Honorable Ernerrt0. Thompoon, Chairmen
Railroad Cemlrslon of Texas
Austin,    Texas

Dear Sir2                        Opinion Ilo.O-2642
                                 Re: Legality of furnlrhlng
                                      of oommunioation 8ervieo8
                                      by rail and 8otor oarrlerr.
            YOU have renewed the nquert of iormr oonmlu-
sionar    km A. Sslth for the oplnlon of thi8 drpartmnt upon
the follow-        faot   rltuatlon whloh 18 quoted from hi8 letter
of Alyrrrt 16, 1940:
             "The Railroad Connl88lon orlglnallf
      prohibited both rail and hIghwar oarrkn
      fZ'OlS OOllVeYit@Elt888ge8and Ol'd8r8,eitbl'
      wrltt8n or verbal, by telephone, telegraph,
      or   otheni8e b&men     shipper8 and oonslgnees,
.     and from dlreotly or lndlractlr paging tele-
      phone or telegraph charge8 In tiehalfol or
      In the intera8t of shippers airaconrlgnees.
      The CommI88ion later awnded trhi8orUer 80
      88 to prohibit On4 the OonVeyhg      Of -88age8
      or or4en    for 8hhipperaby telephone or tele-
      luwh   l  The COmEi88iOn on Bbruam    28, 1940,
      m8OifSded 611 Of it8 ~l'WlOtl8O&l'8 ad
      there are now no out8tandlng km8188ioa
      order8 on the subject. Copies a? tha8?
      order8 ar8 enclosed horewlth.
              “On April 18, 1940, a petltlon 1188
         filed with the COpDll88iOnby Oertaln rail
         and NtOZ' tr8n8,pOt't
                             Oolpp~~bs 88king thBt
         the Oo~le8lOn 188Ue an order prohibiting
         oommon carriers by rail or highway from
         rendering and parfOIming 8aae88Orial 8emiae8
         of this natnre, nblah pstltion 188 diBEiB8ed.
              ~We'rould 1lIm to have your oplnlan a8
         to whether under the3tetutes of thl8 State,
         partioularly Section 16 of the Hotor Carrier
         Aot of 1931, a8 amended, the iurnlcrhlngof
Honorable Ernest Oc Thomp8en, Page 2



    euoh 8erVloe by rail and highway oarrler8,
    either or both, la permi88lble or prohibited.
    If you find that the Statute8 forbid the
    practloe, la any Comml88lon order neoesearyt
    If  you find that the Statute8 are rrllenton.
    the 8UbjeCt,   are you of the opinion that the
    ComIIxl88lon can by It8 order authorlxe or
    prohibit the practice; and If 80, do QOU
    conalder  It neoessary in view of it8 fcwmer
    orders and hearinga, ror .theCoimnlsslonto
    conduct additional hearing or hearings after
    due notice?”

          SUperVi8iOn and rewatlon   of motor WArHerS 18
vested,ln the Railroad Comtni8elonof Te%as b Artlole glib,
gre8;    Annotated Civil Statutea. Section ga reads a8

           "The Commission is hereby ve8te4 with
     power and authority and It Is hereby made
     it8 duty to supervlae and regulate.zthe
     transportation of property for compenaa-
     tlon OF hire by motor vehiole on any pub-
     lic highway In the State, to fix. Drescrlbe
     or amrove the maxlmum or minimum. or maxl-
     mum and minimum rates. fares and charfzeeoif
    heat
     apeolfic provisions herein contained, toe
     preecrlbe all rule8 and regulation8 necee-
     aary for the government of motor carrleri),
     to prescrtbe rules and regulations for the
     eafetg of Operations OP each of suoh motor
     carrier8, to require the filing of 8uCh
     monthly, annual and other report8 and other
     data Of motor Carrier8 a8 the COmmi88iOn
     may deem neoes8ary, to preacrlbe the echedules
     and services of motor carriers  operating a8
     ommon carriers,




          Section 4c state8 that:
         'The Commiaslon la iurther authorlzed
    and empowered and It 8ha11 be It8 duty to
    eupervlse and regulate motor carrier8 In all
    matter8 afiecting the relatlon8hlp between
  .     .




