Atlantic Coast Line R. Co. v. Florida, 295 U.S. 301 (1935)

MR. JUSTICE CARDOZO delivered the opinion of the Court.

Freight charges were collected by a railroad carrier in accordance with an order of the Interstate Commerce Commission after the refusal of a United States District Court to declare the order void. Later, the decree was reversed by this Court without considering the evidence on the ground that the findings of the Commission were incomplete and inadequate. Florida v. United States, 282 U.S. 194. Still later, the Commission, upon new evidence and new findings, made the same order it had made before, this Court confirming its action after appropriate proceedings. Florida v. United States, 292 U.S. 1. The question now is whether restitution is owing from the carrier for the whole or any part of the rates collected from its customers while the first order was in force. The narrative must be expanded to bring us to an answer.

For many years, beginning with 1903, the Atlantic Coast Line Railroad Company or its predecessor maintained a schedule of charges known as the Cummer scale for the transportation of logs in train and carload shipments within the State of Florida. In its inception, this scale was established by agreement between the railroad company and one or more companies engaged in the sale of lumber. Later, in January, 1927, an order was made by the Railroad Commission of Florida whereby voluntary rates then in force, if not higher than the maximum rates approved by the Commission, were to be continued in effect as if officially prescribed. For the purpose of the present controversy, we assume that, by force of this order, the Cummer scale, even though less than compensatory, and even though voidable through appropriate action, must be deemed to have been fixed by law for intrastate transactions.

In May, 1926, the Public Service Commission of Georgia filed a complaint against the Atlantic Coast Line Railroad Company with the Interstate Commerce Commission, the complaint being directed to the maintenance of the Cummer scale. In that proceeding, the Railroad Commission of Florida intervened, and also important shippers affected by the challenged schedule. On August 2, 1928, the Interstate Commerce Commission made a decision (146 I.C.C. 717), amended and broadened on February 7, 1929, enjoining the maintenance of the schedule then in force on the ground (along with others) that the rates were so low as to result in unjust discrimination against interstate commerce. To avoid this discrimination, a new schedule was established. Florida and the intervening shippers brought suits in a federal District Court, made up of three judges in accordance with the statute (28 U.S.C. § 47), to vacate the orders of the Commission and restrain enforcement. The District Court dismissed the bills. 30 F.2d 116; 31 F.2d 580. Upon appeal to this Court, the decrees were reversed on the ground that the report of the Commission did not contain the necessary findings. 282 U.S. 194. It was not enough to find that the intrastate rates were unreasonably low. 282 U.S. at p. 214. It was not enough to state the conclusion that interstate commerce was unjustly affected. 282 U.S. at p. 213. It was necessary to find the facts supporting the conclusion -- as, for instance, that the revenues of interstate commerce would probably be increased if the rates for intrastate hauls were established at a higher level.

In the absence of such findings, we are not called upon to examine the evidence in order to resolve opposing contentions as to what it shows or to spell out and state such conclusions of fact as it may permit.

282 U.S. at p. 215. The Commission was to be free, however, to consider the facts anew and file its report in proper form. It "is still at liberty, acting in accordance with the authority conferred by the statute, to make such determinations as the situation may require." The mandate of reversal, giving effect to that decision, went down from this Court on February 19, 1931, and on March 7, 1931 was filed in the court below.

In the interval between February 8, 1929, the effective date of the new schedule, and March 7, 1931, the railroad company had made collections in accordance with the order of the Commission, discarding the Cummer scale. Indeed, the Florida commission, bowing to the authority of the Interstate Commerce Commission, had made an order in January, 1929, amended in April of that year, whereby the Cummer scale was declared to be suspended so long as the decree of the District Court remained in effect and unreversed. After the mandate of reversal, the Interstate Commerce Commission listened to new evidence, made a new set of findings, and prescribed the same rate that it had put into effect before. 186 I.C.C. 157; 190 I.C.C. 588. The basis of the decision was the unjust discrimination suffered by interstate commerce through losses of revenue resulting from the local rates. Once more, the order of the Commission (dated July 5, 1932, but not effective till February 25, 1933) was assailed by Florida and by shippers through suits in the District Court. The bills were dismissed, 4 F.Supp. 477, and this Court affirmed. 292 U.S. 1. Both the findings of the Commission and the evidence back of the findings were now held to be sufficient.

