Source: https://supreme.justia.com/cases/federal/us/352/59/case.html
Timestamp: 2016-07-28 14:34:35
Document Index: 115710404

Matched Legal Cases: ['§ 16', '§ 322', '§16', '§ 16', '§ 16', '§ 16', '§ 16', '§322', '§ 22']

United States v. Western Pacific R. Co. :: 352 U.S. 59 (1956) :: Justia U.S. Supreme Court Center Log In
› United States v. Western Pacific R. Co.
United States v. Western Pacific R. Co. 352 U.S. 59 (1956)
U.S. Supreme CourtUnited States v. Western Pacific R. Co., 352 U.S. 59 (1956)United States v. Western Pacific Railroad Co.No. 18Argued October 15, 1956Decided December 3, 1956352 U.S. 59CERTIORARI TO THE COURT OF CLAIMS
2. The issues as to the construction and reasonableness of the tariff having been raised by way of defense, referral of those questions to the Commission is not barred by the two-year limitation prescribed by § 16(3) of the Interstate Commerce Act. Pp. 352 U. S. 70-74. Page 352 U. S. 60
The carriers billed the Government at the high first-class rates established in Item 1820 of Consolidated Freight Classification No. 17 for "incendiary bombs." Pursuant to § 322 of the Transportation Act of 1942, [Footnote 2] the Page 352 U. S. 61 Government paid the bills of the Bangor and the Seaboard as presented; on post-audit, however, the General Accounting Office made deductions against these respondents' subsequent bills on other shipments on the ground that the shipments in question should have been carried at the lower, fifth-class, rate applicable to gasoline in steel drums. [Footnote 3] The bills of the Western Pacific were initially paid at the lower rate. Respondents thereupon brought the present suits to recover the difference between the bills as rendered and as paid in the case of the Western Pacific, and the amount of the deductions in the other two cases.
The Government defended on three grounds: (1) that Item 1820 was inapplicable because absence of burster and fuse deprived these bombs of the essential characteristics of "incendiary bombs," and hence no additional sums were due; (2) that, if this tariff item was held to govern, the tariff would be unreasonable as applied to these shipments, and that, as to this issue, the court proceedings should be suspended and the matter referred to Page 352 U. S. 62 the Interstate Commerce Commission; and (3) that, in any event, the Bangor and Seaboard were estopped from charging the "1820" rate.
We are met at the outset with the question of whether the Court of Claims properly applied the doctrine of primary jurisdiction in this case -- that is, whether it correctly allocated the issues in the suit between the jurisdiction of the Interstate Commerce Commission and that of the court. In the view of the court below, the case presented two entirely separate questions. One was the question Page 352 U. S. 63 of the construction of the tariff -- whether Item 1820 was applicable to these shipments. The second was the question of the reasonableness of that tariff if so applied. The Court of Claims assumed, as it had in the Union Pacific case, supra, that the first of these -- whether the "1820" rate applied -- was a matter simply of tariff construction, and thus properly within the initial cognizance of the court. [Footnote 7] The second -- the reasonableness of the tariff as applied to these shipments -- it seemed to regard as being within the initial competence of the Interstate Commerce Commission. Before this Court, neither side has questioned the validity of the lower court's views in these respects. Nevertheless, because we regard the maintenance of a proper relationship between the courts and the Commission in matters affecting transportation policy to be of continuing public concern, we have been constrained to inquire into this aspect of the decision. We have concluded that, in the circumstances here presented, the question of tariff construction, as well as that of the reasonableness of the tariff as applied, was within the exclusive primary jurisdiction of the Interstate Commerce Commission.
The doctrine of primary jurisdiction, like the rule requiring exhaustion of administrative remedies, is concerned with promoting proper relationships between the courts and administrative agencies charged with particular regulatory duties. "Exhaustion" applies where a claim is cognizable in the first instance by an administrative agency alone; judicial interference is withheld until the administrative process has run its course. "Primary Page 352 U. S. 64 jurisdiction," on the other hand, applies where a claim is originally cognizable in the courts, and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body; in such a case, the judicial process is suspended pending referral of such issues to the administrative body for its views. General American Tank Car Corp. v. El Dorado Terminal Co., 308 U. S. 422, 308 U. S. 433.
