UNITED STATES SUPREME COURT DECISIONS ON-LINE

Carriers operating most of the steam railroad mileage in the country and owning nearly all of the common carrier car equipment, belonged clubjuris

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to the American Railway Association and subscribed to a car service and per diem agreement providing for interchange of freight cars under rules adopted by the Association. By these rules, subscribers were entitled to a daily rental of one dollar per car for their general service freight cars while on foreign lines; daily reports were to be made of all cars interchanged between subscribers, and provision was made for a "reclaim allowance," or refund to the extent of the per diem expense incurred in handling cars in terminal switching service. Carriers operating less than 100 miles of railroad -- " short lines " -- were eligible to associate membership in the Association, but without voting rights. Generally, nonsubscribers to the agreement were railroads operating short lines and owning little or no freight car equipment. No reclaim allowance for switching service was permitted them by the rules. In a general investigation of car hire settlements, in which all the common carrier railroads were respondents, the Interstate Commerce Commission found that all, whether subscribers to the agreement or not, were entitled to reasonable compensation for use of their general service freight cars on foreign lines, and that a per diem of $1.00 per car was reasonable, and it laid down certain rules to govern the subject, some of which, referred to below, were assailed as operating to take property without compensation, as not being justified by the evidence, and as being discriminatory, unequal, arbitrary, and unreasonable. It was not disputed that the Commission had authority, under the Interstate Commerce Act as amended, to institute the investigation on its own motion, to prescribe reasonable rules relating to car service, and to prescribe reasonable compensation for the use of the cars of one railroad by another railroad, nor that, in the operation of through routes, common carriers subject to the Act may be obliged to permit their cars to be carried beyond their own lines.

Held:

1. That the Commission was authorized to require not only that the same daily rental be paid to nonsubscribers as is paid to subscribers to the above-mentioned agreement (which is not disputed), but also, as a corollary, that nonsubscribers, like subscribers, shall be entitled to reclaim such portions of the car rentals paid by them as represent their own terminal switching charges, the nonsubscribers being also required to assume the like obligation in respect of reclaim allowances when they, in turn, are owners of the cars used. P. 284 U. S. 92.

2. A rule laid down by the Commission providing

"[t]hat shortline railroads which are less than 100 miles in length, and which return railroad-owned equipment to the road from which received,

Page 284 U. S. 82

shall not be required to report per diem accruals to numerous car owners throughout the country, but shall be attached to their connecting carriers for purpose of car-hire settlement,"

was not invalid. P. 284 U. S. 93.

3. It is not arbitrary or unreasonable, in this connection, to classify the short lines, owning an almost negligible proportion of the country's car equipment, in a different category from the trunk lines, which own substantially all of it, and which have classified themselves apart from the short lines by permitting the latter only an associate membership in the American Railway Association, without voting rights. P. 284 U. S. 93.

4. As, under the per diem agreement, subscribers must report to each car owner as to cars used, and pay the per diem charges to such owner, but nonsubscribers, which are not bound by the agreement, report and make payment to their immediate connecting subscriber carriers, the effect of the Commission's action is to extend this privilege to the subscribing short lines as well, so that all the short lines are put in a separate class and relieved from the burden of keeping account of a multitude of per diem charges and of reporting them separately to the various trunk lines. P. 284 U. S. 94.

5. The power of the Commission to establish reasonable rules, regulations, and practices with respect to car service, conferred by § 1(14) of the Act, includes the power to make reasonable rule prescribing forms and methods of accounting, reporting, and distributing payments in respect of such service. P. 284 U. S. 94.

6. In requiring the trunk lines, which generally own the cars and which are best equipped to perform the clerical work and will receive the most in the way of compensating benefits, to assume, without substantial burden to themselves, this added service of keeping and rendering accounts, thereby relieving the short lines of an excessive and unnecessary burden, the Commission did not transcend the limits of reasonable administrative regulation. Id.

7. Public regulation of the use of railroad property which is so arbitrary and unreasonable as to become an infringement upon the right of ownership violates the due process clause of the Fifth Amendment. P. 284 U. S. 96.

8. In the face of its express finding that all railroads are entitled to receive, as reasonable compensation, a fixed sum per day for the use of every car when on foreign lines, a rule ordered by the Commission favoring short lines by giving them two days' free time for interchanged loaded cars and relieving them from payment on coal cars received for return loading with coal from mines clubjuris

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customarily dependent upon connecting carrier for car supply is arbitrary and unreasonable. Pp. 284 U. S. 96-98.

9. The vice of this exemption is that it finds no justification in the Commission's own findings. The Court is not called upon to consider the evidence upon which the Commission made its findings, and, in disapproving that part of the order, it does not mean, for the present, to go beyond the precise case presented, or to pass upon the question of the authority of the Commission to make proper apportionment of car-hire costs, or, in special cases, to make adjustments and afford proper measure of relief in the matter of payment of charges for the use of cars. Pp. 284 U. S. 96, 284 U. S. 100.

10. The general rule obliging a railroad to furnish equipment for transporting freight tendered to it applies to short lines, and to the case of coal loaded at coal mine, as well as to other traffic. P. 284 U. S. 98.

11. Section 1(12) of the amended Interstate Commerce Act relates to car distribution to coal mines, and does not touch the question of compensation for the use of cars by non-owning railroads. That subject is covered by § 1(14). P. 284 U. S. 99.

Reversed.

Appeal from a decree of the district court of three judges, which dismissed a bill to set aside parts of a general order of the Interstate Commerce Commission regulating car-hire settlements. clubjuris

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