(245 U. S. 136)

Appeal from the District Court of the ST. LOUIS SOUTHWESTERN RY. CO. et United States for the Western District of

al. v. UNITED STATES et al.

(Argued Oct. 12 and 15, 1917. Decided Nov. 12, 1917.)

Kentucky.

Suit by the St. Louis Southwestern Railway Company and others against the United States and the Interstate Commerce Commission. From a decree (234 Fed. 668) dismissCONSTITUTIONAL LAW ing the bill, complainants appeal. Affirmed.

No. 199.

POWERS OF INTERSTATE COM

Mr. Henry G. Herbel, of St. Louis, Mo., for appellants.

Mr. Assistant Attorney General Frierson, for the United States.

Mr. C. W. Needham, of Washington, D. C., for Interstate Commerce Commission.

*Mr. Justice BRANDEIS, delivered the opinion of the Court.

Complainants operated railroads extending from the lumber region west of the Mississippi and south of the Arkansas river, and two of them had through routes to Paducah, Ky., via Cairo, Ill., while the third had a through route via Memphis. The routes via Cairo were materially longer than possible routes via Memphis, and both routes involved the use of the same connecting carrier to Paducah. A rate of 22 cents per 100 pounds was charged from such territory to Paducah, made by adding to the This suit was brought in the District Court joint rate, or local, of 16 cents to Cairo, the local of the United States for the Western Disrate of 6 cents from Cairo to Paducah. On complaint that this rate was unjust, unreason- trict of Kentucky by three railroad comable, and discriminatory, the Interstate Companies1 against the United States and the merce Commission found that the rate to Cairo Interstate Commerce Commission. Plainwas not unduly low, that the rate to Paducah was unreasonable to the extent that it exceed- tiffs seek to enjoin the enforcement of and ed the rate to Cairo, that the disparity of rates to set aside an order entered by the Comgave Cairo an undue preference and advantage, mission on January 21, 1916, directing these and that the natural route to Paducah was via and other carriers to establish certain Memphis, and entered an order prohibiting the charging of the existing rate and directing com- through routes and joint rates on logs and plainants to maintain through routes via either lumber to Paducah, Ky., and reducing existMemphis or Cairo and joint rates not in excess ing rates. An application was made for a of the rates in effect to Cairo. Held that, as Both defendants the order did not require the complainants to temporary injunction. substitute the route via Memphis for that via moved to dismiss the bill. The Commission Cairo, nor to establish an additional route, but also answered. The case was fully heard merely compelled a direct route and a joint_rate of 16 cents, it was within the power of the Com- upon the evidence before three judges "as mission, under Interstate Commerce Act Feb. upon final submission upon the merits"; a 4, 1887, c. 104, 24 Stat. 379, as amended (Comp. decree was entered dismissing the bill withSt. 1916, § 8563 et seq.), and was not violative out costs ([D. C.] 234 Fed. 668); and the of the Fifth Amendment to the federal Constitution, nor in disregard of section 15 of the In- case comes to this court by direct appeal. terstate Commerce Act 1887, as amended (section 8583, Comp. St. 1916), prohibiting the Commission from embracing in a through route less than the entire length of a railroad, unless to do so would make the route unreasonably long. 2. COMMERCE 61(4), 85 REGULATIONS DISCRIMINATION.

It is within the power of Congress and of the Interstate Commerce Commission to pre vent interstate carriers from practicing discrimination against a particular locality to which their lines do not reach, where they bill traffic thereto over connecting lines.

3. COMMERCE 88-ORDERS OF INTERSTATE COMMERCE COMMISSION-CONSTRUCTION.

Where the Interstate Commerce Commission found that a rate on lumber to Cairo, Ill., was not unduly low, that a rate to Paducah, Ky., was unreasonable to the extent that it exceeded the existing rate to Cairo, that the existing disparity of rates gave Cairo an undue preference and advantage, that the natural route to Paducah was via Memphis, rather than via Cairo, and ordered the establishment of through routes to Paducah, via either Memphis or Cairo, and joint rates not in excess of the rates in effect to Cairo, the order was not one to prevent discrimination, under Interstate Commerce Act 1887, § 3 (Comp. St. 1916, § 8565), but an order, under section 15, as amended (section 8583), to reduce existing through rates by establishing joint rates, or in the alternative to estabhish new through routes with joint rates.

