The line between regulations of intrastate and interstate commerce is difficult to draw and hard to maintain. This is well illustrated in the recent case of St. Louis Southwestern Railway Company v. Arkansas, decided by the Supreme Court of the United States April 4, 1910, Advance Sheets, May I, 1910, p. 476, 30 Sup.Ct. 476

Wilgus, Horace LaFayette

English

University of Michigan School of Law

University of Michigan Law School University of Michigan Law School Scholarship Repository Articles Faculty Scholarship 1910 State Regulations Affecting Interstate Commerce Horace LaFayette Wilgus University of Michigan Law School Available at: https://repository.law.umich.edu/articles/1327 Follow this and additional works at: https://repository.law.umich.edu/articles  Part of the Business Organizations Law Commons, Commercial Law Commons, Constitutional Law Commons, and the Supreme Court of the United States Commons Recommended Citation Wilgus, Horace LaFayette. "State Regulations Affecting Interstate Commerce." Mich. L. Rev. 8 (1910): 656-60. This Response or Comment is brought to you for free and open access by the Faculty Scholarship at University of Michigan Law School Scholarship Repository. It has been accepted for inclusion in Articles by an authorized administrator of University of Michigan Law School Scholarship Repository. For more information, please contact mlaw.repository@umich.edu. MICHIGAN LAW REVIEWPUBLISHED MONTHLY DURING THE ACADEMIC- YEAR, EXCLUSIVE OF OCTOBER, BY T.11LAW FACULTY OF THE UNIVERSITY- OF MICHIGANSUBSCRIPTION PRICE $2.80 PER YEAR.JAMES H. BREWSTER, ditorHARRY B. HUTCHINS ,ADVISORY BOARD:VICTOR H. LANE HORACE L. WILGUSEditorial Assistants, appointed by the Faculty from the Class of 1910: 'FRANK AYRES, of Indiana. ,WILLARD J. BANYON, of Michigan.JOHN T. CREIGHTON. oflllinois.EARL W. DELANO, of Michigan.RALPH'W. DOTY, of Michigan.GEORGE K. POSTER, of Illinois.KARL B. GODDARD, of Illinois.LEE M. GORDON, of Miqhilgan.ROBERT T. HUGHES, of Indiana.JHARRY W. ISENBERG, Of Ohio.HARRISON JONES, of Georgia.C. REDMAN MOON, of Idaho.THOMAS I,. O'LEARY, of Michigan."HARRY I. PATTON, Of Illinois.HERMAN A. SCHAFER, of Ohio.FREDERICK H. SCHMIDT, Of Iowa.MARK V. WEATHERFORDi of Oregon.SAMUEL, R. WILLIAMS, of Michigan.ARTHUR P. H. WRIGHT, of Illinois.NOTE AND COMMENT. -STATE REGULATIONS AFrECTING INTERSTATE CoMIN, RcE-The line betweenregulations of intrastate and interstate commerce is difficult to draw andhard.to maintain. This is well illustrated in the recent case of St. LouisSouthwestern Railway Company v. Arkansas. decided by the Supreme Courtof the United States April 4, igo, Advance Sheets, May I, 1.910, p. 476, 30Sup..Ct. 476.This was an action by the prosecuting attorney against the railway com-pany to recover penalties for alleged violation of the rules of the railroadcommission of Arkansas and certain statutory provisions, making it the dutyof railroad companies to furnish shippers with cars upon proper demand,and subjecting them to a penalty for failure.One Reinsch had made written demand of the company for cars to shiphay between places in the state from October 30, 19o5 to January zo, i9o6.and was furnished 5I less than he demanded. He complained to the railroadcommission who' found the company had violated the rule and the statuteand directed the prosecuting attorney to sue for the penalty. The companyaefended on the ground that it was engaged in interstate shipments of freightover its lines in Arkansas, Illinois, Louisiana and Missouri, and by connect-35 CENTS PER NUMBERHeinOnline  -- 8 Mich. L. Rev. 656 1909-1910NOTE AND COMMENTing lines throughout the United States; that its equipment was ample for itsfreight traffic both state and interstate; that in anticipation of greater de-mand it had made an effort to buy ,ooo more cars but had been unable toget them,'and had therefore begun to construct shops of its own to buildits cars; that at the time of the alleged default there was an extraordinarydemand for cars for both interstate and local traffic upon its own and con-necting lines; that it had equally distributed its cars to shippers along itsline giving no preference to interstate over local shippers; and that "it wouldhave been impossible to comply with the rule -without discrimination againstits interstate commerce shippers, and