Case Name: UNION PACIFIC RAILROAD COMPANY v. The UNITED STATES
Court: United States Court of Claims
Jurisdiction: United States
Decision Date: 1974-01-23
Citations: 490 F.2d 1385
Docket Number: No. 316-68
Parties: UNION PACIFIC RAILROAD COMPANY v. The UNITED STATES.
Judges: 
Reporter: Federal Reporter 2d Series
Volume: 490
Pages: 1385–1395

Head Matter:
UNION PACIFIC RAILROAD COMPANY v. The UNITED STATES.
No. 316-68.
United States Court of Claims.
Jan. 23, 1974.
Martin Sterenbueh, Washington, D. C., atty. of record, for plaintiff; Cake & Sterenbueh, Washington, D. C., of counsel.
Michael J. Rubin, Washington, D. C., with whom was Acting Asst. Atty. Gen. Irving Jaffe, for defendant.
Before COWEN, Chief Judge, and SKELTON and BENNETT, Judges.

Opinion:
OPINION
BENNETT, Judge.
This transportation case comes before us from the Trial Division on a decision by Trial Judge Willi. We adopt his findings of fact, with modifications, but reach a different legal conclusion for reasons which hereafter appear, and conclude that plaintiff is entitled to judgment and that the counterclaim should be dismissed.
Plaintiff, Union Pacific Railroad Company, a Utah corporation, filed this suit on October 16, 1968, to recover unpaid demurrage charges of $5,385 which it had billed the Commodity Credit Corporation (CCC), an agency of the United States, on carlot shipments of wheat hauled by plaintiff from various Kansas points of origin to Denver, Colorado, during July and August 1966. On January 17, 1969, the United States, filed its answer denying liability on the claim asserted and stating a counterclaim of $7,880, plus interest. The counterclaim concerned demurrage charges assessed against CCC on wheat consigned to CCC at Denver and hauled there by plaintiff in July and August 1964.
For purposes of this decision, the court concludes that the facts respecting defendant's counterclaim are substantially identical to the facts respecting plaintiff's claim, except that the counterclaim shipments were in July and August 1964 and the demurrage charges, totaling $7,880, were paid by the CCC.
In the years in suit, unprocessed wheat was valued in the market place on the basis of federal grade and protein content. In a given transaction these value indices were determined by laboratory analysis of a sample drawn from the bulk quantity of wheat involved. Since laboratory facilities under authorized management and supervision were essential to these determinations, trade practice found rail carriers typically affording carlot shippers of unprocessed wheat in-transit inspection privileges so that official grade and protein analysis could be conducted at relatively few focal points of rail movement rather than at myriad points of origin and final destination. Denver served as such a point for the large volume of wheat grown in Kansas in 1964 and 1966.
Because of its route structure, plaintiff carried the bulk of wheat that came into Denver by rail in the mid-1960's. Peak movement occurred each year during July and August in the wake of harvest. The temporary congestion of rail facilities inherent in this seasonal pattern of wheat traffic was increased in 1964 and 1966 because in July and August of those years CCC routed approximately 10 million bushels of wheat through Denver to Portland, Oregon, for export sale to Japan. Most of this grain originated along plaintiff's lines.
Plaintiff had an inspection yard in the Denver terminal area with a capacity of nearly 200 cars during the years in suit. Under normal traffic conditions plaintiff's cars carrying CCC wheat under a Denver billing were brought into the terminal area and placed on plaintiff's inspection tracks. Plaintiff would notify the Denver Grain Exchange (DGE), the agent of the CCC in Denver, of the arrival of each individual car. The DGE would then send one of its inspectors to the yard to draw a grain sample for grade and protein analysis at DGE's Denver laboratory. When the test results were available, the DGE would telephone them to the CCC office in Kansas City and that office would telephone disposition instructions to plaintiff at Denver. Thereafter, the car would proceed to its final destination. In due course, the CCC Kansas City office would confirm in writing its telephone advice to plaintiff.
In the months of July and August 1964 and 1966, plaintiff's grain traffic into Denver was so great that its inspection yard was unable to accommodate all of the incoming CCC cars. In these circumstances, plaintiff placed many cars at hold points at distances ranging from 3 to 55 miles short of the Denver termi nal area. In some instances these cars overstayed the "free time" allotted by tariff for inspection purposes, and the demurrage charges in suit here were assessed.
