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the third and undue preference clause of the act, and the unreasonableness of the rates from New Orleans to La Grange. The Commission decided the case in favor of the complainant, and, upon refusal of the defendants, the Louisville & Nashville Railroad Company, the Western Railway of Alabama, and the Atlanta & West Point Railway Company, to obey the order, instituted proceedings for enforcement of its order in the United States circuit court for the southern District of Alabama, which court sustained the order of the Commission (122 Fed. Rep., 709). The circuit court of appeals reversed the decree of the circuit court (112 Fed. Rep., 988), and upon appeal taken by the Commission to the United States Supreme Court a decision was rendered in May, 1903, confirming the decree of the circuit court of appeals (190 U. S., 273).

In the case before the Commission it was shown that the rates from New Orleans to La Grange were made by taking the rate from New Orleans through La Grange to Atlanta and adding thereto the local rate from Atlanta back to La Grange. The same method of making rates was in force to certain stations between La Grange and Atlanta, namely, Hogansville, Newnan, Palmetto, and Fairburn. As above indicated, these stations are more distant from New Orleans than La Grange, but on account of making the rates by combination of the rate from New Orleans to Atlanta plus the local rate back, they were made to take lower rates than the rates from New Orleans to La Grange, which were made on the same basis. In its decision of the case the Commission found that the rates from New Orleans to Atlanta were not unreasonably low; in other words, that they were compensatory for the services rendered, and that while there was competition between the defendants and other carriers operating lines between New Orleans and Atlanta, such competition has not forced down the rates at Atlanta below the point of reasonableness. The Commission also found, as an entirely independent proposition, that the rates from New Orleans to La Grange were unreasonable and unjust under the first section of the act.

As to the long and short haul and undue preference questions, the Commission endeavored with great care to follow, in its decision, the rule which had been previously laid down by the United States Supreme Court in the Alabama Midland and other cases wherein that court construed the meaning and application of those sections. That construction by the Supreme Court is to the effect that competition affecting rates at the longer distance point may create such a dissimilarity in circumstances and conditions as to take the case out of the fourth section and also the third, and thereby justify greater charges to the shorter-distance point, unless the rates to the shorter-distance point should be found unreasonably high or the rates to the longerdistance point unremunerative, or, in other words, unreasonably low. In this case, as above stated, the Commission found that the rates to La Grange were unreasonably high and that the rates to Atlanta were remunerative, and, therefore, not so affected by competition as to render them incapable of being used as a standard for further-distance charges. Having made such findings it seemed clear to the Commission that the prohibition of the statute against greater charges for shorter than for longer distances over the same line in the same direction applied, for besides competition there could be no factor creating dissimilarity in the circumstances and conditions governing the two hauls; and as a further consequence the Commission was required to hold that the prohibition of the third section applied.

The court seems to have taken an entirely different view of the case and of the findings made and the conclusions stated by the Commission. The court said thatIt was and is conceded that the rates on through freight from New Orleans to Atlanta were the result of competition at Atlanta, and that there was hence such a dissimilarity of circumstances and conditions as justified the lesser charge for the carriage of freight from New Orleans to Atlanta, the longer-distance point, than was exacted for the haul from New Orleans to La Grange, the shorter-distance point.

Whatever may have been inferable from the record as made in the circuit court and the circuit court of appeals no such concession or intimation appears from the decision of the Commission. The court took note of the method of making the rates above described and says, referring to the record, that if the charge to La Grange had been based on the nearest competitive point south of La Grange, which is Montgomery, and there had been added to the rate from Montgomery to La Grange and the other stations beyond, the rate from New Orleans to La Grange, they would have been higher than the rates now complained of as excessive. In other words, then says the court, the carriers instead of putting out of view the competition prevailing at Atlanta, when they fixed the rates to the noncompetitive points, took the low rates prevailing at Atlanta as a basis and added thereto the local rates from Atlanta, the result being that the places in question were given the advantage resulting from their proximity to Atlanta, the competitive point, in proportion to the degree of such proximity.

