Earl Warren: Mr. Friedman, you may continue
Daniel M. Friedman: When the Court arose I was just coming to a brief discussion of the statutory provision in Section 307 (d), which directs the Commission whenever deemed by it to be necessary or desirable in the public interest to establish through route and joint rates. This provision which was passed in 1940 marked the culmination of a long struggle almost by Congress to obtain adequate joint rail-barge relationships. The Federal Barge service began shortly after World War I, and then a series of statutes which we have traced in our brief, Congress again and again emphasized the importance of prescribing fair, through joint-barge routes and rates. As a realistic matter, it's only in a small percentage of the cases that barge transportation is meaningful just by itself. Most shippers and most receivers are not both located on a waterway and the result is that the barge transportation to be effective, it is necessary that there'll be a connection, either at the beginning or the end of the water journey or in fact, at both. The inherent advantage of barge transportation as this Court recognized in Mechling is its cheapness. Now, if you have -- again, reverting to the fact of this case, if you have a cheaper route in here, this course here is $5.32 for the barge plus a $1.5 to bring it to the -- from the mine to Galveston was $6.82 as against a local railway from the mine to here of possibly $8.73. The saving of a $1.91, if you're just going from here to here, but if that is not passed on through a connecting rail carrier, the result is that the person who wants to get this sulphur here does not get the benefit. Now, when Congress passed the statute in 1940, one of the things that it was concerned with and deeply concerned was the fare expressed by the proponents of water transportation. That Congress -- that the Commission might administer this Act so as to favor the rail carriers over the water carriers, and it inserted as this Court pointed out in Mechling a number of provisions designed to do that. The Mechling case was concerned with an attempt by the railroads to favor railroads over barge transportation through the device of raising the rates on the traffic which had been moved in by barge. In the Mechling case, this Court struck down a Commission order which had approved a rate under which the railroads attempted to charge more for grain moving from Chicago to the east. If it arrived in Chicago by barge, then it arrives in rail. And in condemning that rate structure, this Court repeatedly pointed out that Congress permitted the Commission no way in which it could approve any rate system which failed to pass on to people who ship by barge the inherent advantage of barge transportation, namely, its lower cost and it relied primarily on the statement in the National Transportation policy that the Commission in administering the Act was to make sure that it would recognize and preserve the inherent advantages of each form of transportation. Now, Congress, when it passed the 1940 Act, also recognized there was another way in which the inherent advantage of barge transportation could be denied to shippers. Instead of the railroads increasing the rail-barge rate, and therefore, wiping out the lower cost of barge transportation, the railroads could reduce their own rates to the level of the barge rates and that would have the same effect and we've set forth in our brief colloquy on the floor of the Senate in which that very question was raised. It was pointed out, “Yes, that is prohibited by the Act.” Now, in view of the fact that effective utilization of barge transportation requires that there'll be fair arrangements between the barges and the rail carriers to pass on to the shippers the inherent advantage of the barge transportation. The failure of the railroads to establish through routes and joint rates with a connecting barge line, while at the same time, maintaining such a relationship with a connecting rail rate in a very serious sense denies to those who would ship by barge the inherent advantages of the barge transportation. In the Mechling case, I'd like to quote briefly, “The Court pointed out at page 579 that it was not within the province of the Commission to adjust rates, elimination, to protect the traffic of railroads from barge competition.” We think realistically in this case that is what has happened. The only carrier that was before this Court and the only defendant railroad before the Commission were these railroads here, not any of these railroads going from East St.Louis to the mine. These railroads up here, the ones who were receiving the barge track have refused to establish the joint rates for the rail carriers on the ostensible ground that if they don't want to get less than $2.95 from a barge traffic moving along here. Well, the first and obvious answer to that is they're not getting anything on the barge traffic now because no barge traffic is moving. The Commission found that since 1950, all of the traffic from the Galveston Mines to Danville has moved by rail, and of course, that isn't at all surprising because I seriously doubt that any sane businessmen would want to pay 60 cents more for inferior transportation. The Commission now suggests in its brief that there was another ground upon which this description of through joint rates is not required. It says at page 50, “The Commission was not required to support the railroad to give up their long haul of a thousand mile and merely taking an exchange this short 186-mile for -- from East St.Louis to Danville.
Speaker: Who -- who says that, the Commission?
Daniel M. Friedman: The Commission says that in its brief now. And our answer to that is, that the only question here is whether this railroad, the railroads from East St.Louis to Danville are required to treat the barges at least the same way as they treat the connecting railroad. And the fact that they apparently wish to protect these railroads from barge competition is not a proper ventures upon which the Commission refuses to prescribe the through joint rates. The Commission also suggests in its brief that the barge route is circuitous, much longer than the railroad. Therefore, they say now, “It was not required -- that the Commission is not required to find a description of rail barge rates within the through rates within the public interest. The short answer to that we think is two-fold. First, the Commission did not rely on that, they didn't. The second and more important, the lower barge cost, the total of $9.77 as against the old rail combination rate of $11.66 was achieved despite the fact that the barge traffic is more -- a more cumbersome route. And of course, one of the things about the barge is it's slower. The barges themselves move slower and the river twists and turns, it doesn't go straight the way a railroad track does. But the fact is that the barges are able to operate this route at $5.32. They should be permitted to pass on to shippers the same benefits that the connecting rail -- the railroad got here give to their connecting rail carriers. We thus think that under the facts of this case where you have a situation that absent joint all-rail rates, the rail barge cost to the shipper would be substantially cheaper than the all-rail rate and whereas the result of a joint all-rail rate, the barge service which is inherently cheaper now costs 60 cents more than the past rail service that the Commission was inquired upon that it was necessary or desirable in the public interest in order to preserve the inherent advantages of the barge transportation to establish through barge routes and joints rates. We also think that the same result follows under Section 3 (4), which prohibits a discrimination by carriers between connecting lines including water carriers. And we think that there's a discrimination prohibited by this section on a rail carrier, establishes a through route and joint rate with one of the connecting rail carriers and at the same time refuses to establish such a through route and joint rate with a connecting barge line which in turn competes with the connecting rail carrier.
Felix Frankfurter: Mr. Friedman, must the joint rate necessarily be lower than the constituent local?
Daniel M. Friedman: Not necessarily, Mr. Justice, but I can see of no reason why they would otherwise establish a joint rate. And I think traditionally in the railroad field, joint rates are created to have --
Felix Frankfurter: (Inaudible)
Daniel M. Friedman: The -- Section 3 (4) is basically designed, we think, to prohibit a carrier from favoring one of two connecting carriers. Now, the Commission repeatedly has held that if a rail carrier has two connecting water carriers, it's a discrimination prohibited by 3 (4) for it to establish through routes and joint rates with one of the water carriers and not with one of the others. Similarly, it is held that where there are two connecting rail carriers, it's discriminatory to establish through routes and joint rates with one and not to establish it with the other. We don't think it makes any difference here that one of the connecting carriers involved is a water carrier and the other one is a rail carrier. The statute speaks in terms of connecting carriers, it doesn't say discriminate between connecting carriers of the same type or prohibit discrimination between all connecting carriers, and we think that whether there are two connecting carriers, which are competing with each other for the business of the shipper, the railroad is required to treat them alike. Of course, that's all that the barges are seeking here. All they're seeking is an opportunity to compete with the rails for the shippers' business on the same term. They proposed, if they will give these railroads joining East St.Louis to Danville the same amount as they receive from the rail carriers. It is supposed that it is probably $2.26 because that is what they receive from Port Sulphur and we think it's quite significant that when there are two sources of sulphur, the rail carriers are willing to make an arrangement with this group and unwilling to make an arrangement with this group. Now, the way we reach the conclusion under 307 (d) that the Commission was required to establish these rates in order to cure the discrimination under Section 3 (4) is that since it was a discrimination under 3 (4) and is illegal under 3 (4), it is plainly necessary or desirable in the public interest for the Commission to prescribe through routes and joint rates to cure that discrimination. Thank you.
