[230 U.S. 340, 341] Mr. Balie P. Waggener for plaintiff in error.
[230 U.S. 340, 342] Mr. John S. Dawson, Attorney General of Kansas, and Messrs. S. N. Hawkes and Richard Henry Towne, and Mr. John W. Tucker, pro se, for defendant in error.
Mr. Justice Van Devanter delivered the opinion of the court:
By an act of February 17, 1905, the legislature of the state of Kansas prescribed a schedule of maximum rates to be charged by common carriers for the transportation, between points in that state, of 'illuminating oil, gasolene, fuel oil, or crude petroleum, in cans, barrels, tanks, or tank cars,' and provided that every such carrier 'which shall demand, exact, or receive for such transportation or delivery any sum in excess of the rates hereby made lawful shall be liable to any person injured thereby in the sum of $500 as liquidated damages, to be recovered by action in any court of competent jurisdiction, together with a reasonable attorney's fee, to be fixed by the court.' Laws 1905, chap. 353, p. 589.
In December, 1906, there were shipped from Humboldt, Kansas, to Cawker City, in that state, 25 barrels of fuel oil, of which J. W. Tucker was the consignee. The shipment was carried from the point of origin about 253 miles over the railroad of the Santa Fe Company to Concordia, and thence to the point of destination, about 47 miles, over the line of the Missouri Pacific Railway Company. According to the statute the charge for the entire transportation should have been $12, but the Missouri Pacific Company demanded and collected therefor from Tucker, the consignee, $3.02 in excess of that sum. He thereupon brought an action in one of the courts of the state, under the act before named, to recover from that company $ 500 as liquidated damages and a reasonable attorney's fee, to be fixed by the court. The company defended upon the grounds that the statutory rates were confiscatory and void, and that the statute, and particularly the provision for the recovery of $500 as liquidated damages, was so arbitrary and unreasonable as to be repugnant to the due process of law and equal protection [230 U.S. 340, 347] clauses of the 14th Amendment to the Constitution of the United States. Other defenses, based on the state Constitution, were interposed, but we need not notice them. The plaintiff recovered a judgment for the $500, which was affirmed by the supreme court of the state, the Federal questions being decided adversely to the company (82 Kan. 222, 108 Pac. 89 ), and the latter prosecutes this writ of error.
As the right of recovery and the judgment sustaining it were rested upon the provision imposing a liability for liquidated damages in the sum of $500, we come at once to the question of the validity of that provision under the 14th Amendment.
Primarily it is to be observed that the rates prescribed by the legislature, while presumptively valid, are not conclusively so; that to require the company, in the operation of its road, to give effect to rates which prevent it from obtaining a reasonable return for the service rendered to the public is to deprive it of its property without due process of law; and that whether the prescribed rates are thus in excess of the state's power (see Atlantic Coast Line R. Co. v. North Carolina Corp. Commission, 206 U.S. 1 , 24-26, 51 L. ed. 933, 944, 945, 27 Sup. Ct. Rep. 585, 11 Ann. Cas. 398, and cases cited) is a question which the company is entitled to have determined in appropriate judicial proceedings. And it also is to be observed that the act of 1905 and other laws of the state, as construed by the state court, afford the company no opportunity for securing a judicial determination of the validity of these rates otherwise than as it may do so in a defensive way when charged, in a case like this or in some criminal prosecution, with failing to give effect to them.
Being a common carrier, the company is not at liberty to accept or decline shipments of oil. It must receive and carry them when offered, and must be ready to name to shippers the rates at which that service will be rendered. If the statutory rates permit a reasonable return, they are [230 U.S. 340, 348] controlling; if they prevent it, they are invalid. But of their obligatory character the company is not the judge. And yet it must choose whether it will give effect to them or no, and then must abide the result of its action. If they be so unreasonably low as to be invalid, it cannot give effect to them without sustaining a serious and irreparable loss; and if effect be not given to them and they be subsequently adjudged lawful, the enforcement of the prescribed liabilities and penalties will likewise entail a most serious loss, for the transactions involved must necessarily be numerous. In one of the briefs it is said that the intrastate oil shipments on the company's lines in Kansas in a single year are as many as 10,000. Thus it will be perceived that the position of the company, with no right itself to institute a proceeding to determine for itself and all shippers the validity of the legislative rates, is one of exceeding perplexity.
On the other hand, the interests of shippers and consumers of oil must be considered no less than those of the carrier. Experience teaches that to secure adherence to rates, even when lawfully prescribed, it is essential that deviations from them be discouraged by adequate liabilities and penalties.
It is in the light of these considerations that the validity of the provision imposing a liability for liquidated damages in the sum of $500 for every charge in excess of the legislative rates must be tested.
It will be perceived that this liability is not proportioned to the actual damages. It is not as if double or treble damages were allowed, as often is done, and as we think properly could have been done here. Nor is it as if there would be difficulty in proving or ascertaining the actual damages, thereby furnishing a reason for prescribing a liquidated amount reasonably approximating the probable damages, taking one case with another. Chicago, B. & Q. R. Co. v. Cram, 228 U.S. 70 , 57 L. ed. --, 33 Sup. Ct. Rep. 437. What the [230 U.S. 340, 349] statute does is to authorize a recovery of $500 in every case, whether the shipment be of 1 barrel, or of 10 or 25 barrels, or of a tank car; and this although it is of common knowledge that the possible damages in respect of the charge for carrying any of these from one point in the state to another could never be more than a small fraction of that sum. In the present case the shipment was of 25 barrels for a distance of 300 miles, and the excess over the legislative rate, $3.02, was less than 1- 150 of the authorized recovery.
The state court, although recognizing that the solution of the problem is not free from difficulty, reached the conclusion that 'so long as the defendant [the carrier] cannot be made to suffer until a competent court had passed upon the justice of the legislative rates, the guaranties of the Federal Constitution are not infringed.' But that this view fails to recognize the real plight of the carrier is made plain by the following extract from the opinion in Ex parte Young, 209 U.S. 123, 147 , 52 S. L. ed. 714, 723, 13 L.R.A.(N.S.) 932, 28 Sup. Ct. Rep. 441, 14 Ann Cas. 764:
What was said in that case is conclusive of the question here. True, the act then under consideration subjected the officers and agents of the carrier to penalties not found in the act now before us, but, notwithstanding this, we think the liabilities and penalties imposed by the Kansas statute bring it within the controlling principle of that [230 U.S. 340, 351] decision. As applied to cases like the present, the imposition of $500 as liquidated damages is not only grossly out of proportion to the possible actual damages, but is so arbitrary and oppressive that its enforcement would be nothing short of the taking of property without due process of law, and therefore in contravention of the 14th Amendment. See Waters- Pierce Oil Co. v. Texas, 212 U.S. 86, 111 , 53 S. L. ed. 417, 430, 29 Sup. Ct. Rep. 220; Standard Oil Co. v. Missouri, 224 U.S. 270, 286 , 769 S., 32 Sup. Ct. Rep. 406. Upon this ground the judgment is reversed, and the case is remanded for further proceedings not inconsistent with this opinion.