The arrangement whereby incoming grain cars were placed at hold points short of Denver when the Denver inspection tracks were filled had been agreed upon by plaintiff and the DGE management long prior to the time periods in suit. This practice had been allowed for more than 20 years prior to this suit. In agreeing to inspect cars at such outlying points, DGE officials expected that plaintiff would use this accommodation only when space was not available in the Denver terminal area. Though it appears that plaintiff did not always limit its use of this procedure to instances of yard congestion, neither the CCC nor the DGE ever chose to make a formal complaint to plaintiff or the ICC regarding such deviations.
Within 24 hours of arrival at the Denver terminal area or at a hold point short of the Denver terminal of a car on which the disputed demurrage was imposed, plaintiff mailed a written notice of arrival to "Commodity Credit Corporation, Denver, Colorado." Plaintiff also prepared a bulletin notice respecting every car of CCC wheat consigned to Denver regardless of whether the car was placed in the terminal area or was stopped short at a hold point. These bulletin notices listed the number and location of all cars received in the Denver area since the previous bulletin notice. Though the written notices were all returned to plaintiff because CCC had no mailing address in Denver, the bulletin notices were received by the DGE inspectors daily, except Saturday and Sunday, before 7 a. m. As DGE was CCC's authorized agent in Denver, notice to it was the same as notice to the CCC. An excerpt from a January 7, 1954 CCC letter indicated that CCC accepted bulletining as adequate notice of car arrivals at stations, such as Denver, where official inspection was performed :
This office has always accepted bulletining of cars of grain, seeds or soybeans billed to CCC for inspection and disposition as due notice of arrival at stations in the states of Missouri, Kansas, Nebraska, Colorado and Wyoming, where' bulletining and official inspection is provided. However, our attention has been directed to some instances where carrier agents cannot locate on file a written notice from this office of acceptance of bulletining as notice of arrival as prescribed in Rule 2 of Demurrage Tariff 4-A.
Therefore, in order to insure that the agents of the individual carriers at all stations concerned have a proper record on file, this letter shall constitute notification that this office accepts the bulletining of cars described above as due and adequate notice of arrival at stations where official inspection is performed.
Accordingly, this court concludes that the bulletin notice given by plaintiff and received by the DGE constituted good and adequate notice for purposes of this case.
When a car was stopped at a hold point outside Denver, the inspector and the DGE followed the same procedure as that employed in the case of CCC ears brought into the Denver terminal area for inspection. Except for the limited additional travel time to and from the various hold points, the CCC was not substantially prejudiced by the fact that cars consigned to Denver were stopped short of inspection at the terminal itself.
The single question confronting the court in this case concerns whether or not the demurrage charges assessed by plaintiff were proper. This inquiry concerns the construction, rather than the reasonableness, of a tariff or service order. Any question regarding reasonableness is properly the concern of an administrative tribunal. United States v. Western Pac. R. R., 352 U.S. 59, 63-65, 77 S.Ct. 161, 1 L.Ed.2d 126 (1956); United States v. Southern Ry., 380 F.2d 49, 53-54 (4th Cir. 1967); United States v. Southern Ry., 364 F.2d 86, 91 (5th Cir. 1966); see also Union Pac. R. R. v. United States, 111 F.Supp. 266, 125 Ct.Cl. 390 (1953). To determine whether the demurrage charges were proper, the court must consider the language of Item 905, § D, of ICC Freight Tariff 4-G, issued September 18, 1964, by H. R. Hinsch, a railroad agent of Chicago, Illinois, and the terms of ICC Car Service Order 947, 28 Fed.Reg. 12127 (1963), and Second Revised Service Order 975, 31 Fed.Reg. 6058 (1966). Freight Tariff 4-G listed demurrage rules and charges established separately by each of the participating carriers, including plaintiff. The service orders were issued by the ICC and contained rules, regulations and procedures regarding freight car utilization. Both S. 0. 947 and 2d Rev.S.O. 975 were issued without notice or public procedure because of emergencies regarding freight car utilization at the time of their issuance. The preamble to S.O. 947 stated that—
an acute shortage of freight cars exists in all sections of the country; cars loaded and empty are unduly delayed in terminals and in placement at, or removal from industries; the present rules, regulations, and practices are insufficient to promote the most efficient utilization of cars; . [28 Fed.Reg. at 12127.]
The preamble to 2d Rev.S.O. 975 noted that—
the unprecedented level of the economy is placing tremendous pressures on railroad transportation facilities, causing such acute shortages of freight cars in all sections of the country as to close industrial plants, impede the movements of agricultural products and other goods to market; . [31 Fed.Reg. at 6058.]
