225 U.S.

326
32 S.Ct. 742
56 L.Ed. 1107

INTERSTATE COMMERCE COMMISSION and the United

States, Appts.,
v.
BALTIMORE & OHIO RAILROAD COMPANY,
Pennsylvania Railroad Company, et al.
No. 719.
Argued January 12 and 15, 1912.
Decided June 7, 1912.

The question in the case is whether railroad companies may charge a

different rate for the transportation of coal to a given point to railroads
than to other shippers, the coal being intended for the use of the railroads
as fuel.
The Interstate Commerce Commission held that a charge of a different
rate was an unlawful discrimination against other shippers, and made an
order requiring a cessation of such charge. The execution of the order was
enjoined by the commerce court.
A number of railroads are petitioners and we shall refer to them as the
companies.
The companies attack in their petition the order of the Interstate
Commerce Commission on several grounds, which may be summarized as
follows: The movement of coal traffic from the point of origin to the point
or points of junction to receiving carriers is different from the movement
of coal to be delivered locally at such junction points.
The traffic is not governed by the rates published under the act to regulate
commerce, which apply to the traffic in coal not intended for use by
consuming railroads, because the charges go to the carrier itself. If the
coal be shipped under a through rate applicable to other coal the actual
rate upon which it moves to the rails of the consuming road is the division
of the through rate going to the roads over which the traffic moves to the

junction point with the rails of the consuming road. The division of the
rate beyond that point goes to the consuming road itself.
All but an inconsiderable part of such coal is necessary and intended for
use as fuel in locomotives. The fueling stations are often many, and are
located at convenient points along the line at varying distances from the
junction points, and it is not possible at the time of shipment to tell at what
point a carload of coal will be needed. If made on a through rate they must
be billed and transported to a point to which the through rate is published.
Even if a centrally located distributing yard for fuel be established, and all
shipments billed on a through rate to that yard, there must be a reverse
movement of the coal between that point and the point of junction.
The fact that fuel coal on the line of a consuming carrier is not governed
by the published rates makes the commercial competitive conditions
different between such coal and other coal. The value to the shipper is not
the same or measured by the same conditions. There is no competition
between the fuel coal and other coal.
Because of the circumstances and conditions differentiating the traffic in
fuel coal the companies have for a number of years past published and
filed, as required by law, separate tariffs of the rates to be charged and
received by them for the transportation of such coal from points of origin
to the junction point of delivery to the consuming carrier. The tariffs vary
in their definitions or descriptions of the traffic to which the rates apply,
but in each case the traffic is such that it would move in reality, not under
the published through rates, but would move under the special conditions
which have been stated. Some of the tariffs apply only to coal intended for
use and used for locomotive fuel. The rates named in the tariffs are open
and available to all producers and shippers, if the shipments be made
under the special conditions stated.
On January 4, 1910, the Interstate Commerce Commission, of its own
motion, instituted an inquiry under an order of that date entitled, 'In the
Matter of Restrictive Rates,' Docket No. 3053, making the Baltimore &
Ohio and the Pennsylvania Railroad Companies parties to the proceeding.
The other companies from time to time were admitted as interveners.
Testimony was taken, argument heard, and the Commission entered the
order complained of in which the Commission required the companies to
cease and desist, on or before May 15, 1911, and for a period of two years
to abstain from using the tariffs on fuel coal stated.
The Commission erred in its construction of the act to regulate commerce

in that it held the facts and circumstances found by it did not distinguish
fuel coal from other coal, and that the different conditions of their
transportation were not in law circumstances and conditions necessary or
proper to be considered in applying the provisions of 2 of the act.
The Commission erred in holding that the rates on fuel coal under 2
should be no more nor less than rates for the shipment of other coal from
the same point of origin for local delivery at the junction point, the
circumstances and conditions showing conclusively that the services done
in the transportation of them, respectively, are not alike nor substantially
similar, within the meaning of the act to regulate commerce.
The Commission erred in holding that fuel coal should be transported
under through rates, as other coal, and that it was unlawful for carriers to
publish or charge any rates other than the through rates agreed upon going
to the line of the terminal carrier, to be used by it in its business as a
common carrier. And that, as the charges on such terminal carrier's line
must be borne by it, the Commission erred in holding that such
circumstance did not differentiate the traffic in such coal from the traffic
in other coal, and did not constitute a substantial difference under 2 in
the conditions of transportation.
The commission erred in holding, further, that any difference in the tariff
for fuel coal, and not applicable to all other coal, was unjustly
discriminatory, in violation of 3.
It appears on the face of the report of the Commission, it is alleged, that it
proceeded in making the order upon its view of 2 and 3; that it did not
find it necessary to consider any specific tariff or tariffs or the rates named
thereby; that the difference in conditions affecting the respective tariffs
could not be considered as distinguishing them. And it is alleged that the
findings of the Commission are findings of law, as well in regard to the
violation of the 3d section of the act as in regard to violation of the 2d
section. Irreparable damages is alleged, and the alternatives presented of
desisting from the carriage of fuel coal at the expense of the loss of large
and valuable revenues, or accepting divisions of through rates, on both
fuel coal and other coal, which will give the companies, as originating or
intermediate carriers, a much lower compensation for both classes of
traffic than they are now receiving and would continue to receive but for
the order of the Commission.
In either case the loss will amount to many thousand dollars. There will be
loss, it is alleged, to the producers of fuel coal who have sold coal under

