Louisville & Nashville Railroad v. Commonwealth

Dissenting opinion was delivered by

Judge DuRelle.

The provisions of law involved in this case are section 218 of the Constitution and section 820 of the Kentucky Statutes, as follows:

Const., sec. 218: “It shall be unlawful for any person or corporation owning or operating a railroad in this. State, or any common carrier to charge or receive any greater compensation in the aggregate for the transportation of passengers or of property of like kind, under subsantially similar circumstances and conditions, for a shorter than for a longer distance over the same line in the same direction, the shorter being included within the longer distance; but this shall not be construed as. authorizing any common carrier or person or corporation owning or operating a railroad in this State to receive as great compensation for a shorter as for a longer distance; provided that upon application to the Railroad Commission such common carrier or person or corporation owning or operating a railroad in this State may, in special cases, after investigation by the Commission, be authorized 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 common carrier, or person, or corporation owning or operating a railroad in this State may be relieved from the operation of this section.”
Ky. Stat., sec. 820: “If any person owning "or operat*243ing a railroad in this State, or any common carrier, shall charge or receive any greater compensation in the aggregate for the transportation of passengers or- property of like kind, under substantially similar circumstances and •conditions, for a shorter than for a longer distance, over the same line in the same direction, the shorter being included within the longer distance, such person shall, for each offense, be guilty of a misdemeanor, and fined not less than one hundred nor more than five hundred dollars, to be recovered by indictment in the Franklin Circuit Court, or the circuit court of any county into or through which the railroad or common carrier so violating runs or carries on its business. Upon complaint made to the Railroad Commission that any railroad or common carrier has violated the provisions of this section, it shall be the duty of the Commission to investigate the grounds of complaint, and if, after such investigation, the Commission deems it proper to exonerate -the railroad or common carrier from the operation of the provisions of this section, an order in writing to that effect shall be made by the Commission, and a copy thereof delivered to the complainant and the railroad or common carrier, and the same shall be published as a part of the report of the Commission.; and after such order, the railroad or carrier shall not be prosecuted or ' fined on account of the complaint made. If the Commission, after investigation, fails to exonerate the railroad or carrier from the operation of the provisions of this section, an order in writing to that effect shall be made by the Commission, and a copy thereof delivered to the complainant, and the railroad or common carrier, and the same shall be published as a part of the report of the Commission; and after such order, it shall be the duty of the *244Commission to furnish a statement of the facts, together with a copy of its order to the grand jury of any county, the circuit court of which has jurisdiction, in order that the railroad company or carrier may be indicted for the offense; and the Commission shall use proper efforts to see that such company or carrier is indicted and prosecuted.”

Without taking time in considering the question whether the statute is in conflict with the constitutional provision, in that it makes no provision for application to the Railroad Commission by the carrier for authority to charge less for the longer than the shorter haul in special cases, which was the evident intention of the Constitution, but provides only for a complaint against the carrier for a violation of the provisions of the statute, or the question whether the indictment is defective, I wish to call attention to the fact that section 218 of the Constitution is taken almost verbatim from section 4 of the Interstate Commerce Act. Our Constitutional Conwention adopted the long and short haul section at its session closing April 11, 1891. At the time of its adoption into our Constitution, that section had been construed by two United States Circuit Courts and by the Interstate Commerce Commission, it being held that “substantially similar circumstances and conditions” did not mean solely the cost of carriage, but included also real competition,, which the carrier might meet by reduction of rates to the competitive point, without making application to the Commission for authority. I attach little importance to the extracts given in the arguments from the Constitutional Convention debates as a means of ascertaining the intent of the provisions adopted; but in this case those extracts show that the attention of the convention was-*245called to the fact that under the Interstate Commerce Act a less charge for the longer haul was permitted when there was river competition at the more distant point. Under the well-settled rule of construction, the conven- • tion must be assumed to have had those constructions . in mind when they adopted the section. Those constructions have been followed with strict uniformity in this country, to say nothing of the English authorities, the cases adversely decided having been reversed, with an apparent exception in the Social Circle case. That case was decided by the Commission upon the ground, in substance, that there was no competition. The circuit court dismissed the bill on the ground that the transportation for the two hauls was not over the same line. The Circuit Court of Appeals reversed the circuit court without delivering an opinion, and the Supreme Court (162 U. S. 184) [16 Sup. Ct. 700], held the decision of the question, unnecessary, and declined to decide it.

