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The Commoner.
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.VOLUME 7, NUMBER '31
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What Judge Landis Said When He Imposed the Big Fine
Whon ho imposed tho flno of $29,240,000
against the oil trust Judge Konesaw ;M. Landis
delivered this opinion:
"This is the prosecution of tho Standard
Oil company of Indiana, for alleged violations of
tho act approved February 19, 1903, known as
tho Elklns law. Tho charge is that defendants'
nronerty was transported by the Chicago and
Alton Hallway company at rates less than those
named in the carrier's tariff schedules published
and filed with the interstate commerce commis
sion, as roquirod by law. Tho offenses are al
leged to have been committed during the per
iod from Soptembor 1, 1903, to March -1, 1905.
Tho indictment contains 1,903 counts, each
charging tho movement of a car of oil. Certain
of tho transportation is alleged to have been
from "Whiting, Jnd., to East St. Louis, 111., the
remaining counts covering transportation from
Chappell, 111., to St. Louis, Mo. The plea was
'not guilty.' On the trial 441 counts wore with
drawn from tho consideration of the jury on
grounds not going to the ultimate questions in
volved in the case. On 1,462 counts the verdict
was 'guilty.' Motions for a now trial and In
arrest of judgment having been overruled, tho
mrttter 1b now before tho court for the imposi
tion of the penalty authorized by law."
Quotes Statutes
In full the court then quoted the statute
making it unlawful for any person, persons or
corporation to offer, grant or give, or to solicit,
accept or receive any rebate, concession or dis
crimination in respect of the transportation of
any property in interstate or foreign commerce
by any common carrier.
Tho court then said it was proven on tho
trial that the defendant, a corporation of In
diana, operates an oil refinery at Whiting, Ind.;
that the Chicago and Alton Roilroad company,
a corporation of Illinois, operates a line of rail
road from Chicago to East St. Louis, 111.: that
icagpTerminal Transfer Railroad com-
iSWtayopertttoBfStcning road from whiting
across tho state lino Into J 'liiiGis;" intersecting the
Alton road at a station called Chappell, a short
distance from Chicago; that there are three com
panies operating terminal roads from East St.
Louis, 111., across the Mississippi river to St.
Joseph, Mo.; that priw to the occurrences upon
which this prosecution is based the Chicago and
Alton company had filed with the interstate com
merce, commission and distributed to its various
freight agencies tariff schedules showing the
rates for the transportation of oil in car lots
from "Whiting, Ind., to East St. Louis to bo eigh
teen cents per hundred pounds, and the rate
.for like transportation from Chappell to St.
Louis, Mo., to be nineteen and a half cents per
-hundred pounds. These schedules were as
follows: ,
Class tariff No. 24, Issued by several car
riers, including tho Alton, operating between
Chicago and East St. Louis, naming a rate of
eighteen cents per hundred pounds on oil from
Chicago to East St. Louis; a. joint tariff of the
..Chicago Terminal and Alton companies provid
ing that the rate from Whiting to East St. Louis
shall bo tho same as the rate from Chicago to
East St. Louis, and specifically enumerating class
tariff No. 24, above mentioned; schedules of the
three St. Louis terminal companies fixing a rate
-.of one and one-half cents per 'hundred pounds
from East St. Louis to St. Louis.
Proof of Rebates
It also appeared that tho shipments were
made over the route covered by these schedules
that is to say, 'from Whiting to Chappell via
the Chicago Terminal road; from Chappell to
East St. Louis via tho Chicago and Alton road
and from East St. Louis to St. Louis over the
lines of the three St. Louis terminal companies
For this service the defendant nniri i auJ
six cents per hundred pounds on tho traffic to
East St. Louis and seven and one-half cents for
the shipments to St. Louis, bills at these rates
being rendered by tho Alton company to the
defendant semi-monthly.
Out of the moneys it received from the de
fendant the Alton company paid tho .terminal
companies for their part of the service.
With these terminal companies the defend
ant had no relations whatever, save only that
the shipments were delivered to. ".the Chicago
Termina.1 company at Whiting, tho point of
origin. ' At no time did tle defendant apply to
cither of these companies for a rate' covering the
sorvico performed, nor did they render any bills
to tho defendant. Their dealings were exclu
sively with the Chicago and Alton company, to
which company, as the defendant's testimony
showed-, it applied for the through rate from
Whiting to destination.
On these facts the court denied "defendant's
motion that tho jury be peremptorily directed
to return a verdict of not guilty. Whereupon,
as justifying and excusing the use of the six
cent rate, the defendant's traffic manager testi
fied that in December, 1902, 1903 and 1904 he
applied to the chief rate clerk at tho office of
tho general freight agent of the Chicago and
Alton company for the rate on oil from Whiting
to East St. Louis for each succeeding year; that
on each occasion the clerk handed him a docu
ment purporting on its face to be a special bill
ing order as follows:
The Chicago and Alton Railway company
Traffic Department.
Special billing order.
Issued , effective January 1, 1903.
From , Chicago, 111.
To Alton, Granite City and East St. Louis,
111., via. .
On oil and petroleum products o. 1. in
tank cars.
Rate, six cents per cwt.
Expires December 31, 1903, unless sooner
revoked.
Collection to be made through auditor's
office. Charles A. King, General Freight Agent.