contracts for future delivery at junction points, and loss also to producers
and shippers who depend on the railroad-fuel business to enable them to
operate their mines at all.
A final decree is prayed for the annulment of the order and a temporary
injunction enjoining and suspending it pending final hearing and
determination.
The petition was supported by affidavits made by a number of coal
producers and shippers.
The answer of the Interstate Commerce Commission is directed
principally at the third paragraph of the petition, and charges against it as
follows: Its allegations relate to comparisons between coal, on the one
hand, consigned to a railroad company, and coal, on the other hand,
consigned to some other party. The former is called railroad-fuel coal, the
latter is known as commercial coal. In each instance, however, regardless
of the consignee, the point of origin and the point of destination of the
shipments are the same, but the rate charged for transporting fuel coal is
much less than the rate exacted for the transportation of commercial coal
over the same line, in the same direction, and between the same points.
Schedules or tariffs providing for such differences in rates have been
heretofore established and put in force and are now maintained and
enforced by the companies.
Where the destination is a junction which is a point of connection between
the lines of two or more of the companies, the movement of coal, fuel and
commercial, is the same, except that at such destination the cars
containing fuel coal are ordinarily placed upon what is called an exchange
track, which is used in common by the connecting carriers, while the cars
containing commercial coal are usually placed upon the side track of the
delivering carrier. The cost of delivering both kinds of coal is practically
the same, depending upon the nature of the delivery facilities furnished by
the companies. Therefore, the cost of delivering fuel coal may be and is
less than the cost of delivering the commercial coal, but the reverse is
sometimes the case. It is alleged, however, that such differences are
similar to differences pertaining to some shipments of commercial coal
compared with other shipments.
Generally what is called 'free time' is allowed by the companies, that is to
say, a certain period of time for unloading the coal is allowed. If the coal
is unloaded within that time, no charge is made for the use of the car. If
that time be exceeded, a charge of $1 for each day or fraction of a day in

excess of the 'free time,' known as a demurrage charge, is exacted by the

companies, while the compensation paid by one carrier to another carrier
for the use of a car owned by the latter is 25 cents a day. Where the coal
transported is fuel coal no 'free time' is allowed, nor is such demurrage
charge exacted or collected. These differences, however, are offset, and
much more than offset, by the differences in the rates of transportation
between the different coals.
Where the destination of the shipment of coal is not a point of connection
between the lines of two or more of the companies, the circumstances and
conditions pertaining to the transportation and delivery of coal are the
same as above described, except that at such destination there are no
exchange tracks used in common by two or more of the companies. Where
the shipment passes over more than one line of railway to such
destination, delivery by one of the companies to another is made in the
same way and under similar circumstances and conditions, regardless of
whether the coal be fuel or commercial.
The lower rates established by the companies and applied by them to the
transportation of fuel coal are not open alike to all shippers, but are, by
reason of the schedules and tariffs above mentioned and by reason of the
practices of the companies, confined to shippers of fuel coal, and denied to
shippers of all other coal, including commercial coal.
The Commission denies the errors attributed to it, and alleges that its
report shows as follows: 'We have never held that the local rate to the
junction point must be paid on shipments that are going beyond that point.
What we have said is that the local rate to the junction point shall be the
same for all shippers to that point, and that the through charges on
shipments going beyond the junction point shall be alike for all shippers to
the same destination.
The Commission alleges (somewhat singularly, on information and belief)
that it considered all facts, circumstances, and conditions pertinent to the
subject-matter of the order, including degrees of difference and
distinction, and each and all of the tariffs and rates of the companies
which are affected by the order, and did not entertain the opinion
attributed to it, that the facts, circumstances, and conditions affecting the
particular traffic could not be lawfully considered by it as distinguishing
the traffic in railroad-fuel coal from the traffic in other coal.
It is alleged that the traffic is interstate, and that fuel coal, as compared
with other coal, including commercial coal, is a like kind of traffic; that

