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classes selected for legislative favor even if, considering rates as a whole a reasonable return from the operation of its road might be received by the carrier. Neither of these concessions, however, can control the case in hand, since it does not directly involve any question whatever of the power to fix rates and the constitutional limitations controlling the exercise of that power, but is concerned solely with an order directing a carrier to furnish a facility which it is a part of its general duty to furnish for the public convenience."
In Interstate Commerce Commission v. Union Pacific R. R., 222 U. S. 541, 549, in speaking of the carriers' concession that they were unable to determine the cost of the particular traffic in question and that a former rate had not been 'less than cost,' the court said: “This concession
establishes an important fact in dealing with the difficult question of determining what is a reasonable rate on a particular article. Where the rates as a whole are under consideration, there is a possibility of deciding, with more or less certainty, whether the total earnings afford a reasonable return. But whether the carrier earned dividends or not sheds little light on the question as to whether the rate on a particular article is reasonable. For, if the carrier's total income enables it to declare a dividend, that would not justify an order requiring it to haul one class of goods for nothing, or for less than a reasonable rate. On the other hand, if the carrier earned no dividend, it would not have warranted an order fixing an unreasonably high rate on such article." (See also Southern Railway v. St. Louis Hay & Grain Co., 214 U. S. 297, 301.) In Wood v. Vandalia R. R., 231 U.S. 1, the rate order of the state commission related to a particular sort of traffic and it appeared that the proof was insufficient to show the cost of transportation. This was also the case in Louisville & Nashville R. R. v. Garrett, 231 U. S. 298, which related to rates on particular commodities
Opinion of the Court.
236 U. S.
and the order of the state commission was sustained, not because the State was at liberty to fix such rates as it might see fit upon the ground of local policy regardless of reasonable compensation and thus to require the carrier to transport the commodities in question for less than cost, but because the evidence not only failed to show that the rates were not reasonably adequate but rather tended to establish that they were (Id., p. 314). The same conclusion, with respect to the same rates, was reached on further hearing in Louisville & Nashville R. R. v. Finn, 235 U. S. 601, 607.
To repeat and conclude: It is presumed,--but the presumption is a rebuttable one--that the rates which the State fixes for intrastate traffic are reasonable and just. When the question is as to the profitableness of the intrastate business as a whole under a general scheme of rates, the carrier must satisfactorily prove the fair value of the property employed in its intrastate business and show that it has been denied a fair return upon that value. With respect to particular rates, it is recognized that there is a wide field of legislative discretion, permitting variety and classification, and hence the mere details of what appears to be a reasonable scheme of rates, or a tariff or schedule affording substantial compensation, are not subject to judicial review. But this legislative power cannot be regarded as being without limit. The constitutional guaranty protects the carrier from arbitrary action and from the appropriation of its property to public purposes outside the undertaking assumed; and where it is established that a commodity, or a class of traffic, has been segregated and a rate imposed which would compel the carrier to transport it for less than the proper cost of transportation, or virtually at cost, and thus the carrier would be denied a reasonable reward for its service after taking into account the entire traffic to which the rate applies, it must be concluded that the State has exceeded its authority.
236 U. S.
Statement of the Case.
The judgments, respectively, are reversed and the cases are remanded for further proceedings not inconsistent with this opinion.
It is so ordered. MR. JUSTICE PITNEY dissents.
NORFOLK AND WESTERN RAILWAY COMPANY v. CONLEY, ATTORNEY GENERAL OF THE STATE OF WEST VIRGINIA.
ERROR TO THE CIRCUIT COURT OF KANAWHA COUNTY, STATE
OF WEST VIRGINIA.
No. 197. Argued October 13, 1914.-Decided March 8, 1915.
Northern Pacific Ry. v. North Dakota, ante, p. 585, followed to effect
that while the State has a broad field for the exercise of its power in fixing intrastate rates for common carriers it may not require them to transport a segregated commodity or class of traffic either at less
than cost or for a mere nominal consideration. This court must on writ of error under $ 237, Jud. Code, analyze the
facts as found by the state court if it is necessary to do so in order to determine whether that which purports to be a finding of fact is so interwoven with the question of law involving the Federal right
asserted as to be in substance a decision of the latter. An analysis of the evidence in this case shows that the two cent a mile
passenger rate established by ch. 41 of the acts of 1907 of West Virginia affords such a narrow, if any, margin over the cost of the traffic that the plaintiff in error is forced to carry passengers, if not at or below cost, with merely a nominal reward, and it follows that the State exceeded its power in enacting the same and that it is void as an attempt to deprive the carriers of their property without due process of law in violation of the Fourteenth Amendment.
