ERROR TO THE CIRCUIT COURT OF SIMPSON COUNTY, STATE OF KENTUCKY
Fuller, Harlan, Gray, Brewer, Brown, Shiras, Jr., White, Peckham, McKenna
MR. JUSTICE PECKHAM, after making the foregoing statement, delivered the opinion of the court.
The writ of error in this case does not bring up for review any judgment of the Court of Appeals of the State of Kentucky, the highest court of that State. It appears that the circuit court of that State is the highest court in which a decision of the case could be had, presumably on account of the amount of the judgment. There was no opinion delivered by the judge holding the court in which the case was tried, and as the case did not go to the highest court of that State, we are without the benefit of any written opinion of the courts of Kentucky in regard to the question involved. We have already held, in the case of the Louisville & Nashville Railroad Company v. Kentucky, 183 U.S. 503, that the section of the Kentucky constitution above set forth, as applied to places, all of which are within the State, violates no provision of the Federal Constitution.
The effect of the decision by the state court now under review is to hold that the provision of section 218 of the state constitution is not confined to a case where the long and short hauls are both within the State of Kentucky, but that it extends to and embraces a long haul from a place outside of to one within the State, and a shorter haul between points on the same line and in the same direction, both of which are within the State, and the question is whether the provision of that
constitution as thus construed is or is not a violation of the commerce clause of the Constitution of the United States.
It would seem that the foundation upon which the validity of the constitutional provision is based is the theory that it operates solely upon the rate within the State, making that rate unlawful if it exceed the rate for the longer distance over the same line in the same direction, though, as in this case, the longer distance is from Nashville, Tennessee, to Louisville, Kentucky. The claim must be that the only effect of the provision is to regulate the rate between points within the State and that it has no direct effect upon nor does it in any degree regulate or affect the rate between points outside and those points which are within the State. The contention is that the State does not prescribe or regulate the rates outside of its borders; that the company may announce and enforce any rate it pleases regarding interstate commerce. It simply directs that between points within the State of Kentucky the charge shall not be greater for a shorter haul than for a longer haul, even though such longer haul may be between a point outside and one inside of the State; that this does not constitute an interference with or a regulation by the State of interstate commerce, and hence the provision is valid.
It this contention were correct, and the constitutional provision, as construed by the state court, did not by its enforcement regulate, or immediately and directly influence and affect the interstate commerce of defendant, either as to amount or rates, the provision in question would be valid. But is it correct? And is there no such immediate influence upon or regulation of the interstate commerce of the defendant?
By the demurrer and the motion for judgment on the pleadings it is admitted that the rates from all points on the defendant's road within the State of Kentucky to Louisville for the transportation of tobacco are not too high, but are in fact just and reasonable in themselves, and to that extent the general obligation of a carrier to make charges that are just and reasonable is fulfilled. There is also a rate for the transportation of tobacco from Nashville to Louisville of 12 cents per one hundred pounds, and that rate is arrived at because of the existence
of water competition between the two points which absolutely prevents the company from making a greater charge, for if it did it would get no business; and yet on account of the fact that trains are to be run in any event and expenses incurred by reason of the operation of the road, it pays the company to take the tobacco at the rate named, even though it is below what would otherwise be a fair and reasonable compensation for the transportation. It follows, therefore, and the fact is averred, that although under the circumstances it pays the company to transport the tobacco from Louisville at the rate of 12 cents per one hundred pounds, yet if it were confronted with the alternative of either giving up such transportation (which a charge of 25 cents per one hundred pounds would necessarily result in) or of reducing the charge from Franklin to Louisville to 12 cents per one hundred pounds for tobacco, it would be compelled to give up the transportation from Nashville rather than reduce the charge from Franklin to Louisville. If the State of Kentucky has the right to base its provision for the rate of a short haul within its own borders by comparison with the rate for a longer haul partly within and partly without its own borders, notwithstanding the direct effect of a limitation arrived at by such comparison may be the regulation or even the suppression of the interstate commerce of the carrier, then this provision is valid; otherwise, it would seem to be the reverse.