the services performed by the companies in connection with the

transportation of fuel coal, as compared to the services performed by them
in connection with the transportation of other coal, including commercial
coal, are alike and contemporaneous, and are performed under
substantially similar circumstances and conditions. It is hence alleged that
the companies are violating 2 and 3 of the interstate commerce act [24
Stat. at L. 380, chap. 104, U. S. Comp. Stat. 1901, p. 3155].
The final allegation of the Commission is that the matters are within its
jurisdiction, and that therefore the correctness of its findings is not open to
review in the commerce court or any other court.
Mr. P. J. Farrell for the Interstate Commerce Commission.
[Argument of Counsel from pages 333-336 intentionally omitted]
Messrs. W. Irvine Cross and Hugh L. Bond, Jr., for appellees.
Assistant Attorney General Denison and Mr. Blackburn Esterline, Special
Assistant to the Attorney General, for the United States.
Statement by Mr. Justice McKenna:
[Argument of Counsel from pages 336-339 intentionally omitted]
Mr. Justice McKenna, after stating the case as above, delivered the
opinion of the court:

The case involves the consideration of 2 and 3 of the interstate commerce

act [24 Stat. at L. 380, chap. 104, U. S. Comp. Stat. 1901, p. 3155]. Section 2
provides that if any common carrier shall directly or indirectly charge or
receive from any person or persons a greater or less compensation than it
charges or receives from any other person or persons 'for doing for him or them
a like and contemporaneous service in the transportation of a like kind of
traffic, under substantially similar circumstances and conditions, such common
carrier shall be deemed guilty of unjust discrimination. . . .'

Section 3 is directed against giving preferences or advantages to persons,

localities, or descriptions of traffic in any respect whatsoever, and subjecting
any person, locality, or traffic 'to any undue or unreasonable prejudice or
disadvantage in any respect whatsoever.'

The companies contend that the Commission applied these sections to the facts

The companies contend that the Commission applied these sections to the facts
found by the Commission, none of them being disputed, and that therefore the
findings of the Commission are conclusions of law. On the other hand, the
Commission charges that its findings are those of fact and exclusively within its
jurisdiction, and not open to review by the commerce court or any court. Many
of its assignments of error are expressions of this view. The other assignments
assert in various ways and with many shades of particularity that the commerce
court erred in disagreeing with the Commission in regard to the traffics in the
different coals, not only in its decision, as indicated in its injunction, in the
matters affecting such traffic, but in substituting its judgment for that of the
Commission.

The facts are certainly undisputed; or, to put it differently, the circumstances
and conditions which determined the order are certainly not in controversy; and
while certain general inferences are disputed which may be called inferences of
fact, yet we think 'power to make the order, and not the mere expediency of
having made it, is the question' presented. Interstate Commerce Commission v.
Illinois C. R. Co. 215 U. S. 452, 470, 54 L. ed. 280, 287, 30 Sup. Ct. Rep. 155.
In other words, that the question presented by the petition is that the order of
the Commission was not merely administrative, but proceeded from a
construction of 2 and 3 as applicable to the conditions which affected the
traffic in the different kinds of coal, and that the different charges for
transportation constituted violations of those sections. The commerce court,
therefore, had jurisdiction of the petition and jurisdiction to enjoin the order of
the Commission if the court considered that the order would cause irreparable
injury. Section 3 of the act creating the commerce court gives that court the
power to 'enjoin, set aside, annul, or suspend any order of the Interstate
Commerce Commission, in a suit brought in the court against the United
States.' Whether the court erred in its judgment is now to be inquired into.

In its most abstract form the simple statement of the controversy is whether the
companies may charge a different rate for the transportation of fuel coal to a
given point than for the transportation of commercial coal to the same point.
But when we depart from the abstract, complexities appear and attention is
carried beyond the consideration of points equally distant, shippers equally
circumstanced, and traffic affected by similar circumstances and conditions. It
is asserted that there are disparties between the traffics and qualifying
circumstances which the Commission disregarded, and, in error, held that
traffic in fuel coal could not be distinguished from the traffic in commercial
coal.

