Description: Legally, all businesses involved in public transportation are designated common carriers.
Significance: In the United States, after the establishment of the Interstate Commerce Commission (ICC) in 1887, the Supreme Court became the arbiter in regulatory matters affecting national transportation that previously had been adjudicated by state judges.
In the eyes of the law in both the United States and Great Britain, a distinction is made between ordinary businesses and those that have a special obligation to the public. In the case of common carriers, in British common law (a subcategory of “common callings”), the latter are distinguished from the former by the fact that their services are available to the general public. The social and economic welfare of the community is much affected by the quality and cost of such services.
The Obligations of Common Carriers
Because of their intimate involvement with the community good, common carriers in Great Britain were charged with three specific obligations. First, they could not discriminate among those who sought their services. They were compelled by law to make these services available to all who applied for them. Second, common carriers were prohibited from assessing unreasonable rates or conditions on those who wanted and needed their services. Third, the liability standards applied to them were much more stringent than those applied to ordinary businesses. Regulation was imposed upon common carriers strictly for the good of the entire community they served. In the United States, before the Interstate Commerce Commission (ICC) was established in 1887, the obligations that had long been a part of British common law were essentially observed and enforced. In the first century of U.S. independence, the laws regarding interstate commerce, which under Article I, section 8, of the U.S. Constitution bestowed the power of regulation on Congress, were enforced by individual judges who adjudicated the cases that came before them. This created a chaotic situation often marked by inequities, favoritism, and, in some cases, graft and corruption.
The Court and Common Carriers
In New Jersey Steam Navigation Co. v. Merchants’ Bank of Boston (1848), the Supreme Court established the rules governing whether a common carrier might contract its liability for negligence to another company. This decision was followed by Parrot v. Wells Fargo (1872), in which the question was whether a common carrier, in this case Wells Fargo, had a duty to serve, as stipulated by common law, if what it was called on to do involved the transportation of dangerous cargo. In this instance, the Court found valid cause for making an exception to the rule that common carriers had a duty to serve all who applied for their services. It was not until Munn v. Illinois (1877), however, that the Court categorically introduced into constitutional law the distinction that British common law had made between ordinary businesses and those that had a special obligation to serve the public. The Munn decision was concerned with grain elevators and railroads, both considered essential in serving the public interest. It had been a common practice at that time for rates to be set for both grain storage facilities and the railroad transportation of grain to market centers and increased substantially as the fall harvest approached. Under newly enacted statutes, the railroads were forced to offer equal rates to all shippers of freight related only to what the cargo was, rather than to when it was being shipped, to how much was being shipped, or to how far it was being shipped. The Court upheld the constitutionality of these statutes. After Munn, the excessive rates the railroads had been charging for short hauls and small shipments began to be equalized, much to the benefit of small farmers.
The Effects of the Munn Decision
The Munn decision established clearly the difference between ordinary businesses and those that had a profound effect on the social and economic welfare of American society. This doctrine established that grain storage facilities and railroads were businesses “affected with a public interest.” The Court further ruled that in the absence of federal mandates regarding the rates charged by businesses with special obligations to the public, the responsibility for regulating interstate transportation would fall to state legislatures. This solution created more problems than it solved and resulted in a chaotic network of railroad charges from one state to another. The Court sought to remedy this situation in its decision in Wabash, St. Louis, and Pacific Railway Co. v. Illinois (1886). This case was brought before the Court because of the inequities that existed among various states in the regulation of interstate commerce, notably the regulation of railroads. The Court found that the only agency that could reasonably regulate interstate commerce charges was Congress, which had been given the authority to do so in Article I, section 8, of the Constitution but had never exercised this prerogative. Out of this decision grew the creation of the ICC the following year.
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