Atchison, T. & S. F. R. Co. v. United States, 279 U.S. 768 (1929)
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U.S. Supreme Court ATCHISON, T & S F RY. CO. v. U S, 279 U.S. 768 (1929)
[Page 279 U.S. 768, 772]
But it has a line from Kansas City to the Gulf, and its standard proportional rate also is 30.5 cents per 100 pounds. Prior to 1924 the Southern was in a position to compete on equal terms with the Santa Fe for the transportation to the Gulf of the grain from Dodge City on storage in Kansas City. In that year, the Santa Fe reduced its through rate from Dodge City to the Gulf via Kansas City to 47 cents. Thereby the Santa Fe 's net proportional rate from Kansas City to the Gulf was reduced 4 cents; that is, from 30.5 cents to 26.5 cents. For, under a practice prevailing at primary grain markets, known as the through rates with transit privilege, one who reships grain on the same railroad which had brought it into the market is entitled to reship on what is called the balance of the through rate. That is, a discount is allowed equal to the difference between the through rate from the point of its origin to the destination ultimately selected and the sum of the standard inbound and outbound rates.
Thus the Southern was disabled from competing with the Santa Fe for the transportation from Kansas City to the Gulf of grain in storage at Kansas City which had come from Dodge City. For the Santa Fe refused to establish a similar through route via the Southern from Kansas City, and the Commission did not order it. Compare St. Louis Southwestern R. Co. v. United States, 245 U.S. 136, 38 S. Ct. 49. The Southern undertook to help itself. It filed a tariff with what is called a varying proportional rate, by lowering to 26.5 its own rate from Kansas City to the Gulf on such grain as had come to Kansas City from Dodge City. [Footnote 2] The Santa Fe protested to the Com-
[Page 279 U.S. 768, 773]
mission against the Southern's varying proportional rate; but the Commission refused to suspend it. [Footnote 3] Then the Santa Fe , in order to exclude the Southern, filed the tariff here in question, imposing the 4-cent addition to its Kansas City rate on any Dodge City grain that should later be reshipped over the Southern's line. It is this conditional addition of 4 cents to the Dodge City-Kansas City rate which the Commission ordered canceled.
[Page 279 U.S. 768, 775]
A supplemetal argument is made by the Santa Fe to overcome the finding of the Commission that at the time when the tariff here in question was filed, there already existed (without any order by the Commission) a through route for grain over the Santa Fe from Dodge City to Kansas City and thence to the Gulf via the Southern. Compare St. Louis Southwestern Ry. Co. v. United States, 245 U.S. 136, 139, 38 S. Ct. 49; Virginian Ry. v. United States, 272 U.S. 658, 666, 47 S. Ct. 222. The supplemental argument is this: Since the Commission could not have ordered this through route via the Southern, it could not prevent the Santa Fe 's withdrawing from the same. [Footnote 4] Its proposed tariff was in effect a withdrawal; for, as the bill alleges, the rates were 'published, not for the purpose of facilitating movement via the routes in connection with which they were published, but were published by plaintiffs to preclude and prevent movement via such routes.' We have no occasion to consider the issue of fact whether there was in existence, when the Santa Fe filed its proposed tariff, a through route from Dodge City via the Southern from Kansas City; nor need we consider the issue of law whether, if there was such a route in existence, the Commission would have been powerless, by reason of paragraph 4 of section 15, to prevent the Santa Fe 's withdrawal
[Page 279 U.S. 768, 776]
from it. For we are of opinion that, although the Santa Fe brought the grain into Kansas City, there is nothing in the situation which precluded the Commission from canceling the Santa Fe 's proposed tariff as being unreasonable.