The Commission insists upon the simplicity of the problem and contends that

there is nothing in the conditions of the traffic which dispenses with the clear
legal duty of the companies under the interstate commerce act to carry for all
shippers alike. The Commission says: 'We have never held that the local rate to
the junction point must be paid on shipments that are going beyond that point.
What we have said is that the local rate to the junction point shall be the same
for all shippers to that point, and that the through charges on shipments going
beyond the junction point shall be alike for all shippers to the same destination.'
Its position, thus expressed, the Commission has supplemented, we are told by
the companies, by its Conference Ruling No. 324, published June 19, 1911, as
follows: 'Division on company coal.Upon inquiry, held, that it is unlawful
for carriers to make special and discriminatory divisions of joint rates upon
locomotive fuel as between an originating or participating carrier and a
purchasing carrier. In the division of joint rates a railroad must be treated
precisely as any other shipper is treated, and the Commission will regard any
special division as a device to defeat the published rate. All divisions upon fuel
coal must be made in good faith without respect to the fact that one of the
carriers is the purchaser of such coal.'
7

The issue of principle between the Commission and the companies is very
accurately presented, and we come to consider whether there are differences in
the traffic of fuel coal which distinguish it from traffic in commercial coal, and
which, as contended by the companies, make the traffic dissimilar in
circumstances and conditions, or whether the opposite is true, as decided by the
Commission.

The circumstances and conditions which may so far be considered as

distinguishing traffics so as to take from different transportation charges the
vice of preference have been described by this court. In Wight v. United States,
167 U. S. 512, 518, 42 L. ed. 258, 259, 17 Sup. Ct. Rep. 822, it is said: 'It was
the purpose of the section [2] to enforce equality between shippers, and it
prohibits any rebate or other device by which two shippers, shipping over the
same line, the same distance, under the same circumstances of carriage, are
compelled to pay different prices therefor.' These words are given more
precision by the declaration 'that the phrase, 'under substantially similar
circumstances and conditions,' as found in 2, refers to matters of carriage, and
does not include competition.' And this was repeated in Interstate Commerce
Commission v. Alabama Midland R. Co. 168 U. S. 161, 166, 42 L. ed. 421,
423, 18 Sup. Ct. Rep. 45. The facts in both cases give significance to the
rulings. In the first case the charges to the shippers were the same, but one was
given extra facilities; in the second case the extraneous effect of competition
was excluded as an element in the application of the section. There is also
example in Interstate Commerce Commission v. Delaware, L. & W. R. Co. 220

U. S. 235, 55 L. ed. 448, 31 Sup. Ct. Rep. 392. It was there held that a carrier
could not look beyond goods tendered to it for transportation in carload lots 'to
the ownership of the shipment' as the basis for determining the application of
its established rates. Do the circumstances and conditions in this case give a
greater power of discrimination and justify the lower charge to railroad-fuel
coal? It is admitted that the fact that a railroad is the shipper or consumer is not
a circumstance or condition that affects the carriage, nor can the different uses
to which the coal may be put; and it would seem necessarily that any other
extraneous condition or circumstance could have no greater potency. Once
depart from the clear directness of what relates to the carriage only and we may
let in considerations which may become a cover for preferences. May a carrier
look beyond the service it is called upon to render to the attitude and interest of
the shippers before, or their attitude and interest after, transportation? It must be
kept in mind that it is not the relation of one railroad to another with which we
have any concern, but the relation of a railroad to its patrons, who are entitled
to equality of charges. See Pennsylvania R. Co. v. International Coal Min. Co.
L.R.A.(N.S.) , 97 C. C. A. 383, 173 Fed. 1.
9

But what are the differences in the traffics which are asserted by the
companies? We have already condensed them from the pleadings, but we may
use the expression of their ultimate elements by the companies, omitting, for
the time being, the physical differences in facilities. They say: 'When the
railroad-fuel coal is consigned to the junction point, as provided in the present
system of tariffs, the circumstances and conditions that differentiate this traffic
from the traffic in commercial coal consigned to the same point are:

10

'1. The fuel coal so shipped is not in competition with the commercial coal
consigned to the same point.

11

'2. It is in competition with other coals coming upon the line of the consuming
road at other points, with which the commercial coal is not in competition.

12

'3. The transportation service is different, in that commercial coal at the

junction point has reached the point of use, while railroad-fuel coal reaching
the consuming railroad at the junction point is still subject to a transportation
service before reaching the point of use,a transportation under the
'commodities clause,' and not under tariff.'