On this point the court further says: When the situation just stated is comprehended, it results that the complaint in effect was that a method of rate-making had been resorted to which gave the places referred to a lower rate than they otherwise would have enjoyed. In this situation of affairs, we fail to see how there was any just cause of complaint.

As to the unreasonableness of the rate to La Grange, the court says there is nothing in the evidence taken by the Commission to lend support to the finding that the rates to La Grange were intrinsically unreasonable; but that, In the report of the Commission considerable reference was made to facts and circumstances which it is to be presumed were upon the files of the Commission and which were deemed to conduce to the conclusion that the rates to La Grange were unreasonable per se.

But, says the court, when the statements on this subject made in the report are considered in connection with the report as a whole, and the subjects to which no reference is made in the report are recalled, we think it clearly results that every conclusion reached by the Commission concerning the unreasonableness per se of the rates to La Grange rests wholly upon the error of law committed by the Commission when it decided that the railroad companies were powerless to consider the competitive rates prevailing at Atlanta and to use those rates as a basis for the charges to points within the competitive area in order thereby to give a lower rate to such points than they would otherwise have enjoyed.

A further observation made by the court in this case was as follows: A clause in the order of the Commission makes it clear that no independent finding as to the unreasonableness of the rates was made, since it allows the carriers to continue to charge the rates complained of to La Grange, provided no higher rates were charged to the more distant points between there and Atlanta. The inconsistency between such an order and the conclusion that the rates to the shorter-distance point were unreasonable per se was pointed out in East Tennessee, Virginia and Georgia Railway Company v. Interstate Commerce Commission (181 U. S., 1) where it said (p. 23): “A decree which ordered the carriers to desist from charging a greater compensation for the lesser than for the longer haul, would be in no way responsive to the conclusion that the rate for the lesser distance was unreasonable in and of itself. Such a decree would in effect authorize the carrier to continue to charge at its election a rate which was in itself unreasonable to the shorter point."

The different clauses in the order were to the effect that the carriers should cease and desist from charging their present through rates to La Grange because they were unreasonable; that they should cease and desist from charging more to La Grange than to Hogansville, Newnan, Palmetto, and Fairburn, longer distance points, because they were in violation of the third and fourth sections of the statute; that they should cease and desist from charging more to La Grange than to Atlanta, because such rates would be in violation of the third section of the statute. Now, all of these sections of the law were invoked by the complainant, and his effort was to secure reasonable rates to La Grange, as well as relatively just rates to that point, as compared with those charged to Atlanta and other longer-distance points named. The Commission found in favor of the complainant on all of these points, and it is difficult to see how it could have framed its order in any other way. The carriers could have complied with all the provisions of the order by reducing the rates to a reasonable basis at La Grange and by readjusting their rates at Atlanta and other longer-distance points, as they would not be less than the rates to La Grange. If we had refrained from requiring reduction of the La Grange rates, it is conceivable that the carriers might have raised their rates at Atlanta and the other longer-distance points, but this would still leave unreasonable and therefore unlawful rates to La Grange. If we had merely ordered reductions of the La Grange rates on account of their unreasonableness, the carriers might still have made them higher than the longer-distance point charges, and this would have left unsatisfied the requirements of the law as contained in the third and fourth sections.

Moreover, the circuit and appellate courts might have enforced all of these separate and distinct parts of the order, or they might have enforced one or more of them and refused to enforce the others. This course was followed in the Social Circle case, by the circuit court of appeals, and also by the Supreme Court in affirming the decision of the circuit court of appeals (162 U. S., 197). A petition for reargument of this case was presented to the Supreme Court and denied. The decision which was rendered by the Commission in this La Grange case was prepared with considerable care and with a view of conforming exactly with the ruling which had theretofore been made by the Supreme Court in cases arising under the fourth and third sections of the law, but either through failure to state separate conclusions upon the reasonableness of the rates to La Grange and the long-and-shorthaul question presented in the case, or because of some imperfections in the record as made in the several courts, or the manner of presenting the case, the Supreme Court took an entirely different view. Under the ruling of the court affirming the decision of the circuit court of appeals the case was remanded to the Commission “for such independent consideration of the reasonableness per se of the rates as the ends of justice might require;” and following that ruling, the case has been set down by the Commission for further hearing in regard to the reasonableness of the rates to La Grange.

