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CHAPTER XIV

FORMS OF ILLEGAL DISCRIMINATION

§ 670. Provisions of the Act.

671. The same rate for substantially similar services.

Topic A. Concessions to get Competitive Business § 672. Whether concessions may be made in competition. 673. Competitive conditions do not justify discriminations. 674. Reductions to get competitive business illegal. 675. Concessions to get shipments from outlying territory. 676. Such concessions forbidden by later cases.

677. Shippers making expensive preparations.

678. Additional services performed for certain shippers. 679. Concessions to certain localities.

Topic B. Concessions to Large Shippers

§ 680. Whether concessions may be made to large shippers. 681. Unreasonable differences universally forbidden. 682. Unreasonable differences forbidden by all courts. 683. Reasonable difference permitted by some courts.

684. Prevalent doctrine against reduction.

685. Reductions to large shippers unjust to small shippers. 686. Services to large and small practically identical.

687. Differences in amount of shipment.

688. Reductions to groups of passengers.

689. Special kinds of passenger transportation.

Topic C. Rebates to Exclusive Shippers

§ 690. Lower rates formerly made to exclusive shippers. 691. Such discriminations foster monopolies.

692. Shippers who agree to give all their business.

693. Consideration of the cost of serving.

694. Shippers requiring less service.

695. Shippers who agree to furnish large quantities.

696. Charging other shippers more than contract rates.

697. Competitive rates for through business.

698. Previous or subsequent haul.

699. Other methods of holding business.

Topic D. Concessions for Special Kinds of Business §700. Different rates for goods used for different purposes. 701. Such rates formerly allowed.

702. Repudiation of this doctrine.

703. Such differences now held illegal discrimination. 704. Classification based upon use.

705. Personality of shipper.

706. Restricting rates to certain purposes.

707. When commodities are of different character.
708. Rates to certain classes of shippers.
709. Special classes of passengers.

$670. Provisions of the Act.

Not only did the original Act forbid outright rebating, but also preferential treatment. Section 3 of the original Act provided that it shall be unlawful for any common carrier subject to the provisions of this Act to make or give any undue or unreasonable preference or advantage to any particular person, company, firm, corporation, or locality, or any particular description of traffic, in any respect whatsoever, or to subject any particular person, company, firm, corporation, or locality, or any particular description of traffic, to any undue or unreasonable prejudice or disadvantage in any respect whatsoever. However, section 1, as amended, permitted the issuance of mileage, joint mileage, excursion or commutation tickets, and when telegraph companies were put under the jurisdiction of the Commission reduced rates for night messages and press despatches were excepted. The discussion in previous chapters, such as Chapters IX and X as to what will make rates unjust or unreasonable, or preferential or prejudicial has also a direct bearing upon these sections.

§ 671. The same rate for substantially similar services. In the preceding chapter the general principles as to discrimination were set forth, and the conclusion was reached that if two shippers asked the same service under the same conditions they ought to be given the same rate. In this chapter it is proposed to describe what sub

stantially identical services are, and various cases are discussed, where the contention has been made that the conditions were different. In most of the cases in this list, it will be seen upon examination that the services are not dissimilar. Whenever a railroad initiates a policy which will get it more business, or enable it to hold the business that it has, it is prone to claim that the differing conditions in the particular case justify making a lower rate to one shipper or class of shippers, while maintaining higher rates for other shippers. But, in many such cases, it will be found that what the railroad is doing is in the face of the principal rule forbidding personal discrimination.

Topic A. Concessions to get Competitive Business § 672. Whether concessions may be made in competition. The idea runs through certain cases that it is justifiable to make reductions to certain shippers where business cannot be obtained without it. This principle, as has been seen, has some scope in permitting the rates to stations where there is competition to be made lower relatively than the rates to stations which have no competitive rates. 55 But it may well be doubted whether it has any operation in justifying a difference in rates between two persons shipping from the same station; for this would seem to be personal discrimination since these two shippers are asking the same service. To some courts it has seemed otherwise, these courts holding that if concessions are necessary to get more business by inducing a shipper who is now employing a rival route to give up his present connections, this necessity justifies the reductions. This

55 Concessions to get competitive business have been justified in some cases, even if they involve discrimination. Johnson v. Pensacola & P. R. R., 16 Fla. 623, 26 Am. Rep. 731; Chicago & A. R. R. v. Coal Co., 79 Ill. 121; Lough v. Outerbridge, 143

N. Y. 271, 38 N. E. 292, 42 Am. St. Rep. 712, 25 L. R. A. 674, Avinger v. So. Car. R. R., 29 S. C. 265, 7 S. E. 493, 13 Am. St. Rep. 716; Ragan & Buffet v. Aiken, 9 Lea (77 Tenn.), 609.

argument apparently disregards the law of public service which, of course, governs this whole question.56

§ 673. Competitive conditions do not justify discriminations.