"now firmly established, that in cases raising issues of fact not within the conventional experience of judges or cases requiring the exercise of administrative discretion, agencies created by Congress for regulating the subject matter should not be passed over. This is so even though the facts, after they have been appraised by specialized competence, serve as a premise for legal consequences to be judicially defined. Uniformity and consistency in the regulation of business entrusted to a particular agency are secured, and the limited functions of review by the judiciary are more rationally exercised, by preliminary Page 352 U. S. 65 resort for ascertaining and interpreting the circumstances underlying legal issues to agencies that are better equipped than courts by specialization, by insight gained through experience, and by more flexible procedure."
Thus the first question presented is whether effectuation of the statutory purposes of the Interstate Commerce Act requires that the Interstate Commerce Commission should first pass on the construction of the tariff in dispute here; this, in turn, depends on whether the question raises issues of transportation policy which ought to be considered by the Commission in the interests of a uniform and expert administration of the regulatory scheme laid down by that Act. Decision is governed by two earlier cases in this Court. In Texas & Pacific R. Co. v. American Tie & Timber Co., 234 U. S. 138, a shipper attempted to ship oak railroad ties under a tariff for "lumber." The carrier rejected them, urging that such ties were not lumber. In a damage action, expert testimony was received on the question. This Court, however, held that the Interstate Commerce Commission alone could resolve the question. The effect of the holding is clear: the courts must not only refrain from making tariffs, but, under certain circumstances, must decline to construe them as well. A particularization of such circumstances emerged in Great Northern R. Co. v. Merchants Elevator Co., 259 U. S. 285. There, the Court held that, where the Page 352 U. S. 66 question is simply one of construction, the courts may pass on it as an issue "solely of law." But where words in a tariff are used in a peculiar or technical sense, and where extrinsic evidence is necessary to determine their meaning or proper application, so that "the inquiry is essentially one of fact and of discretion in technical matters," then the issue of tariff application must first go to the Commission. The reason is plainly set forth: such a
A tariff is not an abstraction. It embodies an analysis of the costs incurred in the transportation of a certain article and a decision as to how much should, therefore, be charged for the carriage of that article in order to produce a fair and reasonable return. Complex and technical cost allocation and accounting problems must be solved in setting the tariff initially. In the case of "incendiary bombs," since it is expensive to take the elaborate safety precautions necessary to carry such items in safety, evidently there must have been calculation of the costs of handling, supervising, and insuring an inherently dangerous cargo. In other words, there were obviously commercial reasons why a higher tariff was set for incendiary bombs than for, say, lumber. It therefore follows that the decision whether a certain item was intended to be covered by the tariff for incendiary bombs involves an intimate knowledge of these very reasons themselves. Whether steel casings filled with napalm Page 352 U. S. 67 gel are incendiary bombs is, in this context, more than simply a question of reading the tariff language or applying abstract "rules" of construction. For the basic issue is how far the reasons justifying a high rate for the carriage of extra-hazardous objects were applicable to the instant shipment. Do the factors which make for high costs and therefore high rates on incendiary bombs also call for a high rate on steel casings filled with napalm gel? To answer that question there must be close familiarity with these factors. Such familiarity is possessed not by the courts, but by the agency which had the exclusive power to pass on the rate in the first instance. And, on the other hand, to decide the question of the scope of this tariff without consideration of the factors and purposes underlying the terminology employed would make the process of adjudication little more than an exercise in semantics.
