JlENACHO '11. WABD.
and others v.
(Oircuit Oourt, 8. D. New York. May 15,1886.)
CARRIERS OF GOODs-DISCRIMINATION IN RATES-ExCLUSIVE PATRONAGlll.
While a common carrier may make discriminations in rates, based upon the quantities of goods sent by different shippers. he cannot charge a higher rate against shippers who refuse to patronize him exclusively.1
In Equity. Frederic R. Ooudert and Edward K. Jones, for complainants. James O. Ouster and Lewis O. Ledyard, for defendants. The oomplainants have filed a bill in eaoh of these oauses to restrain the defendants from making discriminations for transportation against the complainants, which consist in charging them a higher rate of freight than is charged by defendants to other shippers of merchandise generally. A motion is now made for a preliminary injunction. The facts in each case are essentially the same, and both cases may be considered together. The complainants are merchants domiciled in the city of New York, and engaged in commerce between that port and the island of Cuba. The defendants are proprietors or managers of steam-ship lines plying between New York and Cuba. Formerly the bUl:liness of transportation uetween the two places was carl'ied on by sailing vessels. In 1b77 the line of steam-ships known as "Ward's Line" was established, and in 1881 was incorporated by the name of the New York & Cuba Mail Steam-ship Line under the general laws of the state of New York. At the time of the incorporation of this company the line of steam·ships owned by the defendants Alexandre & 80ns had also been established. These two lines were competitors between New York and Cuba, but for several years both lines have been operated under a traffic agreement between themselves, by which uniform rates are charged by each to the public for transportation. The two lines are the only lines engaged in the business of regular transportation between New York and Cuba; and unless merchants ohoose to avail themselves of the facilitie8 offered by them, tbey are obliged to ship their merchandise by vessels or steamers which may casually piy between the two places. It is alleged by the complainant that the defendants have announced generally to New York merchants engaged in Cuban trade that they must not patronize steam-ships which offer fora. single voyage, and on various occasions when other steam-ships have attempted to procure cargoes from New York to Havanna have notified
JBee note at end of case.
shippers that those employing such steam-ships would thereafter be subjected to onerous'discrimiriations by the defendants.· The defendants allege in their answer to the bill, in effect, that it has been found necessary, for the purpose of securing sufficient patronage, to make differences in rates of freight between shippers in favor of those who will agree to patronize the defendants exclusively. Within a few months before the commencement of this suit two foreign steamers were sent to New York to take cargoes to Havanna, and the complainants were requested to act ItS agents. Thereupon the complainants were notified by the defendants that they would be "placed upon the black-list" if they shipped goods by these steamers, and that their rates of freight would thereafter be advanced on all goods which they might have occasion to send by the defendants. Since that time.the defendants have habitually charged the complainants greater rates of freight than those merchants who shipped exclusively by the defendants. The freight charges, by the course of business, are paid by consignees at the bUban ports. The complainants have attempted to pay the freight in advance, but have found this course impracticable because their consignees are precluded from deducting damages or deficiencies upon the arrival of the goods from the charges for freight, and as a result some of the complainants' correspondents in Cuba refuse to continue business relations with them, being unwilling to submit to the annoyance of readjusting overcharges with complainants. Upon this state of facts the complainants have founded the allegation of their bill that the defendants arbitrarily refused them equal terms, facilities, and accommodations to those granted and allowed by the defendants to other shippers, and have arbitrarily exacted from them a much greater rate of freight than the defendants have at the same time charged to shippers of merchandise generally as a condition of receiving and transporting merchandise." They apply for an injunction upon the theory that their grievancl:ls cannot be redressed by an action at law. It is contended for the complainants that a common carrier owes an equal duty to every member of the community, and is not permitted to make unequal preferences in favor of one person, or class of persons, as against another person or class. The defendants insist that it is permitted to common carriers to make reasonable discriminations in the rates demanded from the public; that they are not required to carry for all at the same rates; that discriminations are reasonable which are based upon the quantity of goods sent by different shippers; and that the discrimination in the present case is essentially such a discrimination, and has no element of personal preference, and is necessary for the protection of the defendants. Unquestionably a common carrier is always entitled to a reasonable compensation for his services.. Hence it follows that he is not required to treat all those wno patronize him with absolute equality. It is his privilege to charge less than fair compensation to one person,
JlENACHO " .. WARD.
