Stat. 379, 380; 36 Stat. 539, 547, c. 309; 41 Stat. 456, 480, c. 91 [Comp. St. Ann. Supp. 1923, § 8566]), which declares:

'That it shall be unlawful for any common carrier subject to      the provisions of this act to charge or receive any greater      compensation in the aggregate for the transportation of      passengers, or of like kind of property, for a shorter than      for a longer distance over the same line or route in the same      direction, the shorter being included within the longer      distance, or to charge any greater compensation as a through rate than the aggregate of the intermediate      rates subject to the provisions of this act, but this shall      not be construed as authorizing any common carrier within the      terms of this act to charge or receive as great compensation      for a shorter as for a longer distance: Provided, that upon      application to the Commission such common carrier may in      special cases, after investigation, be authorized by the      Commission to charge less for longer than for shorter      distances for the transportation of passengers or property;      and the Commission may from time to time prescribe the extent      to which such designated common carrier may be relieved from      the operation of this section.'

'But in exercising the authority conferred upon it in this      proviso the Commission shall not permit the establishment of      any charge to or from the more distant point that is not      reasonably compensatory for the service performed. * * *'

All the cases involve the same fundamental question of law. The essential charge is that the carrier demanded and received greater compensation for transporting freight for a shorter distance than its published rate for transporting like property for a longer distance over the same route and in the same direction.

It will suffice to state the salient facts and issues disclosed by record No. 114-Davis, Agent, v. Portland Seed Company. They are typical.

Pecos is in western Texas, 160 miles south of Roswell, N. M. A line of the Atchison, Topeka & Santa Fe Railway system joins these points and extends northward to Denver, Colo., where it connects with the Union Pacific system, which leads into the northwest. January 4, 1919, the carrier received a car of alfalfa seed at Roswell for transportation to Walla Walla, Wash., by way of Denver. Three weeks later respondent Portland Seed Company received this car at destination and paid freight charges reckoned at $2.44 per 100 pounds-the scheduled rate from Roswell. During all of January, 1919, the initial carrier's published schedule specified $1,515 per 100 pounds as the rate for transporting alfalfa seed from Pecos to Walla Walla, through Roswell and Denver, and no application had been made to the Interstate Commerce Commission for permission to charge less for the longer than for the shorter haul. The seed company demanded judgment for the excess above the Pecos rate, as an overcharge illegally exacted and recoverable as money had and received.

The insistence is that under the long and short haul clause the lower published rate from Pecos became the maximum which the carrier could charge for the shipment from Roswell, notwithstanding the higher published rate therefor; that the sum charged above the Pecos rate amounted to an illegal exaction, recoverable without other proof of actual damage and without regard to the intrinsic reasonableness of either rate.

Relying on Pennsylvania R. R. Co. v. International Coal Co., 230 U.S. 184, 33 Sup. Ct. 893, 57 L. Ed. 1446, Ann. Cas. 1915A, 315, the Interstate Commerce Commission has definitely rejected respondent's theory by many opinions, and holds that while a charge prohibited by the long and short haul clause, section 4, may subject the carrier to prosecution by the government it does not afford adequate basis for reparation where there is no other proof of pecuniary damage. Nix & Co. v. Southern Ry. Co. (1914) 31 Interst. Com. Com'n R. 145; S. J. Greenbaum Co. v. Southern Ry. Co., 38 Interst. Com. Com'n R. 715; Chattanooga Implement & Mfg. Co. v. Louisville & Nashville R. Co., 40 Interst. Com. Com'n R. 146; La Crosse Shippers' Ass'n v. C., I. & L. Ry. Co., 43 Interst. Com. Com'n R. 520; Oregon Fruit Co. v. Southern Pacific Co., 50 Interst. Com. Com'n R. 719; Iten Biscuit Co. v. C., B. & Q. R. Co., 53 Interst. Com. Com'n R. 729; Illinois Brick Co. v. Director General (1920) 57 Interst. Com. Com'n R. 320, 323.