132 Ct.Cl. at 118, 131 F.Supp. at 921. The difficulty with this line of argument is that we do not know whether Page 352 U. S. 68 the "incendiary quality of the freight" was in fact the reason for the high rate, still less whether that was the only reason, and how much weight should be assigned to it. Courts which do not make rates cannot know with exactitude the factors which go into the ratemaking process. And for the court here to undertake to fix the limits of the tariff's application without knowledge of such factors, and the extent to which they are present or absent in the particular case, is tantamount to engaging in judicial guesswork. It was the Commission, and not the court, which originally determined why incendiaries should be transported at a high rate. It is thus the Commission which should determine whether shipments of napalm gel bombs, minus bursters and fuses, meet those requirements; that is, whether the factors making for certain costs, and thus a certain rate, on incendiaries are present in the carriage of such uncompleted bombs.
This conclusion is fortified by the artificiality of the distinction between the issues of tariff construction and of the reasonableness of the tariff as applied, the latter being recognized by all to be one for the Interstate Commerce Commission. For the Government's thesis on the issue of reasonableness is not that the rate on incendiary bombs is, in general, too high. It argues only that the rate. "as applied" to these particular shipments. is too high -- i.e., that, since the expenses which have to be met in shipping incendiaries have not been incurred in this case, the carriers will be making an unreasonable profit on these shipments. This seems to us to be but another way of saying that the wrong tariff was applied. In both instances, the issue is whether the factors which call for a high rate on incendiary bomb shipments are present in a shipment of bomb casings full of napalm gel but lacking bursters and fuses. And the mere fact that the issue is phrased in one instance as a matter of tariff construction and in the other as a matter of reasonableness should not Page 352 U. S. 69 be determinative on the jurisdictional issue. To hold otherwise would make the doctrine of primary jurisdiction an abstraction to be called into operation at the whim of the pleader. [Footnote 10]
By no means do we imply that matters of tariff construction are never cognizable in the courts. We adhere to the distinctions laid down in Great Northern R. Co. v. Merchants Elevator Co., supra, which call for decision based on the particular facts of each case. Certainly there would be no need to refer the matter of construction to the Commission if that body, in prior releases or opinions, has already construed the particular tariff at issue or has clarified the factors underlying it. See Crancer v. Lowden, 315 U. S. 631. And, in many instances, construing the tariff does not call for examination of the underlying cost allocation which went into the making of the tariff in the first instance. We say merely that where, as here, the problem of cost allocation is relevant, and where, therefore, the questions of construction and reasonableness are so intertwined that the same factors are determinative on both issues, then it is the Commission which must first pass on them. Page 352 U. S. 70
Relying on the broad language of the latter act, the Court of Claims has, since 1926, consistently held that §16(3) does not apply to suits by carriers to recover alleged undercharges from the United States as shipper. Southern Pac. Co. v. United States, 62 Ct.Cl. 391; Seaboard Air Line R. Co. v. United States, 83 F.Supp. 1012, 113 Ct.Cl. 437; Union Pacific R. Co. v. United States, 86 F.Supp. 907, 114 Ct.Cl. 714. The present suits were thus held timely brought, [Footnote 12] even though more than two Page 352 U. S. 71 years had elapsed since the accrual of the cause of action. [Footnote 13] However, the Court of Claims held that the two-year limitation of § 16(3) did bar the Government from obtaining a reference of its defense of unreasonableness to the Interstate Commerce Commission. [Footnote 14] Presumably it would have ruled likewise as to the issue of tariff construction had it regarded that question as lying initially within the competence of the Commission. In other words, the holding below was that the United States can be sued for six years, but can raise certain defenses only if the suit is brought in the first two of those years.
