w

an unreasonable or unlawful rate was ex- , previously existing between shippers of soap acted for the carriage of soap, or that the in official classification territory. Thus it defendants subjected the soap traffic to any was found that, as a result of the new undue or unreasonable prejudice, disadvan- method of classification, a shipper located tage, or discrimination.

at New York city could ship therefrom to The taking of testimony was ended on practically all points in New England and September 26, 1900, and the report and a large number of points in New York state opinion of the Commission was filed about without paying higher than fourth-class two and a half years thereafter; viz., on rates, while a shipper located at Cincinnati April 10, 1903. 9 Inters. Com. Rep. 440. could not ship northerly or northwesterly As respects putting car-load soap in the therefrom, more than about 60 miles, withfifth class, the Commission refrained both out paying an advance over fourth-class from deciding that the classification was un rates. The Commission expressly declared reasonable per se or that its reasonableness that “the difference of 15 cents between had been affirmatively established. It said: fifth class and third class, which was in

“We regard the primary and controlling effect as between car-load and less than question in this case as a question of clas-car-load shipments from January 1, to sification; that is, of relative rates, and dis- March 10, 1900,” the time during which ofpose of it accordingly. In that view it ficial classification No. 20 prevailed, before is sufficient to hold that car-load soap is it was modified by the percentage reduction not improperly placed in the fifth class, and as to soap in less than car-load lots, “would that fifth-class rates therefore are not plainly be excessive," and that the change shown to be unlawful. So long as most operated by the percentage modification in articles entitled to as low rates as car-load question occasions a difference “which vasoap are put in the fifth class and required ries according to a given per cent, as applied to pay fifth-class rates, we are not war. to different scales of rates, appears to be ranted, on the evidence before us, in con- inequitable and unjust, and the fact is so demning the same rating for that com- found.” modity. This disposition of the case, how. In the order, as entered, the Commission ever, will not authorize the retention of car- dismissed so much of the complaint as reload soap in fifth class if the classification ferred to the classification of common or of other articles with which soap is com- laundry soaps in car loads, and the depared should be reduced, nor will anything fendants were “notified and required to now decided preclude the Commission from cease and desist, on or before the 15th day holding, in an appropriate proceeding, that of June, 1903, from charging, demanding, fifth-class rates in this territory are ex-collecting, or receiving for the transportacessive.”

tion of common or laundry soap in less In regard to the less than car-load clas- than car-load quantities charges or rates sification of common soap, after directing at- per one hundred pounds, equal to 20 per tention to the fact that such traffic had cent less than rates fixed

fixed by

by them always been fourth class until January 1, for the transportation of articles, desig1900, the Commission said:

nated third class in their estab"A presumption that such rates are realished freight classification, called and sonable arises from the voluntary action known as the 'official classification, which of the carriers in keeping those rates in said 20 per cent less than third-class rates effect during such a long period, and that for the transportation of common or laundry presumption has not been overcome, in our soap in less than car loads are found and judgment, by the evidence presented in this determined in and by said report and opincase.”

ion of the Commission to be in violation It was also found that certain rules set of the act to regulate commerce." out in the findings governing car loads of The railway companies not having commixed freight, permitting the carriage of the plied with the order, this proceeding was same at car-load rates, coupled with the commenced by the Commission in the cirincrease in the long-standing less than car- cuit court of the United States for the load rates on soap, operated a strong dis- southern district of Ohio, under the direccrimination in favor of meat packers who tion of the Attorney General of the United manufactured soap, against manufacturers States, to enforce compliance therewith. who were mainly engaged in manufacturing As respects the alleged unlawful character and selling soap. So, also, the Commission of the change in the classification of soap held that the change as to the classification in less than car-load quantities, it was of soap in less than car-load lots, besides in charged in the petition as follows: volving the payment of higher rates for “And the petitioner charges that the acless than car-load shipments, had brought tion of the defendants in raising the classiabout rate relations different from those l fication of common or laundry soap in less