or to a class of persons, and others cannot, justly 60tnplain so long 8.S' he carries on reasonable terms for them. Respecting preferences in rates of compensation,his obligation is to charge no more than a:fair return in each particular transaction, and except as thus restricted he is free to discriminate at pleasure. This is the equal justice to all which the law exacts from the common carrier in his relations with the public. Baxendale v. Eastern Gounties B. Go., 4 C. B. (N. S.) 78; Branley v. Southeastern R. Go., 12 C. B. (N. S.) 74; Fitchburg R. Go. v. Gage, 12 Gray,393; Sargent v. BostOfl. rt L. R. Corp., 115 Mass. 416, 422. It is in this sense that the observations found in some of the authorities are to be understood. So understood, the language of the opinion in Messenger v. Pennsylvania R. Go., 37 N. J. Law, 531, is apposite:
"The business of the common carrier is for the public, and it il:! his duty to serve the public indifferently. In t.he very nature, then, of his duty, and of the public right, his conduct should be equal and just to all. "'''' '" A common carrier owes an equal duty to all, and it cannot be discharged if he is allowed to make unequal preferences, and thereby prevent or impair the enjoyment of the common right." .
et R. R. 0.0.,52 N. H. 430, S. C.13 Amer. Rep. 72, are approved and
adopted as pertinent to the case in hand. The court says:
In the same sense the remarks of the court in McDuffee v. Portland
"And as all common carriers combined cannot, directly or indirectly, de· stroy or interrupt the common right by stopping their branch of the public so neither all of them together, nor service while they remain in that one alone, can directly or indirectly deprive any individual of his lawful enjoyment of the common right. Equality, in the sense of freedom from URreasonable discrimination, being of the very substance of the common right, an individual is deprived of his lawful enjoyment of the common right when he is SUbjected to unreasonable and injurious discrimination in respect to terms, facilities, or accommodations. * ... ... A denial of the entire right of service by a refusal to carry differs, if at all, in degree only, and in the amount of damage done. and not in the essential character of the act, from a denial of the right in part by an unreasonable discrimination in terms, facilities, or accommodations. Whether the denial is general by refusing to furnish any transportation whatever, or special, by refusing to carry for one person or his goods; whether it is direct, by expressly refusing to carry. or indirect, by imposing such unreasonable terms, facilities, or accommodations as render carriage undesirable; whether unreasonableness of terms, facilities, or accommodations operates as a total or a partial denial of the right; and whether the unreasonableness is in the intrinsic individual nature of the terms, facilities, or accommodations. or in their discriminating, collective, and comparative character,-the right dellied is one and the same common right which would not be a right if it could be rightfully denied, and would not be common in the legal sense if it could be legally SUbjected to unreasonable discrimination and parceled out among them in unreasonable, superior, and inferior grades, at the behest of the servant from whom the service is due."
In the present case the question whether the defendants refuse to carry for the complainants at a reasonable compensation resolves it·
self into another form.
Can the defendants lawfully require the complainants to pay more for carrying the same kind of merchandise, under like conditions, to the same plaoes, than they charge to others, because the complainants refuse to patronize the defendants exclusively, while other shippers do not? The faot that the carrier charges some less than others for the same service is merely evidence for the latter, tending to show that he charges them too muoh; but, when it appears that the charges are greater than those ordinarily and uniformly made to others for similiar services, the faot is not only competent evidence against the oarrier, but cogent evidence, and shifts upon him the burden of justifying the exceptional charge. The estimate placed by a party upon the value of his own servioes of property is always sufficient, against him, to establish the real value; but it has augmented probative force, and is almost conclusive against him, when he has adopted it in a long-oontinued and extensive course of business dealings, and: held it out as a fixed and notorious standard for the information of the public. The defendants assume to justify upon the theory that a carrier may regulate his charges upon the basis of the quantity of goods delivered to him for transportation by different shippers, and that their discrimination against the plaintiff is in substanoe one made with reference to the quantity of merchandise furnished by them for carriage. Courts of law have always recognized the rights of oarriers to regulate their charges with reference to the quantity of merchandise carried for the shipper, either at a given shipment, or during a given period of time, although public sentiment in many communities has objected to such discriminations, and crystallized into legislative condemnation of the practice. By the English statutes (17 & 18 Viot. c. 31) railway and canal carriers are prohibited from "giving any undue or unreasonable preference or advantage to or in favor of any particular description of traffic, in any respect whatever," in the receiving, forwarding, and delivery of traffic; but under these provisions of positive law the courts have held that it is not an undue preference to give lower rat.es for larger quantities of freight. Ransome v. Eastem G. R. Go., 1 Nev. & MeN. 63, 155; Nicholson v. Great Western Ry. Go., ld. 121; Strick v. Swansea Ganal Go., 16 C. B. (N. S.) 245; G1"eenOp v. S. E. R. Go., 2 Nev. & MeN. 319. These decisions proceed upon the ground that the carrier is entitled to take into consideration the question of his own profits and interests in determining what charges are reasonable. He may be able to carry a large quantity of goods, under some circumstances, at no greater expense than would be required to carry a smaller quantity. His fair compensation for carrying the smaller quantity might not be correctly measured by the rate per pound, per bushel, or per mile charged for the larger. If he is assured of regular shipments at given times, he may be able to make more economical arrangements for transportation. By extending special inducements to the