Chicago, Indianapolis & Louisville Railway Co. v. United States

Background

The United States sued an Indiana railroad that ran the Monon Route after the company made written contracts with publishers, including the Frank A. Munsey Company. Under a January 24, 1907 contract, the railroad agreed to give the publisher and its employees nontransferable trip and mileage tickets in exchange for advertising space in Munsey’s Magazine. The petition alleged the railroad transported those people interstate while taking only advertising instead of the published fares, charged full fares to others, and had entered into similar agreements with about 251 other publishers.

Reasoning

The central question was whether a carrier may accept anything other than money, measured by its published schedule, as payment for interstate transportation. Relying on a recently decided authority cited in the opinion, the Court held that accepting advertising in place of money violated the federal laws that require observance of published interstate rates. The Court explained that Congress intended all interstate travelers to be treated alike and that barter in the form of advertising would allow easy evasion of the statute. The railroad’s argument that an Indiana law authorized issuing transportation for advertising was rejected because federal commerce laws control interstate transactions.

Real world impact

The decision affirms the injunction preventing the railroad from issuing transportation in exchange for advertising and bars similar contracts that avoid published fares. Railroads and publishers who used barter arrangements for interstate trips must stop those practices. The ruling enforces consistent treatment of interstate travelers and confirms that state laws permitting such exchanges cannot override federal commerce rules.