Q

By THOMAS REED POWELL

II. REGULATION OF COMMERCE

1. Power of Congress

UESTIONS of discrimination in rates or services arising

under the Interstate Commerce Act or some of its amendments came before the court in a number of cases without raising any direct constitutional issues. Such an issue, however, was urged against a refusal of the Interstate Commerce Commission to allow a tap line owned by a lumber company more than $3 per car as its share of the joint rate for traffic over it and the main line, but in

1 For the preceding instalment, see 21 MICH. L. REV. 63.

2 The discrimination unsuccessfully complained of in Central R. Co. v. United States, 257 U. S. -, 42 Sup. Ct. 80 (1921), noted in 35 HARV. L. REV. 769, and 70 U. PA. L. REV. 131, was due to the fact that the carrier on whose line complainant was located afforded no local facility for creosoting lumber in transit, although it maintained joint rates with other carriers which did maintain such facilities on their lines and thereby allowed two physically separate shipments to be rated as one continuous shipment. The court held, however, that neither the original Interstate Commerce Act nor any of its amendments sought to prevent discrimination between different localities except when the discrimination is by the same carrier or carriers. The legality of the action of one carrier could not be determined by the action of another over which it has no control. It was recognized that under a different section of the statute the commission might have ordered that such a transit privilege be given if it regarded the refusal of it as unreasonable or unjust, but it was held that under the clauses relating to discrimination the voluntary action of one carrier does not set a standard to which the others may be compelled to repair.

The question in Pennsylvania R. Co. v. Weber, 257 U. S. --, 42 Sup. Ct. 18 (1921), was whether the court should enforce a reparation order issued by the Interstate Commerce Commission for discrimination against a ship per in the distribution of coal cars when the commission in fixing the amount had improperly used percentages which would have placed the complainant on an equality with the favored competitor. The court reiterated its former ruling that such a basis is erroneous because in effect allow ing a claim to a preference, but in the case at bar the amount of the award

Louisiana & P. B. Ry. Co. v. United States the claim that this restriction was so arbitrary as to deny the tap line due process of law was answered by pointing out that the tap line's contention was predicated on the length of a back haul to certain scales which was wholly unnecessary since the weighing might be done by the trunk line, and that any allowance for such unnecessary trips would enable the tap lines to secure rebates for their owners, the lumber companies, as compared with other lumber concerns shipping over tap lines not owned by them. The Commodities Clause of the Hepburn Act contains an exception which permits carriers and lumber companies to be in substance identical. If such a carrier gets more than its fair share of a joint rate, the benefit enures to the lumber company, which thereby in effect gets for its transportation a rate lower than that paid by other lumber companies which, being shippers only and not shippers and carriers combined, get back no part of the bread which they cast upon the waters.*

was sustained upon the showing that it was not in excess of complainant's actual loss and that if the cars had been evenly distributed he would have received enough to meet all his requirements.

A shipper who complained that it had not received its fair share of coal cars was sent away comfortless and rebuked in Lambert Run Coal Co. v. Baltimore & Ohio R. Co., 258 U. S., 42 Sup. Ct. 349 (1922), when it appeared that its complaint concealed the fact that the distribution actually made was in accordance with the prescription of the Interstate Commerce Commission acting under the authority of emergency powers conferred upon it. The bill was therefore in reality one to set aside the order of the commission, and it failed because the United States was not made a party and because it was brought in the state court. The latter defect was not cured by removal to a federal court at the request of the defendant, since the federal court acquires no jurisdiction by removal from a state court which is without jurisdiction, even though the proceeding might originally have been brought in the federal court.

3257 U. S. —, 42 Sup. Ct. 25 (1921).

The established rule that the Carmack Amendment has made the liability of carriers for loss of goods in interstate transit a matter of federal law was reiterated in Chicago & N. W. Ry. Co. v. Whitnack Produce Co., 258 U. S., 42 Sup. Ct. 328 (1922), which applied a common-law principle acceptable to the federal courts to hold the ultimate carrier liable for the damage when it could not prove that it received the goods in undamaged condition. The provision of the Carmack Amendment allowing suit against the initial carrier was treated as a congressional donation of an extra right of action but not an exclusive one. But the optional action was, of course,

The Transportation Act of 1920 brought a number of cases before the court. This directed the Interstate Commerce Commission to establish and adjust rates with the general object of securing a reasonable return to the roads and enabling them to enlarge their facilities so as to provide adequate transportation. It further commanded the Commission to prescribe the rates so as to remove any

ciples accepted and enforced in the federal courts." The particular rule applied in this case had not previously been recognized by the Supreme Court, but Mr. Justice McReynolds said that it is a good rule, and so by the decision it became an accepted federal rule. This seems sensible, though it is a little tough on those two revered maxims that there is no federal common law and that the courts do not make law. Mr. Justice Clarke did not sit.

The ultimate carrier was more fortunate in the "settled federal rule" applied in Oregon-Washington R. & N. Co. v. McGinn, 258 U. S. - 42 Sup. Ct. 332 (1922), noted in 26 HARV. L. REV. 109 and 32 YALE L. J. 84, which relieved it from liability for an injury to livestock caused by an intermediate carrier when the bill of lading stipulated that "except as otherwise provided by statute" no carrier should be liable for a loss not caused by it. The only contrary provision in the Carmack (now the Cummins) Amendment was confined to the initial carrier, so the stipulation in the bill of lading exonerated the ultimate carrier. The shipper was unfortunate in picking a lawyer who picked as a defendant the only one of three carriers which had a good defense.

