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KEOGH v. CHICAGO & NORTHWESTERN RAILWAY COMPANY ET AL.

decided: November 13, 1922.

KEOGH
v.
CHICAGO & NORTHWESTERN RAILWAY COMPANY ET AL.



ERROR TO THE CIRCUIT COURT OF APPEALS FOR THE SEVENTH CIRCUIT.

Author: Brandeis

[ 260 U.S. Page 159]

 MR. JUSTICE BRANDEIS delivered the opinion of the Court.

This action, under § 7 of the Anti-Trust Act, July 28 1890, c. 647, 26 Stat. 209, was brought by Keogh in the federal District Court for Northern Illinois, Eastern Division, in November, 1914. Eight railroad companies and twelve individuals were made defendants. The case was heard upon demurrer to a special plea; the demurrer was overruled; judgment was entered for defendants, plaintiff electing to stand upon his demurrer; and this judgment was affirmed by the Circuit Court of Appeals for the Seventh Circuit. 271 Fed. 444. The case is here on writ of error.

The cause of action set forth was this: Keogh is a manufacturer of excelsior and flax tow at St. Paul, Minnesota. The defendant corporations are interstate carriers engaged in transporting freight from St. Paul to points in other States. Prior to September 1, 1912, these carriers formed an association known as the Western

[ 260 U.S. Page 160]

     Trunk Line Committee. The individual defendants are officers and agents of the carriers and represent them in that Committee. It is a function of the Committee to secure agreement in respect to freight rates among the constituent railroad companies, which would otherwise be competing carriers. By means of such agreement, competition as to interstate rates from St. Paul on excelsior and tow was eliminated; uniform rates were established; and interstate commerce was restrained. The uniform rates so established were arbitrary and unreasonable; they were higher than those theretofore charged; and they were higher than the rates would have been if competition had not been thus eliminated. Through this agreement for uniform rates Keogh was damaged.The declaration contains a schedule of the amounts paid by him in excess of those which would have been paid under rates prevailing before September 1, 1912, and which, but for the conspiracy, would have remained in effect. He claims damages to the extent of this difference in rates. He also alleges as an item of damages that the increase in freight rates lessened the value of his St. Paul factory through loss of profits.

Defendants set up the fact that every rate complained of had been duly filed by the several carriers with the Interstate Commerce Commission; that upon such filing the rates had been suspended for investigation, upon complaint of Keogh, pursuant to the Act to Regulate Commerce, February 4, 1887, c. 104, 24 Stat. 379, 384, as amended; that after extensive hearings, in which Keogh participated, the rates were approved by the Commission; and that they were not made effective until after they had been so approved. The character of the proceedings before the Commission was more fully shown by reference to Keogh v. Chicago, Burlington & Quincy R.R. Co., 24 I.C.C. 606; also Rates on Excelsior and Flax Tow from St. Paul, Minn., 26 I.C.C. 689; Rates

[ 260 U.S. Page 161]

     on Excelsior and Flax Tow from St. Paul, Minn., 29 I.C.C. 640; Morris, Johnson, Brown, Manufacturing Co. v. Illinois Central R.R. Co., 30 I.C.C. 443; The Excelsior and Flax Tow Cases, 36 I.C.C. 349.

The case is presented on these pleadings. Whether there is a cause of action under § 7 of the Anti-Trust Act is the sole question for decision. Keogh contends that his rights are not limited to the protection against unreasonably high or discriminatory rates afforded him by the Act to Regulate Commerce; that under the Anti-Trust Act he was entitled to the benefit of competitive rates; that the elimination of competition caused the increase in his rates; and that, as he has been damaged thereby, he is entitled to recover. The instrument by which Keogh is alleged to have been damaged is rates approved by the Commission. It is, however conceivable that, but for the action of the Western Trunk Line Committee, one, or more, of these railroads would have maintained lower rates. Rates somewhat lower might also have been reasonable. Moreover, railroads had often, in the fierce struggle for business, established unremunerative rates. Since the case arose prior to the Transportation Act 1920, February 28, c. 91, § 418, 41 Stat. 456, 474, 485, the carriers were at liberty to establish or maintain, even unreasonably low rates provided they were not discriminatory. Compare Interstate Commerce Commission v. Baltimore & Ohio R.R. Co., 145 U.S. 263, 277; Skinner & Eddy Corporation v. United States, 249 U.S. 557, 565.

All the rates fixed were reasonable and non-discriminatory. That was settled by the proceedings before the Commission. Los Angeles Switching Case, 234 U.S. 294. But under the Anti-Trust Act, a combination of carriers to fix reasonable and non-discriminatory rates may be illegal; and if so, the Government may have redress by criminal proceedings under § 3, by injunction

[ 260 U.S. Page 162]

     under § 4, and by forfeiture under § 6. That was settled by United States v. Trans-Missouri Freight Association, 166 U.S. 290, and United States v. Joint Traffic Association, 171 U.S. 505. The fact that these rates had been approved by the Commission would not, it seems, bar proceedings by the Government. It does not, however, follow that Keogh, a private shipper, may recover damages under § 7 because he lost the benefit ...


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