Earl Warren: Mr. Howell.
Samuel R. Howell: Mr. Chief Justice, and may it please the Court. I would like to state at the outset that the statement to which counsel has just referred in the Commission's brief from page 18 which had indicate that the Commission is basing its decision on the short holding provision of the Section 15 (4) is an inadvertence and the Commission does not rely upon the short holding or circuitous routing of this traffic at all in reaching its decision in this case. As a matter of fact, when the barge lines filed a petition with the Commission for reconsideration of Division 3's action which found that there was no discrimination under Section 3 (4), and therefore, and that there have been no showing of any evidence that the barge lines -- that there should be through routes and joint rates established between the barge lines and the railroads in the public interest. And so, the barge lines in asking the Commission -- for Commission to reconsider the action of Division 5, asked that the only -- ask that only with respect to Section 3 (4). And the entire Commission only considered the petition for reconsideration under Section 3 (4). And on the -- when this case was brought into the District Court by the barge lines, the barge lines only asked for a review of the Commission's order under Section 3 (4) and nothing else and the -- and the case was considered by the District Court under 3 (4). And on -- in the jurisdictional statement of the barge lines here, the only alleged discrimination is under Section 3 (4). The Department of Justice's brief, the Department of -- rather, the United State -- brief of the United States discusses the Section 307 (d) issue and that is not even involved in the case. It was not raised in the jurisdictional statement and the United States haven't filed no jurisdictional statement, but merely filed a motion, it's the first time it has got in the case at all, were filing a motion or rather a brief in opposition to the Commission's motion to affirm. Therefore, the -- it would not be having the standing to raise the question of the Section 307 (d) matter. But that -- that's beside the point. The main thing that I wanted to get to talk about now is the question of division, which counsel for the barge lines discussed in his argument. And he made one -- counsel made one statement that deserves some attention. He said, “That services from East St.Louis to Danville, over the rail route was identical on X barge as an X rail track.” Now, there is not a scintilla of evidence in the record that would support that statement.
Felix Frankfurter: Physically, they are identical.
Samuel R. Howell: Physically, they would be identical, if Your Honor please.
Felix Frankfurter: But what -- what are the differences that you suggest in here?
Samuel R. Howell: Well, the only difference would be of course in the exchanging of cars at the -- in the terminal yards at East St.Louis, but there is nothing in the record to show that it was more difficult to transport X barge sulphur or -- I mean, X rail sulphur to the next barge. There is no evidence on the record, and the -- and the --
Felix Frankfurter: It's noted all the costs of -- we were told that the cost of transfer were absorbed by the barges.
Samuel R. Howell: Well, that's right, if the Court please.
Felix Frankfurter: And what is the -- what is the inconvenient difficulty?
Samuel R. Howell: Well --
Felix Frankfurter: Delay?
Samuel R. Howell: I'll answer, Your Honor in this way, that these barge lines charged a violation -- discrimination in violation of Section 3 (4). They did not present any evidence that would sustain a violation of Section 3 (4) and the Commission so found. If they -- before they could establish a discrimination under Section 3 (4), it would be incumbent upon them and the burden rested upon them to show that there was a difference in the transportation conditions, and they didn't do it at East St.Louis.
Felix Frankfurter: That on the (Voice Overlap) --
Samuel R. Howell: Of course, and the Commission could not just assume that there, the conditions were similar because there might well have been difference in the conditions but that was not shown in the record. And so, they cannot now say that there's -- that the service is -- is identical or that the transportation condition is -- is not dissimilar in any manner.
John M. Harlan: Well, is that --
Felix Frankfurter: Is that relevant to the establishment of through routes and joint rates?
Samuel R. Howell: It's not relevant to the establishment of through routes and joint rates, but it's relevant to the question of whether or not the railroads had discriminated against the -- the barge lines in the matter of collecting a smaller rate -- no, I mean the smaller rate, but insisting on the -- their $2.95 local rate while accepting something a little less in the manner of divisions. And I want to get -- that leads me into the question of division. Now, I'd like to answer the question --
John M. Harlan: Mr. Howell, in the last statement you've made, do you rely on the fact that absence of evidence as to what the division is under -- on the rail rate of the transportation between East St.Louis to Danville?
Samuel R. Howell: No, Your Honor, that is not into Danville at all. I want to explain to the Court that --
John M. Harlan: In other words, there's no dispute that they get -- there, they get less from the railroads on that division --
Samuel R. Howell: That fact --
John M. Harlan: -- and the combined rates.
Samuel R. Howell: -- is not disputed in the record.
John M. Harlan: Yes.
Samuel R. Howell: As a matter of fact, the witness testified that the amount of the division was less, but there was nothing in the record to show how much less. Now -- now this leads me to the question of the divisions of (Voice Overlap).
Hugo L. Black: Was there any way they could show it?
Samuel R. Howell: I beg your pardon.
Hugo L. Black: Was there any way they could show it?
Samuel R. Howell: The record doesn't show that the --
Hugo L. Black: Does they ICC let that kind of evidence to be introduced?
Samuel R. Howell: If Your Honor please, there's nothing in this record and I can only -- of course --
Hugo L. Black: But do they -- do they?
Samuel R. Howell: Generally?
Hugo L. Black: Yes.
Samuel R. Howell: I believe it's the position of the Commission that the question of division is a private contract between the railroads or between carriers.
Hugo L. Black: Do they not let it come in? Do they further require them to admit it?
Samuel R. Howell: If the Court please, I'm not -- I think that I did read the case recently and that case is in court now, as I understand it, brought by the counsel for the barge lines.
Hugo L. Black: You mean, of the ICC holdings?
Samuel R. Howell: On the holding of the ICC.
Hugo L. Black: What did it hold?
Samuel R. Howell: I beg your pardon?
Hugo L. Black: What did it hold about the evidence? Is that -- if it's hard to answer, I don't want to ask it but I didn't suppose it'd be hard for a lawyer for the ICC to tell us what they hold about it?
Samuel R. Howell: Well, the Commission has held that the -- I was answering, Your Honor, that the Commission has held that the -- that a division of a rate is not the same thing as a rate.
Hugo L. Black: I understand that. Do they hold that it can be admitted in evidence?
Samuel R. Howell: And they hold that it -- the only case I know of where that was done --
Hugo L. Black: What did they hold?
Samuel R. Howell: They held that it was -- that they would not -- they refused to issue a subpoena duces tecum to require the railroad witness to bring in evidence as to what its divisions was with somebody else. Now, that -- that is in the -- that is in one case and that's the only case I know anything about, if the Court please.
Earl Warren: Well, you can't blame them very much for not bringing it in here, can you?
Samuel R. Howell: They weren't asked to bring it in here, if the Court please.
Earl Warren: But you said that they didn't.
Samuel R. Howell: Well, I mean, here, the -- no subpoena was asked of the railroads involved in this case to bring in the evidence like they did in the beginning.
Hugo L. Black: But -- but do you -- do you allege that they should have done that or do you admit that the rule of the Commission is they won't bring it in? I -- I mean to -- I'd like to know.
