Smith v. Interstate Commerce Commission/Opinion of the Court

by Joseph McKenna

United States Supreme Court

245 U.S. 33

Smith  v.  Interstate Commerce Commission

 Argued: Oct. 2 and 3, 1917. --- Decided: Nov 5, 1917

The fundamental contention of appellant is that the Interstate Commerce Commission has no power to ask the questions in controversy and in emphasis of this he asserts 'the inquiry was confined exclusively to supposed political activities and efforts to suppress competition.' And these, it is further asserted, 'are not matters which the Commission 'is legally entitled to investigate." The contention is attempted to be supported by the insistence that the investigation was provoked and prosecuted solely in obedience to the Senate resolution and neither in exercise of the judgment of the Commission nor in pursuance of a complaint made to it. And the twelfth paragraph of the resolution is dwelt upon as directing and controlling the inquiry as to what amount, if any, the railroads 'have subscribed, expended or contributed for the purpose of preventing other railroads from entering any of the territory served by any of these railroads, for maintaining political or legislative agents, for contributing to political campaigns, for creating sentiment in favor of any of the plans of any of said railroads.'

If, however, we advert to the questions we observe that the matters dwelt on by appellant are incidents only, having the purpose, it may be, in one sense to ascertain the 'amount, if any,' subscribed or expended, but not having the purpose in the sense of the questions, which is: whether the amount subscribed or expended was charged to operating or legal expenses. The latter purpose is more special than the other, and, we may say in passing, does not necessarily involve even a criticism of the other, involves only the display in the accounts of the carriers of the amount expended and its allocation. To this limitation the investigation is reduced, and the question is, being so reduced, Is it within the powers of the Commission?

The Interstate Commerce Act confers upon the Commission powers of investigation in very broad language and this court has refused by construction to limit it so far as the business of the carriers is concerned and their relation to the public. ^[1] And it would seem to be a necessary deduction from the cases that the investigating and supervising powers of the Commission extend to all of the activities of carriers and to all sums expended by them which could affect in any way their benefit or burden as agents of the public. If it be grasped thoroughly and kept in attention that they are public agents, we have at least the principle which should determine judgment in particular instances of regulation or investigation; and it is not far from true-it may be it is entirely true, as said by the Commission-that 'there can be nothing private or confidential in the activities and expenditures of a carrier engaged in interstate commerce.'

Turning to the specialties of the Interstate Commerce Act we find there that all charges and treatment of all passengers and property shall be just and reasonable, and there is a specific prohibition of preferences and discriminations in all the ways that they can be executed, with corresponding regulatory power in the Commission. And authority and means are given to enable it to perform its duty. By section 12 it is authorized to inquire into the management of the business of carriers and keep itself informed as to the manner and method in which the same is conducted, and has the right to obtain from the carriers full and complete information. It may (section 13) institute an inquiry of its own motion, and may (section 20) require detailed accounts of all the expenditures and revenues of carriers and a complete exhibit of their financial operations and prescribe the forms of accounts, records and memoranda to be kept. And it is required to report to Congress all data collected by it.

It would seem to be an idle work to point out the complete comprehensiveness of the language of these sections and we are not disposed to spend any time to argue that it necessarily includes the power to inquire into expenditures and their proper assignment in the accounts, and the questions under review, we have seen, go no further. They are incidental to an investigation as to the 'manner and method' (section 12) in which the business of the carriers is conducted; they are in requisition of a detailed account of their expenditures and revenues and an exhibit of their financial operations (section 20), and the answers to them may be valuable as information to Congress (section 21).

A limitation, however, is deduced from section 13. It is said to be confined to cases where an inquiry is instituted 'as to any matter or thing concerning which a complaint is authorized to be made, or concerning which any question may arise under any provisions' of the act 'or relating to the enforcement of any of the provisions' of the act. In other words, that the inquiry is determined by the manner of procedure. The objection overlooks the practical and vigilant function of the Commission. To sustain it appellant seems to urge that there must be put into words by some complainant or by the Commission, if it move of itself, some definite charge of evil or abuse, and put into expression some definite remedy, and that an inquiry must not transcend either charge or remedy. To so transcend, appellant urges, would be an exercise of autocratic power and is condemned in Harriman v. Interstate Commerce Commission, 211 U.S. 407, 29 Sup. Ct. 115, 53 L. ed. 253.