as

than car-load quantities, on December 29, tion and preference between shippers. The 1899, from fourth class to third class, and case was then appealed to this court. subsequently on March 10, 1900, changing Before considering the fundamental questhe classification of common or laundry soap tion upon which the order of the Comin less than car-load quantities to 20 per mission and the decree of the court enforcent below third-class rates, the same be- cing it rest, we dispose of certain proposi. ing more than fourth-class rates, was in vio- tions relied upon by the railway companies, lation of the act to regulate commerce; and because to do so we think will clear the petitioner further charges that the rates way for an analysis of the final question charged by the defendants since December arising, stripped of confusing and irrelevant 29, 1899, for the transportation of common considerations. We think the Commission, or laundry soap in less than car-load quan- in making an investigation on the complaint tities are in violation of § 1 of the act to filed by the Procter & Gamble Company, regulate commerce, in that they are unrea- had the power, in the public interest, disemsonable and unjust; and said rates are and barrassed by any supposed admissions conhave been in violation of § 3 of said act, intained in the statement of complaint, to that said rates, based upon the classifica consider the whole subject and the operation aforesaid, give an undue and unreason- tion of the new classification in the entire able preference or advantage to other de territory, as also how far its going into efscriptions of traffic, and subject common or fect would be just and reasonable, would laundry soap in less than car loads to an un- create preferences, or engender discriminadue prejudice and disadvantage. The petitions; in other words, its conformity to the tioner further charges that the change in requirements of the act to regulate comclassification by the defendants, made ef- merce. And that such was the view taken fective about December 29, 1899, whereby as well by the railway companies as by the common or laundry soap in less than car- Commission during the course of the investiload quantities was changed from fourth to gation before that body is, we think, beyond third class, and the change in classification doubt. Thus, on the examination of the by the defendants, made effective March 10, very first witness called for the complainant 1900, whereby common or laundry soap in | before the Commission, counsel for the railless than carload quantities was charged way companies stated that, in his opinion, more than fourth-class rates, to wit, 20 per the pending investigation had “no significent below third-class rates, were in viola cance except as preliminary to a judicial tion of said act to regulate commerce, in proceeding.” And when, at the threshold, that said changes were unreasonable and a question was raised in the examination of unjust, and result in unlawful discrimina- the same witness as to the competency of tion and prejudice against common or laun- evidence on a subject not directly expressed dry soap in less than car-load quantities, in the complaint, but bearing upon the effect and against localities in official classification of the new classification, the Commission territory, wherein commodities are produced declared it was competent to show the genand transported, and against producers, ship-eral effect of such classification in the terripers, dealers, and consumers in said territory through which it operated. Our assent tory.”

to this view of the power of the CommisIn the various answers filed issue was

sion conclusively, of course, also disposes taken upon these averments without any of the contention that the court was withintimation that any of the issues so ten out authority to determine the validity of

the order of the Commission by the scope of dered were improper to be raised. The case was heard in the circuit court on admission asserted to exist in the complaint

the act to regulate commerce, because of an the evidence before the Commission and on originally filed before the Commission. It additional evidence taken by the defend- is needless, moreover, to say that the course ants, principally directed to showing the ex. of the proceeding before the Commission tra cost incident to handling and transport- which we have stated strips the case of any ing freight in general in less than car-load element of surprise or possible prejudice. lots. The complainant took no additional The Commission, as we have seen, did not testimony. The circuit court decided in find that the rate promulgated in official favor of the Commission (146 Fed. 559), classification No. 20, as to soap in car loads, holding that the evidence not only failed to was unreasonable, preferential, or discrimjustify the change of classification com- inatory. From this it is elaborately argued plained of, but established that the advance that the order rendered by the Commission in rates caused by the increase in the classi- demonstrates its own error. This proceeds fication of soap in less than car-load quan- upon the following theory: For a number tities was not only unreasonable and unjust, of years prior to 1891 soap in less than car but also resulted in an unlawful discrimina- 1 loads was in the fourth class, and soap in