Samuel R. Howell: If Your Honor please, I -- I don't know what the rule of the Commission is with respect to that, except as -- as I found in that, in the case which I mentioned and that is the cases now in court and is subject to judicial review and another proceeding in a -- in one of the lower courts. Now, I -- I'm -- I understand that it is the position of the Commission that though -- that the private agreements between railroads is not a matter that has any effect or influence upon the -- the manner of making rates. And therefore, it is not relevant to the issue and that they do not require the -- they consider that evidence as being immaterial. Now, in regard to the appellant's contention that the appellee railroads violates Section 3 (4) by accepting a division of an -- of an all-rail joint rate which is less than the rate at which they carry to Danville, sulphur that has been brought to -- by barge East St.Louis. We submit that under the -- under that theory that a division of the joint rate, all-rail rate would be the same thing as a rate or charge which may be compared with and treated the same as a published rate or charge paid by a shipper. And a division of a rate is not a rate. It is not a charge with which the shipper would be concerned, because the shipper is only concerned with the -- with the amount that it takes, the amount he has to pay to transport his property from one point to another point. He doesn't care whether the -- the -- A railroad gets a certain amount of -- in the form of division from B railroad, and that is no -- no concern to him unless it would have some effect upon the -- the total amount he had to pay. And that -- and the divisions do not influence or have any effect upon the amount that the shipper pays. Now, on an unpublished division of a joint rate is not a rate or charge within the meaning of Section 3 (4) of the Act. The Section 3 (4) insofar as it's applicable to this case, merely prohibits the carrier subject to part one of the Act, and also, now by the Transportation Act of 1940 of the -- the barge, the water carriers. It prohibits carriers from discriminating in their rates, fares and charges. Now, there's no other word said about divisions in -- in Section 3 (4). And the -- and the division, the Commission has held in -- in numerous cases is not a rate. And it held it in -- in this case. Now, this Court stated that in the -- in St.Louis Southwestern Railway Company versus United States in 245 U.S., opinion by Mr. Justice Brandeis, that a division of a joint rate is the share which each railroad receives and there's a result of private contract between carriers. And the Court said that in that case, that divisions are and I quote, "A matter of bargain and maybe fixed at in an -- in an arbitrary amount, and sometimes one carrier is allowed the full local rate while the rate of another is seriously reduced, and that the basis of such divisions differ greatly in practice." Now, divisions, therefore, between carriers, reflect bargaining and -- and strategic position of carriers participating in joint rates. They reflect competitive factors. Now, the situation that is clearly demonstrated by the situation at the Port Sulphur, Louisiana to which counsel has -- counsel had referred. There, the -- the barge lines have through routes and joint rates with the rail lines for the delivery of sulphur from Port Sulphur to Danville -- to Danville, Illinois. The barge line factor for the transportation from New Orleans or Port Sulphur to East St.Louis is $4.20. The -- the rail carriers, the total through rate I believe is $6.66 on which the barge factor is only $4.20. And the railroads accept as a division in lieu of the $2.95 rate, $2.26, a 100 pounds for each share of the transportation. Now, with respect to that sulphur, the -- the sulphur originates with the barge lines. It's brought in by some private, little tramcars or something owned by the producers and it moved a few hundred yards or whatever the distance is, up to the barges and they load it in to the barge. So, the price of sulphur or rather the -- the sulphur at Port Sulphur has no prior rail haul. The railroads have their hands upon it. And they get to East St.Louis. Now, the -- then, they are able. They're in a strategic position in order to get a little -- to get a better share of the division, and there is nothing to send us through, as I understand it about carriers --
John M. Harlan: Why -- why are they --
Samuel R. Howell: -- entering into --
John M. Harlan: -- in a better position?
Samuel R. Howell: I beg your pardon?
John M. Harlan: Why are they in a better position?
Samuel R. Howell: Because they have the sulphur, they originated the sulphur themselves and they have it and they -- and of course, under Section 15 (6), if Your Honor please, the -- which gives the Commission now jurisdiction over divisions of rates. It -- it -- they stated in that -- in that Section, Section 15 (6), the standards by which the Commission must -- will be governed in determining division of rates. And one of those standards or factors is, whether or not the carrier involved with the division, would be an originating carrier or whether he's an intermediate or a delivering carrier. Of course, the other factor is involved. There's a cost of service and all of -- and -- and several other factors, but those factors are even different from the factors going into the matter of determining what is a reasonable rate. So, what I am trying to point out --
Speaker: The Danville -- the Danville carriers are not originators of any traffic from Galveston in that area down there.
Samuel R. Howell: The Galveston -- well, I -- as far as the record shows, as far to the materials here, that would be true. I don't know whether they have rail lines that -- I believe from New Orleans and they're serving Danville --
Speaker: Yes, but they -- but they don't --
Samuel R. Howell: -- but I don't know whether they carry sulphur or not.
Speaker: They don't reach the Galveston area at all.
Samuel R. Howell: There is no -- there's no joint rates published, and no movement over any joint rates of sulphur from Galveston to Danville, Texas or to any other point in New Orleans.
Speaker: There is one from the sulphur plant, isn't it?
Samuel R. Howell: A railroad from the sulphur plant brings the sulphur down to --
Speaker: No, no, I mean taking it up to Danville, not to East St.Louis.
Samuel R. Howell: Oh, the railroads -- if the Court please, the --
Speaker: There -- there, you've got a through rate or joint rate --
Samuel R. Howell: This Texas mine, the Texas mines from which this sulphur originates is located down the tracks, I believe in the Southern Pacific. And the Southern Pacific originates the traffic at the mines. The -- the sulphur is loaded into rail cars at the mines at New Gulf in these points where it's produced, and there -- and there's a true all-rail movement, clear through to East St.Louis where the sulphur Danville is turned over to the appellee railroads by merely switching the cars from out of the trains of the -- of the Texas carriers and it goes onto --
Speaker: Now, what -- what I asked you was if there was -- there was no originating carrier between the East St.Louis and Danville that had originated the sulphur down at the shipping point near Galveston. As I understand it, all -- all the carriage, rail carriage between East St.Louis and Danville was done by roads that take it from other roads.
Samuel R. Howell: They -- the through -- you're talking about the through all-rail movement?
Speaker: The connection.
Samuel R. Howell: Yes, Your Honor, that -- that's true. But the --
Speaker: Also, none of those are originating railroads.
Samuel R. Howell: Of the --
Speaker: They charge the $2.95.
Samuel R. Howell: Oh, you're talking about the Danville --
Speaker: The Danville carriers, from East St.Louis to Danville.
Samuel R. Howell: They have -- they have the -- there's no connection except they have the through routes and joint rate arrangements between each other.
Speaker: Yes, yes, that's (Inaudible)
Samuel R. Howell: That's right.
Speaker: -- but that's all in arrangements, so they don't have any advantage from being the originators of the shipment.
Samuel R. Howell: East St.Louis carriers, you're right, Your Honor. They -- they do not have any advantage there over the -- as a matter of fact, since they are the delivering carriers and the -- and the Texas carriers are the originating carriers, the Texas carriers would be in a better strategic position --
Speaker: (Voice Overlap) --
Samuel R. Howell: -- with reference to getting this -- I mean, in making the rate. I mean, I don't mean in making a rate, making a division. So, the --
Speaker: Well, it is your position that 3 (4) has nothing to do with anything except rates.
Samuel R. Howell: Yes, Your Honor, that's our position. And that the division of a rate is not a rate, and therefore --
Speaker: Do not discriminate in their rates or charges.
Samuel R. Howell: That's right. There's no charge made to the railroad, I mean to the shipper --
Speaker: Well, the -- is the --
Samuel R. Howell: -- in connection with divisions.
Speaker: Is the -- both traffic, the river traffic a connecting line --
Samuel R. Howell: The --
Speaker: -- with -- with the carriers from East St.Louis to Danville?
Samuel R. Howell: Yes, Your Honor, I -- I say that they would be connecting lines. Although, they do not connect physically like railroads running into each other, but they are -- they would be considered under the terms of Section 3 (4) as connecting line.
Speaker: Well, let me say and shall not discriminate in the rate -- the rates and charges between connecting lines.