In the meantime, other proceedings had been taken in the District Court with a view to giving effect more completely to the mandate of reversal. In February and March, 1931, shippers of lumber, interveners in the earlier suits, petitioned for a decree of restitution to the extent of the difference between the rates that had been paid from February 8, 1929, to March 7, 1931, under the order of the Commission, and the lower rates that would have been paid if there had been adherence to the Cummer scale. At the same time, the State of Florida and its Railroad Commission petitioned for like relief in behalf of other shippers and consignees. An answer having been filed by the railroad company, the District Court appointed a master to take evidence and report. After intermediate proceedings which it is unnecessary to summarize, the master made a final report in March, 1933, recommending a decree of restitution for part, but only part, of the overcharges claimed. He found that the Cummer scale was unjust and noncompensatory, and, if enforced against the will of the carrier, would result in confiscation. He found that, for the years in controversy, a substituted rate should be established, and established at such a figure as would avoid unjust discrimination against interstate commerce. He found that this end could be attained by the adoption of a schedule higher than the Cummer scale but lower than the one promulgated by the Commission as operative thereafter. He advised restitution in the sum of $99,941.77, which was 34 percent of the amount ($293,946.38) demanded by the claimants. The District Court confirmed the report, one judge dissenting. The prevailing opinion gives expression to the hesitation of the court in thus departing from the findings of the federal Commission. It observes, however, that there would be hardship to shippers and consignees in a sharp and sudden change of rates directed to a business in which freight charges are so large a part of the value of the product. "If the ideal rates be those fixed by the Commission, the ideal might with reason and justice have been approached less precipitately." The case is here on cross-appeals. Arkadelphia Milling Co. v. St. Louis Southwestern Ry. Co., 249 U.S. 134; Baltimore & Ohio R. Co. v. United States, 279 U.S. 781. In No. 344, the appellant is the railroad company, which declares itself aggrieved because restitution was not denied altogether. In No. 345, the appellants are the State of Florida and intervening shippers, who declare themselves aggrieved because restitution was not awarded on the basis of the Cummer scale.

Decisions of this Court have given recognition to the rule as one of general application that what has been lost to a litigant under the compulsion of a judgment shall be restored thereafter, in the event of a reversal, by the litigants opposed to him, the beneficiaries of the error. Arkadelphia Milling Co. v. St. Louis Southwestern Ry. Co., supra; Northwestern Fuel Co. v. Brock, 139 U.S. 216; Ex parte Lincoln Gas & Electric Light Co., 257 U.S. 6; cf. Haebler v. Myers, 132 N.Y. 363, 30 N.E. 963. Indeed, the concept of compulsion has been extended to cases where the error of the decree was one of inaction, rather than action, as where a court has failed to set aside the order of a commission or other administrative body, the constraint of the order being imputed in such circumstances to the refusal of the court to supply a corrective remedy. Baltimore & Ohio R. Co. v. United States, supra. But the rule, even though general in its application, is not without exceptions. A cause of action for restitution is a type of the broader cause of action for money had and received, a remedy which is equitable in origin and function. Moses v. Macferlan, 2 Burr. 1005; Bize v. Dickason, 1 Term Rep. 285; Farmer v. Arundel, 2 Wm.Bl. 824; Kingston Bank v. Eltinge, 66 N.Y. 625.

Suits for restitution upon the reversal of a judgment have been subjected to the empire of that principle like suits for restitution generally.

Restitution is not of mere right. It is ex gratia, resting in the exercise of a sound discretion, and the court will not order it where the justice of the case does not call for it nor where the process is set aside for a mere slip.

Gould v. McFall, 118 Pa. 455, 456, 12 A. 336, 337, citing Harger v. Washington County, 12 Pa. 251. There are other decisions to the same effect. Alden v. Lee, 1 Yeates 160, 207; Green v. Stone, 1 Har. & J. 405; State v. Horton, 70 Neb. 334, 97 N.W. 434; Texasdale v. Stoller, 133 Mo. 645, 652, 34 S.W. 873.