The Ilampton and Danville Cases.—The Hampton case was decided during the year by the circuit court of appeals for the fifth judicial circuit on appeal taken by the Commission from the circuit court of appeals for the southern district of Florida (120 Fed. Rep., 934). The Danville case was decided by the circuit court of appeals for the fourth judicial circuit on appeal taken from the circuit court for the western district of Virginia (122 Fed. Rep., 800). The decisions of the United States circuit courts in the cases were discussed in our last annual report, and they are affirmed by the decisions rendered by the circuit courts of appeals.

The Wilmington, N. C., Case.—In the case of the Wilmington Tariff Association against the Cincinnati, Portsmouth & Virginia Railroad Company et al., the Commission rendered a decision holding that rates from western points to Wilmington, N. C., were unreasonable and unjust under the first section; subjected merchants and dealers at Wilmington, their traffic, and the city of Wilmington to undue prejudice and disadvantage, and gave the dealers of Norfolk, Va., and other Virginia cities undue preference and advantage. The carriers refused to obey the order of the Commission, and a petition to enforce it was filed in the United States circuit court for the eastern district of North Carolina. In August last the circuit court filed its decision, dismissing the petition and finding that the higher rates to Wilmington than Norfolk or Richmond were justified by the much greater competition which exists at Norfolk and Richmond. Little or nothing is said in the decision which can be deemed to relate to the question of unreasonableness of the rates to Wilmington.

SUIT TO COMPEL TESTIMONY AND PRODUCTION OF DOCUMENTS BEFORE THE COMMISSION.

During an investigation held by the Commission in New York City in April last, concerning the legality of rates charged by the anthracite coal roads on transportation of such coal from Pennsylvania mines to New York City and other destinations, witnesses, officers of the defendant carriers or the coal companies controlled by them, refused to answer certain questions and to produce documents in their custody and which had been called for. David G. Baird, secretary of the Lehigh Valley Coal Company, was asked to produce contracts for the purchase and transportation of anthracite coal entered into since January 1, 1901, between his company and any producers of anthracite coal, or owners or operators of coal mines. Fred. F. Chambers, secretary of the Delaware, Lackawanna & Western Railroad Company, was asked to produce similar contracts with that railroad company. Orlando C. Post, auditor of the Delaware, Lackawanna & Western Railroad Company, was asked to produce vouchers showing transactions for the purchase of coal under contracts with that company. George 0. Waterman, secretary of the Lehigh & Wilkesbarre Coal Company; Mr. Richardson, secretary of the Hillside Coal and Iron Company; William G. Brown, secretary of the Philadelphia & Reading Coal and Iron Company, and E. D. Sturges, secretary of the Dolph Coal Company, the Clarence Coal Company, and the Pine Hill Còal Company, were asked to produce similar contracts with their companies. Edgar C. Hebbard, secretary of the Guaranty Trust Company of New York, was asked to produce several contracts, which were known in the case as the Temple Iron Company contracts. George F. Baer, president of the Philadelphia & Reading Railway Company, was also asked to produce the Temple Iron Company contracts. Eben B. Thomas, president of the Lehigh Valley Railroad Company, was asked questions in relation to the fixing of prices for anthracite coal at tidewater, and as to whether these prices were fixed by an agreement between the different coal companies. William H. Truesdale, president of the Delaware, Lackawanna & Western Railroad Company, was also asked questions relating to the prices of coal at tidewater and the fixing of such prices and the cost of producing the coal. He was also asked what elements or expenses were included in the item covering general expenses set forth in the annual report of his company to the Commission.

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