Case Name: SEABOARD AIR LINE RY. CO. et al. v. LEE et al.
Court: United States District Court for the Eastern District of North Carolina
Jurisdiction: United States
Decision Date: 1926-08-28
Citations: 14 F.2d 439
Docket Number: No. 511
Parties: SEABOARD AIR LINE RY. CO. et al. v. LEE et al.
Judges: 
Reporter: Federal Reporter 2d Series
Volume: 14
Pages: 439–443

Head Matter:
SEABOARD AIR LINE RY. CO. et al. v. LEE et al.
(District Court, E. D. North Carolina.
August 28, 1926.)
No. 511.
Murray Allen, of Raleigh, N. C., C. P. Reynolds, of Norfolk, Va., P. W. Gwathmey, of Washington, D. C., T. W. Davis, of Wilmington, N. C., and J. P. Wright, of Norfolk, Va., for complainants.
P. W. McMullan, of Elizabeth City, N. C., and P. P. Hobgood, Jr., and S. S. Alderman, both of Greensboro, N. C., for defendants.
Before PARKER, Circuit Judge, and WEBB and MEEKINS, District Judges.

Opinion:
MEEKINS, District Judge
(after stating the facts as above). Considering this cause upon the evidence set out in the record, the question presented to us is whether a foreign or an intrastate character attaches to the rail movements of the commodities imported into Wilmington, and there reshipped, in the manner above described, to interior points in the state of North Carolina; that is to say: What is the essential character of the commerce? The correct answer to that question is the law of this ease.
Using for illustration nitrate of soda, the movement of which is eoneededly typical, complainants contend that the reshipment from Wilmington is .a continuation of the original movement from Chile; that, at the time of the original shipment, such reshipment in the manner described, was contemplated; and that, this being true, the movement from Wilmington to the interior of North Carolina is not divested of its foreign character, notwithstanding the issuance of new bills of lading at the port, and other admitted incidents of the commerce.
The defendants contend that, when the cargo is discharged at Wilmington, it has reached the end of its journey as foreign commerce ; that any further movement from that point proceeds, riot only upon new billing, but after a definite break in the transportation, restoration of possession to the importer, separation of the bulk, and its distribution in part, amongst various purchasers at the port; and that, this being true, such further movement necessarily takes on a new and independent character, and becomes intrastate or interstate commerce, according as such reshipment is to a point within, or a point without, the state.
In support of their contentions, complainants cite us to a number of authorities, many of which deal with the specific question presented in the instant case. Of these, the most important, perhaps, are Texas & N. O. Railroad Co. v. Sabine Tram Co., 227 U. S. 111, 33 S. Ct. 229, 57 L. Ed. 442, Railroad Commission v. Worthington, 225 U. S. 101, 32 S. Ct. 653, 56 L. Ed. 1004, and Baltimore & O. Railroad Co. v. Settle, 260 U. S. 166, 43 S. Ct. 28, 67 L. Ed. 189.
Railroad Company v. Sabine Tram Company, supra, involved consideration of the character of a shipment of lumber from Rulif£, Tex. This shipment was made upon the order of Powell Company, recognized exporters of lumber, to fill contracts theretofore made for delivery in Europe. By reason of the fact that there were no established through rates from Ruliff to foreign ports, the lumber was billed to Sabine Pass, a port in the state of Texas. The billing further showed that the lumber was "for export." Upon its arrival at Sabine Pass, the lumber, at the direction of Powell Company, was carried one-quarter of a mile beyond the station, and unloaded in the waters of the slip, in reach of ship's tackle, where it remained until the arrival of the vessel previously chartered to carry it to Europe. At Sabine Pass, Powell Company' further demanded and received terminal facilities, additional free time, and other privileges accorded only to shippers of export freight, as well as immunity from storage and demurrage charges to which all local shipments were subject. And, in addition to these consideration, which clearly demonstrate the foreign character of the shipment, it further appears that the case was tried upon agreed facts, the last finding whereof is that "the shipments in controversy, together with other shipments of lumber to Sabine and Sabine Pass, constitute a large and constantly recurring course of foreign commerce" through Sabine and Sabine Pass. The facts in Railroad Commission v. Worthington were very similar.
In Baltimore & O. Railroad Co. v. Settle, it appeared that Settle & Co., lumber dealers at Madisonville, Ohio, had lumber shipped from Southern points to Oakley, Ohio, paid the freight to that point, whence the lumber, in the same ears, was immediately reshipped to Madisonville upon local bills of lading and at local rates. - The decision of the court is based upon the admitted intention of Settle & Co., original and persisting, to ship the lumber to Madisonville, the original billing to Oakley having been fraudulently designed to defeat the application of the interstate rate, and to secure the lower local rate from that point. Upon this admission the court held that the carriers were entitled to recover the difference between the local and interstate rates. The court further held, in effect, however, that, but for Settle & Co.'s admission as to their intent, the jury could well have found that the movement from Oakley to Madisonville was a new, independent, and intrastate movement, and the court practically said that, had the shipment been originally consigned to Oakley for a bona fide purpose of the shipper, for instance, for the purpose of making a sale at that point, the shipment would have been intrastate as a matter of law. In conclusion, the court said:
"The mere fact that cars received on intrastate movement are reshipped by the consignee, after a brief interval, to another point, does not, of course, establish an essential continuity of movement to the latter point. The reshipment, although immediate, may be an independent and intrastate movement. The instances are many where a local shipment follows quickly upon an interstate shipment, and yet is not to be deemed a part of it, even though some further shipment was contemplated when the original movement began. Shipments to and from distributing points often present this situation, if the applicable tariffs do not confer reeonsignment or transit privileges. The distinction is clear between eases of that character and the one at bar, where the essential nature of the traffic as a through movement to the point of ultimate destination is shown by the original and persisting intention of the shippers which was carried out."