therefore obedience to the rule wouldhave resulted in a direct burden upon interstate commerce," and the ruleand statute were therefore in conflict with the Constitution of the UnitedStates conferring power to regulate commerce among the states upon Con-gress. This defense was insisted upon in various ways but overruled by thetrial court, and a verdict of $1,350, with judgment thereon was renderedagainst the company. This was affirmed by the Supreme Court of the state,85 Ark. 311, 107 S. W. 118o, 122 Am. St. Rep. 33.The facts as stated in the opinion of the State Supreme Court were that70 per cent of the freight traffic of the road originated on its own line;that it had 9517 freight cars; 3982.of these were in daily use upon its ownline, and 5525 off its line, while only 2519 foreign cars were upon its line,with a daily balance of exchange of 1473 cars, and a daily shortage of about65o cars; that the number of cars owned was larger than the average freightcarrying road had, and sufficient to meet the demands of its own traffic, if itscars could be kept at home; and that "its failure to furnish cars was whollydue to an inability to regain its cars which were sent to other roads carryingfreight from its own line." Also that the company was a member of theAmerican Railway Association (as were go per cent of the railways of theUnited States) which makes rules for the interchange of cars; that suchassociation is lawful, and a system of interchange of loaded cars, instead ofreloading and reshipping, is essential to the public convenience and conformsto the policy of both Federal and state legislation, and that "for one railroadcompany to be an Ishmaelite among its associates would operate disastrouslyto its shippers"; but fuither that the rules made by the railway associationfor the return of cars,-a charge of 25 to 5o cents per day per car,-weretotally inadequate to sedure their prompt return in case of congested traffic,and that prior to i9o5 the company had lost control of its cars, knowing thatthe rules of the association were insufficient to secure their return within areasonable time.The State Supreme Court therefore by HILL, C. J., ruled, that althoughit may be better for the company "to suffer these ills than to sail under ablack flag and refuse to send its cars beyond its lines," yet until it "showsreasonable rules and regulations for the interchange of cars, it cannot availitself of these rules of interchange as causing and excusing its default tothe public, for the rules here shown have proved unreasonable and inefficientbefore this default occurred."Mr. Justice WHIrE in .reversing. the decision of the state court says: TheHeinOnline  -- 8 Mich. L. Rev. 657 1909-1910MICHIGAN LAW REVIEWcompany "was powerless, of its own motion, to change the rules thus gen-erally- prevailing, and therefore was necessarily either compelled to desistfrom the interchange of cars with connecting carriers for the purpose of themovement of interstate commerce, or to conduct such business with thecertainty of being subjected to the penalties which the state statute providedfor.*** It needs but statement to demonstrate that the ruling of thecourt below involved necessarily the assertion of power in the state to abso-lutely forbid the efficacious carrying on of interstate commerce, or, what isequivalent thereto, to cause the right to efficiently conduct such commerceto depend upon the willingness of the company to be subjected to enormouspecuniary penalties as a condition' of the exercise of the right. *** If therules of the railway association governing go per cent of the railroads anda vast proportion of ihe interstate commerce of the country are inefficientto secure just dealing as to cars moved by the carriers engaged in interstatecommerce, that fact affords no ground for conceding that such subject waswithin the final cognizance of the court below, and could by it be made thebasis of prohibiting interstate ommerce or unlawfully burdening the rightto carry it on. In the nature or things, as the rules and regulations- of theassociation concern matters of interstate commerce inherently within Fed-eral control, the power to determine their sufficiency, we think was primarilyvested in the body upon whom Congress has conferred authority in thatregard." Chief Justice FuLLR