Interstate Commerce Commission and by many students of rate-making that this resolution would have a very material effect upon the rate structures of the future. The Interstate Commerce Commission was directed by this resolution to investigate the general rate structure of the country with a view of enforcing reasonable rates and removing unlawful discriminations, so as to insure, as the resolution stated, a free movement of commodities. The Commission was authorized to take into consideration, among other things, the conditions which at any time should prevail in the several industries. The market values of commodities over a reasonable period of years were likewise to be given consideration according to the terms of the resolution. One paragraph of the resolution was devoted specifically to agriculture, and the Commission was directed to make as low rates on agricultural products affected by economic depression as could be made under the law and with due regard to the maintenance of adequate transportation service. The resolution sought to accomplish its purposes without impairing the substantive provisions of the basic regulatory law as embodied in the Interstate Commerce Act.

The first case to reach the United States Supreme Court under this resolution involved an order of the Interstate Commerce Commission substantially reducing rates on deciduous fruits from California origins to a large part of the eastern half of the United States.577 The court analyzed the resolution in question very carefully and comprehensively and concluded that, in so far as its effect upon rates is concerned, the resolution worked no substantial change in the previous law; that it authorized the observance of no new rate-making elements; that it did not validate a rate that was unlawful under the basic law; that it created no new standards of lawfulness or reasonableness in rates, and that the order of the Commission in reducing rates on deciduous fruits was based upon an erroneous construction of the resolution.

§ 108. Estoppel.-Where carriers, in the exercise of their

577 Ann Arbor R. Co. et al. v. U. S., 281 U. S. 658, 74 L. Ed. 632, 50 Sup. Ct. 444. See Sec. 65, ante, for

an analysis of the resolution in question.

right to determine the policy under which their rates are to be made, establish a rate for the purpose of developing a particular industry, called by the carriers "Missionary Rates," they are not estopped from advancing such rates when the resultant rates are not unreasonable; and the fact that such rates were so established is not alone sufficient evidence to justify a finding that the advanced rates are unreasonable and violative of Section 1 of the Interstate Commerce Act. In Western Oregon Lumber Manufacturers' Association v. Southern Pacific Co.,578 the Commission held that when the Southern Pacific Co. established a rate for the purpose of developing the lumber industry of a particular section, which rate it maintained with brief intervals for six years, an advance thereon, when "on the strength of this rate that industry had attained considerable proportions," was unreasonable. The question of the validity of this order having come before the Supreme Court, that court, in speaking of the contention of the carriers, said: "That is to say, the contention is that the order entered by the Commission shows on its face that the body assumed not only that it had power to prevent the charging of unjust and unreasonable rates, but also to regulate and control the general policy [italics supplied] of the owners of railroads as to fixing rates, and consequently that there was authority to substitute for a just and reasonable rate one which in and of itself, in a legal sense, might be unjust and unreasonable, if the Commission was satisfied that it was a wise policy to do so, or because a railroad had so conducted itself as to be estopped in the future from being entitled to receive a just and reasonable compensation for the service rendered. '579

While the attorneys representing the Commission before the Supreme Court disclaimed for the Commission any such construction of the order, the order was construed by the court to mean what was contended in the foregoing quotation. In speaking of the power necessary to enter the order as it was construed, the court said: This "extraordinary power

578 Western Oregon Lumber Mfrs. Assn. v. Southern Pac. Co., 14 I. C. C. 61. See also Northbound Rates on Hardwood, 32 I. C. C. 521, 524.

579 Southern Pae. Co. v. Interstate Com. Com., 219 U. S. 433, 444, 55 L. Ed. 283, 31 Sup. Ct. 288.

which the railroads thus say was exerted in rendering the order complained of, a power which if obtained, would open a vast field for the exercise of discretion, to the destruction of rights of private property in railroads and would in effect assert public ownership without any of the responsibilities which ownership would imply."

The court, having given the Commission's order a construction as indicated by the contention made, held the order void.

The Commerce Court, citing the Supreme Court case, supra, and in speaking of orders of the Commission, said: "Its orders must be based on transportation considerations, and while it may give weight to all factors bearing either on the cost or value of the transportation service, it must disregard as well the demand of the shipper for protection from legitimate competition, domestic or foreign, for unlimited markets, or for the enforcement of equitable estoppels arising from a justifiable expectation that past rates will be maintained. ''580 That because a carrier has maintained a low rate upon which business has been built up, the carrier may not be estopped from advancing its charges to a reasonable rate, is unquestionably true. This is true because all parties know that rates are subject to legislative control, and estoppel cannot apply. Nor does the decision of the Supreme Court necessarily mean that there is no evidentiary value in the proof that a rate was established to encourage an industry whose prosperity is dependent upon a continuation of the rate.581 There is nothing in the decision of the Supreme Court which prevents the Commission from giving consideration to the presumption arising from the fact that the carriers selling transportation have long fixed a particular value thereon. This presumption is discussed in the next section.