In such cases, the simple but comprehensive question is whether the circumstances are such that, equitably, the defendant should restore to the plaintiff what he has received.

Johnston v. Miller, 31 Gel. & Russ. 83, 87.

We are thus brought to the inquiry whether the rates under the new schedule were collected in such circumstances as to move a court of equity, finding the proceeds of collection in the possession of the carrier, to help the shippers and their representatives in getting the money back.

This Court has held that the Interstate Commerce Commission has jurisdiction exclusive of that of any court to set aside intrastate rates which discriminate unduly against interstate commerce. Board of Railroad Commissioners v. Great Northern Ry. Co., 281 U.S. 412. Even so, the substituted schedule is prospective only, and power has not been granted in such circumstances to give reparation for the past. 281 U.S. at p. 423: Robinson v. Baltimore & Ohio R. Co., 222 U.S. 506, 511. What was done in this case must be considered in the light of that established rule. An order declaring the discrimination to be excessive and unjust was made by the Commission before the carrier attempted to collect the higher charges. Thereafter, the order was adjudged void by a decision of this Court (Florida v. United States, 282 U.S. 194; cf. United States v. Baltimore & Ohio R. Co., 293 U.S. 454, 464; United States v. Chicago, M. St.P. & P. R. Co., 294 U.S. 499), but void solely upon the ground that the facts supporting the conclusion were not embodied in the findings. Void in such a context is the equivalent of voidable. Toy Toy v. Hopkins, 212 U.S. 542, 548; Weeks v. Bridgman, 159 U.S. 541, 547; Ewell v. Daggs, 108 U.S. 143, 148-149. The carrier was not at liberty to take the law into its own hands and refuse submission to the order without the sanction of a court. It would have exposed itself to suits and penalties, both criminal and civil, if it had followed such a path. See, e.g., Interstate Commerce Act, 49 U.S.C. § 16(8), (9), (10), (11). Obedience was owing while the order was in force.

By the time that the claim for restitution had been heard by the master and passed upon by the reviewing court, the Commission had cured the defects in the form of its earlier decision. During the years affected by the claim, there existed in very truth the unjust discrimination against interstate commerce that the earlier decision had attempted to correct. If the processes of the law had been instantaneous or adequate, the attempt at correction would not have missed the mark. It was foiled through imperfections of form, through slips of procedure (Gould v. McFall, supra; Alden v. Lee, supra), as the sequel of events has shown them to be. Unjust discrimination against interstate commerce, "forbidden" by the statute, and there "declared to be unlawful" (Interstate Commerce Act § 13(4); Board of Railroad Commissioners v. Great Northern Ry. Co., supra, at 425, 430; Florida v. United States, 292 U.S. 1, 5), does not lose its unjust quality because the evil is without a remedy until the Commission shall have spoken. The word, when it goes forth invested with the forms of law, may fix the consequences to be attributed to the conduct of the carrier in reliance upon an earlier word, defectively pronounced, but aimed at the self-same evil, there from the beginning. The Commission was without power to give reparation for the injustice of the past, but it was not without power to inquire whether injustice had been done, and to make report accordingly. Indeed, without such an inquiry and appropriate evidence and findings, its order could not stand, though directed to the years to come. Obedient to this duty, the Commission looked into the past and ascertained the facts. In particular, it looked into the very years covered by the claims for restitution and found the inequality and injustice inherent in the Cummer rates during the years they were in suspense and during those they were in force. 186 I.C.C. 157, 166, 167, 168, 187. What it had stated in its first report (146 I.C.C. 717) was thus supplemented and confirmed by what it stated in the second. The two sets of findings tell us, when read together, that restitution is without support in equity and conscience, whatever support may come to it from procedural entanglements.