Samuel R. Howell: But, Your Honor, the -- a division of a rate is not a rate, and I'm going to discuss that further and make it clear if I can, if Your Honor please.
Speaker: Well, I -- I understood that but if the charges -- is this a charge that they make, it isn't a rate?
Samuel R. Howell: It is not. The -- the $2.95 local rate is a rate that applies over the -- this appellee railroad from East St.Louis to Danville on all traffic that would -- would -- except that with which it might have -- the railroads might have through routes and joint rate arrangements and always the joint rates are smaller than the through combination rates.
Felix Frankfurter: Well, what -- what do you say to the suggestion that there's a discrimination in the rate, because they have to pay the local rates, because of the refusal of the Danville road to enter into a joint -- through routes and joint rates whereby they would pay less, would it be a legal through rate?
Samuel R. Howell: That is one -- another form of this 3 (4) -- Section 3 (4) violation that appellants set forth --
Felix Frankfurter: So, that has taken care of the argument when they accept your proposition that divisions are not rates if in here, it's well and good. My complaint is not the rate or device, but by this motive dividing, I have to pay $2.95, which is more than I would have to pay if you would give us the joint through -- through routes to joint rates.
Samuel R. Howell: If Your Honor please, the reason the Commission did not find that the -- find discrimination and it may well have ordered a through routes and joint rates if it had found discrimination was because there was no evidence in the record to -- to prove that there was a need, first in the public interests for these through routes. And secondly, there was no evidence to show that there was any need for any differential rates, lower than the all -- lower than the joint through all-rail rate. There was -- there was no evidence and -- and that's the thing --
Felix Frankfurter: The other -- the other -- the thing is, concededly for the same physical circuit, the same circuit, X part traffic, pay $2.95. And concededly, that point that the through rates (Inaudible) because there is a joint -- through routes and a joint rate. And therefore, either none -- of the denial of the through routes and joint rates, that's the last of the journey, X barge is in disadvantage in order to discriminate between that half of the journey in assuming X rate.
Samuel R. Howell: Yes, Your Honor. Well, no --
Felix Frankfurter: What's your answer to that?
Samuel R. Howell: No, the -- the answer to that would be that the all -- that the $2.95 local rates of the Danville, East St. Louis-Danville carrier is shown to be on a depressed basis. Now, that is shown in the record that the -- at -- by -- and the Commission points out, makes a finding on it. That the -- that the general basis for the reasonableness of some rates in the Southwestern or Southeastern Texas area was 13.5% of first class. Now, that -- that rate was found reasonable by a Commission in an appropriate proceeding, Marion Manufacturing Company versus The Akron Railroad. And that the -- and that -- that rate which is found reasonable --
Felix Frankfurter: Are they local?
Samuel R. Howell: No.
Felix Frankfurter: Are they local rates?
Samuel R. Howell: Well, as -- as -- well, as any rate.
Felix Frankfurter: No, but --
Samuel R. Howell: And onto -- I'm coming to the local rate, if the Court please, and it found in this case that if the -- if the reasonable -- if rates that are 13.5% of first class on sulphur is reasonable in the Southeastern Texas, then the two $2.95 rate, which is 9.2% of first class would show that the $2.95 rate was a depressed rate, and it makes comparisons between the -- the rates on comparable distances within the area around the East St. Louis and Danville. And it shows that the rates from -- well, a comparable distance might be as much as twice, I mean, be twice as much as the $2.95 rate. And in every rate they used, they showed that the -- that the rate for comparable distance was more than the $2.95. So, the Commission found that the $2.95 rate was depressed. And that the -- and that the Commission should not compel the railroads to further reduce a depressed rate in order to give the barge lines a -- a -- an advantage --
Hugo L. Black: Out of a bonus?
Samuel R. Howell: And a bonus.
Speaker: Out of the bonus where the -- if you get anywhere about even with the railroad rate, that would be giving them a bonus, would it?
Samuel R. Howell: No, Your Honor, it would not be giving them a bonus.
Hugo L. Black: Can you cite us to a single case that the Commission has ever decided where it denies relief to a railroad that was compelled by whatever method to pay more or the -- have its goods transported on the railroad than another one to have its goods transported on the railroad on precisely on the same conditions?
Samuel R. Howell: Your Honor, I -- I don't know any offhand?
Hugo L. Black: Have you ever heard of any?
Samuel R. Howell: I don't know that I --
Hugo L. Black: You believe there would?
Samuel R. Howell: I don't know. I -- I don't happen to believe one way or the other about it, Your Honor, but I -- I don't know of any such rate and I don't know that I have heard of any, I mean any such situation.
Felix Frankfurter: What you're saying --
Samuel R. Howell: But --
Felix Frankfurter: --about depressed if I understand you, the argument -- is this the argument that if there were no barge traffic competition, and not only the local from East St. Louis to Danville, but the joint rates from Galveston to Danville would be higher than it is with (Inaudible) because then the railroad could charge more without pure competition. In order to meet the competition of a water traffic, the joint rates as well as the local, could find a local, say, has been reduced in order not to be outdone in order to have any traffic, that's against the barge. Is that the answer to that rate, description of what you've meant by this rate?
Samuel R. Howell: Yes, Your Honor, I think that's the reason why that the railroads make the first rates and there -- and they have the authority.
Felix Frankfurter: I suggest it is -- my suggestion is, that if you -- if the railroad, the Danville Road was compelled to have a joint rate with the barge. The fact would still -- would still be further lower to give that -- that is still further (Inaudible) advantage of the barge rate and still further cut in the competitive function or the competitive trust of barge as against rail traffic, is that right?
Samuel R. Howell: Yes, Your Honor, that -- that's right. Now, the -- I'd like to say this that the Commission found that the barge, that the fully distributed cost of the barge lines for transporting the sulphur from Galveston to East St.Louis amounted to $4.03 a ton. And that the -- the barge rate -- oh, and added to that would be of course the -- I think 29 cents is shown in the -- the record, 29 cents across to the barge lines for transferring the sulphur from the rail -- from barge to rail which will make a total of $4.23 -- $4.32, a fully distributed cost of the barge lines for transporting the sulphur. Now, they charge a rate of $5.32. That's the barge factor, so that would give the rail -- would give the barge lines a total profit on a ton of sulphur moved from Galveston to the East St. Louis of $1.
Felix Frankfurter: Mr. Howell, may I ask you a question?
Samuel R. Howell: So they're getting their -- I'm sorry.
Felix Frankfurter: I -- I beg your pardon.
Samuel R. Howell: They -- they are -- of course, the barge lines and from those -- from those figures would be -- would indicate that the barge lines are getting a very fair profit on the movement of sulphur.
Felix Frankfurter: I saw -- I saw that in the direction of your argument and I unduly interrupted.
Samuel R. Howell: Yes, sir.
Felix Frankfurter: This problem, which is immediate -- a problem immediately before us relates to sulphur, doesn't it?
Samuel R. Howell: Yes, Your Honor.
Felix Frankfurter: In time.
Samuel R. Howell: That's right.
Felix Frankfurter: Now, this problem, namely, the relationship between rail and barge and the gradual disadvantage, economically speaking, of railroads because of traffic and against barge, do this problem arise in connection with other commodities so that one may -- one may have to reflect that what is involved here is an application or -- or an enforcement by the Commission since the 1940 Act that they must as it were, try to maintain both rail privilege as well as barge privilege? What I want to know is, is this sulphur, this segregated sulphur problem an aspect of a lighter problem, which is whether explicitly are not reflected in the Commission report that they're trying to do that what they did here have a relation to a maintenance of the economy of -- of the railroad.
Samuel R. Howell: That's exactly right, Your Honor.
Hugo L. Black: What about the economy of the barge lines?
Samuel R. Howell: Your concern with the economy of the barge lines, Mr. Justice Black.