13

These elements the Commission disregarded, it is contended, and that while it

found a similarity in the traffics, it did not consider or discuss the two most
important features of difference, 'the two features' which make the traffic

unlike; that is, that railroad-fuel coal 'does not come into competition with the
commercial coal, and is in competition with coals coming on the railroad's line
at other points.' But such features do not affect the carriage, qualify or alter the
essential service, which is to get an article from one place to another. The
greater or less inducement to seek the service is not the service. Such
competition, therefore, is as extraneous to the transportation as the instances in
the cases cited. And equally so is the other 'feature' that the fuel coal may be
destined for consumption beyond the junction point. The circumstances do not
alter the fact that it and commercial coal go to the same point, and are delivered
at the same point. There is, it is true, a difference in the manner of delivery,
depending upon the difference in the facilities possessed by the railroads and
other consignees.
14

The Commission, as we have seen, especially disclaimed holding that the rate
to the junction point must be paid on shipments going beyond that point, and
insisted that it only held that the charges to that point should be the same to all
shippers, and rates through that point should also be the same to all shippers.
And the Commission said that the testimony established that the service as to
the coals was alike when they go beyond the junction point. The Commission,
therefore, considered alone the service, disregarding circumstances and
conditions which were mere accidents of it, and had relation only to the
respective shippers.

15

But the companies say, in criticism of the reasoning and order of the
Commission, they are permitted to do indirectly what they want to do directly;
that an easy way of evasion of the prohibiting order is to make a joint rate from
the point of origin of the fuel coal to its points of consumption, and thereby be
enabled 'to charge a lower rate for the fuel coal than for the commercial coal
between the same points.' And further, in display of the easiness with which
this can be accomplished and 'how readily the Commission's order lends itself
to manipulation of rates,' they say that they have only to publish a nominal
delivery point beyond the real delivery point, publish a rate to that point which
they do not intend to charge, and call their actual rate to the junction point,
based on the special circumstances and conditions, a 'division.' They then ask if
'the Commission can so easily juggle a rate for a good purpose, will not
ingenious traffic agents and coal operators do the same for their own perverse
ends?' If such a situation, artfully produced, be used as a device for giving
preferences, the Commission might be able to find some means to defeat it. At
present we must regard its possibility as relevant as exhibiting a misconception
of the Commission's purpose. The Commission has not said what the rate
should be, nor has it said, as we have seen, that the local rate to the junction
point should be the same as the rate beyond that point. The Commission has

ordered equality, and struck down what it deemed to be preferential charges,

even though they were made under formal tariffs. If there may be legal or
illegal evasion of the order, we may wonder at the controversy. If the
difference between the effect of the order and what the companies can do or
want to do be, as is contended, a 'question of words,'a 'question of the
nomenclature to be used in tariffs,'the order of the Commission may still be
valid. Tariffs are but forms of words, and certainly the Commission, in the
exercise of its powers to administer the interstate commerce act, can look
beyond the forms to what caused them and what they are intended to cause and
do cause.
16

There are other contentions or rather phases of those that we have considered,
and which seek to further emphasize the strength of competition as a
circumstance or condition differentiating the traffic. For instance, it is urged
that the shipment of the fuel coal to a particular railroad 'for the use of that
railroad' makes special the traffic. And, further, that 'a railroad is not a person,'
but is 'rather in the nature of a geographical division and extends through long
distances.' Pushing the argument or illustrations farther, it is urged that a
railroad company may be distinguished from the physical thing, the railroad
itself, and may be a locality where a commodity is used, like 'a river, a county,
or a city,' and be entitled to preferential rates to accommodate competitive
conditions. The Import Rate Case (Texas & P. R. Co. v. Interstate Commerce
Commission) 162 U. S. 197, 40 L. ed. 940, 5 Inters. Com. Rep. 405, 16 Sup.
Ct. Rep. 666, is invoked as analogous. We cannot accept the likeness nor the
distinctions which are said to establish it. The railroad company cannot be put
out of view as a favored shipper, and we see many differences between such a
shipper, receiving coal for use in its locomotives, and a nation, as the
destination of goods from other nations, for distribution throughout its expanse,
on through rates from points of origin.

17

The point is made that 'the Commission's method of filing fuel-coal rates is
illegal under 6 of the interstate commerce act and under the Elkins act [32
Stat. at L. 847, chap. 708, U. S. Comp. Stat. Supp. 1911, p. 1309],' and the later
act and 6 are quoted in illustration. The rather vague argument which is urged
to support the point lands in the proposition that the right to violate the law as
to preference in rates is justified by the law in its requirement of the filing of
schedules of rates. However, counsel say that 'it all goes back to the same
principle' 'dealt with under point 1.' We have sufficiently discussed point 1.

18

The decree of the Commerce Court is reversed and the case remanded, with
directions to dismiss the petition.