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as much per hundred cubic feet as those who consumed a less amount. Under this statute the question of consumption was one of the elements to be considered in determining the rates. Surely, it cannot be said to be unreasonable to provide less rates where a large amount of water is used than where a small quantity is consumed. That principle is usually present in all contracts or established rents of that character. It will be found in contracts and charges relating to electric lights, gas, private water companies, and the like, and is a business principle of general application. We find in the rates as they were established nothing unreasonable, or that would in any way justify a court in interfering with them." 1

§ 1322. Prevalent doctrine against such concessions.

2

It may be asserted with confidence, however, that it is opposed to fundamental principles to permit the giving of special concessions to the large shipper as such. In the leading case of Hays v. Pennsylvania Company," this doctrine is well worked out. The plaintiffs in that case, had for several years been engaged in mining coal for sale in the Cleveland market. Their complaint was that the defendant discriminated against them and in favor of their competitors in business, in the rates charged for carrying coal from Salineville to Cleveland. It appeared in evidence that defendant's regular price for carrying coal between the points mentioned, in 1876, was $1.60 per ton, with a rebate of from 30 to 70 cents

1 In St. Louis Brewing Assn. v. St. Louis, 140 Mo. 419, 37 S. W. 525, 41 S. W. 911 (1897), it was held that a water company could not only make lower rates to manufacturers than to other consumers, but also lower rates to large manufacturers than to small.

In Boeth v. Detroit City Gas

Co., 152 Mich. 654, 116 N. W. 628, 18 L. R. A. (N. S.) 1197 (1908), it was held that a gas company might grant a lower rate to persons consuming large quantities for different purposes.

* Hays v. Pennsylvania Co., 12 Fed. 309 (1882).

per ton to all persons or companies shipping, 5,000 tons or more during the year, the amount of rebate being graduated by the quantity of freight furnished by each shipper. In an excellent opinion by Baxter, the United States circuit judge, the various grounds upon which differences in rates have been justified by reason of differences in the cost of service by reason of economies of handling the business were reviewed,' but he held very properly that none of these applied to the exclusive shipper as such, his conclusion being well worth quoting at length. "In all particulars the plaintiffs occupied common ground with the parties who obtained lower rates. Each tendered coal for transportation in the same condition and at such time as suited his or their convenience. The discrimination complained rested exclusively on the amount of freight supplied by the respective shippers during the year. Ought a discrimination resting exclusively on such a basis be sustained? If so, then the business of the country is, in some degree, subject to the will of railroad officials; for, if one man engaged in mining coal, and dependent on the same railroad for transportation to the same market, can obtain transportation thereof at from 25 to 50 cents per ton less than another competing with him in business, solely on the ground that he is able to furnish and does furnish the larger quantity for shipment, the small operator will sooner or later be forced to abandon the unequal contest and surrender to his

1 The following cases are strongly to the same effect:

United States.-Western U. T. Co. v. Call Pub. Co., 181 U. S. 92, 45 L. ed. 765, 21 Sup. Ct. 561 (1901); Kingsley v. Buffalo, N. Y. & P. R. R. Co., 37 Fed. 18 (1888).

Indiana.-Louisville, E. & St. L.

C. R. Co. v. Wilson, 132 Ind. 517, 32 N. E. 311 (1892).

Ohio. Scofield v. Lake Shore & M. S. R. R. Co., 43 Ohio St. 571, 3 N. E. 907, 54 Am. St. Rep. 846 (1885).

Vermont.-Fitzgerald v. Grand Trunk Ry. Co., 63 Vt. 169, 22 Atl. 76, 13 L. R. A. 70 (1891).

more opulent rival. If the principle is sound in its application to rival parties engaged in mining coal, it is equally applicable to merchants, manufacturers, millers, dealers in lumber and grain, and to everybody else interested in any business requiring any considerable amount of transportation by rail; and it follows that the success of all such enterprises would depend as much on the favor of railroad officials as upon the energies and capacities of the parties prosecuting the same."

§ 1323. Services to large and small customers practically identical.