Paducah is situated on the south bank of the Ohio river, 42 miles above Cairo, Ill., which lies on the north bank of the Ohio near its confluence with the Mississippi. An important business in each city is manufacturing and jobbing lumber. They compete in both the buying and the selling markets. Each draws its supplies of logs and lumber, in part, from the extensive region lying west of the Mississippi and south of the Arkansas river, known in the trade as the "blanket territory."2 The distances from this region to Paducah are not greater than to Cairo; but, prior to the order of the Interstate Commerce Commission herein complained of, the through freight rate on logs and lumber was 22 cents per hundred pounds

1 A fourth carrier, the Louisiana & Arkansas Railway Company, was permitted to intervene as party plaintiff and joined in the appeal; but the special facts concerning it are not of importance.

This region is called "blanket territory," because a "blanket" rate on logs and lumber is made from all shipping points within the territory to points beyond. That is, the rate is the same regardless of the distance hauled within the territory, which extends about 400 miles from north to south and 300 from east to west,

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38 SUP.CT.-4

to Paducah while it was only 16 cents to | of the Rock`Island with the Illinois Central* Cairo.

Central Railroad Co., 37 Interst. Com. Com'n | Cairo with a local rate on the Illinois CenR. 719.5

Before the effective date of the order, this bill was filed. It sets forth sixteen reasons for holding the order void; and most of them are repeated in the assignment of errors in this court. One is a charge, left wholly unsupported by evidence, that a 16-cent rate to Paducah is confiscatory. Eight deal with the sufficiency or weight of the evidence before the Commission, of which there was ample to sustain its findings. Some relate to the form of the order, which was clearly appropriate. Few, only, of the errors assigned require discussion here.

tral of 6 cents from Cairo to Paducah), a joint rate of 16 cents from the "blanket ter ritory" to Paducah; thus reducing the existing through rate. The carrier connecting at Cairo (the Illinois Central) and all but one of the carriers connecting with these complainants in the "blanket territory," acquiesced in the order establishing this joint rate. The Illinois Central's share of the 22-cent rate was its local rate of 6 cents. If these complaining carriers cannot reach satisfactory agreements with the Illinois Central as to what its share of the 16-cent rate should be, they may, under section 15 of the Act to Reg

ply to the Commission for an appropriate order. In respect to the Rock Island the situation is similar.

[1] First: The carriers deny that the Com-ulate Commerce (Comp. St. 1916, § 8583), apmission has the power to compel them to establish through routes and joint rates. It is admitted that all the complaining carriers were interstate railroads and were engaged otherwise in interstate commerce. It is undisputed that for many years there has been over the lines of two of these carriers a through route to Paducah via Cairo, and over the other a through route via Memphis; and that on all the lines there were through rates. But it is contended that if a carrier establishes a through route and joint rate with its connections, it creates in effect a relation of partnership; that this relation must be entered into, if at all, voluntarily; and that to "compel a carrier chartered by a state" to enter into such a relation with a carrier chartered in another state violates the Fifth Amendment of the federal Constitution.

The order entered does not require any complaining carriers to substitute the route via Memphis for that via Cairo; nor does it require any to establish an additional route via Memphis. Carriers are left free to furnish the through transportation either via Cairo or via Memphis. The order merely compels a through route and a joint rate of 16 cents to Paducah. If they elect to continue existing through route via Cairo, the order operates merely to introduce reduced joint rates. If they elect to discontinue the through routes via Cairo, the order operates to establish through routes and joint rates via Memphis, which the findings of the Commission fully justify.

The complaining carriers having engaged That Congress has power to authorize the in this particular commerce, it is clear that Commission to enter an order for through Congress has power to regulate it. Atlantic routes and joint rates, like that here comCoast Line Case, 219 U. S. 186, 31 Sup. Ct. plained of, has been heretofore assumed." 164, 55 L. Ed. 167, 31 L. R. A. (N. S.) 7. No No reason is shown for questioning its existreason appears why the regulation might not ence now. The provisions of the Act to Regtake the form of compelling the substitution ulate Commerce as amended (1887, c. 104, §S of a joint rate for a through rate made by 1, 12, 15, 24 Stat. 379; 1906, c. 3591, § 4, 34 a combination of local rates or by a combina- Stat. 584; 1910, c. 309, § 12, 36 Stat. 539, 552tion of a local rate with a joint rate to an in- [Comp. St. 1916, §§ 8563, 8576, 8583]) are also termediate point. Cincinnati, New Orleans appropriate to confer this authority upon*the* & Texas Railway v. Interstate Commerce Commission. And there is no foundation in Commission, 162 U. S. 184, 16 Sup. Ct. 700, fact or law for the contention of complain40 L. Ed. 935. So far as the order relates to ants that the Commission disregarded the the existing routes via Cairo and Memphis provision of section 15, by which it is prorespectively it did no more than this: It sub-hibited from embracing in a through route stituted for the through rate of 22 cents "less than the entire length of a" railroad (made up on two of the lines of a combina-"unless to do so would make the route untion of a joint rate or local rate of 16 cents to

reasonably long." Whether a carrier engaged solely in intrastate commerce could be compelled by Congress to enter interstate commerce, or even whether a carrier, having entered into some interstate commerce, may be compelled to enter into all, we have no occasion to consider; for the complaining car