Hugo L. Black: Can they operate -- can they operate on this basis against the railroad --
Samuel R. Howell: Your Honor, the --
Hugo L. Black: -- as a matter of common sense?
Samuel R. Howell: Your Honor, they -- they can, on the basis of the earnings as shown. I can only speak from the record to the court, on the basis of the record.
Hugo L. Black: Do you mean they could cut their rates?
Samuel R. Howell: If they need to -- if they need to get this traffic, if they want to get the traffic, the Commission found that they -- that since the rail rate was reasonable and since this factor from East St.Louis to Danville was depressed, that if the barge lines hope to get into this traffic, then they should reduce their -- their barge factor from Galveston to --
Hugo L. Black: Does the -- does the Commission have a right to pass on the reasonableness of the barge rate?
Samuel R. Howell: Well, yes, Your Honor.
Hugo L. Black: Well, it could do that, doesn't it?
Samuel R. Howell: Well, it did in -- in effect here. It passed on the reason it found that there was a -- that the barge lines were making a -- a gross profit after -- they're making a profit of $1 a ton, for every ton of sulphur they move from Galveston to East St. Louis, and that the rail -- the rail rates from -- of the railroads was depressed, and the --
Felix Frankfurter: Mr. Howell, does the record --does the record show -- I haven't read it, does the record give any light on the question put by Mr. Justice Black, namely, has there been a diminution in barge traffic --
Samuel R. Howell: The reason of the rate --
Felix Frankfurter: I mean, at large, I mean, with reference to this commodity, is this -- is this case based on the fact that this operates -- shows the barges can't do business or business profit? How long are these rates -- through respective rates can enforce?
Samuel R. Howell: The rates have been in effect, certainly, I believe, since World War II, and -- but the -- but there's never been any -- any shipments by water from Galveston by the appellant barge lines. There was a contract carrier barge lines --
Felix Frankfurter: You mean, never?
Samuel R. Howell: I beg your pardon?
Felix Frankfurter: You mean, never?
Samuel R. Howell: Never as far as I know.
Felix Frankfurter: Does the railroad -- did the railroad driven off the barge business?
Samuel R. Howell: They never were in the barge businesses, if the Court please. And there was a time though back when this record -- I mean, from Galveston to East St.-- from Galveston to Danville.
Hugo L. Black: What happened to these barge lines since it's raised by the defendant?
Samuel R. Howell: They never had any traffic before and we don't have any now.
Hugo L. Black: What happened to the barge -- what happened to them?
Samuel R. Howell: Oh, I don't know they were carrying sulphur. They may be carrying sulphur now from Galveston to East St.Louis and then advance to Danville over the road.
Hugo L. Black: And they haven't gone out of business yet?
Samuel R. Howell: I haven't heard of one going out of business. And the --
Felix Frankfurter: Is there no light on this -- on this -- what seems to me to be a rather underlying problem before the Commission. Is there no lighting or I say as to what the actual economic effect, the transportation effects have been on rates, as you said in an existent form of 10 years, is that right?
Samuel R. Howell: Well, I'm -- I'm not sure as to the -- the time --
Felix Frankfurter: Well, is there any --
Samuel R. Howell: There -- there is no evidence as far as -- as I know in the record, Your Honor, on that subject.
Hugo L. Black: Do you know of any barge lines in the United States since there have been barge lines that were able to carry anything by charging a higher rate than the railroad?
Samuel R. Howell: No, Your Honor.
Hugo L. Black: Have you ever heard of any?
Samuel R. Howell: Never heard of any and there never will be any --
Hugo L. Black: Have you ever dreamed that there could be such?
Samuel R. Howell: There will never be any as to the -- because --
Hugo L. Black: Never will be (Inaudible)
Samuel R. Howell: -- because of the character and nature of the barge service.
Hugo L. Black: That -- so that you know without any evidence, the Commission knows without any evidence that the barge rate is higher than the other. The barge rate can't carry any goods.
Samuel R. Howell: Well, that's -- that's --
Hugo L. Black: That's correct, isn't it?
Samuel R. Howell: But here, the -- of course, if Your Honor please --
Hugo L. Black: If that's wrong, are there any barges that travel at that rate that can carry any goods that they charge more than the railroad?
Samuel R. Howell: I don't believe so, Your Honor, but --
Hugo L. Black: You know of none.
Samuel R. Howell: -- but we must keep this fact -- we keep this factor in mind, if the Court please, that the -- that it would not be fair. It would not be in cognizance with the National Transportation policy for any regulatory body, like the Commission, to permit the barge lines to tap the resources of rail lines at interior points to take traffic there and to bring it to the barge lines, draw it to the barge lines to give the barge lines a haul. Only in those instances --
Speaker: Voice Overlap) --
Samuel R. Howell: -- where it would be -- it will not be consistent with the --
Hugo L. Black: Did Congress appeal -- did Congress appeal that statement that says, “It's the duty to operate this thing, this law in a way that will give the barge lines inherent advantages of a cheaper rate, a tad cheaper?”
Samuel R. Howell: Oh, yes, the Commission does that, they recognize that fact in this case here and points it out.
Hugo L. Black: It -- you said -- you mean -- it said, it recognize it.
Samuel R. Howell: Well --
Hugo L. Black: How did they recognize that?
Samuel R. Howell: Well, from the decisions that I -- I think from the decisions that I have read and I can't name one to Your Honor, -- to Your Honor but I think in the decisions of these cases I've read, rail versus barge rates that the Commission has tried to balance the factors thereunto --
Hugo L. Black: Well, how could you -- how could you say they did it here when the rate is higher on the barge than it is on the railroad?
Samuel R. Howell: Well, the -- because --
Hugo L. Black: It might say so, but now, I just want to know if -- if that can be proven. I'd like to have it established. I -- I wouldn't have thought it could.
Samuel R. Howell: Well, the -- the answer would be that you'd have to take into consideration, of course, the -- the cost -- the cost of moving by a barge line and the cost of moving by the rail lines. And here, I think there will be a savings under the present all-rail rate. If you adopt the -- if the Commission had granted the proposed joint barge rail rate that these barge lines sought, there would be a savings to the -- to the shipper or to the consignee when he uses barge lines, barge-rail rates rather than the through barge service of only $1.04, a gross ton.
Hugo L. Black: Well, they could carry that much cheaper, doesn't it?
Samuel R. Howell: Well, the -- the barge lines -- the barge lines rate would be only $1.04 under the all -rail rate.
Hugo L. Black: I'm not talking about how much -- I'm not talking about how much they've gained.
Samuel R. Howell: Oh, they can carry cheaper. Oh, yes.
Hugo L. Black: They can carry cheaper and can carry cheaper than this.
Samuel R. Howell: That's right.
Harold Burton: And if they did, then the railroads will reduce their rate to provide a little more of the railroads and -- and --
Samuel R. Howell: Well --
Harold Burton: -- they put the barges in a disadvantage.
Samuel R. Howell: Well, the -- the -- of course, the Commission would determine the reasonableness -- have I taken up 30 minutes? We've agreed on a division of time and I'm sorry if I -- if I've gone over. But the -- of course, the -- the railroads could not or any carrier, reduce its rates below a reasonable minimum rate. They'd have to keep within the zone of reasonableness and the Commission would check that, but it would certainly try us to do equity and justice between the barge and the rail lines.
Earl Warren: How much is -- has the rate been depressed between Galveston and East St. Louis?
Samuel R. Howell: I believe -- I'm not sure, but I think it's depressed from $1 -- I'm not sure. I believe Mr. Daily, who will follow me, can answer that.
Earl Warren: Oh, I will ask him then, all right.
Samuel R. Howell: Thank you, Your Honor.