Subparagraphs (a)(l)(iv) of each of the two service orders contained language applicable to plaintiff's claim and defendant's counterclaim. Subpara-graph (a)(l)(iv) of 2d Rev.S.O. 975 provided that —
(iv) Loaded cars held at destination for accessorial terminal services described in the applicable tariffs, such as holding for orders or inspection, shall be placed on unloading, hold or inspection tracks, and proper notice given within 24 hours, exclusive of Saturdays, Sundays, and holidays, after arrival at destination. On cars set off and held short of billed destination, or on ears held at destination and short of inspection tracks, a written notice shall be sent or given to consignee or other party entitled to receive such notice, within 24 hours of arrival, exclusive of Saturdays, Sundays, and holidays, at the hold point. Time and charges shall be computed from the first 7 a. m., following such notice and demurrage assessed in accordance with provisions of Service Order No. 979. [31 Fed.Reg. at 6059.]
Subparagraph (a)(l)(iv) of S.O. 947 provided that—
(iv) Loaded cars held at billed destination for accessorial terminal services described in the applicable tariffs, such as holding for orders or inspection, shall be placed on carrier's or consignee's unloading or inspection tracks, within 24 hours, exclusive of Saturdays, Sundays, and holidays, after arrival at billed destination. On cars set off and held short of billed destination, a written notice shall be sent or given to consignee within 24 hours following the first 7:00 a. m. after arrival at hold point. [28 Fed. Reg. at 12127.]
Section D of Item 905 of Freight Tariff 4-G, applicable in July and August 1966, provided in pertinent part:
On cars of grain held in transit and placed for inspection or grading, including reconsignment or other disposition orders, the free time for disposition will expire at 6:00 p. m. of the day following notice. •>:•
While this section might by its terms also contemplate ears set off and held short of billed destination, a review of subparagraphs (a)(1)(iv) of S.O. 947 and 2d Rev.S.O. 975 reveals that both of these paragraphs make specific reference to "cars set off and held short Since this case concerns freight cars "set off and held short" it seems proper for this court to rely on the aforementioned service orders for purposes of deciding this controversy. Carrier tariffs are normally controlling except insofar as they are in conflict with the terms of ICC car service orders. Fort Worth & Denver Ry. v. Goodpasture, Inc., 442 F.2d 1294, 1298 (5th Cir. 1971), aff'g Dist.Ct. opin. (S. D.Tex.); Reading Co. v. Commodity Credit Corporation, 289 F.2d 744 (3rd Cir. 1961). In employing this analysis, the court does not infer that Item 905, § D, is in conflict with subparagraphs (a)(1)(iv) of the two service orders nor inconsistent with the result we reach in this case. It only determines that the two aforementioned orders contain language much more specific than that found in Item 905, § D, and, accordingly, lend more guidance to the court's consideration of the issue before it without at the same time being in conflict therewith. It is clear from the language of subparagraphs (a)(1)(iv) that they apply to "[ljoaded cars held at [or short of] billed destination for accessorial terminal services such as holding for orders or inspection." This was precisely the situation in the instant case since plaintiff's cars were held at or near Denver for inspection and disposition instructions. The subparagraphs required that written notice of arrival at destination be sent within 24 hours after car arrival regardless of whether the car arrived at its destination terminal or was "set off and held short of billed destination."
Bulletin notice of car arrival was also to be posted by 9 a. m. each day. This notice was to include all car arrivals since the previous bulletin. See Freight Tariff 4-B, issued Sept. 18, 1964, Item 905, § D, p. 57. No distinction was made in either the written notice or bulletin notice provisions between cars held short of destination and ears brought into the terminal. Notice of arrival was sent or posted regardless of whether a freight car actually made it within the terminal area or whether it was set off and held short of destination.
Defendant argues that questions regarding notice are not dispositive of the issue upon which this case turns. Even accepting that notice was good, defendant would argue that "demurrage cannot be exacted by a carrier unless the shipper or consignee is clearly at fault." Defendant also argues that the facts of the present case indicate that plaintiff was at fault and consequently no demur-rage charges can be levied.