In the case at bar it was shown that there was a substan- • tial difference in the mileage cost of transportation of coal from Pittsburg, Ky., to Louisville, as compared with its., transportation to Lebanon, for the reason that the greater volume of traffic in coal and other freight to Louisville made it possible to haul the Louisville freight in through trains, loaded to their full capacity, and without delay, while the traffic to Lebanon, by reason of its smaller volume, Avas necessarily transported in local trains, which is. more expensive. It was also shoAvn that the coal destined to Elizabethtowm could be handled in the through trains as far as Lebanon Junction, which was the end of a division, and only twelve miles from Elizabethtown. The appellant company was not permitted to prove that the transportation of coal from Pittsburg and all the mining section of.:' *246Southeastern,Kentucky to Louisville was not only affected, but controlled, by competition at the latter point, which did not exist át all at Lebanon. This competition was from West Virginia and Pennsylvania coal brought in barges down the Ohio to Louisville, — by the cheapest known method .of transportation. The cheapness of its transportation gave Pennsylvania and West Virginia coal control of the Louisville market, and no other coal could be sold there unless the transportation rates were made so low as to enable it to compete with the coal from those States. Neither the Southeastern nor Southwestern Kentucky coal fields could reach the Louisville market at all but for the very low rates of transportation given to Louisville over the Kentucky railroads; and, if those rates can not be given, Louisville must depend entirely for coal upon West Virginia and Pennsylvania, or upon the mines of other States which, under the Interstate Commerce Act, can obtain low through rates to competitive points across this State. No injustice from the low through rates to Louisville resulted to Lebanon or other intermediate points, for the rates to those points would have been the same, and the cost of coal probably higher, if the Southeastern Kentucky coal could not have been carried to Louisville. The majority opinion is, in effect, that cost of transportation 3s the only circumstance or condition that can be considered. If that be so, it is strange that more apt words were not used in the Constitution. The words used are certainly susceptible of a far wider significance. In my. -view, the section quoted left the railroads in the same condition, and with the same rights, as before its adoption, except in so far as something is expressly forbidden to be done. As said by Judge Jackson (then circuit judge) in a case afterwards affirmed by the Supreme Court, and twice *247subsequently quoted with approval (162 U. S. 184, 197), [16 Sup. Ct. 700, 705]: “Subject to the two leading prohibitions that their charges shall not be unjust and unreasonable and that they shall not unjustly discriminate so as to give undue preference or advantage or subject to undue preference or disadvantage persons or traffic similarly circumstanced, the act to regulate commerce leaves common carriers where they were at common law, free to make special contracts looking to the increase of their business, to ■ classify their traffic, to adjust and apportion their rates so as to meet the necessities of commerce, and generally to manage their important interests upon the same principles which are recognized as sound and adopted in other trades and pursuits.” Interstate Commerce Commission v. Baltimore & O. R. Co., 43 Fed. 37. In the case of Missouri Pac. Ry.Co.v.Texas & P. Ry. Co., 31 Fed. 862, it was said: “Nor can it well be denied that, as between the Short and long haul, competition may exist to that extent that what would otherwise be similar circumstances and conditions will be dissimilar circumstances and conditions.” In Ex parte Koehler, 31 Fed. Rep., 315, the court said: “Freight carried to or from a competitive point is always carried under 'substantially dissimilar circumstances and conditions’ from that carried to or from non-competitive points. In the latter case the railway makes its own rates, and there is no good reason why it should be allowed to charge less for a long haul than a short one. When each haul is made from or to a noncompetitive point, the effect of such discrimination is to build up one .place at the expense of the other. Such action is willfully unjust, and has no justification or excuse in exigencies or conditions of the business of the . corporation. In the former case the circumstances were altogether different. The-*248power of the corporation to make a rate is limited by the necessities of the situation. Competition controls the charge. It must take what it can get, or, as was said in Ex parte Koehler, ‘abandon the field, and let its roads go to rust.’ ” In Interstate Commerce Commission v. Atchison, T. & S. F. R. Co., 50 Fed. Rep., 295, the court said: “If the circumstances and conditions are not substantially similar, the prohibition imposed by the statute does not apply at all. * * -* The common carrier can not be required to ignore or overcome existing differences in the transportation facilities of different localities, created, not by its own arbitrary action, but by nature, or by enterprises beyond its control.” In the case of Behlmer v. L. & N. R. Co., et al., 71 Fed. Rep., 835, decided by the United States Court for the district of South Carolina, January 22, 1S96, the court quoted from Judge Cooley (In re L. & N. R. Co., 1 Interstate Commerce Com. R. 57), as follows: “‘The charging or receiving greater compensation for the shorter than for the longer haul is sure to be forbidden only where both are under substantially the same circumstances and conditions. And therefore, if in any case the carrier, without first obtaining an order of relief, shall depart from the general rule, its so doing will not alone convict it of illegality since, if the circumstances and conditions of the two hauls are dissimilar, the statute is not violated.’ This is quoted with approbation by the United States Circuit Court, Southern district of California. Interstate Commerce Commission v. Atchison, T. & S. F. R. Co., 50 Fed., 295. When, then, may the circumstances and conditions of the two hauls be said to be dissimilar? Judge Cooley, in the same case, answers this question: . ‘Among other things, in cases where the circumstances and conditions of the traffic were affected by the element of competition, and where excep*249Hons might be a necessity if the competition were to continue. And water competition was, beyond doubt, especially in view.’ * * The Interstate Commerce Law was intended to promote trade. Such a construction as is now sought would destroy competition, the life of trade.” And see Interstate Commerce Commission v. Alabama Midland Ry. Co., 69 Fed. 227; Id. [21 C. C. A. 51], 74 Fed. 715. The doctrine of these cases has been followed by the Supreme Court of the United States in the recent case of Interstate Commerce Commission v. Alabama Midland Ry. Co. (decided November 8, 1897) [18 Sup. Ct., 45], Said the court in that case: “The competition may in some cases be such as, having due regard to the interests of the public and of the carrier, ought justly to have effect upon the rates, and in such cases there is no absolute rule which prevents the Commission or the courts from taking that matter into consideration.” The Supreme Court expressly states, the conclusion that in complying with the provisions of the third and fourth sections of the act, competition ichich affects rates is one of the matters to he considered. The court further holds that where the circumstances and conditions of the long haul and short haul are substantially dissimilar, there is no necessity for the railroad company to apply to the Commission for authority to charge less for the long haul than for the short haul. Of course, whether actual competition exists is a question of fact depending on the matter proved in each case.