Honorable Ernest 0. Thompson, Page 3



      8uch motor carriera sr.dthe shipping public
      ;gha,q   be neceaeary to the lntereat of the
             .
          Article 169Ob, paragraph (g), Vernon'e Annotated
Penal Code of Texas, reads a8 foiiows:
            "It ehail be urlawfui for any motor
      carrier  (common or contr.%&), or the owner




              or any shipper or ooaslgnee or hi8 agent.
      lrervantor employee, to receive from such mot.or
      oarrler, dlreotly or lndirect:.y,any suoh com-
      ml88lDn or Oon8ld8retlon as an lnduaement to
      ",e",ur$
             the transportation of any suoh property.
            * (Empha818 ours).
            Paragraph (h) of Artisle 1690b reads a6 followe:
           “Any comon carrier motor carrier, hle
      agent, eervazt or empio*fir?
                                 who directly or
      lndlrectlv Elves to aW shlptxr any rebate,
      or any shipper, his ag+x%, ,;r-rils:?t
                                         OF em-
      ployee who directly or f.r&~?ntly recslves
      any rebate, sha3.Lbe guE.tg of a misdemeanor
      an8 shall be *u%lshedby f:.nsnot to exceed
                    200) Doliara fop each offenee,
      Two Hundred (1%
      in any court of competent Jx4sdlction In




          Chapter ll.,Title 112, Revl8ed Civil StaMtes of
1925, relate8 to the Railroad Commlaslon of Texas, it8 power
and authority. Article 6445 makes it the duty of the Rail-
road Commieslon to "adopt ail necessary ratea, charge8 and
renulatlone. to govern and reuulate suoh railroads. per8onB.
aeeoclatlo~ and-corporations; and to oorrect abu8%and      -
prevent unrluatdlscrlmlnatlon in the rate8. chernee and
    Honorable Ernest 0. Thompson, Page 4




              The first paragraph of Article 6448 provldee that
    the Commission shall “adopt all neceeearg rates, charges and
    regulations, to govern ,andregulate freight aaN pamenger
,.‘-“-
‘.&&#afflc, to correct abuses and.prevent unjust discrimination
    and extortion In ratea-of freight,,,an.d
                                          ,q%?.senger
                                                    traiilc on
    the different raiLT@s   In this &at&-
              Artiale 6474.prohibits unjust discrimUatlon aria
    in that connection states that the following shall conatltute
    unjust    discrimination:

              “If any railroad subject hereto directly
         ot,
         or indire 1
         drawback or other device, ehall charge, demand,
         collect or receive from any person. firm or
         corporation a greater or 1651+compi3nsationfor
         any service rendered or to be rendered by it
         than it charges, demands, collects or reeQYqes
         from any other person, firm or corporation for
         doing a like and contemporaneous service, or
         shall give any undue or unreasonable preference
         or advantage to any particular pereon, firm or
         corporation, or locality, or to subject any
         particular deecription of traffic to any undue
         or unreasonab$e prejudice, delay or disadvantage
         in any r6apact HhataoeveL1.” (Emphaeis ours).
              Article 6513 provides that the Commiaaion shall
    fix juat.and reasonable rates to be charged by railroad
    compante?:and~that It shall adopt such rates, rules and
        la-
    .p$$::;-.   as will prevent discrimination In the operation
         &tz?tcks or the handling of traffic. Article 6515
    also relates to the discriminatory operation of tracks and
    Article 6536 fixes a penalty for the failure of any rall-
    road company to comply wlth the orders of the Co~i~alOn~
              Chapter 9, Title 19, Penal Code of Texas, la de-
    voted to the Railroad Comml~eion. Article 1687 of that
    chapter fixes puniehment for the follonlng offenses:
                  “If any ofi’ioer,agent, clerk, servant
             or employee, or any receiver, or his servant,
.      -