Defendant is wrong in its assertions for four principal reasons. In the first place, the assessment of demurrage charges in no way depends upon a finding of shipper or consignee fault. No reference to fault is contained anywhere in subparagraphs (a)(1)(iv) of S.O. 947 and 2d Rev.S.O. 975. Subparagraphs (a)(1)(iv) apply to accessorial terminal services performed not for the benefit of the carrier, but for the benefit of the shipper or consignee. As such, a requirement of shipper or consignee fault as a condition precedent to demurrage charges would amount to a complete reinterpretation by this court of subparagraphs (a)(1)(iv). Such a judicial undertaking would be bejond the competence of this court. United States v. Western Pac. R. R., supra; Great North. Ry. v. Merchants Elevator Co., 259 U.S. 285, 42 S.Ct. 477, 66 L.Ed. 943 (1922). If such an interpretation were allowed, a shipper or consignee would be able to benefit from the accessorial services provided for in the subparagraphs while at the same time avoiding payment for such services.
Second, the decisions of the ICC do not support the proposition set forth by plaintiff regarding the matter of ship per or consignee fault. In Chrysler Corp. v. New York Cent. R. R., 234 I.C.C. 755 (1939), Chrysler was required to pay demurrage assessed against it by defendant when defendant was prevented from removing its cars from Chrysler property on account of a take-over strike at a number of Chrysler plants. The commission found that as between Chrysler and defendant "it was primarily complainant's right and duty to open its gates, 234 I.C.C. at 757. The commission rejected Chrysler's proposed interpretation of the applicable demurrage tariff and concluded that—
[demurrage may properly be assessed where the detention occurs through no fault of the shipper, even though the cause of detention is beyond the shipper's control. [234 I.C.C. at 758.]
Similarly, in Pennsylvania R. R. v. Moore-McCormack Lines, Inc., 370 F.2d 430 (2d Cir. 1966), aff'g 246 F.Supp. 143 (S.D.N.Y.1965), demurrage charges levied pursuant to an ICC tariff were determined to have been properly assessed. There, a strike of the consignee's sea-going employees caused independent stevedores to refuse to cross picket lines to unload plaintiff-carrier's lighters so that cargo would be delivered to defendant-consignee for export. In upholding plaintiff's demurrage assessments, the court stated that the—
general rule is that de-murrage is extended freight and, where there has been an excess of lay days over those stipulated, the consignee is liable to pay demurrage for those excess days regardless except (2) where the delay is the fault of the carrier . [370 F.2d at 432.]
As in Chrysler, the court found that the strike was not the carrier's fault and that defendant-consignee was not thereby relieved of its obligation to pay de-murrage. The court also noted that "absence of fault in the shipper or consignee [was] not sufficient to excuse it from liability for demurrage." Id. In reaching this determination, the court noted in a footnote that "[a] few courts have held to the contrary, e. g., St. Louis, Southwestern R. R. v. Mays, 177 F.Supp. 182 (E.D.Ark.1959); Southern R. R. v. Alcoa, 119 F.Supp. 389 (E.D. Tenn.1951), affirmed 210 F.2d 139 (6 Cir. 1954). [370 F.2d at 432.]
Defendant has cited both Mays and Alcoa for the proposition that fault is necessary for demurrage assessment. Both cases, however, express the minority rule and can be distinguished. Both cases involved demurrage charges assessed under a carrier tariff on cars held for loading and unloading rather than demurrage charges resulting from accessorial terminal services beneficial to a shipper or consignee under an explicit provision of an ICC car service order. In Mays, plaintiff filed a motion for summary judgment for the assessment of demurrage charges. Defendant answered, alleging that plaintiff's employees contributed to the delay, and hence caused the assessment of demur-rage charges. This allegation raised factual issues which, if true, would have led to a denial of plaintiff's claim. The district court accordingly denied the motion for summary judgment so that the factual matters raised by defendant could be resolved. Alcoa was a case which turned on the interpretation given, over an extended period of time, by a carrier and a shipper-consignee to a carrier-drawn tariff provision.
At oral argument defendant called the court's attention to a decision of the ICC, Holding of Loaded Grain Cars— Texas Gulf Ports, Export, 321 I.C.C. 328 (1963), said to be consistent with Alcoa and Mays. There, the ICC opined that "to allow the collection of demurrage charges by respondents as a result of their own disability at these ports would be to permit them to profit through their own fault." 321 I.C.C. at 330. Accordingly, the ICC considered and approved a tariff for the special circumstances surrounding the Galveston, Texas situation. The tariff provided that the notice sent when a shipment reached the Galveston yards would not issue until the freight car was actually brought into the Galveston yards. Since time did not run on a shipment until notice was sent, the new Galveston rule prevented the expiration of free time and the accrual of demurrage charges until a freight car was actually brought into the yards. Apparently, the slightest rumors of overcrowding at Galveston had been enough to send grain shippers scurrying for other lines over which to ship their grain. Since it was impractical for the railroads to enlarge the Galveston yards in order to accommodate peak periods, the next best practical solution was to change the notice time so that shippers would not be inclined to redirect their shipments. In its analysis the ICC noted that the "periods of congestion [were] few at Galveston." For this reason, the ICC found that "there [was] nothing to indicate that the proposed rules would actually tend to increase the use of rail ears 321 I.C.C. at 330.