It is legitimate to consider a question of state policy as tending to show' what was intended by a law, whether a provision of the organic law or a statute. Not that we should decide a case upon what we think the proper policy to pursue, but we may consider the policy which the lawgivers had in view as indicating what is the meaning of *250their enactment. Surely, the framers of our Constitution did not intend to cripple or destroy a growing industry of the State. But the construction by the Supreme Court of the Interstate Commerce Act, which is the same which was given it at the time it was copied into our Constitution, and the construction now given to our Constitution by the majority opinion — directly the reverse of that which prevailed when the instrument was adopted, — work together to accomplish that end. Under the law as laid down by thé Supreme Court, it is perfectly law'ful for the appellant company, transporting interstate commerce, in order to meet the Ohio river competition at Louisville, to carry coal from Jellico, Tenn., to Louisville at a lower rate than it charges from Jellico, Tenn., to Lebanon, Ky. Under the majority opinion, it can not carry coal from Jellico, Ky., to Louisville at a less rate than it charges to Lebanon! If, therefore, it be true, as claimed, that the low through rate given to the competitive point is not sufficient to pay the cost of transportation, taking into consideration the fixed charges of the railroad, — interest on debt, official salaries, etc., — ft follows, not that the rate to Lebanon and other non-competitive points will be lowered, but that the through rate to the competitive point (Louisville) must be abandoned. The appellant will therefore be precluded from transporting Kentucky coal to the greatest market for it, and the mines shipping from Tennessee will have the benefit of Louisville as a market for their surplus, without any competition from Kentucky points. It appears that the Louisville market is almost indispensable to the successful working of the Kentucky mines. Giving access to that market by a through competitive rate works no injury to Lebanon, or to any other non-competitive point, but is a benefit in which Lebanon and other points indirectly share. To deprive the *251Kentucky mines of that benefit will profit no one except the miners of other States, which will thereby secure a monopoly of the Louisville market. But, without considering the authorities, and without considering what the constitutional convention ought to have intended, and doubtless did intend, as a matter of policy, for the interests and industries of the State, the language of the enactment shows beyond question what was the object intended to be effected by this provision of the Constitution, and in what way was that object to be effected. It was made unlawful for the carrier to charge a greater compensation in the aggregate for transportation of passengers or property for a shorter than for a longer haul, over the same line, in the same direction, the shorter being included in the longer distance, if such transportation be made under substantially similar circumstances and conditions; but in the prohibition of a greater charge for a shorter distance it was provided that unconditional authority should not be given by implication to make as great a charge for a shorter as for a longer haul. It is therefore unlawful to charge as great a compensation for the shorter as for the longer haul, when the shipments are made under substantially similar circumstances and conditions. But even where the shipments are made under substantially similar circumstances and conditions, and where the carrier would, therefore, be confessedly guilty of violating the section if more were charged for the shorter than for the longer haul, on application to the Commission he may be authorized to make less charge for the longer haul, and the Commission may prescribe the extent to which he may be relieved from the operation of the section. When charged with a violation of the law, the carrier may answer — First, that the shipments were not made under substantially similar cireum*252stances and conditions, but under circumstances and conditions materially different; or, second, confessing the circumstances and conditions to be substantially similar, the carrier, may answer that application has been made to the Commission, and authority given by it to make the less charge for the longer distance. If the circumstances and conditions of shipment are materially dissimilar, the law does not apply at all, and there is no need to be relieved from its operation by the Commission. In this case the appellant admits that it has charged a greater sum for the shorter than the longer haul, but claims that the shipments have not been made under substantially similar circumstances and conditions; and has undertaken to make good its defeuse by showing — First, that the greater relative cosit of the short haul makes a substantial dissimilarity; and, second, by offering to show that, by reason of competition from the Ohio river and from other railroads at Louisville, the shipments to that place have not been made under circumstances and conditions substantially similar to those' which apply to a shipment to Lebanon. The testimony as to the cost of carriage is admittedly competent. The question presented here is whether proof that Louisville is a competitive point and Lebanon is not is competent to show that the circumstances and conditions are dissimilar.