dissents.Mr. Justice WHITZ cites no authority for his ruling, -and no reliance isplaced upon tl - rule that the subject has been regulated by Federal legisla-tion, or by any rule of the Interstate Commerce Commission, -nor upon the-rule that, because Congress has not acted upon the matter, it is to be as-sumed that the subject is to be left free and untrammeled by any state reg-ulations. Neither is there any finding of facts as to the proportion of inter-state and intrastate traffic,-only that 70 per cent of the traffic originates onits line, and 3o per cen off, but how much of either is interstate traffic isniot stated. The lower court ruled that the statute only imposed a penaltyfor negligently failing to perform the common law duty to furnish carspromptly upon demand, whether for state or interstate shipments, and theknown inadequacy of the association rules to enable the company to com-ply with this duty was negligence. The association rules for return of carsnecessarily directly affected both state and interstate shipments. If theywere -inadequate, and had been known to be so generally, does the supreme.court mean to hold that conformity to them would, not be negligent, justbecause go per cent of the roads are parties to them?In Missouri P. R. Co. v. Larabee Flour Mills Co. (I9o9), 211 U. S. 612,29 Sup. Ct. 214, Mr. Justice BaxWR says; "The roads are engaged in bothinterstate commerce and that within the state. In the former, they are sub-ject to the regulation of Congress; in the latter, to that of the state; and toenforce the proper relation between Congress and the state, the full controlof each over the commerce subject to its dominion must be preserved," andMr: Justice MOODY, dissenting, says: "The commerce clause vests- the power toregulate interstate commerce exclusively in the Congress, and leaves the powerHeinOnline  -- 8 Mich. L. Rev. 658 1909-1910NOTE AND COMMENTto regulate intrastate commerce exclusively in the states. Both powers beingexclusive, neither can be directly exercised except by the government in whichit is vested." If these statements are correct, and the same regulation hadbeen made by Congress or the Interstate Commerce Commission as to aninterstate shipment, and the company had pleaded that it would have beenimpossible to comply without discrimination against its state traffic, becauseits cars were negligently allowed to be away from home so that it could notadequately supply either its interstate or state shippers, would the Federalregulation have been held unconstitutional, as beyond the Federal power, be-cause directly affecting state commerce, or would the company have been, heldliable because of its negligence, when the only case before the court was oneof interstate commerce, and not state commerce? Or to put the matter inanother way, is it possible that where a railway association rnoakes ineffectiverules relating to the return of cars to one of its members, which knows theyare notoriously inadequate, and shippers, therefore cannot get cars promptly,the state can not impose a penalty for not furnishing the cars to a stateshipper, because that would directly affect interstate commerce, and the Fed-eral government cannot impose a penalty for not furnishing cars to an inter-state shipper, because that would directly affect state traffic? Such certainlycannot be the rule.In Houston and T. C. R. Co. v. Mayes (i9o6), 201 U. S. 321, 26 Sup. Ct.491, ilaintiff sued to recover a penalty for failing to furnish him cars foran interstate shipment, contrary to a statutory provision penalizing the com-pany for its failure to furnish cars within a specified time aftei demand, andmaking the duty an absolute one, admitting of no excuse whatever. Thiswas held,-Mr. Justice BROWN, delivering the opinion (Chief Justice FULLER,Mr. Justice HARLAN, and Mr. Justice MCKENNA, dissenting) "as applied tointerstate commerce," to be unconstitutional. In McNeil v. Southern. R.Co. (igo6), 2o2 U. S. 543, 26 Sup. Ct. 722, a state railway commission or-dered cars containing interstate shipments to be delivered beyond its rightof way to a private siding. The suit was to enjoin the collection of thestatutory penalties for violating the orders of the commission. This orderthe court by Mr. Justice WHITE, held to be an unlawful interference withinterstate