Opinion ID: 389258
Heading Depth: 1
Heading Rank: 3

Heading: The Construction of the Tariff.

Text: 17 In recommending judgment in favor of the Government, the magistrate found that U.S. Steel violated the Hepburn Act by receiving rebates not authorized by the tariff because shipments to destinations within the corporate limits of the City of Duluth are not shipments to interior destinations. The magistrate reasoned that U.S. Steel's interpretation of the tariff was unacceptable, as a matter of law, because that interpretation would cause the eastern railways to discriminate against shippers by allowing rebates for wholly intracity third leg movements by rail but disallowing rebates for wholly intracity third leg movements of coal by truck or other means. The court believed that such intermodal discrimination would violate 49 U.S.C. § 2 4 and, therefore, was not an interpretation that could be adopted by the court, regardless of the resolution of disputed facts. We have difficulty with this analysis. 5 18 In United States v. Wabash Railroad, 321 U.S. 403, 64 S.Ct. 752, 88 L.Ed. 827 (1944), the Supreme Court held that the determination of total charges due under a filed tariff for a combination of carrier services was to be accomplished by an investigation of the facts of the carrier's service to the particular shipper to be charged, irrespective of whether charging for a spotting service as part of the total charge would discriminate against the shipper in violation of section 2. Id. at 413, 64 S.Ct. at 756. 6 The lesson of Wabash is that to determine if a person has violated a tariff the primary inquiry is whether the particular carrier's and shipper's situation comes within the terms of the tariff, as defined according to their ordinary and intended meaning, practical application, and commercial context. Accord Penn Central Co. v. General Mills, Inc., 439 F.2d 1338, 1340-41 (8th Cir. 1971). 19 The Hepburn Act prohibits only a shipper's departure from the terms of a tariff; that the tariff might be subsequently determined to be unlawful under section 2 in proper proceedings is not controlling for Hepburn Act purposes. 7 The district court apparently overlooked the possibility that the Chesapeake & Ohio may have published a discriminatory tariff, the compliance with which by U.S. Steel would incur it no liability under the Hepburn Act. 20 The magistrate relied on Great Northern Railway v. Delmar Co., 283 U.S. 686, 51 S.Ct. 579, 75 L.Ed. 1349 (1931), for a rule of construction which requires district courts to interpret tariffs so as to avoid possible violations of law. See also Penn Central Co. v. General Mills, Inc., 439 F.2d 1338, 1341 (8th Cir. 1971); National Van Lines, Inc. v. United States, 355 F.2d 326, 332-33 (7th Cir. 1966). Although we acknowledge the desirability of interpreting tariffs so as to obviate illegal results, we do not believe Delmar established an inviolable rule. We cannot accept such a myopic approach to tariff interpretation where it will result in substantial liability for a shipper without affording it a chance to prove it complied with the original and intended interpretation of the tariff. 8 We conclude the district court erred in construing the tariff solely upon the rule of construction which would attempt to avoid a violation of section 2. This rule as set out in Penn Central may be used to obviate a strict construction against a carrier. A corresponding rule of construction is that ambiguity or doubt should always be decided in favor of the shipper. However, more importantly, we think it fundamental before applying the limited rule of construction used by the magistrate, a court should first determine a permissible construction which conforms with the intentions of the framers of tariff. See Penn Central, 439 F.2d 1340-41. Here the magistrate did not undertake this investigation. 21