Counsel insist that under section 4 it was unlawful to charge compensation above the published Pecos rate for the transportation from Roswell to Walla Walla. Therefore, the published Roswell rate being unlawful, nonexistent indeed, the Pecos rate became the only one in force. United States v. Louisville & Nashville R. R. Co., 235 U.S. 314, 322, 323, 35 Sup. Ct. 113, 59 L. Ed. 245, is relied upon, and it is said that the opinion there interprets the long and short haul clause as 'absolutely prohibiting the existence' of higher rates for shorter hauls unless approved by the Commission. Read with the real issue in mind the opinion gives no support to respondent's argument. The Interstate Commerce Commission held that certain reshipping privileges granted to Nashville, but refused to Atlanta, amounted to unreasonable preference under section 3 (Comp. St. § 8565), and ordered the carrier to discontinue them. The Commerce Court restrained the enforcement of this order. This court declared that the challenged privileges were prohibited by the long and short haul clause; that section 4 controlled the right to grant them; that they had not been authorized by the Commission, and therefore it would be unlawful to continue them. Accordingly the order to desist was approved and the decree of the Commerce Court reversed. No disagreement with Pennsylvania R. R. Co. v. International Coal Co. was suggested. The court said:

235 U.S. 322, 323, 35 Sup. Ct. 115: 'The express or implied      statutory recognition of the authority on the part of      carriers to primarily determine for themselves the existence      of substantially similar circumstances and conditions as a      basis of charging a higher rate for a shorter than for a      longer distance within the purview of section 4 of the Act to      Regulate Commerce and the right to make a rate accordingly to      continue in force until on complaint it was corrected in the      manner pointed out by statute, ceased to exist after the      adoption of the amendment to section 4 by the Act of June 18,      1910, c. 309, 36 Stat. 539, 547. This results from the fact      that by the amendment in question the original power to      determine the existence of the conditions justifying the greater charge      for a shorter than was exacted for a longer distance, was      taken from the carriers and primarily vested in the      Interstate Commerce Commission, and for the purpose of making      the prohibition efficacious it was enacted that after a time      fixed no existing rate of the character provided for should      continue in force unless the application to sanction it had      been made and granted. Intermountain Rate Cases, 234 U.S.      476. If then it be that the rebilling privilege which is here      in question, disregarding immaterial considerations of form      and looking at the substance of things, was, when originally      established, an exertion of the authority conferred or      recognized by section 4 of the act, as there is no pretense      that permission for its continuance had been applied for as      required by the amendment and the statutory period for which      it could be lawfully continued without such permission had      expired, it follows that its continued operation was      manifestly unlawful and error was committed in permitting its      continuance under the shelter of the injunction awarded by      the court below.'

The opinion does not discuss the carrier's liability to shippers who had paid higher rates for the shorter hauls. No doubt similar relief would have been granted by the Commission, if the situation here revealed had been brought before it.

Respondent has not asked an injunction against illegal rates. It seeks to secure something for itself without proof of pecuniary loss consequent upon the unlawful act. A similar effort failed in Pennsylvania R. R. Co. v. International Coal Co., supra. The International Company shipped 40,000 tons of coal from the Clearfield district, paying full schedule rates. The carrier had allowed other shippers from and to the same places at the same time rebates ranging from 5 to 35 cents per ton. Without alleging or proving pecuniary injury resulting to itself from this unlawful action, the company sought to recover like concessions upon all its shipments. Through Mr. Justice Lamar, this court said:

'The published tariffs made no distinction between contract      coal and free coal, but named one rate for all alike. That      being true, only that single rate could be charged. When      collected, it was unlawful, under any pretense or for any      cause, however equitable or liberal, to pay a part back to      one shipper or to every shipper. The statute required the      carrier to abide absolutely by the tariff. It did not permit      the company to decide that it had charged too much and then      make a corresponding rebate; nor could it claim that it had      charged too little and insist upon a larger sum being paid by      the shipper. * * * The tariff, so long as it was of force,      was, in this respect, to be treated as though it had been a      statute, binding as such upon railroad and shipper alike. If,      as a fact, the rates were unreasonable the shipper was      nevertheless bound to pay and the carrier to retain what had      been paid, leaving, however, to the former the right to apply      to the Commission for reparation.'