Earl Warren: Would you mind answering that question, please, Mr. Daily.
John A. Daily: As to how much the rail rate has been depressed?
Earl Warren: The rail rate between Galveston and East St. Louis has been depressed on this sulphur.
John A. Daily: Well, the only -- I cannot give you the starting point of the -- that would be of course the first all-rail rate that was ever established between those two points. You can --
Earl Warren: Well, give us the best you can give us.
John A. Daily: Well, you can see from the -- from the chart which Mr. Belnap handed to you at the start of the argument that the all-rail rate is $2.50 less than the combination.
Earl Warren: $2.50?
John A. Daily: That's right. That may have occurred across the period of years. That rate of $9.18, joint all-rail, I should like to dispel any notion that that was simply put in to attract the Danville trip. That is a rate which represents 41 cents per 100 pounds, which has been in effect for many years and which extends, not only to Danville, but to many, many parts on the Great Lakes. We've had several cases before the Commission on the 41-cent basis and they have just recently, within the last six months, finally approved that rate.
Speaker: Well, what -- what is the percentage rate of sulphur as against to -- what do you call it, first class rate?
John A. Daily: Yes, I think it would be approximately --
Speaker: About 30% then?
John A. Daily: Yes, I think that's right, Mr. Justice. It is in the record, however.
Speaker: Well, let's -- let's assume, I'm not --
John A. Daily: Yes.
Speaker: -- I'm not sure that that is right either. But let's assume starting with that. Then what -- when did this rate figure that they have there now, the depressed rate? A rate that wasn't depressed would be 30% of the first class rate, wasn't it? Galveston to --
John A. Daily: That would be your normal basis for moving sulphur in the area which the Commission ordinarily uses as a test.
Speaker: Yes. Now, how much has been depressed below that, percentage wise or do we know?
John A. Daily: Sir, it would take a -- a rate man to tell you that with a tariff at his side. I could not immediately tell you what 30% of first class would be, but it -- it would be somewhat higher.
Speaker: Now, there is no depressed rate between East St. Louis and Danville, is it?
John A. Daily: Yes, sir. That brings me to a point. Mr. Belnap was very careful to point out to you that Danville is an inland point that there is no water competition there, and therefore, that rate of $2.95 could not be depressed. But the $2.95 applies to Joliet, which is approximately up here on the Illinois Waterway, and that is a competitive point. And on the lines of these railroads operating between --
Speaker: That mean -- that means Joliet has the same rate?
John A. Daily: That's right, because Danville would be intermediate.
Speaker: Danville is farther south than Joliet?
John A. Daily: Yes.
Speaker: Not as long haul.
John A. Daily: No. Danville would simply take the same rate because it's intermediate on the lines of these carriers operating between the St.Louis and Joliet. Now, while Mister -- may I continue, Mr. Justice? While Mr. Howell has discussed the overall aspects of the case on behalf of the Commission, I should like to make my argument a bit more personal on behalf of the railroads. In December of 1949, these barge lines approached the railroads with one proposal, a through route, a joint rate of $7.67, a division to them of $5.41, and the balance of $2.26 to us. Now, please note that their local rate at that time was $5.32, so their great contribution to this competitive effort is to take 9 cents more as their requested division of the joint rate. So that any advantage, which is going to accrue to a shipper or consignee is going to accrue from the railroads, not from any action of the barge lines. We turned that proposal down. It was not recommended. And we would not recommend their proposal from any barge line or any railroad on that basis, because, as I think one of the justices pointed out, joint rates are ordinary less than the combination of locals. So, it means that your division would ordinarily be less all things considered equal. But what the appellants expect you to do here is to write divisions into Section 3 (4). They wish to make a comparison between a division, which is dealt elsewhere within the Act and a rate or a charge which the Congress deals with under Section 3 (4). They admit that those two things are not comparable when a shipper comes before the Commission or before the Court, but they overlooked the point that the reason they're not comparable is because they are unlike things in their very establishment under the law that Congress has dealt differently with both of them in the Act. They are inherently different, and thus, it is the comparison itself which is invalid. And if the comparison is invalid, it is not -- it does not depend on who makes it. A division is specifically dealt with in Section 15 (6). At other points throughout the Act, the Congress has taken care to -- to say divisions when they mean divisions. And you will find differences reflected throughout the Act such as in Section 1 (4) where the railroads are required to maintain just and reasonable rates, but just reasonable, and equitable divisions. And nowhere in the Act will you find the term “equitable” used in connection with the rate, a fare, or a charge.
Felix Frankfurter: Well, Mr. Daily, if -- if the demand of the barge lines for a joint rail rate were exceeded here, then what you suggest, these are the barges that would have an equally larger share by way of division? It would not have to be heeded because the Commission can then fix upon a complaint, whatever may be the private rate, the Commission can fix the appropriate division as standard.
John A. Daily: Yes, sir.
Felix Frankfurter: So that, if they ordered, they want to order a joint rate, wouldn't follow that the barges would get a larger share out of the joint rates they may now get out of the locals?
John A. Daily: That's perfectly right. And it demonstrates, I think, what I said in the beginning, what they asked for when they started out a division for themselves of $5.41, 9 cents more than the local. And they have to have that entire package, not just any part of it. They have to have it all and they're asking this Court to give it to them --
Felix Frankfurter: Well, why do you say --
John A. Daily: -- as a matter of law.
Felix Frankfurter: -- (Voice Overlap)? Why do they have to have it? The Commission could deny it here, give them only some -- some (Inaudible) out of the package.
John A. Daily: No. What I say is that they must have that division they require because otherwise, they've reduced their revenue.
Felix Frankfurter: Do you mean, from their selfish point of view, from their business point of view?
John A. Daily: That's the only view I see of theirs here, Mr. Justice.
Felix Frankfurter: Well -- well, these people of the old at that time, don't know what are self-business is.
John A. Daily: I think that I can demonstrate this. At the time of this proposal, as were shown by a movement study in the past six months of 1950, the last six months of the 1950, the record shows that the contract carrier, barge, was moving this traffic at a rate of $4.65 per gross ton, 67 cents a ton under the local rate maintained by these plaintiffs. It was not moving all-rail. They could not conceivably, honestly, and justly blame the all-rail railroad rate for their failure to share in the tonnage, because the barge carrier contract rate of $4.65 obviously provided a much more economic method of transportation to the shipper. Now, when they see that that barge, that contract carrier barge is moving this at $4.65, they have two choices. The first is obvious, reduce our rate and make ourselves competitive on the barge leg of the haul. The second is a little more obscure and it takes a little ingenuity. If we can sell the railroads, the idea of a joint rate, through route, and get at least as much as we now get for our local rate, then we can get the sulphur to the Danville consignee at the same amount with very little difference, if any, as that Danville consignee can now get it by contract carrier barge. And so, they come to the Commission in the guise of public interest and necessity, seeking through routes and joint rates, if you please, contending that the railroads are keeping them out of this traffic, and all they're going to do is get the sulphur to the Danville consignee at the same cost. The only difference is that if they can get that joint rate in the public interest, that joint rate will be available only to them. And the contract carrier with whom we do not and are not required to join the joint rates, will still have the application of the $2.95 local rate, plus his $4.65. So, they get themselves into the position where they can compete, but at the same time for that barge leg of the haul, these very generous people who tell you they only want equality of treatment, are not going to give any of that decreased cost to the shipper or to the consignee. They're giving him nothing he doesn't have at the time, and that's why no shipper or consignee appear if they were giving them some advantage. In my very brief experience with the railroads and before the Commission, I have never noticed the reluctance on the part of any shipper to appear and tell the railroads he wanted something, but he wasn't getting any advantage here. And then, I think --
Earl Warren: Why shouldn't -- why shouldn't the railroad -- Danville railroads be willing to -- to give the barge line the same -- the same rate as it gives the other railroad carriers?