    Honorable Ernest 0. Thompeon, Page 5


           agent, or mployeo of any railread pollpany
           ia thir State shall, m           C+Fm         ,
           pr br aw    meoial rate. -bat&. m
           g&p    devloq for, end on behalf of suoh rall-
           road aoapaly: knowingly oharge, demand, aontraot
           for,  oolleot or reoolro fro8   any pw80n, fir8
           or oorporation a gnatar or 1011 008pmmtion
           for  my nerv1oe rendered,    or to be rehdered,
           by any aueh railroad company that such rallroad
           company * + * demands, oontracta for,    collects
           or receives from any other person, firm or
           corporation for dolng a like and contemporaneous
           service, or-if any officer, agent, clerk, eervant
           or employee, or receiver, or hi8 agents, 8ervant8,
           or employees, of any railroad company in this
           State, shall on behalf of euah railraod    company,
           make or give any undue or unreasonable Dreferenae
           or aw   advantane to any particular pereon,
                     firm,  corporationor locality, ae to
           ~y%%ioe       rendered or to be rendered by mob
           railroad company, or shall srubjectany partioular
           dwcoiptlon of traffic on such railroad company
           to any undue or unreat!onableprejudloe, delay
             r dleiadvantagoZn any reoprat whatever. * * l.’
           4Rmpharlr,ourr).
              The above legislative enactments are %n compllanoe
    with ConstItutIonal mandate. The Supreme Court of Texas has
    stated that the Oonstltutlon delegated to the Legislature
    the duty of paenlng lawe for the correctlon of all abueee or
    improper u8ea of franahlsee which have been granted or might
    be granted to railTOad  In thla State, 81)rell a8 to all
    abuses connected ulth or growing out of buainese transacted
    in the exercise of euah frycittes.     Railroad Commltsslonv.
    H. & T. C. Railroad Co., 9 T       340. The statutes which
    the Legislature has enacted foliow closely the language of
    the Conetltutlon, and It 1s clear that the general and
    ultimate purpose which the Legislature had In mind was to
    establish equal and fair rates and to prohlblt rebates or
    dlecrlmlnatlon regardleas of the form which they might take.
              Cases arleing In lnterrtate commerce bear a etrik-
    lng reeemblance to situations whloh have been or may be
    present&d under the Texas statutes, due to elmllarlty In
    purpose and language between the Acts of Congreea and the
    Statutes enaoted by the Texas Leglelature. The same obaerva-
    ;;E;eo3de true with regpect to cases arlslng in other
          . The general purpoee of all statutes or acts of
IionorableErnest 0. Thompson, Page 6