The log and lumber rates from blanket territory to Cairo and Paducah or competitive points had been investigated by the Commission also in earlier proceedings. Rates on Lumber from Southern Points, 34 Interst. Com. Com'n R. 652; Wisconsin & Arkansas Lumber Co. v. St. Louis, Iron Mountain & Southern Railway, 33 Interst. Com. Com'n R. 33: Paducah Board of Trade v. Illinois Central Railroad, 29 Interst. Com. Com'n R. 583; Lumberman's Exchange of St. Louis v. Anderson & Saline River O'Keefe v. United States, 240 U. S. 294, 33 Sup. Ct. 313, 60 L. Ed. 651; Interstate Commerce ComRailroad, 24 Interst. Com. Com'n R. 220; Chicago Lumber & Coal Co. v. Tioga Southeastern Railway mission v. Northern Pacific Railway, 216 U. S. 538, Co., 16 Interst. Com. Com'n R. 323; Central Yellow 30 Sup. Ct. 417, 54 L. Ed. 608. Pine Association v. Illinois Central Railroad, 10 Interst. Com. Com'n R. 505. See, also, St. Louis, Iron Mountain & Southern Railway v. United States (D. C.) 217 Fed. 80.

But see Michigan Central Railroad v. Michigan Railroad Commission, 236 U. S. 615, 631, 35 Sup. Ct. 422, 59 L. Ed. 750; Minneapolis & St. Louis Railroad v. Minnesota, 186 U. S. 257, 22 Sup. Ct. 900, 46

riers had voluntarily entered into the par- prohibiting the carrier from charging more ticular class of interstate commerce with for carriage to one locality than under simPaducah to which alone the order related.

ilar conditions to another; and they usually [2] Second: Carriers insist also that the leave the carriers free to remove the discrimorder is void on the ground, that since their ination either by raising the lower rate or by "rails do not reach Paducah, they cannot be lowering the higher rate or by doing both. guilty of discrimination against that city." American Express Co. v. Caldwell, 244 U. S. They, however, bill traffic via Cairo or Mem- 617, 624, 37 Sup. Ct. 656, 61 L. Ed. 1352. The phis through to Paducah in connection with order here complained of gives the carriers the Illinois Central, thus reaching Paducah, no such option. It directs that the rates to although not on their own rails. And, there- Paducah shall be "not in excess of the rates by, they become effective instruments of dis- at present in effect from the same points or crimination. Localities require protection as groups to Cairo, Ill." In other words, the much from combinations of connecting car- Commission having found the 22-cent rate riers as from single carriers whose "rails" unduly high, reduces it to 16 cents by estabreach them. Clearly the power of Congress | lishing joint through rates. The injury reand of the Commission to prevent interstate sulting from discrimination was doubtless carriers from practicing discrimination the reason which induced the Paducah Board against a particular locality, is not confined to of Trade to institute the proceedings; and those whose rails enter it. Cincinnati, New the Commission may have considered the Orleans & Texas Pacific Railway v. Interstate existence of the lower rate to Cairo persuaCommerce Commission, supra. sive evidence that the 22-cent rate to Padu[3] Furthermore, the order in the case at cah was unreasonably high and the resulting bar is not merely one to prevent discrimina- discrimination strong reason for establishing tion. Orders to remove discrimination, as the 16-cent joint rate. But the order is commonly framed, do not fix rates. They strictly one under section 15 of the Act to merely determine the relation of rates, by L. Ed. 1151; Wisconsin, Minnesota & Pacific Railroad v. Jacobson, 179 U. S. 287, 21 Sup. Ct. 115, 45 L. Ed. 194. Compare Norfolk & Western Railway v. Dixie Tobacco Co., 228 U. S. 593, 595, 33 Sup. Ct. 609, 57 L. Ed. 980; Galveston, Harrisburg & San Antonio Railway v. Wallace, 223 U. S. 481, 491, 32 Sup. Ct.

205, 56 L. Ed. 516.

Regulate Commerce to reduce existing through rates by establishing joint rates or, in the alternative, to establish new through routes with joint rates. It is not primarily an order to remove discrimination in violation of section 3.

Decree affirmed.

(245 U. S. 151)

GOULD v. GOULD.

(Submitted Nov. 8, 1917. Decided Nov. 19,

1917.) No. 41.

residing at home or abroad, and to every person residing in the United States, though not a citizen thereof, a tax of 1 per centum per annum upon such income, except as hereinafter provided.