Moreover, the services to large shippers and to small shippers are practically identical. The large shipper sends more car loads in the aggregate than the small shipper, it is true; but it makes no real difference whether a railroad takes two cars from A or one car each from A and B. And it is plain that to carry two barrels of sugar for one person on a given date, and to carry one barrel of sugar for another person, between the same points, over the same route, two days later, are contemporaneous, and like services. Moreover there is not from an operating point of view any real basis for making a lower price to customers who run up larger bills in the course of a stated period. Indeed, the person who has a large aggregate bill may have received a multitude of costly small services. There is nothing to differentiate the large shipper from the small shipper in such a case except that one may perhaps seem to be a more desirable customer than the other; but this is not enough in itself.2

1

§ 1324. Company need never grant such reductions. It would probably be generally agreed that a public

1 United States v. Tozer, 39 Fed. 369 (1889).

2 Kingsley v. Buffalo, N. Y. & P. R. R. Co., 37 Fed. 181 (1888).

service company would not be acting unreasonably which made a flat rate for all customers whether their bills be large or small. Thus in one case where a city was charging all customers large and small a flat meter rate of five cents per thousand gallons it was held that the mere fact that the complainant was a very large customer gave him no ground for complaint. Even those courts which permit the making of a lower rate for larger consumption of water require that it shall all be sold to one place; a large real estate owner cannot get his bills added together and get the lower rate.2

1

Topic C. Rebates to Exclusive Customers

§ 1325. Whether exclusive policies may be adopted. Undoubtedly there is a commercial advantage in being able to adopt the policy of promoting exclusive arrangements with desirable customers by offering reductions. The essential illegality of this policy appears most plainly, as has been seen in other connections, when there is an outright refusal to serve those who deal with a rival. A railroad cannot refuse to take freight from a shipper who formerly shipped by it exclusively but has now made arrangements to ship part of his freight by another line. A telephone company cannot take out its instruments from a customer who has subscribed to another system.3 It is no ground for refusing an application for gas that the applicant is connected with another system. If the

1 St. Louis Brewing Assn. v. St. Louis, 140 Mo. 419, 37 S. W. 525, 41 S. W. 911 (1897).

Penn Iron Co. v. Lancaster, 17 Lanc. L. Rev. 161 (1900).

State ex rel. Gynn v. Citizens' Telephone Co., 61 S. C. 83, 39 S. E. 257, 85 Am. Rep. 870 (1901).

But see Bald Eagle Valley R. R.

Co. v. Nittany Valley R. R. Co., 171
Pa. St. 284, 33 Atl. 239 (1895).

Portland Nat. Gas & I. Co. v. State ex rel., 135 Ind. 54, 34 N. E. 818, 21 L. R. A. 639 (1893).

See also Sorraine v. Pittsburgh, J., E. & E. R. R. Co., 205 Pa. St. 132, 54 Atl. 580, 61 L. R. A. 502 (1903).

companies cannot refuse to serve for the promotion of their business interests, no more can they discriminate to get the advantages which may accrue to the company if it may make lower rates to those who will deal exclusively with it, are plain and this policy would still prevail in making rates in competitive business doubtless as it once did were it not for the modern recognition of its essential illegality. That such a policy may be advantageous to the company which employs it may be granted, but it has already been seen that those who conduct a public employment must forego many methods of getting business and holding it which are permissible in private affairs.

§ 1326. Such discriminations foster monopolies.

The leading case against such personal discrimination is Schofield v. Lake Shore & Michigan Southern Railway Company. In that case it appeared that the railway company, having tariff rates for the public generally, contracted with the Standard Oil Company that, in consideration of said company giving to the railway its entire freight business in the products of petroleum, they would transport such freight for the company at certain rates, about ten cents per barrel cheaper than for any other customers whatsoever. Plaintiffs, one Schofield and others, being also engaged in the manufacture and also dealers in refined and other products of petroleum, offered their products to the railway company for shipment on the same terms granted to the Standard Oil Company, and, on being refused shipment on the terms, brought their bill to enjoin the railway company from charging and collecting from them, for freight on said line, rates and amounts in excess of those charged to the Standard Company for like goods to the same points, or from dis

1 43 Ohio St. 571, 3 N. E. 907, 54 Am. Rep. 846 (1885).

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