commerce, whether considered as a general power to regulate car-riers engaged in interstate commerce, or .to make an order in a particularcase.On the other hand in the Larabee case supra the plaintiff brought man-'damus to compel the railroad company to resume the transfer of cars loadedand unloaded from the line of a connecting carrier to his flour mill upon-payment of the customary charges. Three-fifths of plaintiff's shipmentswere interstate, the. defendant was a member of a car service associationwhich regulated the interchange of cars; plaintiff refused to pay a demurr-age charge on certain cars furnished by the defendant, because the delay wascaused by it instead of by the plaintiff; the car service association demandedpayment, and upon refusal directed the defendant to discontinue furnishingcars to plaintiff as before; it was found that the delay for which the de-murrage charge was made was due to the fault of the company. There wasHeinOnline  -- 8 Mich. L. Rev. 659 1909-1910MICHIGAN LAW REVIEWno state regulation involved,-only common law duties.' The defendantclaimed that it was subject to the control of Congress only, since the ship-ments were partly or mostly interstate. The court, by Mr. Justice BREWER(MOODY and WHITE, dissenting) held that the state court could enforce thecommon law duty not to discriminate between shippers in such a case,-"atleast until Congress or the Interstate Commerce Commission takes action,although both carriers are engaged in interstate conmmerce, and three-fifthsof the output of the mill is shipped out of the state," and the mere delegationby Congress to the Interstate Commerce Commission of power over interstatecommerce" is not equivalent to specific action by Congress in respect to thematter involved which prevents a state from making regulations conducive tothe welfare and convenience of its citizens that may indirectly affect com-merce." This case reviews the cases upholding state regulations. Comparealso Atlantic C. L. R. Co. v. Macursky (igo), 216 U. S. 122, 30 Sup. Ct. 378.In Mississippi Railroad Commission v. Illinois Cent. R. Co. (igo6), 203U. S. 335, 27 Sup. Ct. go, after reviewing the cases the court by Mr. JusticePECKHAM, says: "A state railroad commission, under a state statute, mayorder the stoppage of trains if the company does not otherwise furnishproper and adequate accommodation to a particular locality, and in such casesthe order may embrace a through i!pterstate train actually running, and com-pel it to stop at the locality named. In such case. in the absence of Con-gressional legislation covering the subject, there is no illegal or improperinterference with the interstate commerce right"; but if reasonable accom-modation is otherwise furnished, a regulation requiring interstate- trains tostop would be void. See also Missouri P..R. Co. v. Kans. (1910), 216 L. S.262, 3o Sup. Ct. 330.In view of these decisions, it seems that the-case under review ought tohave passed upon the point of the negligence 'of the company, rather thanheld the statute (which made no absolute requirement as the state courtheld to furnish cars at all events, without reference to its effect upon inter-state commerce) to be an unconstitutional and direct interference with inter-state commerce. It seems fair under all the facts of the case to hold. con-trary to what the lower court held, that the railroad company, consideringits duties to both its state and interstate shippers was not negligent, andtherefore not liable for any damages or penalty; and because the questionof negligence in such cases of apportioning cars necessarily involves the rel-ative duties to state and interstate shippers, and therefore raises a questionunder the federal law, the federal courts would have jurisdiction to determinewhether there had been negligence or not, and if such court found there wasnegligence in the performance of the common law duty to- a state shipper,then should not the state law imposing the penalty be upheld ? H. L. W.HeinOnline  -- 8 Mich. L. Rev. 660 1909-1910

State Regulations Affecting Interstate Commerce

https://repository.law.umich.edu/cgi/viewcontent.cgi?article=2326&amp;context=articles

State Regulations Affecting Interstate Commerce

Abstract

Similar works

Full text

Available Versions

University of Michigan School of Law