The carrier’s position takes on an added equity when the fact is borne in mind that the charges of the Cummer schedule are less than compensatory, and would result in confiscation if enforced by the power of the state after challenge by the carrier in appropriate proceedings. What those proceedings are has been a subject of dispute under the Florida decisions. For many years, it was believed that a carrier objecting to a schedule as unreasonably low might put another into effect without asking the consent of anyone, and justify its conduct later if a contest should develop. Pensacola & A. R. Co. v. State, 25 Fla. 310, 5 So. 833; Cullen v. Seaboard Air Line R. Co., 63 Fla. 122, 58 So. 182. The shippers and the State of Florida contend that, by a very recent decision, this practice has been ended. Reinschmidt v. Louisville & Nashville R. Co., 160 So. 69. The present rule is said to be that the carrier must resort in the first place to an administrative remedy before the Railroad Commission of the state, and look to the courts afterwards. If all this be accepted, the conclusion does not follow that the confiscatory character of a schedule is not to be considered in determining the equity of the carrier’s possession when higher rates have been collected under color of legal right and consignees or shippers are trying to regain what they have paid. In saying this, we do not forget that the Cummer scale of rates was voluntary in origin. Later, by an order of the state commission, it became a scale prescribed by law. Whatever voluntary quality it then retained must be deemed to have departed when the carrier made common cause with the critics of the scale in contesting its validity.

The claim for restitution yields to the impact of these converging equities, with all their cumulative power. It would yield to such an impact though the action to which it is an incident were triable in a court of law. Moses v. Macferlan, supra; Schank v. Schuchman, supra. It must yield more swiftly and surely when the litigants are in a court of equity. Tiffany v. Boatman’s Institution, supra; Willard v. Tayloe, 8 Wall. 557; Mississippi & M. R. Co. v. Cromwell, 91 U.S. 643, 645; Deweese v. Reinhard, 165 U.S. 386, 390. The right that equity declines to further may have its origin in contract. But also, and in typical instances, it has its origin in statute. Tiffany v. Boatman’s Institution, supra. The tests of conscience and fair dealing will be the same in either case. This District Court whose decree we are reviewing was organized to pass upon the question whether the challenged order of the Commission should be vacated or upheld. 28 U.S.C. § 47. Whatever power it has to compel restitution by the carrier of items subsequently collected derives from that primary jurisdiction, and is ancillary thereto. In the exercise of that power, it is not required to lend its aid in perpetuating a forbidden practice. Florida has no equity other than the equities of the consignees and shippers. The consignees and shippers have no equity that can override a prohibition and a policy declared by act of Congress. To prevail, the claimants must make out that, in the circumstances here developed, a fixed and certain duty has been laid upon a court of equity to make the carrier pay the price of the blunders of the commerce board in drawing up its findings. The blunders being now corrected, the verities of the transaction are revealed as they were from the beginning. We think the better view is that, in the light of its present knowledge, the court will stay its hand and leave the parties where it finds them.

To this, the claimants answer that inaction in such circumstances is an assumption by the federal court of legislative powers, and an unconstitutional encroachment upon the powers of a sovereign state. The argument misses the significance of equitable remedies. The federal court, by its inaction, does not trench upon any jurisdiction, legislative or judicial, inherent in the State of Florida. It does not undertake to say that the rates collected by the carrier were lawful in the sense that a suit would lie to recover them if credit had been given to the shipper and a balance were now unpaid. All that the federal court does is to announce that it will stand aloof. It inquires whether anything has happened whereby a court of equity would be moved to impose equitable conditions upon equitable relief. In the course of that inquiry, it perceives that the charges were collected under color of legal right, in circumstances relieving the carrier of any stigma of extortion. It discovers through the evidence submitted to the Commission and renewed in the present record that what was charged would have been lawful as well as fair if there had been no blunders of procedure, no administrative delays. Learning those things, it says no more than this -- that, irrespective of legal rights and remedies, it will not intervene affirmatively, in the exercise of its equitable and discretionary powers, to change the status quo. This is not usurpation. It is not action of any kind. It is mere inaction and passivity in line with the historic attitude of courts of equity for centuries.

