Opinion
Civil Action No. 431.
July 17, 1942.
Auvergne Williams, of Memphis, Tenn., and Nuel D. Belnap, of Chicago, Ill., for plaintiff.
J. Stanley Payne, of Washington, D.C. and William McClanahan, U.S. Dist. Atty., of Memphis, Tenn., for defendants.
Before MARTIN, Circuit Judge, and DARR and BOYD, District Judges.
Action by L.T. Barringer Company against the United States of America and another to enjoin and set aside operation and effect of an order of defendant Interstate Commerce Commission, wherein the Atchison, Topeka Santa Fe Railway Company and others intervened.
Complaint dismissed.
In the above entitled case, the Court makes the following findings of fact and of law:
Findings of Fact
1. For some years prior to April 21, 1942, the railroads which have intervened in this suit and the Oklahoma Railway Company maintained on cotton re-shipped from concentrating points under carload rates a loading charge of 5.5 cents per square bale and 2.75 cents per round bale if the cotton was loaded by said railroads at a point of origin served by them in Oklahoma after tender to said railroads at a depot or cotton platform for shipment therefrom to the concentrating point.
2. Said loading charge is contained as a separate item in the rate and transit tariffs filed by said railroads with the Interstate Commerce Commission (hereinafter referred to as the Commission) and applied to all such cotton so tendered and loaded by said railroads, regardless of the ultimate destination to which said cotton was reshipped in carloads from the concentrating point.
3. Said loading charge was a charge which was maintained and assessed by the individual railroad performing the loading service.
4. The cotton to which said loading charge applied was handled and the rates and charges accruing thereon were collected in the following manner: The cotton originated at a country station (hereinafter referred to as a gin point), at which point it was tendered to the railroad at its depot or cotton platform by a shipper, with the request that the cotton be loaded by the railroad and transported to a nearby compress. When so tendered, the carrier loaded the cotton into a car, utilizing the labor of its agency forces or section gangs. The cotton was then transported in lots of one bale or more to the nearby compress specified by the shipper and, upon said movement, the carrier collected its local "float-in" or transit rate for the inbound line-haul service from the gin point to the compress station. Ordinarily, the charge for loading was not collected at that time but, as authorized by the railroad tariffs, followed the shipment as an advance charge, such advance charge being inserted in the original bill of lading. At some later date, after compression, the cotton was reshipped in a carload lot to a final destination, such as a gulf port or a domestic mill in the southeast or the Carolinas. At the time of that reshipment, the carrier collected its carload rate from the compress station to final destination for the outbound line-haul service rendered. The carriers maintained in tariffs filed with the Commission various levels of carload rates made dependent upon the minimum weight loaded, the different carload rates being governed by minima of 25,000, 35,000, 50,000 and 65,000 pounds. On cotton so transported, the railroad tariffs authorized a subsequent readjustment of the inbound and outbound rates as originally assessed for line-haul services to the basis of the through carload rate from the gin point to final destination. This is called a transit settlement and the loading charge, when applicable, was ordinarily collected at the time the transit settlement was made.
5. By tariffs filed with the. Commission to become effective June 11, 1941, the railroads referred to in paragraph 1 above (said railroads being hereinafter referred to as respondents) proposed to cancel the loading charge hereinabove described on cotton reshipped to Beaumont, Corpus Christi, Galveston, Houston, Orange, Port Arthur, and Texas City, Texas, and Lake Charles, La. (said destinations being hereinafter referred to as the Texas ports), and to continue said loading charge on cotton reshipped in carloads from concentrating points to all other destinations.
6. On petition and protest from numerous interests, including L. T. Barringer and Company, the plaintiff herein, the Commission, acting under the authority conferred upon it by Section 15(7) of the Interstate Commerce Act, 49 U.S.C.A. § 15(7), entered an order on June 10, 1941, which postponed the effective date of said schedules until January 11, 1942, and instituted an investigation into the lawfulness thereof. The proceeding instituted by the Commission was entitled Investigation and Suspension Docket No. 4981, Loading Cotton in Oklahoma, and will be hereinafter referred to as I. S. 4981. Subsequently, the respondents further postponed the effective date of said schedules until the termination of the proceedings before the Commission.
7. Hearing was had in I. S. 4981 before an examiner of the Commission at New Orleans, La., on July 19, 1941, at which evidence was received from the respondents who supported the schedules and from the protestants, including the plaintiff, who opposed the proposed schedules.