Appellant presses that case beyond its principle. And we may observe that section 13 has been amended and broadened since the decision of that case. ^[2] The inquiry in the present case is more immediate to the function of the Commission than the inquiry in that and comes within Interstate Commerce Commission v. Chicago, R. I. & P. Ry., supra, where it was said, at page 103 of 218 U.S., at page 656 of 30 Sup. Ct. (54 L. ed. 946):

'The outlook of the Commission and its powers must be greater than the interest of the railroads or of that which may affect those interests. It must be as comprehensive as the interest of the whole country. If the problems which are presented to it therefore are complex and difficult, the means of solving them are as great and adequate as can be provided.'

And they must necessarily be expressed in generalities. A precise specification of powers might work a limitation and all not enumerated be asserted to be withheld.

We find it difficult to treat counsel's argument as seriously as they urge it. The expenditures of the carriers essentially concern their business. Section 20 declares it and gives the Commission power to require a detail of them, and necessarily not only of their amount but purpose and how charged. And the Commission must have power to prevent evasion of its orders and detect in any formal compliance or in the assignment of expenses a 'possible concealment of forbidden practices.'

It may be said that our comments are not applicable to questions numbered 7 and 8, which relate to the expenditure of money in Alabama 'in a campaign against rate reduction.' That is, those questions are not directed to 'political activities' strictly so called, nor to the suppression of competition. They are directed, however, to the use of funds in a campaign against state legislative action. But this, appellant asserts, is at the farthest an attempt to 'influence legislation or to mold public opinion' and that there is nothing in the Interstate Commerce Act 'which forbids it or gives to the Commission any power to investigate the subject.' And it is besides urged, as it is urged against the other questions, that they do not relate to 'the subject under investigation,' which is strictly defined by the Senate resolution, to which, it is contended, the order of the Commission was responsive and subservient, and was to be and is confined to the efforts simply 'of the railroad companies in political matters and in attempts to suppress competition.' Indeed, the servility of the Commission to the Senate's resolution is the basic and insistent contention of appellant and taints, he further contends, all that the Commission did.

The contention ascribes too much dominance to the resolution and puts out of view or unduly subordinates the invocation of the powers of the Commission by the complaint of Lea and the interval of two years between it and the resolution, and puts out of view besides the independent and inherent powers of the Commission to which we have adverted.

Abstractly speaking, we are not disposed to say that a carrier may not attempt to mold or enlighten public opinion, but we are quite clear that its conduct and the expenditures of its funds are open to inquiry. If it may not rest inactive and suffer injustice, it may not on the other hand use its funds and its power in opposition to the policies of government. Beyond this generality it is not necessary to go. The questions in the case are not of broad extent. They are quite special, and we regard them, as the learned judge of the court below regarded them, as but incident to the amount of expenditures and to the manner of their charge upon the books of the companies. This, we repeat, is within the power of the Commission. The purpose of an investigation is the penetration of disguises or to form a definite estimate of any conduct of the carriers that may in any way affect their relation to the public. We cannot assume that an investigation will be instituted or conducted for any other purpose or in mere wanton meddling.

Order affirmed.

Notes

1. Wilson v. New, 243 U.S. 332, 37 Sup. Ct. 298, 61 L. Ed. 755; Interstate Commerce Commission v. Baird, 194 U.S. 25, 24 Sup. Ct. 563, 48 L. Ed. 860; Interstate Commerce Commission v. Goodrich Transportation Co., 224 U.S. 194, 32 Sup. Ct. 436, 56 L. Ed. 729; United States v. White Star Line, 224 U.S. 194, 32 Sup. Ct. 436, 56 L. Ed. 729; Hale v. Henkel, 201 U.S. 43, 26 Sup. Ct. 370, 50 L. Ed. 652; Interstate Commerce Commission v. Chicago, R. I. & P. Ry. Co., 218 U.S. 88, 30 Sup. Ct. 651, 54 L. Ed. 946.
2. Prior to the decision section 13 read as follows: 'Said Commission shall in like manner investigate any complaint forwarded by the railroad commissioner or Railroad Commission of any state or territory, at the request of such commissioner or Commission, and may institute any inquiry on its own motion in the same manner and to the same effect as though complaint had been made.'

After the decision the section was amended to read as follows: '* * * And the Interstate Commerce Commission shall have full authority and power at any time to institute an inquiry, on its own motion, in any case and as to any matter or thing concerning which a complaint is authorized to be made, to or before said Commission by any provision of this act, or concerning which any question may arise under any of the provisions of this act, or relating to the enforcement of any of the provisions of this act.' Comp. St. 1916, § 8581.