§ 42. Attachments and Garnishments.-Interstate carriers must of necessity interchange cars, and from this interchange of cars and from the transaction of through business credits arise in favor of one carrier against another. Whether or not these cars and credits belonging to a railroad of another state may be reached by process of attachment and garnishment was a mooted question in the state courts. Where a railroad company of a state received the cars of a railroad company of another state under a contract by which the domestic company had the right to carry the loaded car to its destination and to reload and return the car to the owner in another state, it was held that garnishment served on the domestic company would not, in the absence of a lien, hold the foreign car. This decision was based upon the local law, and in the same case it was held that such garnishment was not illegal on the ground that it affected interstate commerce.232 The same court subsequently held that where "the car was an empty freight car, and all use thereof by the claimant under the contract had ceased, and nothing remained to be done except to return it to the owner," that the levy of an attachment upon the car was valid.233 The questions of local law are not within the purview of this discussion and the differences between the state courts as to 232 Southern Flour & Grain Co. v. Northern Pac. Ry. Co., 127 Ga. 626, 56 S. E. 742, 9 L. R. A. (N. S.) 853, 119 Am. St. Rep. 356; Southern Ry. Co. v. Brown, 131 Ga. 245, 62 S. E. 177. Agreeing with the Georgia court on the right growing out of the contract but disagreeing as to the question of interstate commerce, see, Wall v. Norfolk & W. Ry. Co., 52 W. Va. 485, 44 S. E. 294, 64 L. R. A. 501, and see note, 94 Am. St. Rep. 948. 233 Cent. of Ga. Ry. Co. v. Evans, 133 Ga. 639, 66 S. E. 788. For other authorities discussing the question see, Michigan C. R. Co. v. C. & M. L. S. R. Co., 1 Ill. App. 399; Connery v. R. R. Co., 92 Minn. 20, 99 N. W. 365; Shore & Bro. v. Baltimore & O. Ry. the federal question have, as to the general right, been settled by the Supreme Court of the United States. A case arose where certain freight cars and certain credits of a corporation of Indiana and Ohio were sought to be reached by garnishment against a carrier in Iowa which had in its possession such cars and credits. The cars had moved to Iowa in interstate commerce and the credits arose from such commerce. The cars had been unloaded and had not started on the return trip. The federal trial judge denied effect to the garnishment in language which presents that view as forcibly as it can be expressed.234 The Supreme Court reversed the lower court and held that under the circumstances of that case the garnishment was valid. The opinion of the court, written by Mr. Justice McKenna, indicates that there might be circumstances under which the attachment or garnishment would not be valid.235 § 43. Rates. A common carrier is so far engaged in the performance of a public service that its rates or charges may, within certain limitations, be fixed by governmental agencies. This principle not only had its foundation in the earliest known laws,236 but it is a principle which has been exercised and accepted with significant uniformity. The Supreme Court of the United States said: "State regulation of railroad rates began with railroad transportation;" and in the same opinion it was said:237 "The authority of the state to limit by legisla 234 Davis v. Cleveland, C. C. & St. L. R. Co., 146 Fed. 403, 411, and see cases cited. 235 Davis v. Cleveland, C. C. & St. L. R. Co., 217 U. S. 157, 54 L. Ed. 708, 30 Sup. St. 463, cited in Minnesota Rate Cases at pp. 409 and 410; and see Pullman Co. v. Linke, 202 Fed. 1017. See Section 568, post. 236 Stephens v. Cent. of Ga. Ry. Co., 138 Ga. 625, 75 S. E. 1041, 42 L. R. A. 541, Ann. Cas. 1913E, 609. 237 Simpson v. Shepard, 230 U. S. 352, 57 L. Ed. 1511, 33 Sup. Ct. 729. At page 412 of the original opinion is given a list of early state laws, which list is followed by a history of the decisions of the Supreme Court relating to rate regulation by the states. For a further summary of state legislation see, Interstate Com. Com. v. Cincinnati, N. O. & T. P. Ry. Co., 167 U. S. 479, 495, 496, 42 L. Ed. 243, 17 Sup. Ct. 896. A statute fixing a rate on one commodity, oil, was sustained by the Supreme Court of Kansas,-Tucker v. Missouri Pac. R. Co., 82 Kan. 222, 108 Pac. 89; and see German Alliance Ins. Co. v. Lewis, 233 U. S. 389, 58 L. Ed. 1011, 34 Sup. Ct. 612, sustaining a law of Kansas fixing the price of fire insurance. tion the charges of common carriers within its borders was not confined to the power to impose limitations in connection with grants of corporate privileges. In view of the nature of their business, they were held subject to legislative control as to the amount of their charges unless they were protected by their contract with the state." This general power to regulate is co-extensive with the need of regulation and is not limited to the regulation of those businesses for the regulation of which there is legislative precedent. "The underlying principle," said the Supreme Court,238 is that business of certain kinds holds such a peculiar relation to the public interest that there is superinduced upon it the right of public regulation;" or to use a briefer statement of that court: "The basis of the ready concession of the power of regulation is the public interest.''239 In the early history of state regulation of railroad rates, the Supreme Court used language that "went further than to sustain the state law with respect to rates for purely intrastate carriage" and "treated as being within the state power" rates on interstate transportation. This decision was very soon modified and the power of the state limited to regulating rates on intrastate transportation.240 It has been held, upon what seems inconclusive reasoning, that where a state, being the owner of an interstate railroad, leases the road with a provision reserving to the state the right to make "just and reasonable rules, orders, schedules of freight and passenger tariffs," that such reservation, so far as concerns interstate rates, is void as in conflict with the commerce clause of the federal Constitution. It would seem that as the state, as owner, like other owners, had the right 238 Quoted from Budd V. New York, 117 N. Y. 27, 5 L. R. A. 559, 15 Am. St. Rep. 460, 22 N. E. 670, 143 U. S. 517, 36 L. Ed. 247, 4 I. C. R. 45, 12 Sup. Ct. 468. See for citations 58 L. Ed. 1021. 