CongreBe relating to raten, dlsorlmlnatory rat@8 and rebates
ls~to prevent un.Wst dlsorlmlnatiinaand unedUa1 rates. The
                                             ee"of'Utiited
                                               stat-t
                                             i reduced below
zh;;z;t $iven in the published echiidulele,,onefor giving
        , and again In the same aaae that the.net amount
whla; the,parrler rffcelvesfrom a shlpger.and retains fix&e
th; r$tem;arged.      In the case of Chloaao and A. R. COW
pay          Y. 225 U. S. 1    the Supreme Court held that
where ni provision was made r exoedited service in the
published-rates, the shipper was~riquired to pay only the
rate published, and could %ot be required to pay a higher
rate for any special or expedited service. A higher rate
might be exacted fc@ epeclal 8erilc.ebut If such is the
case, the rate must be published.
          In the 0886 of Hew York Central & 8. R. 011 CQ.,
vs. General Electric Co,. 114 I E 112 Justice Caxdoea
of the Hew York Court of Appeal; riled {h#at an allowance
by a railroad for services rendered by the consignee af er
dellverg was an unlawful rebate. The opinion states +t at a
reaeonable allowance may be made for neoeaaary eervlaes
rendered by the consignee in oomDletlnn dellverg but that
no allowanoe mar be made for dervices which the railroad
comoany was under no duty to perform.
           It appears to be well settled that any device
whereby one person Is charged leea than another for the
same service constitutes CI mebate, and further, that a
rebate automatically results if there IS any deviation
from the published tariff. With particular respect to
Aots of Congress, it ha8 been held that no device to de-
feat lefzlelatlon?e3atfve to.discPiminatosu Pat& can be
ugheld.- >
Co., 120 At1 62     Furathax,it appear8 that the mere fact
that a car&r    iz'under no legal duty to perform a partI--
cular transportation eeraice or a pai+t.lcu~ar  Item of serv-
ice in connection with tTs transportation of persons or
p-nopertydoea not authorize discrimination in that res
9 Amer. Jur. 571; Xansaa City dc S. R. Co.. vs. U. S.. 2
             Rates as fixed must be strictly adhered to and
t ere must be no departure therefrom. A device need not
%==*
necessarily be fraudulent in order to result In a prohibited
rebate, the purpose of statutes in thle regard being to
prohibit every method of dealing by which the forbidden
result can be brought about. Too much stress cannot be
laid on the intention of the lawmaking bodies to provide
.       .




    Honorable Ernest 0. Thorn&son,Page 7


    one rate nith equal prLvileg;E ea$t;qS’o*,;llu6h;ppe;
    thereunder. Armour PaCkinn    .   l  .,’        **      *
    Yinn VB. Express Coi, 128 N. W. b63.

               Ig2Eh; c$se60f Federal Oriwel CO. vs. D&ttiit &
    M. R:Cd.,        . .     , the Supreme Court of Uickiga,an
    iollowiw   the trend ‘i   ated in the cases cited above. and
    under a typical aituatbon, holds that a rebate may be &-
    dompllshed by indirect as well as direct methods. The state
    utes Involved In this case are somewhat similar to the Tex-
    as laws. Turning again to interstate commerce we flad the
    case of Interstate Commerce Commassiotivs. Louisville & Ft.
    R. co., I 18 Fed, 613 holding that a carrier aannot for the
    purpose of building ip a port on its own line at the expense
    of a rival road adopt rate8 which are unreasonable ir-.them-
    selves or undilllypreferehtlal, 13;$. 3. S. 845.

               The Supreme Court of New Hampshire in the case of
    Boston & 1. R. R. Co.. VE. Greatfalls Manufacturing Co., 111
    Btl                                              ve been t6fir
    by ihe c&Mar    for ferry service re~%r~d”to ehippezs. The
    case appears to be authority for the prapoeltlon that if a
    particular eervlce rendered by a carrier is of substantial
    benefit to shippers of a particular class, but %ot to those.
    bf other claaeea, the expense of such servide cannot be con-
    sidered part of the’overheadand included’.ingeneral rates,
    but a separate charge therefor should be made agalcst shippers
    receiving the benefit, if all of the chippers are to be treat-
    ed substantially alike. The following quotation it,from the
    body trf the opinion and Is the test established by the Supreme
    Court of New Hampshire upon which the declslon turns:
                 “The test to determine whether a
            seperate.charge should be made for that
            service Is to lnqulre whether that must
            be done if all ahlppers (those who do and
            those who do not need that service) are
            to be treated substantially alike, and
            that Is also the test to determine whether
            such charge is permissible. * * l:8
              The offer of aommunication eervloe to shippers
    by rail or highway carriers, regardless of the mode of com-
    munication employed, Is not a part of transportation service.
    At the most it is an inducement Do the shipper to avail him
    self of facilities offered by the particular carrier. Ordi-
    narily the cost of communication between consignor and con-
    signee muet be borne by one of those partlee, and is a leg-
    itimate business expense, properly charged to the person or
                                                            -     .