The facts, which involve the constitutionality under the due process provision of the Fourteenth Amendment of a statute of West Virginia fixing the maximum fare for
Argument for Plaintiff in Error.
236 U. S.
passengers on railways at two cents a mile, are stated in the opinion.
Mr. John H. Holt and Mr. Lucien H. Cocke, with whom Mr. Joseph I. Doran and Mr. Theodore W. Reath were on the brief, for plaintiff in error:
The earnings from intrastate passenger business must be separated from all other earnings to determine whether the act is confiscatory.
Chapter 41, Act of 1907, regulating passenger rates upon railroads in the State of West Virginia, and prescribing penalties for the violation thereof is unconstitutional. Ches. & Ohio Ry. v. Conley, 230 U. S. 513; Coal Ry. v. Conley, 67 W. Va. 129; Consolidated Gas Case, 212 U. S. 19; Five Per Cent Case, 31 I. C. C. 351, 407; Int. Com. Comm. v. Un. Pac. R. R., 222 U. S. 541; Knoxville v. Water Co., 212 U. S. 1; Prentis v. Atlantic Coast Line, 211 U. S. 210; Railroad Co. v. Philadelphia, 220 Pa. St. 100; Smyth v. Ames, 169 U. S. 466; Southern Ry. v. St. Louis Hau Co., 214 U. S. 297.
The railroad properly shows the capital invested in its intrastate passenger service used and useful in that service.
The railroad company properly shows the earnings and expenses derived from and chargeable to its intrastate passenger business.
The railroad company should be allowed to segregate its intra-passenger earnings from all other earnings in the State in its attempt to show confiscation. Atl. Coast Line v. North Carolina, 206 U. S. 1; Coal Ry. v. Conley, 67 W. Va. 174; Lake Cargo Coal Rate Case, 22 I. C. C. 604; Louis. & Nash. R. R. v. Alabama, 208 Fed. Rep. 35; Minnesota Rate Cases, 230 U. S. 352; Missouri Rate Cases, 230 U. S. 474; M. & St. L. R. v. Minnesota, 186 U. S. 257; Smyth v. Ames, 169 U. S. 466; S. & N. A. R. R. v. Alabama, 210 Fed. Rep. 465.
Mr. A. A. Lilly, Attorney General of the State of West Virginia, for defendants in error:
The carrier does not properly show the capital invested in its intrastate passenger service used and useful therein. The valuation proved is improper for a rate basis. People v. New York, 199 U. S. 1; San Francisco v. Dodge, 197 U. S. 70; Missouri Rate Case, 230 U. S. 474; Allen v. St. Louis &c. Ry., 230 U. S. 552; Chi., M. & St. P. R. R. v. Tompkins, 176 U. S. 167; nor does it properly show intrastate earnings and expenses.
The carrier cannot segregate its intrastate passenger earnings from all other intrastate earnings in order to show confiscation. Norfolk & West. Ry. v. Pinacle Coal Co., 44 W. Va. 574; Railway Co. v. Conley, 67 W. Va. 174; Railway Co. v. United States, 99 U. S. 402.
If the State allows the carrier to earn suitable return for its whole intrastate business it may require some commodities to be carried at a loss. St. Louis &c. Co. v. Gill, 156 U. S. 649; Minnesota Rate Case, 230 U. S. 352; Minn. &c. Ry. v. Minnesota, 186 U. S. 257; Willcox v. Consol. Gas Co., 212 U. S. 19; Atl. Coast Line y. Nor. Car. Corp. Comm., 206 U. S. 1; Pens. di Atl. Ry. v. Florida, 3 L. R. A. 661; Penna. R. R. v. Philadelphia, 220 Pa. St. 122.
A rate of 6% per annum is reasonable, Covington &c. Co. v. Sanford, 164 U. S. 578, but even if smaller, if any, the carrier cannot complain.
MR. JUSTICE HUGHES delivered the opinion of the court.
In 1907, the legislature of West Virginia passed an act fixing the maximum fare for passengers on railroads, as described in the statute, at two cents a mile. Acts, 1907, Ch. 41, p. 226. After the rate had been tested by operating under it for two years, the plaintiff in error brought this suit to restrain its enforcement as being in violation of the