239 German-Alliance Ins. Co. V. Kansas, 233 U. S. 389, 58 L. Ed. 1011, 34 Sup. Ct. 612. 240 Simpson v. Shepard, 230 U. S. 352, citing as supporting the statement in the text, Peik v. Chicago & N. W. Ry. Co., 94 U. S. 164, 24 L. Ed. 97, and Wabash, St. L. & P. Ry. Co. v. Illinois, 118 U. S. 557, 30 L. Ed. 244, 7 Sup. Ct. 4. to initiate rates intrastate or interstate, such right could be reserved in a lease of its road, and that in the first instance the state could require its lessee to comply with the lease. The Interstate Commerce Commission could control the interstate rate so fixed in like maner as other rates made by other owners of carriers, but that fact should not prevent the state from making the rate in the first instance.241 In the Minnesota Rate cases,242 the power of the states to regulate railroad rates for transportation between points in the same state is reiterated and fully stated. This power is, therefore, under existing federal statutes, indisputable, although the federal statutes have been amended and supplemented since the decision in the Minnesota Rate cases was rendered. The power is not, however, unlimited and must be exercised in such way as not to infringe the carrier's constitutional rights under the Fourteenth Amendment to the Constitution of the United States. This right to prescribe rates includes the right to suspend proposed increases in rates243 and to require the establishment, where such systems had been voluntarily established by the carrier, of commutation rates.244 Classification of commodities is a necessary preliminary to any system of rates, and the right to prescribe a rate for the future includes the right to classify commodities. This classification must not be arbitrary or unreasonable but, in making a classification, the rate-making body "is not precluded from the consideration of economic considerations recognized by the carriers in the conduct of their business," but "may consider and act on every economic or industrial factor potentially influencing the operation of a railroad in the transportation 241 State of Georgia v. Western & A. R. Co., 138 Ga. 835, 76 S. E. 577. 242 Simpson v. Shepard, supra, and Cent. of Ga. R. Co. v. R. R. Com. of Ala., 209 Fed. 75; Darnell v. Edwards, 209 Fed. 99; Chicago & N. W. R. Co. v. Smith, 210 Fed. 632; Sou. Pac. Co. v. R. R. Com. of Oregon, 208 Fed. 926; Puget Sound Traction Light & Power Co. v. Reynolds, 223 Fed. 371; 243 Trenton & M. C. T. Corp. v. Trenton, 227 Fed. 502, affirmed 229 Fed. 140, 143 C. C. A. 316. 244 Penn. R. Co. v. Towers, 245 U. S. 6, 62 L. Ed. 117, 38 Sup. Ct. 2. of freight.245 A joint rate would, if the whole rate is intrastate, be within the regulating power of the states.246 The right to prescribe reasonable rates includes the right to prohibit rates which are unjustly discriminatory.247 While the federal government had control of and operated interstate railroads and telephone companies (1918-1920), intrastate rates were withdrawn from the regulatory powers of the states.248 § 44. Intrastate Rates Which Affect Interstate Rates.-A state may not regulate intrastate rates by the standard of interstate rates by basing a rate for a short haul within the state upon the carrier's rate for the long haul over the same line when the long haul is between states.249 And when local rates are made for the purpose and have the effect of so regulating transportation that commerce which might be interstate is forced to move intrastate, and when the local rates discriminate against the interstate rates, the regulation making such local rates is invalid. The Railroad Commission of Texas established rates between points in that state which the railroads accepted, and which discriminated in favor of localities in Texas and against localities in Louisiana. Upon petition on behalf of the localities in Louisiana against the carriers, the Interstate Commerce Commission held that this discrimination was unlawful and unjust.250 Suit having been filed in the Commerce Court to set aside the order of the Commission, it was held that the carriers were guilty of unlawful and unjust discrimination, 245 Southern Ry. Co. v. Atlanta Stove Works, 128 Ga. 207, 57 S. E. 429, an able opinion, in which is discussed the principles of regulation. 246 Hill, et al, Com'rs. v. Wadley Sou. Ry. Co., 128 Ga. 705, 57 S. E. 795. 247 Portland Ry. Light & Power Co. v. R. R. Com. of Oregon, 229 U. S. 397, 57 L. Ed. 1248, 33 Sup. Ct. 820, affirming same styled case, 56 Or. 468, 105 Pac. 709. 248 Northern P. R. Co. v. North Dakota, 250 U. S. 135, 63 L. Ed. 897, 39 Sup. Ct. 502, construing Federal Control Act, Mar. 21, 1918, 40 Stat., Chap. 25, Comp. Stat. 1918, Sec. 3115-3/4A; Dakota Cent. Tel. Co. v. South Dakota, 250 U. S. 163, 63 L. Ed. 910, 39 Sup. Ct. 507, construing Resolution of June 16, 1918, 40 Stat. 904, Chap. 154, Comp. Stat. 1918, Sec. 3115-3/4X. See Appendix 1. 249 Louisville & N. R. Co. v. Eubanks, 184 U. S. 27, 46 L. Ed. 416, 22 Sup. Ct. 277. 250 Railroad Com. of La. v. St. Louis S. W. R. Co., 23 I. C. C. 31. |