APPEAL FROM THE UNITED STATES COMMERCE COURT.
MR. JUSTICE LAMAR delivered the opinion of the court.
The New Orleans Board of Trade, in October and November, 1907, brought three separate proceedings against
the Louisville & Nashville Railroad, asking the Commerce Commission to set aside as unfair, unreasonable and discriminatory certain class and commodity rates (local) from New Orleans to (1) Mobile, to (2) Pensacola, and (3) through rates, via those cities, to Montgomery, Selma, and Prattville. The Railroad answered. A hearing was had, the issue as to commodity rates was adjusted by agreement, and on December 31, 1909, the Commission made a single order in which it found the class rates complained of to be unreasonable, directed the old locals to be restored and a corresponding reduction made in the through rates. The Railroad thereupon, on January 26, 1910, filed a bill, in the United States Circuit Court for the Western District of Kentucky, praying that the Commission be enjoined from enforcing this order, which it alleged was arbitrary, oppressive and confiscatory, and deprived the company of its property and right to make rates, without due process of law.
After a hearing before three Circuit Court judges, the carrier's application for a temporary injunction was denied (184 Fed. Rep. 118). Testimony was then taken before an Examiner. Later the suit was transferred to the newly organized Commerce Court -- the United States being made a party. There, in addition to the evidence in the Circuit Court, the Railroad exhibited all that had been introduced before the Commission, as a basis for the contention that this evidence utterly failed to show that the rates attacked were unreasonable. This view was sustained by the Commerce Court, which, in a lengthy opinion, held (one judge dissenting) that the order was void because there was no material evidence to support it.
On the appeal here, the Government insisted that while the act of 1887 to regulate commerce (24 Stat. 379, c. 104, §§ 14, 15, 16) made the orders of the Commission only prima facie correct, a different result followed from the provision in the Hepburn Act of 1906 (34 Stat. 584, c. 3591, § 15)
that rates should be set aside if after a hearing the "Commission shall be of the opinion that the charge was unreasonable." In such case it insisted that the order based on such opinion is conclusive, and (though Int. Com. Comm. v. Union Pacific R.R., 222 U.S. 541, 547, was to the contrary) could not be set aside, even if the finding was wholly without substantial evidence to support it.
1. But the statute gave the right to a full hearing, and that conferred the privilege of introducing testimony, and at the same time imposed the duty of deciding in accordance with the facts proved. A finding without evidence is arbitrary and baseless. And if the Government's contention is correct, it would mean that the Commission had a power possessed by no other officer, administrative body, or tribunal under our Government. It would mean that where rights depended upon facts, the Commission could disregard all rules of evidence, and capriciously make findings by administrative fiat. Such authority, however beneficently exercised in one case, could be injuriously exerted in another; is inconsistent with rational justice, and comes under the Constitution's condemnation of all arbitrary exercise of power.
In the comparatively few cases in which such questions have arisen it has been distinctly recognized that administrative orders, quasi-judicial in character, are void if a hearing was denied; if that granted was inadequate or manifestly unfair; if the finding was contrary to the "indisputable character of the evidence." Tang Tun v. Edsell, 223 U.S. 673, 681; Chin Yoh v. United States, 208 U.S. 8, 13; Low Wah Suey v. Backus, 225 U.S. 460, 468; Zakonaite v. Wolf, 226 U.S. 272; or, if the facts found do not, as a matter of law, support the order made. United States v. B. & O.S.W.R.R., 226 U.S. 14. Cf. Atlantic C.L. v. North Carolina Corp. Com., 206 U.S. 1, 20; Wisconsin, M. & P.R. Co. v. Jacobson, 179 U.S. 287, 301;
Oregon Railroad v. Fairchild, 224 U.S. 510; I.C.C. v. Illinois Central, 215 U.S. 452, 470; Southern Pacific Co. v. Interstate Com. Comm., 219 U.S. 433; Muser v. Magone, 155 U.S. 240, 247.
2. The Government's claim is not only opposed to the ruling in I.C.C. v. Union Pacific, 222 U.S. 541, 547, and the cases there cited, but is contrary to the terms of the Act of Regulate Commerce, which, in its present form, provides (25 Stat. 861, § 17) for methods of procedure before the Commission that "conduce to justice." The statute, instead of making its orders conclusive against a direct attack, expressly declares that "they may be suspended or set aside by a court of competent jurisdiction." 36 Stat. 539 (15). Of course, that can only be done in cases presenting a justiciable question. But whether the order deprives the carrier of a constitutional or statutory right; whether the hearing was adequate and fair, or whether, for any reason, the order is contrary to law -- are all matters within the scope of judicial power.
3. Under the statute the carrier retains the primary right to make rates, but if, after hearing, they are shown to be unreasonable, the Commission may set them aside and require the substitution of just for unjust charges. The Commission's right to act depends upon the existence of this fact, and if there was no evidence to show that the rates were unreasonable, there was no jurisdiction to make the order. Int. Com. Comm. v. Northern Pacific Ry., 216 U.S. 538,544. In a case like the present the courts will not review the Commission's conclusions of fact (Int. Com. Comm. v. Delaware &c. Ry., 220 U.S. 235, 251), by passing upon the credibility of witnesses, or conflicts in the testimony. But the legal effect of evidence is a question of law. A finding without ...