I have said that, where the circumstances and conditions are dissimilar, the law, under its own terms, does not apply; but this is to be taken with some modification. Because a less charge is allowable under the act for a longer distance than for a shorter, on account of a less cost, it does not follow that the act loses its application entirely. The proper construction is that the less rate is allowable only as it is in proportion to the less cost. The cost might be ven* little less for the longer haul, and yet the charge made *253be materially less, in which case the act would apply, because the less charge would not be justified by the less cost, and would clearly be the result of an unjust and arbitrary discrimination. And so, if it appear that a point is á competitive one, it does not follow from that fact alone that the law is not aiiplicable. It must also appear that the less charge is induced solely by the competition, or By it and the fact that the cost is less; otherwise, under pretense of less cost of shipment and alleged competition, the carrier might charge the less price arbitrarily, and solely because of a desire to favor one locality over another. When the real purpose of the provision is considered, it seems plain' that its enactment was not at all for the purpose of enforcing reasonable rates of transportation, — a matter which is provided for by other statutes and by the common law. That is clearly not the purpose of this enactment, because, if the charge in this case had been $1.56 from Pittsburgh to Louisville, the rate from Pittsburgh to Lebanon being $1.55, no one would have dreamed of invoking the aid of the provision under consideration to effect a reduction of the rate to Lebanon; nor could it be invoked if the charges had been $2 to Lebanon and $2.10 to Louisville. The enactment, therefore, does not prohibit the carrier imposing any rate it desires, so long as a less rate in the aggregate is not charged for the longer than for the shorter haul. Clearly, the only purpose was to prevent the carrier from arbitrarily favoring one locality over another. Complaint had been made that by discrimination in rates railroad companies would build iip towns and cities where they, or their management, owned property, and to prevent such injustice and arbitrary discrimination this provision was enacted. The act was intended to prevent the building up of favored . centers of population at the expense of the country at large. *254But, if the less rate is fairly attributable to the fact that the cost of shipment for the longer distance is less than the cost of shipment to the nearer point, it follows that the difference in charge is not attributable to an arbitrary design to favor one locality at the expense of another; and so if the less rate for the longer haul is fairly attributable to competition in business, by water or otherwise. The act of arbitrarily favoring one locality over another is that act. which it was the purpose of the constitutional convention and the Legislature to condemn. But, if the difference in charge is attributable to legitimate motives — that is, any motive other than that condemned hy the law■ — then there is no room for the operation of the law, as that which it prohibits is not in fact done. To charge a carrier with a violation of this law is, in substance, to charge it with unjustly favoring one locality over another, by charging the favored place with a less rate, though the shipment is for a longer distance; and it is a legitimate answer to say that the less charge was made for another cause than the one the law prohibits, and therefore, unless the law is one to regulate the cost, of shipment or competition in business, the causes named may be shown to have induced the less charge. It can hardly be claimed that the purpose of the law was to deprive Louisville of its low or competitive rate, or to attempt to place Lebanon in as favorable a geographical position as if it were situated on a large watercourse. I think, therefore, that, so long as Louisville is given only the benefit of it natural advantages, and only such low rates as flow from geographical position, it can not be said that there has been any arbitrary discrimination, to prevent which alone this law was adopted. Conceding the force and *255.vigor of the argument of the Chief Justice, I have been compelled to reach a different conclusion.