That the railroad commission is authorized upon application to permit the company to charge less for longer than for shorter distances, is immaterial. If the provision in question, if enforced, does directly affect interstate commerce, its invalidity is not cured by the fact that if the railroad commission should choose, it might permit the interstate charges to remain. In either case the interference is illegal.
The result of the construction of this provision by the court below is in effect to prohibit the carrier from making a less charge for the transportation from Nashville to Louisville than from Franklin to Louisville, or else to make a charge that will prevent its doing any business between the States in the carrying of tobacco. The necessary result of the provision under
the circumstances set up in the answer directly affects interstate rates, or in other words, directly affects interstate commerce, for it directly affects commerce between Nashville and Louisville. The fact is not altered by putting the proposition in another form, and saying that the constitutional provision only prevents the carrier from charging a greater sum for the shorter distance from Franklin to Louisville, both within the State, unless the consent of the railroad commission is obtained, because in either event the charge from Nashville to Louisville enters into and forms a part of the real subject matter of the provision, the greater sum for the shorter distance within the State being compared with the lesser sum for the longer distance without the State; and the prohibition is absolute unless the consent of the commission is obtained, from charging any more for the shorter distance within the State than for the longer distance partly within and partly without the State. And in this case, in order to maintain its state rate, it must fix its interstate rate at an amount which prohibits its doing interstate business.
We fully recognize the rule that the effect of a state constitutional provision or of any state legislation upon interstate commerce must be direct and not merely incidental and unimportant; but it seems to us that where the necessary result of enforcing the provision may be to limit or prohibit the transportation of articles from without the State to a point within it, or from a point within to a point without the State, interstate commerce is thereby affected, and may be thereby to a certain extent directly regulated, and in that event the effect of the provision is direct and important and not a mere incident.
Although not exactly in point, yet the case of Wabash, St. Louis &c. Railway v. Illinois, 118 U.S. 557, is somewhat analogous in principle. In that case chapter 114 of the Revised Statutes of Illinois, section 126, came under consideration. That section enacted that if any railroad corporation should charge for the transportation of freight, etc., upon its railroad, for any distance within the State, the same or a greater amount of toll or compensation than is at the same time charged, collected
or received for the transportation in the same direction of any passenger, etc., over a greater distance of the same road, such charges should be deemed prima facie evidence of unjust discrimination prohibited by the act, and penalties were provided for its violation.
An action was brought to recover for a violation of the provisions of the act, and in the declaration it was alleged that the company had charged Elder & McKinney for transporting goods from Peoria in the State of Illinois to New York city at the rate of 15 cents per one hundred pounds, and on the same day the company charged Bailey & Swannell for transporting another carload of the same kind of goods from Gilman in the State of Illinois to the city of New York at the rate of 25 cents per one hundred pounds, although the carload transported for Elder & McKinney from Peoria was carried eighty-six miles further in the State of Illinois than the other carload of the same weight, and it was claimed that as the freight was of the same class in both instances and carried over the same route, except as to the difference of distance, a discrimination against Bailey & Swannell was made in the charges against them as compared with those given to Elder & McKinney, and hence suit was brought. Mr. Justice Miller delivered the opinion of this court, in which he expressed some doubt whether the statute of Illinois had been correctly construed by the court below, yet as that court had given an interpretation to it which made it apply to commerce among the States, although the contract was made within the State of Illinois and a part of its performance was within the same State, this court was held to be bound as to the construction given to the act by the state court. What that construction was is stated by the court itself. It said:
"We see no reason to depart from the conclusion reached in this case when it was here before. See People v. W. St. L. & P. Railway Co., 104 Ill. 476. But to avoid misapprehension, we deem it desirable to state explicitly that we disclaim any idea that Illinois has authority to regulate commerce in any other State. We understand and simply hold that, in the absence of anything showing ...