John A. Daily: Now, at the time, if I may answer it this way. At that time, it's moving by contract carrier barge, and our revenue on the traffic, which is moving barge rail is $2.95. That's where the preponderance of the sulphur is moving. Now, they come along with their proposal. They want us to reduce that revenue and they suggest $2.26. So, we will take the -- we will take the difference of 69 cents per gross ton, we lose that. The shipper gains nothing he doesn't already have. And the only beneficiary of the whole deal is the plaintiff barge lines, who come to us, if you please, and want more than their local rate as their division of a joint rate.
Earl Warren: Well, how will you gain any benefit from -- from the higher rate that you charge the -- the barge people if there isn't going to be any barge traffic and you have to -- you have to get all of the sulphur there by rail at your $2.26 rate?
John A. Daily: Mr. Justice, that simply wasn't the fact. The fact is we did have the revenue. We did have the revenue at that time, $2.95 a gross ton.
Earl Warren: Well, you haven't got it. You won't have it now when you entered this ruling of the -- of the Commission. There's nobody who's going to -- nobody is going to ship anything by barge, are they, if it costs 70 cents a ton more to get it from -- from the mines to Danville.
John A. Daily: No, sir.
Earl Warren: So, you'll -- you -- you'll have to carry all of it for your $2.26 anyway, won't you?
John A. Daily: No, sir. That's what I tried to point out at the beginning that a barge contract carrier will carry that sulphur at $4.65 a gross ton and that apparently gave the shipper or consignee enough economy that that's the way he wanted it to move.
Speaker: But if that contract is only from Port Sulphur, is it?
John A. Daily: No, sir.
Speaker: It comes from Galveston.
John A. Daily: From Galveston. It moved by Galveston by a contract carrier who could and did charge 67 cents a gross ton, less than these people who were willing to share in the business for it. And they're not willing to go down to that level to share in this business.
Felix Frankfurter: Is that -- is -- is that -- the contract carrier has now have this tonnage?
John A. Daily: Are you speaking about today?
Felix Frankfurter: Today or anything that's in this record, or is your --
John A. Daily: Sir --
Felix Frankfurter: -- your $4.65, is that a -- is that a real opinion to this thing, or is that a --
John A. Daily: I suspect --
Felix Frankfurter: What --
John A. Daily: -- perhaps these inquiries come as a result of the statement in the Government's brief that there has been no revenue of $2.95 since 1950, and thus, today, as I think they said, we are not now getting that revenue. Of course, all they're saying there is that they don't have any movement. Apparently, the United States was told that by the appellant, he couldn't get it out of the record.
Felix Frankfurter: What about the contract carrier? Is there a contract carrier business of sulphur from Galveston and others?
John A. Daily: Oh, yes, sir, no question about that.
Felix Frankfurter: (Inaudible) amount as competitors who are being the common carrier barges? Your argument, the last few minutes was that what area you're worrying about is the cheaper haul by the contract carriers and they can be protected by joint rates which wouldn't go for the benefit of the contract carriers. They put them out of business and then sell out (Inaudible) Is that --
John A. Daily: The contract carriers are the bane of their existence, Mr. Justice.
Felix Frankfurter: What -- is that true today? Is that in the record?
John A. Daily: Surely.
Felix Frankfurter: If I find -- redirect as I find it?
John A. Daily: Well, it -- it can't. Obviously, the hearing was March 14th, 1951 and that's when the hearing has closed and the record has closed.
Felix Frankfurter: I mean, as of that time, as of that time.
John A. Daily: That's positively right, positively right, and --
Felix Frankfurter: How much tonnage go to -- goes up that river, one way or the other?
John A. Daily: Off to Mississippi?
Felix Frankfurter: Yes -- no, off the sulphur tonnage.
John A. Daily: Oh, do you mean just to Danville or?
Felix Frankfurter: Yes, just to Danville.
John A. Daily: Well, I think it weigh about 20,000 tons a year.
Felix Frankfurter: 20,000. Of that tonnage, how much does the railroad have, all of it?
John A. Daily: I'm not sure.
Felix Frankfurter: How much of the contract carriers have?
John A. Daily: The statement was that the preponderance of the movement moved barge rail. We made a movement study for the last --
Felix Frankfurter: As I understand a little while ago, (Inaudible) that they had no traffic at all.
John A. Daily: They don't have any traffic at all.
Felix Frankfurter: Do you mean by barge, you mean the contract barges?
John A. Daily: Yes, sir, that's right.
Felix Frankfurter: All right.
John A. Daily: That's right.
Speaker: Well, these -- what these people asked for was a -- was a making of a rate, wasn't it?
John A. Daily: No, they want a through route rate and a division. Because if they don't get that division, Mr. Justice, if the Commission, assuming they had taken everything the barge lines here said and agreed with it and established through routes and joint rates, these barge lines would still have to face the problem of what their proper division is under the Act.And so --
Speaker: Well, I'm -- I'm --
John A. Daily: And so.
Speaker: -- looking at their complaint, which -- which asked only for through routes and joint rates.
John A. Daily: That's the point I made, sir, that they never raised this business of a division versus a rate barge charge, not until after the hearing.
Speaker: Well, would you -- you refused them the through route, the joint rate or the Commission did?
John A. Daily: That's right, sir.
Speaker: The Commission refused it on the basis of 3 (4), Section 3 (4), didn't they?
John A. Daily: That's right.
Speaker: So, really, what -- what they have to do -- or is it correct to say that what we have to do is to decide whether 3 (4) applies to the through and joint rates of theirs?
John A. Daily: I think that's their point, yes, sir. Yes, that's the point that I think is properly before the Court. And if I can leave the subject of a division -- oh, before I leave that subject, I would simply like to point out one factor. Mr. Belnap left you with the idea, or at least, he left me with the idea that he was leaving you with the idea that a through route and a joint rate is their only answer to this question of divisions. That -- that the Commission cannot deal with these divisions and so forth and that they are left without relief in the absence of through routes and joint rates. Nothing could be more further from the fact. At the time of the oral argument, counsel for the plaintiffs was asked, “Suppose that we,” meaning, the Commission, “were to establish proportional rates between East St.Louis and Danville, the same as the amount of the rail division, would that solve your difficulty?” Now, that's they're complaint here. That's the particular point of the appellants. And the answer was, “Yes, sir, that's one way of taking care of the discrimination, but that isn't the one we want.” And that's in the record at pages 146 and 147. They're satisfied with nothing less than a through route and joint rate, and they didn't give the Commission a scintilla of evidence of the public interest and necessity that is required under Section 15 (3) and 307 (d), and the same statement holds true for what is or is not a reasonable differential under Section 307 (d). If the -- why didn't they want that? Now, let's assume that that had been ordered. And now, we charge the same for both types of transportation. Now, how can they complain against us? They can't. But how does that fit their situation? Now, that rate that the Commission has established means we've got to charge the same for everybody, regardless of a division or anything else. The trouble is that rate would then be available on any sulphur which came in the East St.Louis by a railroad with whom we do not joined in a joint rate, on any sulphur which came into St.Louis by truck, on any sulphur which came in by the plaintiff barge lines, and on any sulphur which came in by the contract carrier barge line. So, when they got all through and we were purged of our so-called discrimination, they would turn around to be confronted with the same competition they were confronted with before, a lower contract rate on the river.
Hugo L. Black: They're also confronted with the lower or the higher -- being compelled to pay a higher rate to the railroad rate, I think.