8. On January 29, 1942, after full hearing, brief, and oral argument, the Commission, by Division 3, entered a report in I. S. Docket No. 4981 setting forth its findings of fact and conclusions, and holding that the elimination of the loading charge on cotton originating in Oklahoma, compressed in transit, and moving from the compress points to the Gulf ports in question at the carload rate from origin point is just and reasonable and not otherwise unlawful. With said report, and as a part thereof, the Commission entered an order dated January. 29, 1942, which vacated and set aside the previously entered order of suspension in I. S. Docket 4981 as of February 21, 1942, and discontinued the proceeding.
9. On February 18, 1942, the plaintiff filed with the Commission its petition for reconsideration in said proceeding in which it urged that under the facts and law the Commission should have found the proposal to be unlawful and in violation of Sections 2 and 3 of the Interstate Commerce Act, and requested that the report and order of January 29, 1942, be modified accordingly and the respondents be required to cancel the proposed change. The Commission, pending action on that petition, deferred the effective date of its order of January 29, 1942, to April 21, 1942.
10. By order of April 13, 1942, the Commission denied the petition of the plaintiff for reconsideration and the change in the tariff schedules was permitted to and did become effective on April 21, 1942, and is now in effect.
11. Plaintiff, L. T. Barringer and Company, a cotton merchant of Memphis, Tennessee, by bill of complaint filed on or about May 11, 1942, prays that this Court perpetually enjoin and set aside the operation and effect of the said order of the Commission of January 29, 1942.
12. By order entered on June 29, 1942, the Atchison, Topeka Santa Fe Railway Company, Gulf, Colorado Santa Fe Railway Company, Panhandle Sante Fe Railway Company, Missouri-Kansas-Texas Railroad Company and Kansas City Southern Railway Company, respondents before the Commission in I. S. Docket No. 4981, were permitted to intervene as parties defendant herein.
13. The physical service of loading cotton tendered to a respondent at any particular depot or cotton platform in Oklahoma for shipment to a particular concentrating point is the same on cotton subsequently reshipped in a carload from the concentrating point to the Texas ports as on cotton subsequently reshipped in a carload from the concentrating point to other destinations, such as domestic mill points in the southeast or the Carolinas.
14. The tariff change approved by the Commission provides for the loading of cotton without charge when reshipped from concentrating point, in carloads, to the Texas ports only if the cotton is tendered to a respondent at its depot or cotton platform at the inception of the inbound line-haul move from gin point to compress station, and does not apply to cotton loaded into a car at a compress, and does not apply to cotton other than that which moves from the station at which loaded to concentrating point on the basis of inbound "float-in" or transit rates.
15. Hearing before this Court, specially constituted of three Judges as required by the Urgent Deficiencies Act, 28 U.S.C.A. § 47, was held July 8, 1942. A certified copy of the oral testimony and documentary exhibits introduced in the proceeding before the Commission, and certain other documents considered by the Commission, were received in evidence by the Court, together with an affidavit filed by plaintiff, which was received solely on the question whether plaintiff possesses sufficient legal interest to bring and maintain this suit.
16. With its order of January 29, 1942, the Commission issued a report containing its findings of fact, decision and conclusions.
17. Upon the hearing before the Commission, the respondents sought to justify the difference in the charges for loading cotton reshipped to the Texas ports, on the one hand, as compared with the charges for loading cotton reshipped to all other destinations, on the other hand, on two grounds, among others, i. e., (1) they urged that the free loading to the Texas ports was necessary to meet truck competition and that there was no truck competition to the southeast and to the Carolinas; and (2) they contended that the difference in loading charge was justified because the carload rates assessed for the line-haul services from Oklahoma to the southeast and the Carolinas are relatively lower than the carload rates assessed for the line-haul services from Oklahoma to the Texas ports.
18. As to the first ground: The evidence before the Commission showed the same truck competition from gin points to compress stations for cotton later reshipped to the southeast and the Carolinas as for cotton later reshipped to the Texas ports.
19. As to the first ground: The evidence also showed there was no truck competition from Oklahoma compresses to southeastern or Carolina destinations, although there was truck competition from Oklahoma compresses to the Texas ports.
20. As to the first ground: The only destination embraced within the term "Texas ports" for which any evidence was presented as to specific tonnage of cotton transported by truck from Oklahoma gin points was Houston, Texas.
