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118.

119.

Carload and Less-than-Carload Movements as Affecting the Rate.
Establishing Carload Rates.

120. Same Subject-Rule in Duncan Case Criticised.

121.

122.

Proper Differential Between Rates on Carload and Less-than-Carload
Freight; Carload Minima.

Train-Load Rates.

123. Relation of Through Rates to the Sum of the Local Rates.

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125. Through Rates Must Not Exceed Aggregate of Intermediate Rates. 126. Through Routes and Joint Rates.

127. Same Subject-Amendments of 1910 and 1912.

128.

Rates on Commodities Requiring Refrigeration.

Rates on Returned Shipments.

129.

130.

The Public Interest Must Be Considered in Making Rates.

131. General Principles Applicable to the Question, What Is a Reasonable Rate?

132. Same Subject-Some Statements of the Commission as to Such General Principles.

133.

134.

Same Subject-Discussion of Principles in Chicago Live-Stock Exchange "Case.

Same Subject-Rate Considered in and of Itself. 135. Same Subject-Commission Not Bound by Technical Rules. 136.

General Summary.

§ 82. All Charges Must Be Reasonable.-At common law and under the Interstate Commerce Act all charges made by common carriers for any service rendered, or to be rendered, in the transportation of persons or property, or in connection therewith, are required to be just and reasonable, and every unjust and unreasonable charge for such service, or any part thereof, is prohibited and declared unlawful. This principle of law necessarily arises from the franchises and practical monopoly incident to the business of common carriage. The principle is not new, but as has been held by the courts for over two hundred years when private property is "affected with a public interest, it ceases to be juris privati only." Mr. Chief Justice Waite, speaking of governmental regulation of public carriers, said:447

447 Munn v. Illinois, 94 U. S., 4 Otto 113, 24 L. Ed. 77, 84. Mr. Justice Hill of the Supreme Court of Georgia traced the principle of regulation back to Hammurabi; see Stephens v. Central of Ga. Ry. Co., 138 Ga. 625, 75 S. E. 1041, 42 L. R. A. (N. S.)

541, 1913E, Ann. Cas. 609.
For com-
mon-law rule as to reasonableness, see
Int. Com. Com. v. C., N. O. & T. P.
Ry. Co., 167 U. S. 479, 42 L. Ed. 243,
17 Sup. Ct. 896, and, for statutory re-
quirements, see Sec. 405, post.

"This brings us to inquire as to the principles upon which this power of regulation rests, in order that we may determine what is within and what without its operative effect. Looking, then, to the common law, from whence came the right. which the constitution protects, we find that when private property is affected with a public interest, it ceases to be juris privati only. This was said by Lord Chief Justice Hale more than two hundred years ago, in his treatise De Portibus Maris, 1 Harg. L. Tr., 78, and has been accepted without objection as an essential element in the law of property ever since. Property does become clothed with a public interest when used in a manner to make it of public consequence, and affect the community at large. When, therefore, one devotes his property to a use in which the public has an interest, he, in effect, grants to the public an interest in that use, and must submit to be controlled by the public for the common good, to the extent of the interest he has thus created. He may withdraw his grant by discontinuing the use; but, so long as he maintains the use, he must submit to the control."

What is a "just and reasonable" charge is not always easily determinable, but that is the desideratum sought by the law. Whether or not a particular rate on a single commodity is, in and of itself, just and reasonable cannot be absolutely or exactly demonstrated.448 Certain principles and presumptions have been made use of by the courts and commissions, in determining cases that came before them, but it cannot be claimed that rate-making is a science. Very early in its history, the Interstate Commerce Commission expressed the difficulty of determining what constituted a just rate as follows:

"The question of the reasonableness of rates is always a perplexing one. A great variety of considerations are necessarily involved in each instance. Theory and conjecture merely are not enough. A comparison of one isolated rate with another is not sufficient. The whole field must be considered in order to approximate justice, and at best the result cannot be regarded as other than an approximation."449

448 National Hay Asso. v. Lake Shore & M. S. R. Co., 9 I. C. C. 264, 303, 304, 305.

449 Howell v. New York, L. E. & W. R. Co., 2 I. C. C. 272, 2 I. C. R. 162.

In the Western Rate Advance case of 1910,450 Mr. Commissioner Lane discussed the principles by which a satisfactory judgment as to what a reasonable rate is could be formed and, in concluding the opinion of the Commission in that case, said: "We are dealing here with a difficult problem, involving multitudinous facts and an infinite variety of modifying conditions, which make the establishment of principles and the framing of policies a matter of slow evolution."

Some of the principles announced by the courts and the Interstate Commerce Commission will be stated in the next succeeding sections.451

§ 83. Rule Applied to Accessorial Services. It will be noted that the charges "in connection" with transportation are included within the requirement of reasonableness. The same reason applies to charges for demurrage,452 refrigeration,453 delivery,454 terminal charges,455 as well as any other charges made for any service connected with transportation. The Supreme Court, however, has held, reversing the Commission and the lower courts, that carriers are entitled, for a service and expense in stopping goods in transit, to reasonable compensation in addition to the actual expenses incurred.456 Many services in connection with the receipt, delivery, elevation and transfer in transit, ventilation, refrigeration or icing (including heating), storage and handling of property transported,457 are not separately charged for, but the charge is included in the general charge for the line haul. The Supreme Court has decided that, as for a through rate to a given point, the carrier contracted to deliver at that point, the pre

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450 Advances in Rates, Western Case, 20 I. C. C. 307.