car loads in the fifth class. By the order of unreasonableness of discrimination, and of the Commission, rendered in 1891, as we preference and the consequent destruction, have seen, soap in car loads was put in the if these effects exist, by the new classificasixth class. By official classification No. 20 tion, of the prior relation between soap in soap in car loads was moved up to fifth, and car loads and less than car-load quantities, soap in less than car loads from fourth to let us briefly consider the intrinsic merit of third class. The change made by the new the proposition relied upon. It is that prior classification destroyed the previous rela- to official classification No. 20 there was a tion, since the difference between the rates just relation between soap in car loads in governing third and fifth classes made by the class 6 and soap in less than car loads in new was greater than the difference between class 4. Of course, this admits that such the fourth and sixth classes as obtaining just relation was destroyed by official classiin the prior classification. And this was one fication No. 20 as originally put in force, of the complaints made by the Procter & since thereby soap in car-load lots was Gamble Company concerning the new classi- placed in class 5 and soap in less than carfication No. 20. The carriers, it is said, to loads in class 3, between which classes there meet this objection, adopted, after the com- was a greater difference relatively in rates plaint was filed, the modified classification than theretofore existed between the two of 20 per cent less than third class, but not commodities in the prior classitication. This less than fourth class. The effect of this inequality the carriers declare was obviated reduction, it is declared, was to cause soap after the complaint was filed by the modi. in less than car loads to occupy just the fied classification as to soap in less than same relative position to soap in car loads car-load lots of 20 per cent less than third as it had occupied in the classification ex- class, but not less than fourth class. By isting prior to the going into effect of of- this means, it is insisted, the relation preficial classification No. 20. And as the order viously existing was recreated, and any disof the Commission did not change the classi- turbance engendered by official classification fication as applied to soap in car loads, made No. 20 was cured. Now, on the surface of by official classification No. 20, the propo- things, the contradiction of the position is sition is that that body, in holding the modi. manifest. The modified rate on its face fied classification of 20 per cent less than did not propose to put soap in less than car third class, and not less than fourth class, loads throughout the whole territory in a to be illegal, destroyed the relation which uniform class, but in the class which might the Commission had created by its former result from the operation of a percentage order, and which it was the purpose of the basis, controlled by whether or not the apcomplaint of the Procter & Gamble Complication of the percentage might or might pany to restore. But the argument takes not take soap out of one class and into anfor granted the very question for decision,-other. In other words, it clearly contemthat is, whether the modified classification plated that, by the varying rates to which of 20 per cent less than third class, but not the percentage would be applied, soap in less less than fourth class, operated to continue than car loads would be left in portions the relation between soap in car loads and of the territory in fourth class and soap in less than car loads, which prevailed in a higher class

class in other portions. throughout official classification territory be. How, in view of this, it can be in reason confore the making of official classification No. ceived that the admitted uniform classifi. 20. That the proposition thus begs the cation prevailing prior to the percentage rule whole question is demonstrated by the mere could possibly continue under a classification statement that both the Commission and inherently wanting in uniformity, we fail to the court below decided that official classifi-understand. cation No. 20, as modified as to soap in less But put the foregoing considerations aside. than car loads by the percentage order, was The complaint as to the order of the Comunreasonable, discriminatory, and, by its ef- mission is that it disturbed the previous refect, created preferences among manufac-lations between soap in car loads and less turers and shippers of soap which had not than car loads. What was the order? In existed prior to the new classification effect it condemned, and directed the carrier When the real significance of the proposito desist from enforcing, the modified pertion is thus seen it amounts to this, that we centage classification. At the worst view must assume that both the court below and for the carrier the order complained of can the Commission erroneously decided the con only be taken as persuasively indicatingtroversy, and, upon this mere assumption, and such was the view intimated in the opin. proceed to reverse their action. But our ion of the Commission-the duty of the

