New York Central & Hudson River Railroad Co. v. United States

Supreme Court of the United States · 1909 · Corporations

CorporationsInterstate CommerceRailroad RebatesCorporate Criminal LiabilityElkins Actrebatespublished tariffinterstate commerce

Facts

The railroad and other lines had a published tariff rate of 21 cents per hundred pounds for sugar shipped from New York to Cleveland. In 1902, the railroad's traffic officials and the American Sugar Refining Company agreed that the shipper would pay the full tariff but later receive rebates of 4 cents on sugar for local Cleveland delivery and 6 cents on sugar reconsigned beyond Cleveland. The sugar was transported before the Elkins Act took effect, but on April 3, 1903, after the Act became effective, the railroad paid $26,141.81 on claims presented as overcharges. No evidence showed any legitimate basis for those payments.

Issue

Does the Elkins Act apply when the agreement for rebates and the transportation occurred before the Act took effect, but the actual rebate payment was made afterward? Also, were the indictment and jury instructions sufficient to sustain the conviction?

Rule

The Elkins Act punishes the offering, granting, giving, soliciting, accepting, or receiving of a rebate in respect of interstate transportation whereby property is transported at less than the published tariff rate. Where the shipper first pays the lawful tariff, the rebating offense is not complete until part of that rate is actually refunded; therefore, a rebate paid after the Act's effective date is punishable even though the transportation occurred earlier. Criminal intent in this setting means an intent to do the act prohibited by statute, not a wicked or immoral intent.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In January, before a new federal anti-rebate statute took effect, Lakefront Freight Lines and Mesa Produce in Chicago agreed that Mesa would pay the full published interstate tariff on lettuce shipments to Detroit and later receive a refund of 5 cents per crate. The shipments moved in February, and Mesa paid the filed rate in full. In April, after the statute became effective, Lakefront mailed Mesa a check labeled "rate adjustment" with no legitimate basis other than the prior arrangement.

Is Lakefront most likely criminally liable under the statute?

Explanation. The majority held that where the shipper first pays the published rate, rebating is not complete until part of that lawful rate is actually refunded. Thus a post-enactment refund is punishable even if both the rebate arrangement and the transportation predated the statute. The earlier illegal arrangement created no vested right to consummate the rebate later.