Honorable Meat    o. !&xaps~, Page 8



tnat any oonummxoatlon
                     servme orrerea~7 tne carrzer10 a
more or less valuable conalderatlon, unless the colrelgnor
or consignee haa no reamm ncc 3eslre to avail hiaeelf of
‘the mrviad.  We think the inevitable result ia a dtiferezce
in the rateu chazged Sor the transportation of property.
me oaz-i&d    paymmt of c0llnlmlcat1cnchargea, dlreotly oJ?
luU.lrectl~ ooastltztas”a zeb%te or ocscaabioa by the car-
rier, resdhag   irr a lower rata f&m that published. The
amount of rebate depen& upon ~e??ta& factore which noold
appear to be imkaterzal to this opinion. mc cep9Icc is
oue of which a ehlpper might or a&&t not desire to avail
ldIU6Cl.f.If he does not atrailNmcelf of al: facilltZe8
aa ludWeme&s     offered by the carrier, he ~131 pay the
name sate for freight se does the ehlpper who does avail
himself of the free 0onmunication semloe.    Oomumloatioa
is uct a service uhioh the tmnupor”;atloa agemy can be re-
qtlired to reader, Wld UZXi3 UF~iZl4P.VCl2'~wan~eS w    COni-
muulcatioa between conrsignorand oonnlgnee*wouZU be puld
for at rates~firs4 by the cotmunloatioa agenoy. We believe
the bmaotloc is prohlblte4 both ac to rail and Wghuar oar-
riero br l@ae statutelreet out ln this opinion. Irehold
ofheru~w wou3d be to v%oJnte the LntentZoz!and put’~o6sof
the WW!atura     aud frwacm a? the hauWmtioa     of Tbxas
ia their effort to memxt    4Mces    *oh  mcult la unequal




self of aomurxloatloa at a0 additional co&.      The faot that
swab aervlce   ha6 been offlam   1% “uhs paat,
                                             .oc everi   thatIt
has beoome an aatabllshed o~.tom by reason of lapse of time,
18 act atsterlalto the laaus; nor 18 the Pact that rXr%!YelOn
    t result frzm pr$zl;it;q~ of the prac?;fc:+
                                             * “.23 0. J. S.
Y
Qi   Atablmoa    8, , , 0, va. S&ate, 206 P;.f?36.
          Ia aneiwerto the specIElo queetlone whloh you have
asked, we am of the opinion that the statutss prohibit the
praatloe of furnishing free aomam%oation eervioe br rail or
highway oarriera, and that 4~1order of the Oomlaelon ia not
necessary to problblt or pu&sh.   The LeglslatWe hae, howeve
protided for germ-al supemlelon  and regulation by the
                                                         =
.    .   -




    Honorable Ernest 0. Thompson, Page 9


    Railroad CammissIon, to correct abuses, prevent unjust,die-
    crlmlnatlon, rebates, Inducements, etc. The Commission has
    been given power to preacrlbe reasonable rules and regula-
    tions pertaining to ratea, dlecrlmlnatlon, additional serv-
    ices, etc., and la charged with the duty of aupervlslng mat-
    tera affecting the relationship between aarriere and shippers.
    We are of the opinion, therefore, that the Commiaelon may If
    It desires, cbnduot addltlonal hearings and make such reaaon-
    able rules and regu&atlona as it deem8 neceesary under the
    circumstances.
                                  Yours very truly,
                             ATTORNEY MSNRRAL OF    TEXAS



                             By     /s/Roes Carlton
                                       Roes Carlton
                                       Assistant

    RC:eau:mg
    APPROVED    MARCH 10, 1941
      /a/ Qerald C. Mann
    ATTORNEY QKNERAL OF TEXAS           APPROVED
                                         OPINION
                                      !‘COMMITTEE
                                      By BUB
                                         ThaWman
                                                                     .