It is also true that carriers "may not make contracts which abrogate the Act to Regulate Commerce," and such contracts

580 Atchison, T. & S. F. Ry. Co. v. Interstate Com. Com., 190 Fed. 591 (Lemon Case), Opinion Commerce Court No. 7, p. 83; same case, 203 Fed. 56; Opinion Commerce Court No. 61, p. 537.

581 Louisville & N. R. Co., v. Finn, 235 U. S. 601, 59 L. Ed. 379, 35 Sup. Ct. 146; Duluth, Minnesota Log Rates, 29 I. C. C. 420, 421.

cannot prevent the Commission from determining the rate involved therein and prescribing, when necessary, a different rate or practice.582

§ 109. Rates Long in Existence Are Presumed to Be Reasonable. When conditions have not materially changed, it is consistent with the motives which usually actuate mankind to presume that a rate long in existence is reasonable and that the burden of proof is on him who seeks to obtain or justify another and higher rate. As early as 1889, the Commission, speaking of a rate sought to be changed by a carrier, said: "It has, without the pressure of competition other than on equal terms, long continued this rate and as long been making evidence that this nineteen-cent rate is not unreasonably low.''583 The principle was again announced in the Food Products case584 and in Proctor v. Cincinnati, H. & D. R. Co.585 Mr. Commissioner Prouty, in Holmes v. Southern Ry. Co.,586 announced the rule in this language: "The continuance of a given rate is not conclusive evidence of the reasonableness of that rate, but when a railway company advances a rate which has been for some time in force, the fact of its continuance is in the nature of an admission against that company, which tends to show the unreasonableness of the advance; and the force of this admission becomes great in view of the general decline in the average of railway rates and the lessened cost of service." The general rule is recognized, but found not applicable to the facts, in Proctor v. Cincinnati, H.

582 Ottumwa Bridge Co. v. Chicago, M. & St. P. Ry. Co., 14 I. C. C. 121. See also Commercial Coal Co. v. Baltimore & O. R. Co., 15 I. C. C. 11; Menefee Lumber Co. v. Texas & P. Ry. Co., 15 I. C. C. 49; Penn Tobacco Co. v. Old Dominion Steamship Co., 18 I. C. C. 197; Baltimore Butchers Abattoir & Live Stock Co. v. Philadelphia, B. & W. R. Co., 20 I. C. C. 124, 128; Daffney Brick Co. v. B. & M. R. R., 39 I. C. C. 118, 122; Stonega Coke & Coal Co. v. L. & N. R. Co., 39 I. C. C. 523,

549; Cape Girardeau Commercial Club v. Ill. C. R. Co., 51 I. C. C. 105.

583 Logan et al., Com.. of Northwestern Grain Assn. v. Chicago & N. W. R. Co., 2 I. C. C. 604, 2 I. C. R. 431, 434.

584 Re Alleged Excessive Freight Rates on Food Products, 4 I. C. C. 48, 3 I. C. R. 93.

585 Proctor v. Cincinnati, H. & D. R. Co., 4 I. C. C. 87, 3 I. C. R. 131. 586 Holmes v. Southern Ry. Co., 8 I. C. C. 561, 568.

588 the

& D. R. Co.587 In the Central Yellow Pine Asso. case, Commission said: "When carriers advance a rate which has been for some time in force, the burden of proof is upon them to show sufficient grounds for such advance." In the Tift case,589 this language was used: "The maintenance of materially lower rates for such long periods of time brings this case within the rule that 'when an advance is made in rates which have long been maintained and the evidence shows that the traffic affected is large, important and constantly increasing, the advance will be held unjust unless it is satisfactorily explained.'"' Each of these cases was tried in the Circuit Court and reached the Supreme Court where both were affirmed.500 In the Yellow Pine case, the Supreme Court said: "The question submitted to the commission

was

one which turned on matters of fact. In that question, of course, there were elements of law, but we cannot see that any one of these or any circumstances probative of the conclusion was overlooked or disregarded." It was stated by the Supreme Court that the Tift case, supra, depended "upon the same legal considerations" as the Yellow Pine case.

The case of Memphis Cotton Oil Co. v. Illinois Cent. R. Co., 17 I. C. C. 313, while not repudiating the doctrine above, states it less clearly than some of the prior decisions of the Commission. It is a fundamental law that acts of an individual are presumptively not contrary to his interests, and as said by Judge Wallace, in Menacho v. Ward, 27 Fed. 529, 532, 23 Blatch. 502: "The estimate placed by a party upon the value of his own services or 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-continued and extensive course of business dealings.

587 Proctor v. Cincinnati, H. & D. R. Co., 9 I. C. C. 440. For further history of this case, see Interstate Com. Com. v. Cincinnati, H. & D. R. Co., 146 Fed. 559; Cincinnati, H. & D. R. Co. v. Interstate Com. Com., 206 U. S. 142, 51 L. Ed. 995, 27 Sup.

Ct. 648, enforcing order of the Commission.

588 Central Yellow Pine Asso. v. Ill. Cent. R. Co., 10 I. C. C. 505.

589 Tift v. So. Ry. Co., 10 I. C. C. 548.

590 Tift v. So. Ry. Co., 138 Fed.