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Where the Interstate Commerce Commission has, upon complaint and after hearing, declared what is the maximum reasonable rate to be charged by a carrier, it may not at a later time, and upon the same or additional evidence as to the fact situation existing when its previous order was promulgated, by declaring its own finding as to reasonableness erroneous, subject a carrier which conformed thereto to the payment of reparation measured by what the Commission now holds it should have decided in the earlier proceeding to be a reasonable rate.
On complaint of petitioner shipper and others, the Interstate Commerce Commission, after hearing, ordered the establishment of a certain rate. The Commission later declared the rate too high and ordered reparations. The carriers objected that they should not be required to pay reparations on shipments which moved under rates approved or prescribed by the Commission as reasonable. The district court ruled in favor of the petitioner. On appeal, however, the Circuit Court of Appeals for the Ninth Circuit, reversed the judgment. Petitioner challenged the decision.
Under the circumstances, should the carriers be obliged to pay reparations?
The Court ruled that the Commission erred when it failed to recognize that when it prescribed a maximum reasonable rate for the future, it was performing a legislative function, and that when it was sitting to award reparation, it was sitting for a purpose judicial in its nature. In the second capacity it was bound to recognize the validity of the rule of conduct prescribed by it and not to repeal its own enactment with retroactive effect. It could repeal the order setting rates as it affected future action, and substitute a new rule of conduct as often as occasion might require, but this was the limit of its power. The Commission could not, by declaring its own finding as to reasonableness erroneous, subject a carrier which conformed thereto to the payment of reparation measured by what the Commission later held it should have decided in the earlier proceeding to be a reasonable rate.