Gooch v. Oregon Short Line R. Co., 257 U. S. —, 42 Sup. Ct. 192 (1922), noted in 20 MICH. L. REV. 668, and 31 YALE L. J. 887, held valid a stipulation in a drover's pass that the carrier should not be liable for an injury to him unless he gave notice in writing of the injury within thirty days after it occurred. Mr. Justice Pitney did not sit; Mr. Justice Clarke wrote a dissenting opinion in which Chief Justice Taft and Mr. Justice McKenna joined.

For discussions of federal regulation of liability in connection with interstate shipments, see Edgar Watkins, "Liability of Consignors and Consignees of Interstate Shipments for Unpaid Freight Charges," 6 MINN. L.. REV. 23; and notes in 22 COLUM. L. REV. 564 on rights under contracts in violation of the Interstate Commerce Act; 10 GEORGETOWN L. J. (No. 1) 70 on limiting liability under the Carmack Amendment; 20 MICH. L. REV. 348 on what is a shipment within the Cummins Amendment; 20 MICH, L. REV. 350 on Michigan Central R. Co. v. Owen, 256 U. S. -, 41 Sup. Ct. 554 (1921); 20 MICH. L. REV. 445 on Western Union Tel. Co. v. Esteve Brothers Co., 256 U. S. 41 Sup. Ct. 584 (1921), 19 MICH. L. REV. 138; 20 MICH, L. REV. 765 on rules of liability under the second Cummins Amendment; 6 MINN. L. REV. 157 on Union Pacific Ry. Co. v. Burke, 255 U. S. 317, 41 Sup. Ct. 283 (1921), 19 MICH. L. REV. 139, note 14; and 8 VA, L. Rev. 214 on limitation of liability in shipment to non-adjacent foreign country.

undue or unreasonable advantage as "between persons or localities in intrastate commerce on the one hand and interstate or foreign commerce on the other," and in addition "any undue, unreasonable, or unjust discrimination against interstate or foreign commerce, which is hereby forbidden and declared to be unlawful." A further clause declared explicitly that rates so fixed by the Commission should be observed, "the law of any state or the decision or order of any state authority to the contrary notwithstanding." In execution of the authority thus vested, the Commission raised interstate rates throughout the country and then ordered certain intrastate rates to be raised in order to prevent discrimination against persons and localities in interstate commerce and discrimination against interstate commerce generally. The refusal of two state commissions to authorize the raising of intrastate rates to the full extent commanded by the federal Commission left the roads subject to contradictory orders and brought the issue to the Supreme Court for solution.

Railroad Commission of Wisconsin v. Chicago, B. & Q. R. Co.3 was a suit by a railroad to enjoin a state commission from interfering with the maintenance of the intrastate rates established by the federal Commission. In so far as the order was predicated on the necessity of removing discrimination against persons and localities in interstate commerce, the Supreme Court found it too broad and sweeping, since it included intrastate traffic that might not in any sense compete with interstate traffic. The remaining question was whether the order was justified as an effort to remove discrimination against interstate commerce as a whole. Most of the opinion of Chief Justice Taft is concerned with the question whether the statute authorized the Commission to raise local rates generally in order to prevent discrimination against interstate rates generally. This was answered in the affirmative. It was when dealing with the issue of statutory construction that the chief justice pointed out that "if the railways are to earn a fixed net percentage of income, the lower the intrastate rates the higher the interstate rates may have to be." The idea seems to be that the total return of the roads is fixed by economics and by Congress and

$ 258 U. S. 42 Sup. Ct. 232 (1922). See 10 GEORGETOWN L. J. (No. 3) 78; 35 HARV. L. REV. 864, 886; 20 MICH. L. Rev. 675; 6 MINN. L. REV. 520; 8 VA. L. REV. 615; and 31 YALE L. J. 870. For references to discus

that the power of Congress to raise local rates rests not so much on their direct contribution to the total return as on their bearing on the proportionate contribution to that return made by the interstate rates. This, however, is a matter of inference rather than of explicit statement. The chief justice disposes of the constitutional issue very briefly. After saying that the Shreveport case and others "leave no room for discussion on this point," he continues:

"Congress in its control of its interstate commerce system is seeking in the Transportation Act to make the system adequate to the needs of the country by securing for it a reasonable compensatory return for all the work it does. The states are seeking to use that same system for intrastate traffic. That entails large duties and expenditures on the interstate commerce system which may burden it unless compensation is received for the intrastate business. reasonably proportionate to that for the interstate business. Congress as the dominant controller of interstate commerce may, therefore, restrain undue limitation of the earning power of the inter-.. state commerce system in doing state work. The affirmative power of Congress in developing interstate commerce agencies is clear. *** In such development, it can impose any reasonable condition on a state's use of interstate carriers for intrastate commerce it deems necessary or desirable. This is because of the supremacy of national power in this field."

To this is added the qualification that it does not sustain general federal regulation of intrastate commerce and that the action of the federal Commission "should be directed to substantial disparity which operates as a real discrimination against, and obstruction to, interstate commerce," and must leave to the states appropriate dis cretion to adjust intrastate rates as between themselves on the gen eral level found by the federal Commission to be fair to interstate commerce. It is also suggested that if state commissions recognize their duty to give the roads a proportionate return from local busi ness, conference between state and federal commissions may well result in leaving the former with power to alter the local rates in their discretion.

The same rulings were made in New York v. United States,

238 U. S.

42 Sup. Ct. 239 (1922). This case to discurad in many of the editorial notes cited in note 4%, supra