The reasons are obvious why the principles enunciated in the quoted decisions, and in similar cases, cannot be deemed controlling of the instant ease. The instant record, rather, in our view, disclose? a state of facts which call for the application of other principles, enunciated in Gulf, Colorado & Santa Fe Railway v. Texas, 204 U. S. 403, 27 S. Ct. 360, 51 L. Ed. 540, Chicago, Milwaukee & St. Paul Railway Co. v. Iowa, 233 U. S. 334, 34 S. Ct. 592, 58 L. Ed. 988, and Pennsylvania Railroad v. Mitchell Coal Co., 238 U. S. 252, 35 S. Ct. 787, 59 L. Ed. 1293.
Indeed, the facts of this case are strikingly similar to those in Railway v. Texas, supra, which involved consideration of the rate to be applied upon a shipment of corn from Texarkana, Tex., to Goldthwaite, in the same state. In that case it appeared that the Harroun Commission Company, of Kansas City, having purchased two ears of com at Hudson, S. D., for delivery to its order at Texarkana, Tex., sold the com during transit to the Hardin Grain Company, which had previously sold two ears of com for future delivery to Saylor & Burnett, of Goldthwaite, Tex., and who purchased the com in transit, with the present intention of immediately reshipping same, upon its arrival at Texarkana, to Saylor & Burnett, at Goldthwaite. It was held that the shipment from Texarkana to Goldthwaite was intrastate in character, notwithstanding it closely followed the original shipment from Hudson, S. D., and was made in the same cars.
The authority of this ease has never been doubted, though some of its reasoning has been disapproved, and the correctness of its conclusion has been repeatedly reaffirmed. It is difficult to escape the conclusion that it is controlling of the instant ease. The sole actual difference is that, while the cited case in volved a single shipment, the instant involves a number of shipments, constantly recurring. This difference, however, is not important. The essential character of the commerce is not to be determined by its volume, but by the original and persisting intention of the shipper, using that term in the sense of him for whose benefit the shipment is made, or, as it is sometimes expressed, by the intention of the shipper, which is carried out.
'It is entirely clear that, at the time a cargo of nitrate starts on its journey from Chile, the importer has no intention that its ultimate destination shall be an interior point in the state. Indeed, it is unknown at such time to which port of entry the vessel will proceed. The importer knows, of course, that nitrate of soda is a fertilizer, or a fertilizer ingredient, and that, therefore, a cargo, or a large part thereof, consigned to Wilmington, will ultimately find its way, in segregated lots, to the manufacturers and the agriculturists located in the trade territory of that port. He knows, further, of course, that interior movements of the products must proceed by rail from Wilmington. But this is very different from saying that he intends, at the time of consigning a cargo to Wilmington, to reship it from that point in mere continuation of the original movement from Chile.
On the other hand, the record conclusively shows that his intention is fully carried out, and his purposes fully subserved, when the cargo is delivered to him at Wilmington. At this point he has an established place of business. At this point his contracts of sale call uniformly for delivery. Not only is it physically impossible, by reason of a lack of through facilities, to ship this commodity, in small quantities, from Chile to interior points in the state, but it is further obvious that, even were such facilities existent, the adoption of this mode of shipment could subserve no useful purpose of the importer. As aforesaid, his contracts call uniformly for delivery at Wilmington. Why, then, should he make shipment to an interior point in the state? Manifestly the sole result of so doing would be to require a reshipment to the port before delivery could be enforced.
It is insisted, however, that the importer could as readily make contracts calling for delivery at interior points. This may, or may not, be true. In any event, there is no legal requirement that he do so. The record carries no suggestion that the method of shipment and dealing described is fraudulently resorted to or otherwise adopted in order to defeat the application of the interstate rate. On the other hand, it conclusively appears that this method has been continuously followed since the beginning of these importations, and was in effect prior to the time when the controversy as to rates arose. Nor is there any suggestion that the selection of Wilmington as a place of sale and delivery is merely feigned. And, even if so, it would be unimportant, since it is a prerequisite to the operation of the order complained of that there be a bona fide change of title at the port.