The claimants refer to cases in which this Court has denied the power of the federal judiciary to take upon itself the functions of a ratemaking body, charged with legislative duties. None of the cases cited controls the case at hand. A typical illustration is Central Kentucky Natural Gas Co. v. Railroad Commission, 290 U.S. 264. Rates prescribed by a state commission for the furnishing of gas were found by a federal court to be below the line of compensation. In the face of that finding, the decree refused relief unless the complainant would consent to abide by a new schedule established by the court itself. Upon appeal to this Court, the condition was annulled. We gave explicit recognition to the power of a court of equity to subject an equitable remedy to equitable terms. We held, however, that full protection could be accorded to seller and consumer if the regulatory Commission were permitted to discharge its proper function of prescribing a just schedule after the unlawful one had fallen.

In the circumstances, there was no occasion for the court to draw upon its extraordinary equity powers to attach any condition to its decree, and the condition which it did attach was an unwarranted intrusion on the powers of the commission.

290 U.S. at 273.

A very different situation is shown to us here. A complex of colorable right and procedural mistake has brought about a situation in which the equities of the carrier, if they are not protected by the court, will be unprotected altogether. The rates now recognized as just are not a fabrication of the judges. They have not been fixed by a court to take effect thereafter. They are the rates prescribed for the future by the appointed administrative agency, and that, on two occasions, after scrutiny and study of injustice suffered in the past. The court surveys the years and discerns the same injustice, dominant at the beginning as well as at the end. Indeed, nowhere in the record is there a suggestion on the part of anyone that, during this long litigation, there has been any change of conditions whereby a discrimination against interstate commerce illegitimate at one time would be innocent at another. What was injustice at the date of the second order of the Commission is shown beyond a doubt to have been injustice also at the first. A situation so unique is a summons to a court of equity to mould its plastic remedies in adaptation to the instant need.

The case up to this point has been dealt with on the assumption that the award upon restitution is to be for the whole demand or nothing. There is, however, a possibility between these two extremes, a possibility exemplified in the decree of the court below. The District Court, following the recommendation of the master, refused a decree of restitution for the full amount of the difference between the collections by the carrier and the rates of the Cummer scale, but did award restitution for 34 percent of that difference, or $99,941.77. We think the claim for restitution should have been rejected altogether. In thus holding, we do not suggest that the determination of the Interstate Commerce Commission as to the rates to be operative thereafter had the force of res judicata in respect of past transactions. Cf. Arizona Grocery Co. v. Atchison, T. & S.F. Ry. Co., 284 U.S. 370, 389; State Corporation Commission v. Wichita Gas Co., 290 U.S. 561, 569. Nonetheless, as the court below conceded, it was entitled to great respect, representing, as it did, the opinion of a body of experts upon matters within the range of their special knowledge and experience. Illinois Central R. Co. v. Interstate Commerce Commission, 206 U.S. 441, 454; Virginian Ry. Co. v. United States, 272 U.S. 658, 665. This Court has already held that their findings had support in the evidence before them. Florida v. United States, 292 U.S. 1, 12.

The present record does not satisfy us that a new scale should be set up to govern claims for restitution. The field of inquiry is one in which the search for certainty is futile. Opinions will differ as to the qualifications of experts, the completeness of their inquiry into operating costs, the accuracy of their methods of computation, the soundness of their estimates. There is a zone of reasonableness within which judgment is at large. Banton v. Belt Line Ry. Co., 268 U.S. 413, 422-423. Only by accident, perhaps, would two courts or administrative bodies draw the line within the zone at precisely the same points. In a sense, then, it is true that there is support in fairness and reason for each of the two conclusions, the Commission’s and the master’s. More than this, however, must be made out to uphold the claims in suit. The claimants do not sustain the burden that is theirs by showing that the master set up a reasonable schedule. They must show that the other schedule, the one set up by the Commission, is unreasonable. In the absence of such a showing, the carrier does not offend against equity and conscience in standing on its possession and keeping what it got.

The decree is reversed, and the cause remanded, with instructions to dismiss the claims.

It is so ordered.

* Together with No. 345, Florida et al. v. United States et al. Appeal from the District Court of the United States for the Northern District of Georgia.

* Many cases are assembled in Keener on Quasi-Contracts, pp. 412, 417, and Woodward on Quasi-Contracts, § 2.