Judge Burnam concurs in this dissent.

On September 24th in response to a motion by sundry coal companies not parties to the record to file a supplemental petition for a rehearing, the following opinion of the court was delivered by C.hief Justice Lewis.

The question here arising is on a motion made in the case of Louisville & Nashville Railroad Company v. Com. [46 S. TV., 707] (decided at the last term of this court), to file what is described as a “supplemental petition for rehearing.” The paper is signed by “Clifton J. Pratt, Counsel for the Coal Miners and Operators Named in the Accompanying Resolutions.” As the resolutions were not permitted to be filed, and have been withdrawn, the persons for whom counsel appears can not be readily identified. However, we will assume that counsel has been regularly employed, and has the warrant of attorney to make the motion. The persons now seeking to file the supplemental petition are not parties to the litigation, nor did counsel for them, orally or by brief, argue the case before it was decided by this court. They do not come to now interfere with the litigation with consent of, or even upon notice to, either appellant or appellee. In our opinion, to permit the paper filed under the circumstances would be irregular, unjust to the real parties, and might be a precedent producing mischief and confusion. The petitioners have not the right to file the paper without the consent of the present parties to the litigation. Motion, for the present, overruled.

On a subsequent day of the term, by consent of the parties, the supplemental petition was permitted to be filed. *256and thereupon the opinion of the court overruling same was on the 28th day of October delivered,by C. J. Lewis.

Willing to consider all that can be .said by those who believe themselves injuriously affected by the opinion in this case, we have, in addition to the petition for rehearing tiled by appellant, as matter of fight, permitted j>etitions filed in behalf of twenty or more Coal Companies. It is urged as reason for withdrawal of the opinion that, if Railroad Companies be not permitted to make special rates to competitive points, shipment of coal mined in this State must cease. Though an argument drawn from hardship or inconvenience is usually more appropriately addressed to lawmakers, it should, of course, have due weight with the court in determining the proper construction of a law the meaning of which is doubtful or obscure, but never so much as to induce a construction that is absurd, defeats the evident object in view, or involves stultification of those who made it. However, the argument in behalf of the Coal Companies, even if based upon entirely correct premise, is counterbalanced by the fact that, while special rates to competitive points may benefit a particular industry, removal of all restraint upon discrimination by Railroad Companies might be injurious to other industries and interests connected or identified with non-competitive points. Conceding the construction we have been, by a sense of duty, constrained to give section 218, will work injury to the coal industry of this State, the court is not authorized or permitted to afford relief by perverting the true meaning, and thereby defeating the manifest object of the section. The needed relief must be afforded, if at all, according to, and in the manner provided by, the law itself, which will be hereafter' considered.

