Source: http://www.chanrobles.com/usa/us_supremecourt/330/567/case.php
Timestamp: 2019-09-16 22:56:41
Document Index: 602640943

Matched Legal Cases: ['§ 307', '§ 907', '§ 3', '§ 3', '§ 2', '§ 4', '§ 307']

For many years, eastern railroads have carried grain east from Chicago at reshipping rates 8 1/2 cents per hundred pounds lower than local rates. Up to 1939, this "Chicago to the east" reshipping rate had been identical for grain, whether brought to Chicago by a connecting railroad, connecting lake steamer, or connecting barge. Although barge lines were much slower than railroads, they were less expensive to operate, and therefore could afford to transport freight much more cheaply than railroads. The result was that the barge-rail rate from a point in the west to eastern destinations was considerably cheaper chanroblesvirtualawlibrary
The Commission has now considered and decided that question in a proper proceeding. 262 I.C.C. 7. It found the originally proposed 8 1/2 cent higher rates for ex-barge grain to be unlawful, and required the eastern roads to cancel the schedules fixing those increased reshipping rates. This part of the Commission's order has not been challenged. But it also concluded that ex-barge grain rates east from Chicago would be reasonable and lawful even though they were 3 cents per hundred pounds higher than rates for ex-rail and ex-lake grain. Consequently, the Commission provided that its order cancelling the scheduled reshipping rate increase was "without prejudice to the filing of new schedules in conformity with the findings herein." Thus, the effect of the whole order was to permit, if not require, the railroads to charge higher reshipment rates for ex-barge than for ex-lake and ex-rail grain. Under these rates, barge-rail grain shipments would be a trifle less expensive than all rail transportation between the same points. [Footnote 4] But the through barge-rail transportation chanroblesvirtualawlibrary
Appellees [Footnote 5] then filed this action in the District Court against the Commission and the United States to cancel, annul, and enjoin enforcement of the order insofar as it permitted the railroads to put these new higher ex-barge grain rates into effect. The complaints charged that the order was in violation of the Interstate Commerce Act, as amended by the Transportation Act of 1940, 54 Stat. 898. It was contended that the order was void because it approved railroad rates which penalized ex-barge grain to the extent of 3 cents per hundred pounds, solely because the grain had been transported to Chicago in barges, and without evidence or adequate findings that it cost the railroads 3 cents more to transport ex-barge than it cost to transport ex-rail or ex-lake grain. The United States, represented by the Department of Justice, appearing as a defendant, admitted these allegations. The Interstate Commerce Commission intervened and defended the order. After a hearing, the District Court found that the allegations were sustained. Accordingly, it set aside and enjoined enforcement of the order to the extent that it permitted the 3 cent extra charge. [Footnote 6] The result of the chanroblesvirtualawlibrary
Cf. United States v. Chicago Heights Trucking Co., 310 U. S. 344, 310 U. S. 352-353; Board of Trade of Kansas City v. United States, 314 U. S. 534, 314 U. S. 546. But the congressional debates and committee reports on the 1940 Act and the statutory provisions which emerged from this legislative background show that Congress enunciated positive policies and specific limiting standards which it expected the Commission to follow in fixing rates, including "differentials" between all-rail and water-rail rates. The provisions of the Transportation chanroblesvirtualawlibrary
Act of 1940 which brought water carriers under Interstate Commerce Commission jurisdiction were vigorously opposed in Congress by those who feared that the Commission might raise barge rates in order to enable railroads better to compete with inherently cheaper water transportation. These opponents were repeatedly assured by sponsors of the 1940 Act who advocated Commission regulation of water transportation that the questioned legislation unequivocally required the Commission to fix rates which would preserve for shippers the inherent advantages of barge transportation: lower cost of equipment, operation, and therefore service. [Footnote 8] As Senator Wheeler, spokesman chanroblesvirtualawlibrary
And § 307(f), 54 Stat. 898, 938, 49 U.S. § 907(f), requiring the Commission, in fixing rates, to consider "the effect of rates upon the movement of traffic by the . . . carriers for which the rates are prescribed," emphasized that the Commission must consider, in fixing rates, " . . . the need, in the public interest, of adequate and efficient water transportation service at the lowest cost consistent with the furnishing of such service." In addition, § 3(4) of the preexisting Act, which forbade carriers "to . . . discriminate in their rates, fares, and charges between connecting lines," 41 Stat. 479, was amended by the 1940 Act specifically to include water carriers, such as these barge lines, within the definition of connecting carriers. 54 Stat. 898, 903, 904, 49 U.S.C. § 3(4). Finally, § 2 of the preexisting Act has long forbidden the Commission to authorize railroads to charge one person more than another for "a like and contemporaneous service in the transportation of a like kind of traffic under substantially chanroblesvirtualawlibrary
The basic error of the Commission here is that it seemed to act on the assumption that the congressional prohibitions of railroad rate discriminations against water carriers were not applicable to such discriminations if accomplished by through rates. But this assumption would permit the destruction or curtailment of the advantages to shippers of cheap barge transportation whenever the transported goods were carried beyond the end of the barge line. This case proves that. For, while Chicago is a great grain center, it cannot consume all barge-transported grain. That grain, like other grain coming to Chicago for marketing or processing, is reshipped to distant destinations. To penalize its transportation in barges by charging discriminatory rates from Chicago to its final destination has precisely the same consequence as would follow from raising barge rates inbound to Chicago. Recognizing that it could not require these barge carriers chanroblesvirtualawlibrary