230 U.S. 200, 33 Sup. Ct. 897: 'Though the act has been held      to be in many respects highly penal, yet there was no fixed      measure of damage in favor of the plaintiff. But, as said in      Parsons v. Chicago & N. W. Railway, 167 U.S. 447, 460,      construing this section (8): 'Before any party can recover      under the act he must show not merely the wrong of the      carrier, but that that wrong has in fact operated to his      injury.' Congress had not then and has not since given any      indication of an intent that persons not injured might,      nevertheless, recover what though called damages would really      be a penalty, in addition to the penalty payable to the      government. On the contrary, and in answer to the argument      that damages might be a cover for rebates, the Act of June      18, 1910 (36 Stat. 539, c. 309), provided that where a carrier misquotes a rate it should pay      a penalty of $250, not to the shipper, but to the government,      recoverable by a civil action brought by the United States.      35 Stat. 166; Congressional Record 1910, 7569. The danger      that payment of damages for violations of the law might be      used as a means of paying rebates under the name of damages      is also pointed out by the Commission in 12 I. C. C. 418-421,      423, and 14 I. C. C. 82.'

230 U.S. 200, 33 Sup. Ct. 897: 'It is said, however, that it      is impossible to prove the damages occasioned one shipper by      the payment of rebates to another, and that if the plaintiff      is not entitled to recover as damages the same drawback that      was paid to its competitor, the statute not only gives no      remedy, but deprives the plaintiff of a right it had at      common law to recover this difference between the lawful and      the unlawful rate.'

230 U.S. 200, 201, 33 Sup. Ct. 897: 'We are cited to no      authority which shows that there was any such ancient measure      of damages, and no case has been found in which damages were      awarded for such discrimination. Indeed, it is exceedingly      doubtful whether there was at common law any right of action      for any sort of damages in a case like this, while, this      statute does give a clear, definite and positive right to      recover for unjust discrimination.'

230 U.S. 201, 202, 33 Sup. Ct. 898: 'Union Pacific R. R. v.      Goodridge, 149 U.S. 680, 709, involved the construction of      the Colorado statute, which did not, as does the Commerce      Act, compel the carrier to adhere to published rates, but      required the railroad to make the same concessions and      drawbacks to all persons alike, and for a failure to do so      made the carrier liable for three times the actual damage      sustained or overcharges paid by the party aggrieved. This      distinction is also to be noted in the English cases cited.      The act of Parliament did not require the carrier to maintain      its published tariff but made the lowest rate the lawful      rate.

Anything in excess of such lowest rate was extortion and      might be recovered in an action at law as for an overcharge.      Denaby v. Manchester Ry., L. R. 11 App. Cases, 97, 116. But      the English courts make a clear distinction between      overcharge and damages, and the same is true under the      Commerce Act. For if the plaintiff here had been required to      pay more than the tariff rate it could have recovered the      excess, not as damages, but as overcharge, and while one      count of the complaint asserted a claim of this nature, the      proof did not justify a verdict thereon, for the plaintiff      admitted that it had only paid the lawful rates named in the      tariff. Of course, no part of such payment of lawful rates      can be treated as an overcharge or as an extortion.'

230 U.S. 202, 203, 33 Sup. Ct. 898: 'Having paid only the      lawful rate plaintiff was not overcharged, though the favored      shipper was illegally undercharged. For that violation of      law, the carrier was subject to the payment of a fine to the      government and, in addition, was liable for all damages it      thereby occasioned the plaintiff or any other shipper. But,      under section 8, it was only liable for damages. Making an      illegal undercharge to one shipper did not license the      carrier to make a similar undercharge to other shippers, and      if having paid a rebate of 25 cents a ton to one customer,      the carrier in order to escape this suit had made a similar      undercharge or rebate to the plaintiff, it would have been      criminally liable, even though it may have been done in order      to equalize the two companies. For, under the statute, it was      not liable to the plaintiff for the amount of the rebate paid      on contract coal, but only for the damages such illegal      payment caused the plaintiff. The measure of damages was the      pecuniary loss inflicted on the plaintiff as the result of      the rebate paid. Those damages might be the same as the      rebate, or less than the rebate, or many times greater than      the rebate; but unless they were proved they could not be      recovered.

Whatever they were they could be recovered, because section 8      expressly declares that wherever the carrier did an act      prohibited of failed to do any act required, it should be      'liable to the person injured thereby for the full amount of      damages sustained in consequence of such violation * * *      together with reasonable attorney's fee."