Counsel for appellant, after stating that it had for seven *257years relied upon a construction of the long and short haul law settled, as they say, by the Interstate Commerce Commission and certain Circuit Courts of the United States, permit themselves to use this language: “The court of appeals now, at this late day, propose to repudiate that construction, and announce a construction which has never been announced by any tribunal with reference to the law from which our law was copied verbatim” Counsel might without much effort have recollected that the Court of Appeals does never propose, but finally decides, the construction to be given such parts of the constitution and statutes of this State as need construction, and can not be foreclosed or bound by the views in regard thereto by any other tribunal. It is not true that framers of the constitution adopted section 218 with a view to a construction that had been put upon section 4 of the Interstate Commerce Act adverse to the one we have given section 218. At that time there had been no decision of the question by the Supreme Court of the United States, the only tribunal empowered to construe section 4 authoritatively and finally. It could, however, be said, if necessary, that, prior to the adoption of our constitution, it had been held by respectable English Courts that cost of service constitutes the difference of circumstances and conditions, in the meaning of their statute on the same subject, and similar in terms to section 2,18. The language of section 21S plainly shows it was made part of the constitution for the definite purpose of surely inhibiting Railroad Companies doing something they had previously done at will and discretion; that is, charging and receiving greater compensation in the aggregate for transportation of passengers and property the shorter than the longer distance. But if competition *258at particular localities in the business of transportation, or other circumstances or conditions influencing the common carrier, not affecting the general public, be held by this court a sufficient reason or excuse for discrimination, Railroad Companies may, without legal restraint or interference, continue to do precisely what they did before section 218 was adopted, and it becomes a dead letter. In order to give meaning and effect to that section, cost of service must be held to alone constitute the difference of circumstances and conditions which will authorize greater aggregate compensation to be charged or received for the .shorter than longer distance of the same line of road; and '.as, only to the extent of difference in the actual cost of transportation, a difference of aggregate compensation may be rightfully charged or received, the general public, as well as the carrier, is affected thereby. As counsel for appellant do not show or attempt to show in what manner railroad companies would or could be restrained or prevented from charging at will greater aggregate compensation for the shorter than longer distance, nor what possible 'purpose section 218 would or could serve, if the construction they contend for be accepted, we need not consider their petition for rehearing further.

It is argued by counsel for Coal Companies that the court has and should exercise jurisdiction to revise an order of the Railroad Commission refusing an application to authorize a common carrier, in special cases, to charge less aggregate compensation for the longer than shorter distance of the same line of road. Unquestionably, framers of the Constitution contemplated probable existence of exceptional circumstances and conditions working hardship or injustice to the Railroad Company, as well as particular industries or interests, and therefore recognized the justice *259and necessity of authorizing special rates to be given to competitive points in special cases. But the Constitution does not contain, nor would it have been practicable to pur in it, provisions applicable to every state of case that might arise. The Railroad Commission was therefore created to meet the emergency, and was intended to be invested with full power to authorize or not, in special cases, less compensation to be charged for the longer than shorter distance, and to prescribe from time to time the extent to which the-common carrier may be relieved from operation of the section. In our opinion, the court has not jurisdiction to either compel the Railroad Commission, upon application of the common carrier or those interested in particular industries or callings, to suspend or relax operation of section 218, or, upon application of individuals or corporations feeling aggrieved, to prohibit such suspension or relaxation, in special cases. While the commission is thus and to that extent free from judicial interposition, it can not, of course, nullify, or except in special cases at all suspend, operation of section 218; and, though the Railroad Commission be invested with this unusual power, it must be treated as a constitutional power, with which the court can not interfere. The petition for rehearing is. overruled.