Wilmington, on the facts of this record, is the importer's distributing point, at which the cargo is restored to his possession, having come definitely to rest, in accordance with his original and continuing intention. The facts of this case, indeed, strongly resemble those in Standard Oil Co. v. Atlantic Coast Line Railroad Co. (D. C.) 6 F.(2d) 911. It is true that, in the cited case, the traffic was transported in the ships of the owners, while, in this case, vessels are chartered; that, in the cited ease, the owner has storage tanks at Wilmington, while, in this ease, the importer uses for storage purposes the warehouse of the Wilmington Compress Company, under a continuing agreement; and that movements from shipside, in the cited ease, pass to cars through such storage tanks, while, in the instant ease, they merely pass over the docks of said compress company in trucks. But these differences are immaterial.
To create a distributing point, the one essential fact is distribution. Whether it be made from premises owned, leased, or merely used for this purpose, undfer a continuing agreement, is unimportant. In the instant case, as in the cited one, the important considerations are that, at Wilmington, there is an interruption of the movement, new billing, a breakage of the bulk, and a resumption of possession by the owner, not for some purpose purely incidental to the transportation covered by transit or consignment privileges in the contract of transportation, but for the real bona fide purpose of the importer, in order to enable him to break the bulk and sell the commodity, or to deliver it pursuant to contracts heretofore made, thus consummating his original persisting intention with regard to the commodities imported from Chile to Wilmington, N. C.
We are not unmindful that the Supreme Court of the United States has said that "neither through billing, uninterrupted movement, continuous possession by the carrier, nor unbroken bulk, is an essential of a through interstate shipment." It is to be remembered, however, that this language was used by the court in a case, Baltimore & O. R. Co. v. Settle, 260 U. S. 166, 43 S. Ct. 28, 87 L. Ed. 189, in which the intention to make a through interstate shipment was admitted. And it should be noted, also, that in the same case the court further said:
"These are common incidents of a through shipment; and when the intention with which a shipment was made is in issue, the presence, or absence, of one or aE of these incidents may be important evidence bearing upon that question."
In our view, Ettle, if any, importance attaches to the fact that, in a majority of instances, contracts of sale are made in advance of the shipment, or during transit, or to the further fact that reshipment by the purchaser is made from shipside and foEows closely the arrival of the vessel at the port. These are but common and characteristic incidents of the business of every jobber. In Baltimore & O. R. Co. v. Settle, supra, it is clearly pointed out that the independent character of a reshipment is not affected by the fact that it foEows immediately a shipment in interstate commerce, and in Chicago, Milwaukee & St. Paul R. Co. v. Iowa, 233 U. S. 334, 34 S. Ct. 592, 58 L. Ed. 988, it appeared that the reshipments were in fact made immediately upon the arrival of the coal at Davenport, and in the same ears; whEe, speaking to the first of these questions, that is, the time of execution of the contracts of sale, the Supreme Court of the United States, in General Oil Company v. Crain, 209 U. S. 211, 28 S. Ct. 475, 52 L. Ed. 754, uses this expressive language:
"The company was doing business in the state, and its property was receiving the protection of the state. Its oE was not in movement through the state. It had reached the destination of its first shipment, and it was held there, not in necessary delay or accommodation to the means of transportation as in State, etc., v. Engle, 34 N. J. Law, 425, but for the business purposes and profit of the company. It was only there for distribution, it is said, to fulfill orders already received. But to do this required that the property be given a loeaHty in the state beyond a mere halting in its transportation."
Let us assume, for purposes of Elustration, that these importations into WEmington had been in interstate instead of foreign commerce. Could it, in such ease, be reasonably contended that the initial carrier was responsible for loss or damage occurring during a reshipment by a purchaser at that point ? The conclusive answer to. the question is that, under the terms of the original contract of shipment, made in good faith and fairly expressed, every obEgation of the initial carrier ceased at Wilmington. It has been so decided. Bracht v. San Antonio & A. & P. Ry., 254 U. S. 489, 41 S. Ct. 150, 65 L. Ed. 366.
The mere fact that raE shipment begins at Wilmington, or that there is a change of title at WEmington, or that there is a rebilEng at Wilmington to parties other than the original consignees, does not determine the essential character of the commerce, but, as stated, these are mere incidents of the commerce. Moreover, an order of the state Corporation Commission would not be vaEd which held that the presence of any one or aE of these incidents of commerce of themselves constitutes intrastate commerce. The order of the state Corporation Commission under consideration must be interpreted in the Eght of the answer of the commission, and in the Eght of the evidence set out in the record. It is clear that the appEeation of the order is solely with regard to what we hold to be intrastate commerce. If there were evidence of any purpose or attempt to apply the order to interstate or foreign commerce, or to make such incidents of commerce as the beginning of raE transportation, or change of title, or rebilEng, determinative factors of what is interstate commerce, an altogether different question would be presented.
Taking the facts before us as presented by the evidence, and upon appEeation of well-considered and eontroEing cases of the United States Supreme Court, we are of the opinion that the out-bound movements from WEmington to the interior of North Carolina, involved in this inquiry, are intrastate in character, and that therefore the order of the commission complained of is without prejudice to complainants.
The injunction prayed for must be, and is, hereby denied.