21. As to the second ground: The evidence before the Commission was confined to a comparison of the rates, distance, ton mile, earnings and car mile earnings involved, but no evidence was offered as to the specific costs of the respective line-haul services or as to any transportation circumstance and condition incident to line-haul services other than the mere matter of distance.
22. The evidence offered before the Commission by the plaintiff showed that it purchases cotton in Oklahoma for reshipment to the southeast and Carolinas in competition with other merchants pur
chasing cotton in Oklahoma for reshipment to the Texas ports; that if the proposed change were permitted to become effective, the plaintiff would be compelled to pay a charge for having its cotton loaded by the respondents, while its competitors would be able to obtain a similar loading service from the respondents without charge; and that this difference in charges would impose a competitive disadvantage upon the plaintiff in the purchasing of Oklahoma cotton.
23. The Court adopts as its own the findings of fact set forth in the said report of the Commission.
24. The Commission found, inter alia, that there is (1) no trucking of cotton between points in Oklahoma and the Southeast, whereas there is trucking of cotton between points in Oklahoma and the Gulf ports, (2) that the carload rates on cotton from Oklahoma origins to the Southeast are on a relatively lower basis than the carload rates on cotton from the same origin to the Gulf ports, and (3) that the rates from points in Oklahoma both to the Southeast and to the Gulf ports are depressed.
25. The Commission also found, inter alia:
"In the Southwestern Cotton case the Commission at page 724 said:
"`The practices which may have prevailed in the past with respect to free transit are no criteria in the present circumstances. In the past there was substantially no unregulated competition and the rates were not depressed. If carriers gave a free service in one instance it was not unreasonable to expect them to give it in another. Now the situation has changed. In the present circumstances it is not only the carriers' right but their duty to conduct their operations in the most economical manner possible, in order to retain the greatest net revenue out of the low competitive rates which they are compelled to charge. The fact that they have provided certain transit services without charge in addition to the transportation rates, in instances where that seems to be good business policy from a competitive standpoint affords no basis for requiring them to assume the additional burden and expense incident to such services where the opportunities for corresponding benefits to them are lacking.'
"This was said with reference to the circumstances which distinguish the granting of transit in the interior but not at the ports. It applies with equal force to either of the situations presented in the proceedings now before us."
26. The ultimate findings of the Commission were:
"We, therefore, find that the elimination of the rail carriers' loading charge on cotton originating in Oklahoma on respondents' lines, compressed in transit and moving from compress point to Texas-Gulf ports and Lake Charles, La., at the carload rate from origin point, is just and reasonable and not shown to be otherwise unlawful.
"We further find that the re-establishment of the loading charge on shipments of cotton originating in Texas on the St. Louis, San Francisco and Texas Railway Company and destined to the same points, including New Orleans, La., for export, is just and reasonable and* not shown to be otherwise unlawful."
Conclusions of Law
1. The Interstate Commerce Commission in its report made essential basic findings of fact, supported by substantial evidence of record.
2. The Commission did not exceed its authority and the power conferred upon it by the Interstate Commerce Act in entering the order sought to be enjoined, and the Commission's action was not arbitrary.
3. The findings of the Commission are adequately supported by substantial evidence.
4. In determining whether or not the provisions of Sections 2 and 3 of the Interstate Commerce Act, 49 U.S.C.A. §§ 2, 3, have been violated by the publication of the tariffs under consideration herein, the Commission properly considered the dissimilarity in circumstances and conditions between the line-haul movement of cotton from Oklahoma origins to the southeast and the line-haul movement of cotton from Oklahoma points to the Gulf ports here involved.
5. The Commission's findings support its ultimate conclusion that the rail tariffs under consideration are just and reasonable and not otherwise unlawful.
This cause came on to be heard on the complaint of L. T. Barringer Company praying a perpetual injunction and cancellation of the operation and effect of an order of the Interstate Commerce Commission dated January 29, 1942, and upon the responsive pleadings of the defendants and interveners, and upon the full record in the cause, including the order of the Interstate Commerce Commission, the transcript of the hearing before the Interstate Commerce Commission, and exhibits filed and considered at such hearing.
The court is of opinion that the Interstate Commerce Commission, in its report, made essential basic findings of fact, supported by substantial evidence of record; and that the order of the Commission is lawful.
Contemporaneously herewith, the court has filed findings of fact and conclusions of law deemed appropriate.
The complaint, accordingly, is dismissed with proper costs.