451 See Alldredge on Rate-Making for Common Carriers, Chapter IV, pp. 40-113, incl.

452 Penn Millers' Asso. v. Philadelphia & R. R. Co., 8 I. C. C. 531, 558. 453 Re Charges for Transportation and Refrigeration of Fruit, 11 I. C. C. 129, Knudson-Ferguson Fruit Co. v. Mich. Cent. R. Co., 148 Fed. 968, 79 C. C. A. 483.

454 St. Louis Hay & Grain Co. v. Chicago, B. & Q. R. Co., 11 I. C. C. 82, 87.

455 Int. Com. Com. v. Chicago, B. & Q. R. Co., 186 U. S. 320, 342, 46 L. Ed. 1182, 22 Sup. Ct. 824; Cattle Kaisers' Asso. v. Chicago, B. & Q. R. Co., 12 I. C. C. 507.

456 Southern Ry. Co. v. St. Louis Hay & Grain Co., 214 U. S. 297, 53 L. Ed. 1004, 29 Sup. Ct. 678.

457 Sec. 403, post.

sumption was that the through rate included adequate compensation for the services rendered at the point of delivery.''458

In the Five Per Cent. Case, 31 I. C. C. 351, the Commission expressed the view that every service should be charged for; and later, in referring to this view, Mr. Commissioner Harlan spoke of the soundness of the principle and the propriety of its application.459 Unquestionably, all services should be charged for at a reasonable rate; but, as stated, the charge for the accessorial service is sometimes included in the charge for the principal service. The objection to one charge is that only some of the shippers receive the accessorial service; and, when there is only one charge, all the shippers pay the same charge. This is a preference to the shipper who receives the accessorial services and a disadvantage to the shipper who gets no such service, but pays the same rate as the shipper who does.

Insurance premiums on property stored by the carrier in a public warehouse pending acceptance by a consignee are no part of transportation and not subject to regulation by the Commission.400

§ 84. Classification.-Classification of commodities is generally followed in the making of rates. Most freight articles, especially the more valuable ones, move under class rates; the heavier articles are frequently given what are called commodity rates.461 In the past, there have been several different classifications in force in the United States. Confusion and sometimes unjust discrimination resulted from these different classifications when the traffic moved through territory where different classification rules, ratings and descriptions applied.

458 Covington Stock Yards V. Keith, 139 U. S. 128, 35 L. Ed. 73, 11 Sup. Ct. 461; Int. Com. Com. v. Chicago, B. & Q. R. Co., 186 U. S. 320, 326, 46 L. Ed. 1182, 1191, 22 Sup. Ct. 824; Duluth Dockage Absorption, 44 I. C. C. 300, 302. The statement of accessioral charges separately from the line-haul rates is becoming a rather common practice since the decisions above cited were rendered.

459 Cheese Dealers Asso. Co. v. A. T. & S. F. Ry. Co., 40 I. C. C. 1, 3.

460 Cotton Seed Products Co. v. St. L. S. F. Ry. Co., 53 I. C. C. 574.

461 See Sulphuric Acid from New York, 42 I. C. C. 200, and Rates and Rules on Shipments of Packing House Products, 36 I. C. C. 62.

Efforts have been made by representatives of the carriers and commissions, national and state, to remedy this condition by the adoption of a more uniform system of freight classification. In some sections there are commodities which do not exist in others. Long-existing systems, in reliance upon which business has been established and prospered, are facts which make difficult a complete solution of the problem. But it is not, as said by Mr. Commissioner Lane, "fanciful to say" that a solution may be arrived at. The learned Commissioner, in the same connection, stated some principles which must be considered. He said: "Supplement cost with scientific classification of freight and we have something certainly more nearly akin to reason than the hazard of a traffic manager, no matter how benevolently inclined. "'462

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It is the duty of carriers subject to the Acts to Regulate Commerce "to establish, observe and enforce reasonable classification of property for transportation," and the Interstate Commerce Commission may "enter upon a hearing concerning the propriety of such classification." "May determine and prescribe what will be the just and reasonable, individual or joint classification. ''463 Classification, like the other details in rate-making, is not an exact science.464 In framing classifications and rates, no one consideration is controlling. Bulk, value, liability to waste or injury in transit, weight, form in which tendered, etc., must be taken into consideration.465 All classifications must be made with due regard to these and kindred considerations. Market conditions and the promotion of competition are also facts which are considered. Classification must not, of course, be made to benefit one shipper, or a few shippers, and must be without unjust discrimination.466 The Interstate Commerce Commis

462 Advance in Rates, Western Case, 20 I. C. C. 307, 362.

463 Sec. 488, post. Re Advances on Coal to Lake Ports, 22 I. C. C. 604, 623, 624.

464 Forest City Freight Bureau v. Ann Arbor R. Co., 18 I. C. C. 205, 206.

465 Ford Co. v. Michigan Central R. Co., 19 I. C. C. 507, 509; Yawman

& Erbe Mfg. Co., v. Atchison, T. & S. F. R. Co., 15 I. C. C. 260, 262.

466 McClung & Co. V. Southern Ry. Co., 22 I. C. C. 582, 584; Sutherland Bros. v. St. Louis & S. F. R. Co., 23 I. C. C. 259, 262. The difficulties encountered in making rates between different classification territories are discussed in Interior Iowa Cities Case, 28 I. C. C. 64, 72, and in Memphis v.

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