— duty not to assume, but to decide the case, carriers to return soap in less than car loads cannot be thus obscured.

to class 4, in which it had been uniformly Laying aside, however, the questions of placed prior to the going into effect of of. ficial classification No. 20. The real griev- The statute gives prima facie effect to the ance which the railway companies must findings of the Commission, and, when those

, have reduces itself to this,—that the order findings are concurred in by the circuit court, may lead to the putting of soap in less than we think they should not be interfered with car loads in class 4. But the very percent- unless the record establishes that clear and age basis which the carriers adopted con- unmistakable error has been committed. See templated that, in some portions of the Cincinnati, N. 0. & T. P. R. Co. v. Interterritory and somewhere, the effect of the state Commerce Commission, 162 U. S. 184, modification by a percentage reduction 194, 40 L. ed. 935, 938, 5 Inters. Com. Rep. might be to put soap in less than car loads 391, 16 Sup. Ct. Rep. 700; Louisville & N. in the fourth class; else, why the limitation, R. Co. v. Behlmer, 175 U. S. 648, 672, 44 L. "but not less than fourth class,” contained ed. 309, 318, 20 Sup. Ct. Rep. 209. in the modified classification.

It is insisted that this is a case of that We are thus brought to the fundamental character. How, in reason, it is urged, can question, which is, Did the percentage classi- it be said that discrimination or preference, fication lead to rates which were unreason which did not before exist, was or could be able, unjustly discriminatory, or unduly produced from the mere application to the preferential ? If either was the result, the prior rates of a uniform percentage reducorder directing the carriers to desist from tion? This, however, obscures the fact that enforcing the classification in question was the 20 per cent reduction was not uniform, proper.

but was that percentage less than third We take up the related questions of dis- class, with the qualification “but not less crimination and preference because the aris- than fourth class.” In other words, the ing of such consequences from the classifica- modified percentage reduction was not a tion more saliently appear, and because the fixed percentage, but was one which might demonstration of such results is, in a meas- vary, depending upon the result which would ure, elucidated by what we have previously be brought about by applying the rule. Putsaid. Concerning the discrimination the ting, however, entirely aside this view, let Commission said:

us consider only the result of the working “Whatever the effect of a percentage less of the rule on the basis of 20 per cent less than third class for less than car-load ship- than third class. The factors to be considments of other commodities, taking that ered are these: a, the relation existing rating under the classification, may be, it prior to the going into effect of official plainly works discrimination against com- classification No. 20; b, the operation of plainant and other western shippers of soap that classification over the whole of official in less than car-load lots, in favor of their classification territory; c, the percentage competitors in the East, when the present modification of 20 per cent less than third situation is compared with that which ex- class as to soap in less than car loads, and isted under the old fourth-class rating.”

also its operation over the whole territory; And this finding was expressly concurred and, d, the varying rates of charges in the in by the circuit court. In pointing out separate spheres into which the official the mode by which the modified classifica classification territory was divided, viz., tion operated the result in question, the Central Freight Association territory and Commission said:

the Trunk Line territory. Now, testing the “These differences are due to variations matter by these criteria, does it appear, as in the scales of rates prevailing in the dif- contended, that the findings of the Comferent sections. The 20 per cent less than mission and the court, as to resulting prefthird-class rating for less than car-loads ap- erences and discrimination, are so contraplies to all shippers of less than car-load dictory and erroneous that we should dislots of soap throughout the entire territory, regard them? The proposition that they but it increases some rates more than oth were must rest upon the assumption that ers, and leaves some as they were before it the application of a fixed percentage reducwas adopted. When, for example, under the tion to existing rates, whilst it might vary application of that rule, the rate from Cin-them, could not possibly change their relacinnati to Boston is increased 4 cents, and tion. But this assumes that the variation the rate from New York to Boston remains which existed between rates in the different the same, as compared with the fourth-class spheres of official classification territory was rates formerly in effect, it is plain that this only a difference in the sum of the rate premethod of determining rates upon a per- vailing in one territory from that which centage basis operates unequally upon the prevailed in the other as to the same class. different shippers of less than car-load quan. But this is a mistake, since there was also a tities in that territory.”