It must be insisted upon at the outset that competitive conditions in themselves do not justify the making of personal discriminations between shippers, giving a lower rate to those to whom it is necessary to make concessions. This is forbidden both by the English courts and by the United States courts under their respective Acts forbidding discrimination, but permitting reasonable concessions when the conditions are dissimilar. Thus in the leading case of London and Northwestern Railroad v. Evershed," it was said: "We think that a railway company cannot, merely for the sake of increasing their traffic, reduce their rates in favor of individual customers, unless, at all events, there is a sufficient consideration for the reduction which shall lessen the cost to the company of the conveyance of their traffic, or some other or equivalent or other services are rendered to them by such individuals in relation to such traffic." And in the important case of Interstate Commerce Commission v. Texas and Pacific Railroad Company 58 it was said: "The Interstate Commerce Act would be emasculated in its remedial efficacy, if not practically nullified, if a carrier can justify a discrimination in rates merely upon the ground that unless it is given, the traffic obtained by giving it would go to a competing carrier. A shipper having a choice between competing carriers would only have to refuse to send his

56 But by the better view such concessions are held unjustifiable, when they involve discrimination. Wight v. United States, 167 U. S. 512, 42 L. ed. 258, 17 Sup. Ct. 822; Menacho v. Ward, 27 Fed. 529, B. & W. 372; Messenger v. Pennsylvania R. R., 7 Vroom (36 N. J. L.), 407, 13 Am. Rep. 457, 8 Vroom (37

N. J. L.), 531, 18 Am. Rep. 754,
B. & W. 357; Brundred v. Rice, 49
Ohio St. 640, 32 N. E. 169, 34 Am.
St. Rep. 589; Fitzgerald v. Grand
Trunk Ry., 63 Vt. 169, 22 Atl. 76,
13 L. R. A. 70.

57 L. R. 3 App. Cas. 1029.
58 52 Fed. 187.

goods by one of them unless given exceptional rates to justify that one in making a discrimination in his favor on the ground of the necessity of the situation."

§ 674. Reductions to get competitive business illegal. Such reductions to get business from a rival line are regarded as personal discrimination in most cases, however complicated the facts. This is a matter upon which the English cases have been particularly strong in holding that it is not sufficient that the railway company merely desires to attract the traffic from another line to itself, especially where the favor thus shown to a few is prejudicial to many others in the same trade as the favored persons.59 Thus the fact that one shipper can go by another route and will probably do so if charged as much as the charge made to the complaining party, is not a circumstance justifying an unequal charge; nor will the fact that those charged a less rate are seeking to develop a new trade.60 For the lowering of rates for the purpose of developing business is an undue preference; 61 and so is making a lower rate in consequence of a threat from the owner of a colliery to construct another railway, by which traffic would be diverted.62

§ 675. Concessions to get shipments from outlying territory.

It has been seen that some courts permit any difference in the situation to be seized upon as a reason for making a discrimination. Thus in Ragan & Buffet v. Aiken,63 where a bill in equity was filed by merchants at a station on the defendant's railway who were charged a twentyfive-cent rate, who alleged that other shippers who brought

59 Thompson v. London, etc., R. Co., 2 Nev. & Mac. 115.

60 Denaby Main Colliery Co. v. Manchester, S. & L. R. Co., L. R. 11 App. Cas. 97.

61 Oxlade v. North Eastern R. Co.,

1 C. B. (N. S.) 454, s. c., 26 L. J. C. P. 129, 1 Nev. & Mac. 72.

62 Harris v. Cockermouth & W. R. Co., 3 C. B. (N. S.) 693, s. c., 27 L. J. C. P. 162, 1 Nev. & Mac. 97. 63 9 Lea (77 Tenn.), 609.

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