The TGP administrative decision has no bearing here for several reasons: (a) No determination has been made by this court that plaintiff was responsible for delays caused by its lack of terminal facilities. On the contrary, this court has found that the overcrowded conditions at Denver were the result of a peak in harvest and the routing of unusually large shipments of grain through Denver to Japan, (b) The peculiar circumstances at Galveston are not found in this case. Regular inspection procedures at Denver contemplated the taking of grain samples from cars brought into the Denver terminal as well as from cars set off and held short of the terminal. Notice issued as soon as a car was brought to the Denver area and placed at the terminal or at a hold point away from the terminal. (c) The TGP ruling concerned the reasonableness of a carrier-proposed tariff. As has already been noted, such a matter must first be considered by an administrative tribunal charged with such duty by Congress. United States v. Western Pac. R.R., supra, (d) The TGP carrier tariff proposal was provoked by a tariff section similar to 2d Rev.S.O. 975(a)(1)(iii). In TGP the two railroads sought to delay notice so that bottlenecks occurring at their terminal facilities would not give rise to immediate assessment of demurrage charges. As is noted below, subpara-graphs (a)(1) (iii) were not applicable to the facts of this ease.
The Chrysler — Moore-McCormack rationale that absence of shipper or consignee fault was not sufficient to excuse it from liability for demurrage was followed by the Fifth Circuit in Port Terminal R.R. Ass'n v. Connell Rice & Sugar Co., 387 F.2d 355 (5th Cir. 1967), and noted favorably in Houston Belt & Terminal R.R. v. Connell Rice & Sugar Co., 411 F.2d 1220 (5th Cir. 1969), cert, denied, 397 U.S. 908, 90 S.Ct. 905, 25 L.Ed.2d 89 (1970).
Third, there have been other instances in transportation law where fault has had little relation to assessment of tariff charges. Even though a carrier might erroneously quote a price to be charged for shipment of goods, the shipper or consignee is nevertheless liable for the actual published tariff rate and not the price erroneously quoted to it. This is true despite the fault of the carrier. 49 U.S.C. § 6(7); Atchison, Topeka & Santa Fe Ry. v. Bouziden, 307 F.2d 230, 234 (10th Cir. 1962).
Fourth, a reference to shipper or consignee fault is found in subparagraphs (a) (1) (iii), but these subparagraphs are inapplicable to the present case. Sub-paragraphs (iii) reference car delivery to "an industrial interchange track or to other than a public delivery track No such deliveries, however, were contemplated or made by plaintiff in this case. Reference to subpara-graphs (iii) in this case can only have arisen from a mistaken reading of the applicable service orders. Subpara-graphs (iii) state that if car delivery cannot be made to a particular type of track on account of the fault of a shipper or consignee, the car will be held back, notice will be sent, and demurrage charges will begin to accrue. Though subparagraphs (iii) are fully in keeping with the purpose of promoting efficient car utilization in that they encourage shippers and consignees to remove obstacles to ear delivery or face the consequence of demurrage charges, they are nevertheless, by their terms inapplicable to the circumstances of this case. Sub-paragraphs (iii) only apply to a particular set of circumstances; that is, instances where terminal bottlenecks, attributable to shipper or consignee fault, make it impossible for cars in transit to be brought to their final destination point. Demurrage charges for ears which arrive at a terminal area for loading or unloading, but then are held beyond their allotted "free time" are assessed under subparagraphs (a)(2) of the applicable service orders. See S.O. 947(a)(2), 28 Fed.Reg. at 12127; 2d Rev.S.O. 975(a)(2), 31 Fed.Reg. at 6059.
For the reasons stated, this court concludes that judgment in the amount of $5,385 should be entered for plaintiff and that defendant's counterclaim should be dismissed.
. 7 U.S.C. § 76 (1964), ch. 313, part B, § 4, 39 Stat. 483 (1916). This section was amended in 1968. By this amendment Congress adhered to the recommendation of the Department of Agriculture and made the inspection requirement permissive instead of mandatory. Pub.L. 90-487, 7 U.S.C. § 76 (1970), 82 Stat. 762 (1968).