difference in the two separate spheres of territory as to the margin of difference Central Freight Association territory. But between the

the different classes of rates this simply involves a restatement of the governing in the two territories. Thus, there misconception which we have already pointwas in Central Freight Association ter- ed out. The discriminations and preferences ritory not only a higher rate for commodi- which the Commission and the court below ties in the third class than prevailed in found to exist were results arising from the Trunk Line territory for the same class, application to the conditions prevailing in but there was also in the Central Freight official classification territory of the modi. Association territory a wider difference be-fied percentage classification. In other tween the rates governing commodities in words, the order forbidding the enforcement the third class and those controlling com- of the modified percentage classification was modities in the fourth class. It follows based on the finding that that classification from this that where, in any given case, the disturbed the rate relations theretofore ex20 per cent reduction was applied to the in- isting in official classification territory, and creased rate which had arisen from having created preferences and discriminations placed less than car-load soap in the third which would disappear if the further enclass, if the application of the full 20 per forcement of the changed classification was cent reduction was not sufficient to reduce prevented. the amount to the fourth class, the com- This brings us to the final contention modity would pay more than fourth class. made on behalf of the railway companies, In other words, although the commodity in viz., that the order of the Commission was the case stated would get the full benefit of not lawful, because not within the power the 20 per cent reduction from the third- conferred by the act of Congress. This is, class rate, as giving it that benefit did not we think, largely disposed of by what we reduce to the fourth-class rate the commodi- have previously said as to the nature and ty would yet pay higher than fourth-class scope of the investigation which the Comrate. It also follows that if, in any case mission was authorized to make and the rewhere the 20 per cent reduction was applied dress which it was empowered to give irthe result of applying it, because of the nar: respective of the particular character of the rowness of the difference between third and complaint by which its power may have fourth class in that territory, operated to been previously invoked. Whatever might reduce the same to the fourth class, the com-! be the rule by which to determine whether modity would be left exactly in the class in which it stood before,—that is, fourth class. where the case with which the order dealt

an order of the Commission was too general By this it indubitably resulted that in a large degree in one of the subdivisions of involved simply a discrimination as against the same classification territory soap in less

an individual, or a discrimination or preferthan car loads remained in fourth class, and ence in favor of or against an individual or in the other took a higher class. And this a specific commodity or commodities or loillustrates the correctness of the findings of calities, or as applied to territory subject to the Commission and of the court as to the different classifications, we think it is clear preference resulting from applying to a that the order made in this case was within territory governed by one classification a the competency of the Commission, in view rule of percentage which, while assuming of the nature and character of the wrong unity, produced diversity, and which, while found to have been committed and the reasserting equality of class, engendered in- dress which that wrong

necessitated. equality. Of course, we confine our decision Finding, as the Commission did, that to the case before us.

the classification by percentage of comAnd the views heretofore expressed serve

mon soap in less than car-load lots opalso to dispose of the contention that, al- erating throughout official classification terthough it be conceded that discrimination ritory, brought about a general disturbance and preference was created, yet the carrier of the relations previously existing in that should not have been ordered to desist from enforcing the modified percentage classifica- | territory, and created discriminations and tion, because the discrimination and prefer- preferences among manufacturers and shipence, if any, were not the result of the op- | ties in such territory, we think the Commis

pers of the commodity and between locali, eration of that classification, and, moreover, were not repugnant to the act to regulate sion was clearly within the authority concommerce, because they were simply the conferred by the act to regulate commerce in sequence of natural competitive advantages directing the carriers to cease and desist enjoyed by shippers in the sphere of the from further enforcing the classification opTrunk Line territory, which were not pos-erating such results. sessed by shippers in that other portion of Affirmed. official classification territory, known as