John A. Daily: Sir, that -- that brings me to the point of divisions versus rates, fares, and charges. That Congress deals with those specifically. You cannot compare those simply saying that this amount is a division and this amount is a local rate, and the two are different and therefore, some discrimination must exist, because different factors go into account in divisions. Divisions do not depend on the cost of service alone. Section 15 (6) sets out the various items which the Court -- which the Commission has been directed by the Congress to specifically consider, and that's why, and the appellants admit that divisions may and do vary between the same carriers for the same service on the same commodity between the same points. And the fact that the divisions do so differ from each other establishes nothing.
Hugo L. Black: It does --
John A. Daily: And obviously --
Hugo L. Black: What it established here, because I may be wrong, that the same sulphur come from the same place, precisely the same time it gets to East St.Louis, and your railroad takes it to Danville, you charge more for it if it came by railroad or if it came by barge than when it came by railroad.
John A. Daily: I -- I don't like the term “charge”, Mr. Justice, because --
Hugo L. Black: Well, you -- you collect that much more.
John A. Daily: All right, but that's our portion. When -- well, let -- let's say when we collect less, what we collect is our portion of a joint rate and that does not depend on the service we render.
Hugo L. Black: But the Act of Congress didn't -- didn't draw distinctions that divisions and proportions or any other labels, as I understand it --
John A. Daily: Well, sir, they did.
Hugo L. Black: -- (Voice Overlap) there could not be any discrimination so that the railroads would be allowed to charge more rates than barges and deprive barges of the inherent advantages which -- which they have.
John A. Daily: I have simply pointed out to you, sir that the Congress did distinguish between a division and a rate. And they -- they expect reasonable through routes and the Congress gives the Commission power to establish through routes when they're reasonable, when they're necessary or desirable in the public interest --
Hugo L. Black: Well, do you think they didn't --
John A. Daily: -- and that's the same for railroads or barge lines.
Hugo L. Black: Do you think they didn't give -- do you think it didn't give the Commission power without regard to name if the barges were being charged -- if you were charging more for the transportation of stuff that came over a barge as to the stuff that came over a railroad that Congress is -- the ICC is without power to prevent the discrimination.
John A. Daily: Sir, I just pointed out that the ICC does have the power under Section 611 (b) to establish proportional rates of whatever amount they desire --
Hugo L. Black: Well, they could --
John A. Daily: -- on X water trip.
Hugo L. Black: Well, they could prevent this then, could they?
John A. Daily: Why certainly, they could prevent it if they had raised the issue properly which they did not. Now --
Hugo L. Black: That -- that's your ground then, if they didn't start the proper proceedings and they haven't proceeded in the right way, now, that may be a good objection.
John A. Daily: What their case might be under six -- Section 611 (b), I don't know. But counsel was offered that from the Commission. I don't say offered it, they simply suggested it to him and he said no. That would cure the discrimination. They admit that, but that isn't what they want.
Hugo L. Black: Do you mean, decreased rates?
John A. Daily: Yes, sir.
Felix Frankfurter: I mean, or increase yours?
John A. Daily: No change in ours.
Felix Frankfurter: (Inaudible)
John A. Daily: They would simply decrease it as it applies to these people. That's right.One more thing, there has been some testimony of pro and con about the absence or a non-absence of a showing of what service changes are here or differences. There is no showing at all in this record, whether the services are the same or different, but let me point out just one thing to you as a matter of common sense. When we receive all-rail traffic from our southwestern connections at East St.Louis, that sulphur is in cars, which is supplied by the Southwestern lines. In maintaining our local rate between East St.Louis and Danville, it is we who must round up and supply all these empty cars. In other words, on through all-rail traffic, our only duty would be to put a locomotive on the end of their train and take it away. But here, just as a matter of common sense, we have to supply the cars from the traffic. We have to round up these empties, put them down at the dock, how many of them we don't know because this comes up in 1,000-ton lots, but that's a considerable number of empties to supply. So, there is at least that difference in the service.
Earl Warren: Mr. Belnap, you have a few minutes.
Nuel D. Belnap: Mr. Chief Justice, if the Court please, just on the last point as to supply of cars, these lines, of course, do not serve the barge terminals. There's a switching line service for barge terminals. The record is that federal barge lines and American barge lines, which are the terminating barge lines of East St.Louis, for cars supplied, pay per diem, the usual per diem rate for the cars throughout the terminal and pay a per diem reclaim the switching line.
Hugo L. Black: Would you explain your viewpoint of what was said about the contract carrier --
Nuel D. Belnap: Yes, sir.
Hugo L. Black: -- and your -- and the contract barges in your argument?
Nuel D. Belnap: During the course of the oral argument in 1953, November, Mr. Daily argued the case for the railroads. He talked about and I quote, “The traffic which we now have with the Missouri Pacific.” That's on the record 139. He spoke about a prior movement from Galveston by a contract carrier. The evidence shows that in the latter part of 1950, there was such a movement by a contract carrier. In the report of the Commission, upon reconsideration on page 30 of the record, decided in January 1954, this is said, “Beginning with and since 1951, the entire movement of sulphur from the Galveston area approximating 20,000 tons a year has been over at the all-rail routes.”
Hugo L. Black: Is there anything to dispute that anywhere else in the record?
Nuel D. Belnap: No, sir.
Hugo L. Black: So, that the result of all -- for some -- for some reason, all the sulphur now goes over the railroad.
Nuel D. Belnap: It all goes over the railroad. I think in the examiner's proposed report, there was a statement that the contract carrier had gone out of business. And in that --
Felix Frankfurter: On page 20 -- 24 of the Commission to the fifth division -- I mean the Division 3.
Nuel D. Belnap: Yes, but I'm going to --
Felix Frankfurter: (Inaudible)
Nuel D. Belnap: May I -- may I say this to warn the Court about the misprint in this record. Folio 33 on pages 22 to 24 has been interchanged with folio 25, which is on pages -- of the record, 11 and 12. One is page 2 of the examiner's proposed report and the other is page 2 of the report of Division 3. So, the matter to which Mr. Justice Frankfurter directed my attention --
Felix Frankfurter: The first full paragraph.
Nuel D. Belnap: The first full paragraph, it's from page 20 --
Felix Frankfurter: Four, under the --
Nuel D. Belnap: That is from the examiner's proposed report.
Felix Frankfurter: Oh, that's not from the report?
Nuel D. Belnap: That's not from the report of divisions.
Felix Frankfurter: And where does that (Inaudible)
Nuel D. Belnap: It should be in the place of folio 25, Mr. Justice, on pages 11 and 12 of the record. Those two folios are interchanged in the print.
Felix Frankfurter: In the print.
Speaker: (Inaudible)
Nuel D. Belnap: 33 is the folio that's interchanged, Mr. Justice. 33 should be on --
Hugo L. Black: Was that folio 34?
Nuel D. Belnap: Well, if I did, I must spoke to myself. Folio 33 on pages 22 to 24 of the print should be interchanged with folio 25, which is on pages 11 and 12 of the print.
Hugo L. Black: In other words, folio 33 is folio 25. That's what you mean.
Nuel D. Belnap: Yes, it should be that way.
Speaker: What page is 25 on?
Nuel D. Belnap: Beginning at -- no, it's folio 33.
Felix Frankfurter: That's all right. At page 25 is where it belongs.
Nuel D. Belnap: 25 is where it belongs. The bottom half of page 24 is where it belongs. The Commission --
Felix Frankfurter: Then that statement about the contract carrier, it was from the examiner's report?
Nuel D. Belnap: That was from the examiner's report and not from the report of Division 3.
Felix Frankfurter: Anyhow, the facts are the same.
Nuel D. Belnap: I have no doubt they are. My time has expired.
Earl Warren: You may -- you may answer the -- that last question. Did you have a question? Did you finish the -- did you finish your question?
Hugo L. Black: No, I didn't --
Nuel D. Belnap: Thank you, sir.
Speaker: I think it's all right.
Earl Warren: All right. Well --