"B. That, subject only to such exemptions and deductions as are hereinafter allowed, the net

1. STATUTES 245- CONSTRUCTION OF TAX-income of a taxable person shall include gains, ING STATUTES.

In construing statutes levying taxes, it is the established rule not to extend their provisions by implication beyond the clear import of the language used, or enlarge their operations to embrace matters not specifically pointed out, and in case of doubt they are construed most strongly against the government and in favor of the citizen.

2. INTERNAL REVENUE 7-INCOME WHAT CONSTITUTES "INCOME."

profits, and income derived from salaries, wages, or compensation for personal service of whatever kind and in whatever form paid, or from professions, vocations, business, trade, commerce, or sales, or dealings in property, whether* real or personal, growing out of the ownership or use of or interest in real or personal property, also from interest, rent, dividends, securities, or the transaction of any lawful business TAX-carried on for gain or profit, or gains or profits and income derived from any source whatever, including the income from but not the value of property acquired by gift, bequest, devise, or descent. *

Under Act Oct. 3, 1913, c. 16, § 2a, subd. 1, 38 Stat. 166, levying a tax on the entire net income accruing to every citizen, and section 2b, defining "income," alimony paid to a divorced wife under a decree of court does not constitute

income.

[Ed. Note.-For other definitions, see Words and Phrases, First and Second Series, Income.] 3. INTERNAL REVENUE 7—INCOME TAXDEDUCTIONS.

The net income of a divorced husband, subject to taxation under Act Oct. 3, 1913, is not decreased by the payment of alimony under the order of the court.

[1] In the interpretation of statutes levying taxes it is the established rule not to extend their provisions, by implication, beyond the clear import of the language used, or to enlarge their operations so as to embrace matters not specifically pointed out. In case of doubt they are construed most strongly against the government, and in favor of the citizen. United States v. Wigglesworth, 2 Story, 369, Fed. Cas. No. 16,690; American Net & Twine Co. v. Worthington, 141 U. S. Action by Katherine O. Gould against 468, 474, 12 Sup. Ct. 55, 35 L. Ed. 821; BenHoward Gould. To review an adverse judg-ziger v. United States, 192 U. S. 38, 55, 24 ment (168 App. Div. 900, 152 N. Y. Supp. 1114), affirming an order of the trial court, defendant brings error. Affirmed.

In Error to the Supreme Court of the State of New York.

Mr. Martin W. Littleton, of New York City, for plaintiff in error.

Sup. Ct. 189, 48 L. Ed. 331.

the net income upon which subdivision 1 [2] As appears from the above quotations, directs that an annual tax shall be assessed, levied, collected and paid is defined in division B. The use of the word itself in the

Mr. John L. McNab, of San Francisco, definition of "income" causes some obscurity, Cal., for defendant in error.

but we are unable to assert that alimony paid to a divorced wife under a decree of Mr. Justice MCREYNOLDS delivered the court falls fairly within any of the terms opinion of the Court.

A decree of the Supreme Court for New York county entered in 1909 forever separated the parties to this proceeding, then and now citizens of the United States, from bed and board; and further ordered that plaintiff in error pay to Katherine C. Gould during her life the sum of $3,000 every month for her support and maintenance. The question presented is whether such monthly payments during the years 1913 and 1914 constituted parts of Mrs. Gould's income within the intendment of the act of Congress approved October 3, 1913 (38 Stat. 114, 166, c. 16), and were subject as such to the tax prescribed therein. The court below answered in the negative; and we think it reached the proper conclusion.

employed.

In Audubon v. Shufeldt, 181 U. S. 575, 577, 578, 21 Sup. Ct. 735, 736 (45 L. Ed. 1009), we said:

"Alimony does not arise from any business transaction, but from the relation of marriage. It is not founded on a contract, express or implied, but on the natural and legal duty of the husband to support the wife. The general obligation to support is made specific by the decree of the court of appropriate jurisdiction. * Permanent alimony is regarded rather as a porequitably entitled, than as strictly a debt; alimony from time to time may be regarded as a portion of his current income or earnings. *

tion of the husband's estate to which the wife is

*[3] The net income of the divorced husband subject to taxation was not decreased by payment of alimony under the court's order; and, on the other hand, the sum received by the wife on account thereof cannot be regarded as income arising or accruing to her within the enactment.

Pertinent portions of the act follow: "Section II, A. Subdivision 1. That there shall be levied, assessed, collected and paid annually upon the entire net income arising or accruing from all sources in the preceding calendar year to every citizen of the United States, whether firmed.

The judgment of the court below is af

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*152