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. 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. at L. 379, §§ 14-16, chap. 104, U.S.C.omp. Stat. Supp. 1911, p. 1284) 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. at L. 584, § 4, chap. 3591, U.S.C.omp. Stat. Supp. 1911, p. 1297), 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 Interstate Commerce Commission v. Union P. R. Co. 222 U.S. 547, 56 L. ed. 311, 32 Sup. Ct. Rep. 108, 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.