Alabama & Vicksburg Railway Co. v. Mississippi Railroad Commission

Background

A railroad company in Mississippi had a special local price called a "rebilling-rate" of 3J cents per 100 pounds for grain shipped from Vicksburg to Meridian when the grain arrived over the Shreveport road. The company allowed a Vicksburg merchant who received a carload over that other road to either forward that carload or, within ninety days, send a similar carload from Vicksburg to Meridian at the same low rate. Other Vicksburg merchants did not have dealings with the Shreveport road but wanted the same low rate.

Reasoning

The State Railroad Commission ordered that the low rate apply to all grain shipments from Vicksburg to Meridian. The Court explained the core question as whether the State may enforce one equal local rate when a railroad voluntarily gives a low rate to some shippers. The Court held the State may make that rate universal. Because the railroad had voluntarily created the special local rate for some merchants, it could not later object when the State required equal treatment for all local shipments. The Court said the commission need not determine whether the low rate gave adequate return to the railroad when enforcing equality.

Real world impact

The ruling lets the State require the same local freight price for all shippers for the same route and distance, preventing private deals that favor certain merchants. Railroads that create voluntary local discounts can be required to offer those same discounts to everyone, and the State’s enforcement of equal local rates was upheld.