Misled by Clerk
This witness also stated that when these
special billing orders were delivered to him he
received from the rate clerk an Alton tariff
schedule called an application sheet applying
Chicago and East St. Louis rates to similar
traffic from Whiting to East St. Louis; that at
each of said times the traffic manager inquired
of the rate clerk whether the rate had been filed
and was assured by him that it had. The traffic
manager was thus misled by the rate clerk into
the honest belief that the rate of six cents per
hundred pounds as shown by the special billing
order from Chicago to. East St. Louis had been
filed with the interstate commerce commission,
and that, acting in this honest belief, payments
at the six cent rate to East St. Louis and seven
and one-half cents to St. Louis were made. This
special billing order was not and did not pur
port to have been filed with the interstate com
merce commission, nor was it distributed by the
Alton company to any freight agent for use in
quoting rates to the general shipping public,
with the single exception that, as tho rate clerk
testified, a copy was retained in the tariff files
at the general freight office. Nor did the appli
cation sheet contain any reference to the special
billing order, but it did specifically enumerate
the Chicago-East St. Louis tariff No. 24 above
mentioned, which tariff No. 24 showed the Chicago-East
St. Louis rate to be eighteen cents
per hundred pounds. This alleged occurence
between the traffic manager and the rate cleric
will receive more detailed consideration here
' after.
It Is the position of the defendant that the
Elkins law and certain pertinent portions of the
interstate commerce law of 1SJS7 are unconsti
tutional for the following reasons:
Interstate Powers
First That the defendant has a natural in
herent right to make a private contract for a
railroad rate, of which right the Elkins law
-would deprive the defendant by requiring it
to pay the rate published and filed by the car
rier, and making a failure so to do criminal, in
Violation, as id claimed, of the fifth amendment
to the constitution of tho United States, which"
provides that "no person shall be deprived of
life, liberty or property without due process of
law."
Second That by authorizing common car
riers to establish rates, which when published
and filed shall be binding upon the shipper, the
law delegates to the carrier leiriRlntivA r-m
which section one of article one of the consti
tution confers upon congress exclusively.
Third That the law vests in the interstate
commerce commission the power to pass ulti
mately upon -the question of reasonableness or
unreasonableness of freight rates as established
by a carrier, thereby depriving the defendant of
its right to invqke the judgment of the courts
in respect thereto, in violation of section one of
article three, qf , the, federal constitution, which
vests tho judicial power of the United' States
exclusively in the courts.
Fourth That paragraph three of section
eight of article one of the constitution, common
ly known as the commerce clause does not em
power congress to forbid &nd--make criminal the
act of the defendant in accepting from the car
rier a less rate than that published and filed by
the carrier as required by section six of the in
terstate commerce law.
The decision continues: "With respect to
the second proposition, it need only be said that
the supreme court of the United States has in
a number of instances ruled adversely to the de
fendant's contention in cases where the same
question arose on state statutes "empowering
railroad commissions to fix rates. And the third
objection is not sound for the reason that the
interstate commerce law does not purport to de
prive the courts of their jurisdiction at the suit
of a shipper to ultimately doterimne the ques
tion of reasonableness or unreasonableness of a
rate.
"Respecting the defendant's alleged natural
right to make a private contract for a secret
railroad rate, candor obliges the court to say
he knows nothing to support the proposition
but the eminence of counsel who advance it.
"In such case, as in all others, it would re
quire two parties, each competent to contract,
and considering the nature of the thing to be
contracted for the railway common carrier ia
fundamentally incompetent. This is so for the
reason that the railway company is n public
functionary and is enabled to construct and oper
ate a railroad only by its exercise of the power
of eminent domain, which is a sovereign power
of government. Thus, by condemnation pro
ceedings such a corporation may take the real
property of the individual citizen, even his home
stead, against his will and protest. The theory
upon which government authorizes this to be
done is that it is necessary for thejpublic wel
fare, and nothing can possibly be more' plain
than that property thus acquired must be used
for the benefit of the public nbt part of the
public, but all of the public. Under the doctrino
insisted upon by the defendant the railway com
pany might give the Standard Oil company a
very low transportation rate and by contract
obligate itself to 'withhold the same rate from
the very man the taking of whose property by
condemnation rendered possible the construc
tion of the road. A more abhorrent heresy could
not be conceived. There is no more reason foe
the claim of natural right to private contract
for the exercise by a railway company of the
public power with which it is endowed than;
there would be for the claim of similar right
to private contract with the collector of customs
or tax assessor for a secret valuation of property.
Power of Congress
"It is the defendant's position that . the
commerce clause does not empower congress to
forbid and make criminal the defendant's act
in accepting from the carrier a less rate' than
that published and filed by the carrier, as re
quired by law. In' the court's view the only,
point Involved in this proposition is whether,
congress has authority to require that railroad
rates shall be uniform. It being now settled
that congress has this power, it necessarily fol
lows that to preserve uniformity that body may
prohibit the doing of any act or thing whatever
by any person or corporation calculated to im
pair uniformity and may enforce such prohibi
tions by such penal provisions as congress may,
deem requisite.
"The defendant maintains that the interstate
commerce law does not apply to the Alton com
pany's connection with the transportation of de
fendant's property, inasmuch as the road it oper
ates lies wholly within the state of Illinois. The
theory is that the haul by the Chicago Terminal
from Whiting- across the Illinois line to Chap
pell, and the haul by the St. Louis Terminal from'
East St. Louis across the Missouri line to St,
Louis are each Interstate, and therefore subject
to federal control, but that the Alton company's
intrastate haul of the same property from Chap
pell to East St. Louis is beyond the reach of
federal authority. The trouble with this con
tention is that it Ignores the basic proposition:
underlying the whole question and confuses the
intrastate character of the carrier with the in
terstate character of the commerce in which the
carrier' itf "engaged. ' Thja truti'and primary test
:ls whether the fcomiriodlty tb' tie trWsported is to
nasS ' if om'-orie 'state Into another state.' "If It
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