The Commission did not approve increases in these reshipping rates on the ground that the eastern roads were not receiving a fair return for carrying ex-barge grain. And the grounds on which the Commission rested its order do not support the rates approved. Most of the argument of the Commission in support of its conclusions and order treated matters which had no relation to what the reshipping rates from Chicago should be. The length of the total barge-rail haul emphasized by the Commission, however significant it might be under other circumstances, has no relevance here. For the lower rates allowed ex-rail and ex-lake grains include carriage for distances identical with the ex-barge hauls. Nor is the Commission's order supported by its conclusion that it is "inequitable" for the barges to charge a much lower rate for the inbound grain haul than the competitive western railroads can afford to charge for the same haul, resulting in barge-rail rates lower than all-rail rates from the same localities. [Footnote 11] For this is no reason for authorizing chanroblesvirtualawlibrary
Related to the question just discussed is the Commission's contention here that permitting reshipping rates for ex-barge grain to remain equal to the rates for chanroblesvirtualawlibrary
ex-rail and ex-lake grain will cause "incurable chaos" in and disrupt the national rail rate structure, which reflects many interrelated conditions governing the transportation of grain from west of Chicago to eastern markets. The Commission does not show how any possible disruption of railroad rates structure arises from giving shippers the full inherent advantage of cheaper barge rates, other than that competing railroads have lost traffic to the barge lines. As we have pointed out, Congress knew that barge line rates were cheaper than rail rates, wanted the shippers to get full benefit of them, and left the Commission no power to take that benefit away from shippers by adjusting rail-barge traffic competition or rates. But we note incidentally that these rates had been equal prior to 1939 without any apparent disruption of the total structure. The possibility of such a disruption does not remotely justify discriminations against barge traffic which actually deprive shippers and the barge companies of the inherent advantages of water transportation guaranteed to them by Congress. See United States v. Chicago, M. & St.P. R. Co., 294 U. S. 499, 294 U. S. 506-510. Nor is the fact that barge-rail rates, from certain places in the west through Chicago to the east, are less than local rail rates from Chicago east, and adequate reason for increasing the east-of-Chicago part of the through barge-rail rate. The initiation of new rates with such a disparity in through rail rates as compared with local rail rates would, of course, be forbidden by § 4 of the Act as amended in the absence of Commission approval. [Footnote 12] But, insofar as the inherent cheapness of the barge leg of the through route produces a disparity between barge-rail rates and local rail rates, Congress has said that the Act must be so administered as to preserve, not eliminate or reduce, the disparity. chanroblesvirtualawlibrary
Carriage of ex-barge grain by eastern roads may conceivably entail more service, and therefore greater costs, than are involved in carrying ex-rail or ex-lake grain. If so, the eastern roads may, in certain circumstances, be justified in receiving an extra charge for that extra service wherever it is rendered. But the extra service must fit the extra charge, and cannot justify lump sum rate increases which cut into the inherent advantages of cheaper barge transportation which Congress intended to guarantee to shippers. Here, the Commission found in broad general terms, without limitation to the localities where barge and rail compete, that, "on the average," ex-rail grain from all the west requires less terminal and transit service east of Chicago than does grain moving by barge from the relatively few barge terminals. [Footnote 13] As to terminal service, it noted that some rail grain traffic going through Chicago without stopping receives no terminal service at all, whereas all barge grain shipments must be unloaded in Chicago and reloaded on freight cars. But all ex-lake grain reshipped from Chicago and an unspecified amount of ex-rail grain stopped in Chicago for processing requires exactly the same terminal service as is rendered there for ex-barge grain. [Footnote 14] Yet there is no greater rate charged for ex-barge and ex-rail grain which receives this same chanroblesvirtualawlibrary
The Commission also pointed out in its decision that rail rates from the west to Chicago (which we must assume on this record are fair and reasonable for the services performed) permit three transit stops west of Chicago without extra charge. Thus, some ex-rail grain, unlike ex-barge and ex-lake grain, has already been processed en route to or in Chicago before it ever reaches the eastern lines, reducing the likelihood that it will require further transit service on the route from Chicago to the east. [Footnote 15] But ex-lake grain which enjoys the proportional rates with the approval of the Commission apparently is not processed before arriving at Chicago, or before reshipment on the eastern lines, and consequently requires the same transit service on the eastern haul as is required by ex-barge grain. Similar transit service is required for the unspecified amounts of ex-rail grain not processed east of Chicago. But the Commission made no finding that the eastern reshipping rates permit transit service east of Chicago without extra charge. Probably the reason that it did not make such a finding is that carriers usually make chanroblesvirtualawlibrary
MR. JUSTICE FRANKFURTER would sustain the order of the Interstate Commerce Commission because he deems it amply supported by adequate findings of the Commission differentiating the average circumstances and conditions chanroblesvirtualawlibrary
§ 307(f). The Commission chanroblesvirtualawlibrary