230 U.S. 206, 33 Sup. Ct. 900: 'To adopt such a rule and      arbitrarily measure damages by rebates would create a      legalized, but endless, chain of departures from the tariff,      would extend the effect of the original crime, would destroy      the equality and certainty of rates, and, contrary to the      statute, would make the carrier liable for damages beyond      those inflicted and to persons not injured. The limitation of      liability to the persons damaged and to an amount equal to      the injury suffered is not out of consideration for the      carrier who has violated the statute. On the contrary, the      act imposes heavy penalties, independent of the amount of      rebate paid, and as each shipment constitutes a separate      offense, the law in its measure of fine and punishment is a      terror to evil-doers. But for the public wrong and for the      interference with the equal current of commerce these      penalties or fines were made payable to the government. If by      the same act a private injury was inflicted a private right      of action was given. But the public wrong did not necessarily      cause private damage, and when it did, the pecuniary loss      varied with the character of the property, the circumstances      of the shipment and the state of the market, so that instead      of giving the shipper the right to recover a penalty fixed in      amount or measure, the statute made the guilty carrier liable      for the full amount of damages sustained-whatever they might      be and whether greater or less than the rate of rebate paid.'

Southern Pacific Co. v. Darnell-Taenzer Co., 245 U.S. 531, 38 Sup. Ct. 186, 62 L. Ed. 451, presents no conflict with Pennsylvania R. R. v. International Coal Co. There the shipper paid a published rate which the Commission afterwards found to be unreasonable. This court held he could recover, as the proximate damage of the unlawful demand, the excess above the rate which the Commission had declared to be reasonable. The opinion went no further. Certainly it did not suggest that the unreasonable rate was nonexistent for any purpose because forbidden by law.

'(1) That every common carrier subject to the provisions of      this act shall file with the Commission created by this act      and print and keep open to public inspection schedules      showing all the rates, fares, and charges for transportation      between different points on its own route and between points      on its own route and points on the route of any other carrier      by railroad, by pipe line, or by water when a through route      and joint rate have been established. * * * (3) No change      shall be made in the rates, fares, and charges or joint      rates, fares, and charges which have been filed and published      by any common carrier in compliance with the requirements of      this section, except after thirty days' notice to the      Commission: * * * Provided, that the Commission may, in its      discretion and for good cause shown, allow changes upon less      than the notice herein specified. * * * (7) No carrier,      unless otherwise provided by this act, shall engage or      participate in the transportation of passengers or property,      as defined in this act, unless the rates, fares, and charges      upon which the same are transported by said carrier have been      filed and published in accordance with the provisions of this      act; nor shall any carrier charge or demand or collect or      receive a greater or less or different compensation for such      transportation of passengers or property, or for any service      in connection therewith, between the points named in such      tariffs than the rates, fares, and charges which are      specified in the tariff filed and in effect at the time; nor      shall any carrier refund or remit in any manner or by any      device any portion of the rates, fares, and charges so specified, nor extend to      any shipper or person any privileges or facilities in the      transportation of passengers or property, except such as are      specified in such tariffs.' Comp. St. Ann. Supp. 1923, §      8569.

'Sec. 8. That in case any common carrier subject to the      provisions of this act shall do, cause to be done, or permit      to be done any act, matter, or thing in this act prohibited      or declared to be unlawful, or shall omit to do any act,      matter, or thing in this act required to be done, such common      carrier shall be liable to the person or persons injured      thereby for the full amount of damages sustained in      consequence of any such violation of the provisions of this      act, together with a reasonable counsel or attorney's fee, to      be fixed by the court in every case of recovery, which      attorney's fee shall be taxed and collected as part of the      costs in the case.' Comp. St. § 8572.