We may assume without deciding that the Government would have been barred by § 16(3) from filing an affirmative suit before the Commission to recover overcharges from a carrier. Nevertheless, we do not think that the statute operates to bar reference to the Commission of questions raised by way of defense in suits which are themselves timely brought. Respondents in effect ask us to hold that a suit may be brought for six years, but that certain defenses thereto may be raised only for two years. Only the clearest congressional language could force us to a result which would allow a carrier to recover unreasonable charges with impunity merely by waiting two years before filing suit. Page 352 U. S. 72
It is argued that this Court has construed § 16(3) as "jurisdictional," and that the Commission is therefore barred absolutely from hearing questions as to the reasonableness of rates arising in suits brought after two years, whether such questions come to the Commission by way of referral or in an original suit. Reliance is placed upon A. J. Phillips Co. v. Grand Trunk Western R. Co., 236 U. S. 662; William Danzer & Co. v. Gulf & S.I. R. Co., 268 U. S. 633; Midstate Horticultural Co. v. Pennsylvania R. Co., 320 U. S. 356. But these cases all dealt with affirmative claims for the recovery of transportation charges, and not with referrals incident to suits which were originally brought in time. The teaching of the Midstate case, for instance, is that the running of the statute destroys the right to affirmative recovery as well as the remedy, so that the period of limitations cannot be waived by the parties. But here the Page 352 U. S. 73 Government is not asserting a right to affirmative recovery. It is seeking only to have adjudicated questions raised by way of defense. It is therefore irrelevant whether the statute of limitations is "jurisdictional" or not; the question would still remain whether Congress intended it to apply to referrals as well as to affirmative suits. Nor does Morrisdale Coal Co. v. Pennsylvania R. Co., 230 U. S. 304, help the respondents. There again, the statute of limitations was invoked against a plaintiff in order to bar an affirmative claim which was untimely filed. A coal shipper had sued a carrier for damages arising out of the alleged discriminatory allotment of railroad cars for its use. Stating that the propriety of the carrier's method of allotment, even though incident to a damage action, was cognizable only by the Commission, and that redress there was governed by the two-year statute of limitations, the Court held that the statute could not be evaded by filing suit in the District Court, rather than before the Commission, and then having the barred claim adjudicated by referral to the latter. In effect, the holding was that the plaintiff had invoked the wrong tribunal, and that, since limitations barred suit before the correct tribunal, no referral could be made to the latter. Morrisdale must be limited to its peculiar facts, and we shall not extend it to bar the referral of defenses in actions properly and timely brought, as the Court of Claims has held this one was. [Footnote 15]
We are told that the Government can protect itself, when it believes it has been charged an unreasonable rate, Page 352 U. S. 74 by filing an affirmative claim for reparations with the Commission within the two-year period provided by § 16(3). But Congress has relieved the Government from filing such anticipatory suits by expressly authorizing the General Accounting Office to deduct overpayments from subsequent bills of the carrier if, on post-audit, it finds that the United States has been overcharged. [Footnote 16] This right was thought to be a necessary measure to protect the Government, since carriers' bills must be paid on presentation and before audit. On respondents' theory the Government could invoke this right only at the peril of losing its defenses in a later suit by the carrier. Evidently this was not the purpose of Congress in authorizing unilateral set-off. [Footnote 17]
There remains the question of whether the Court of Claims properly dismissed the Government's defense of estoppel as to the respondents Bangor and Seaboard. We deal with it now because that defense would be reached should the further proceedings below, which must follow in consequence of what we have already said, result in Page 352 U. S. 75 adherence to the view that Item 1820 applies to these shipments. [Footnote 18]
We think that the Court of Claims erred in disposing of this defense by summary judgment. It appears to be undisputed that the ruling in question was not rescinded until after all of these shipments had been made. [Footnote 19] The Government's affidavits in opposition to the motion for summary judgment were, in our opinion, sufficient to entitle it to an opportunity to prove reliance and detriment. The fact that the Government paid the carrier's bills as rendered is without significance in light of §322 of the Transportation Act, supra, requiring payment "upon presentation" of such bills and postponing final settlement until audit. And the question whether the Official Classification Committee had authority to bind these two carriers to acceptance of a lower rate presents Page 352 U. S. 76 issues of fact which must be tried. Nor, unlike the case of a private shipper, do we think that the defense of estoppel is unavailable to the Government. See 49 U.S.C. § 22. Cf. Oregon-Wash. R. Co. v. United States, 255 U. S. 339; Western Pac. R. & N. Co. United States, 255 U. S. 349. [Footnote 20] We conclude that the Government should have an opportunity to prove estoppel, without any intimation, of course, as to whether it will be able to establish the defense.