'Sec. 10 (1). That any common carrier subject to the      provisions of this act, or, whenever such common carrier is a      corporation, any director or officer thereof, or any      receiver, trustee, lessee, agent, or person acting for or      employed by such corporation, who, alone or with any other      corporation, company, person, or party, shall willfully do or      cause to be done, or shall willingly suffer or permit to be      done, any act, matter, or thing in this act prohibited or      declared to be unlawful, or who shall aid or abet therein, or      shall willfully omit or fail to do any act, matter, or thing      in this act required to be done, or shall cause or willingly      suffer or permit any act, matter, or thing so directed or      required by this act to be done or not to be so done, or      shall aid or abet any such omission or failure, or shall be      guilty of any infraction of this act for which no penalty is      otherwise provided, or who shall aid or abet therein, shall      be deemed guilty of a misdemeanor, and shall, upon conviction      thereof in any district court of the United States within the      jurisdiction of which such offense was committed, be subject      to a fine of not to exceed five thousand dollars for each offense: Provided, that      if the offense for which any person shall be convicted as      aforesaid shall be an unlawful discrimination in rates,      fares, or charges for the transportation of passengers or      property, * * * such person shall, in addition to the fine      hereinbefore provided for, be liable to imprisonment in the      penitentiary for a term of not exceeding two years, or both      such fine and imprisonment in the discretion of the court.'      Comp. St. Ann. Supp. 1923, § 8574.

What liability did the carrier incur by publishing a rate from Pecos lower than the scheduled one from Roswell without the Commission's permission, and thereafter imposing and collecting the higher rate upon the shipment to Walla Walla?

Construing the words of section 4 literally, it is argued that unless some property moved over the longer distance at the lower rate before greater compensation was charged for transporting like property over a shorter one, there was no violation of law. We cannot accept this view. It does not accord proper weight to imperative requirements concerning publication of rates and subsequent observance of them. The Commission holds, for example, that although the schedule contains a plain clerical error, nevertheless no other charge may be demanded and the shipper may recover any excess. Lamb-Fish Lumber Co. v. Y. & M. V. R. R. Co., 42 Interst. Com. Com'n R. 470.

The record shows, we think, that the carrier violated the statute by publishing the lower rate for the longer haul without permission and, prima facie at least, incurred the penalties of section 10. Also it became 'liable to the person or persons injured thereby for the full amount of damages sustained in consequence of * * * such violation,' together with reasonable counsel fees, as provided by section 8. But mere publication of the forbidden lower rate did not wholly efface the higher intermediate one from the schedule and substitute for all purposes the lower one, as a supplement might have done, without regard to the reasonableness or unreasonableness of either.

With special knowledge of rate schedules and relying on Pennsylvania R. R. Co. v. International Coal Company, the Interstate Commerce Commission for 10 years has required proof of financial loss as a prerequisite to reparation for infractions of the fourth section. The rule is firmly established. Congress has not shown disapproval. The Transportation Act of 1920 (Comp. St. Ann. Supp. 1923, § 10071 1/4 et seq.), with evident purpose to conserve the carriers' revenues, added the following to the proviso which gives power to exempt from the long and short haul clause:

'But in exercising the authority conferred upon it in this      proviso the Commission shall not permit the establishment of      any charge to or from the more distant point that is not      reasonably compensatory for the service performed.'

The rule adopted by the Commission follows the logic of the opinion relied upon and can be readily applied. The contrary view would not harmonize with other provisions of the act, and, put into practice, would produce unfortunate consequences.

The statute requires rigid observance of the tariff, without regard to the inherent lawfulness of the rates specified. It commanded adherence to the published rate from Roswell; section 6 forbade any other charge. Observance of the lower rate from Pecos, put in without authorization, might have been forbidden, as pointed out in United States v. Louisville & Nashville R. R. Co., supra; but it would be going too far to hold, as respondent insists, that the unauthorized publication established the lower rate as the maximum permissible charge from the intermediate point the only rate therefrom which could be demanded.

If a lower rate published without authority becomes the maximum which may be charged from any intermediate point, mistakes in schedules (and they are inevitable) may become disastrous. Suppose the rate from an obscure point in Maine to San Franciso via Boston, New York, and Chicago should be printed at $15.00, instead of $150, and the error remain undiscovered for many months, could all who had paid more than $15.00 for passage along that route recover the excess without proof of pecuniary loss?

After the challenged judgments were entered, Kansas City Southern Ry. v. Wolf, 261 U.S. 133, 43 Sup. Ct. 259, 67 L. Ed. 571, was decided. We adhere to the ruling there announced, and in view of it defenses in these causes based upon prescribed limitations must be determined.

The judgments below are reversed. The causes will be remanded, with appropriate instructions for further proceedings.

Mr. Justice BRANDEIS dissents. 

Notes