First. In ordering cancellation of the proposed tariff the Commission exercised only its function of determining the reasonableness of rates. It made a rate order to which the matter or routing was merely an incident. The Santa Fe calls the proposed rate, by which it undertook to add 4 cents to the Dodge City-Kansas City rate, if the grain should be reshipped on the Southern, proportional. To call it proportional is misleading. [Footnote 5] But, if it were truly a part of a through rate, the fact would be without legal significance. The Commission's power to declare rates unreasonable applies alike to all rates, be they joint, local, or proportional. The Commission may, and in controversies involving through rates often does, deal with one factor only of the combination of rates which make up the through rate, and that factor may be a proportional rate. [Footnote 6]
The broad power to pass on the reasonableness of rates conferred upon the Commission in 1887 has not been in terms limited by any amendatory act. On the other hand, there has been much legislation designed to make the power more effective. [Footnote 7] The special power to establish
[Page 279 U.S. 768, 778]
tion, or by what railroad, it will be carried. Southern Kansas Grain Ass'n v. Chicago, Rock Island & Pacific Ry. Co., 139 I. C. C. 641, 666. The treatment of substantially all grain coming from the country point is this: The bill of lading is for a shipment from the country point to the primary market. There is nothing in any of the papers connected with that transportation to indicate that the grain has a destination beyond the primary market. Upon arrival there, the owner requires delivery to be made at such elevator or other place as he selects. The freight charges are paid; the amount being the full local rate for transportation from the country point to the primary market. [Footnote 10] The car is then released; and the movement-called inbound-ends.
[Page 279 U.S. 768, 779]
in Kansas City. [Footnote 11] Alleged Unlawful Rates and Practices in the Transportation of Grain and Grain Products, 7 I. C. C. 240, 247; In re Substitution of Tonnage at Transit Points, 18 I. C. C. 280; Transit Case, 24 I. C. C. 340.12 The practice prevails often, even where the haul to the primary market is out of line; that is, is not on the direct route from the point of origin to the point which ultimately becomes the destination of the grain.
[Page 279 U.S. 768, 781]
425, 44 S. Ct. 560. Moreover, here the competition is not for transportation of the identical merchandise.
Third. In this court there is a faint contention that the evidence before the Commission did not support the finding of unreasonableness. It was not made either before the Commission or the District Court and is clearly unfounded. See Virginian Ry. Co. v. United States, 272 U.S. 658, 665, 47 S. Ct. 222; Assigned Car Cases, 274 U.S. 564, 580, 47 S. Ct. 727. There is also a suggestion that the Commission should have suspended and ordered canceled the Southern's varying proportional rate. Its action in that respect is not subject to review in this proceeding.
Affirmed. Footnotes
Footnote 1 A through rate is ordinarily lower than the combination of the local rates. When a through rate is made by combination of rates for intermediate distances, the rate for the later link in the shipment is, when lower than the local, spoken of as a proportional rate. See Hocking Valley R. Co. v. Lackawanna Coal & Lumber Co. (C. C. A.) 224 F. 930, 931; also, Railroad Commissioners of Kansas v. A., T. & S. F. Ry. Co., 22 I. C. C. 407; Swift & Co. v. Director General, 66 I. C. C. 409; Kansas City Board of Trade v. Atchison, Topeka & Santa Fe Ry. Co., 69 I. C. C. 185; Rates on Bunker Coal, 73 I. C. C. 62; Lumber from San Francisco Bay Points, 78 I. C. C. 760; Wichita Chamber of Commerce v. Alabama & Vicksburg Ry. Co ., 109 I. C. C. 368.
Footnote 2 This varying proportional rate was less advantageous to the Southern than if a joint rate had been established by agreement with the Santa Fe . For, in acting alone, the Southern was obliged to absorb the whole of the 4-cent reduction; whereas, if the Santa Fe had joined with the Southern in establishing a through route and joint rate, the 4-cent reduction would presumably have been divided between the two carriers.
Footnote 3 Varying proportional rates had been approved in Export Rates on Grain, 31 I. C. C. 616. The occasion for such rates and their operation are described in Southern Kansas Grain Association v. Chicago, Rock Island & Pacific Ry. Co., 139 I. C. C. 641, 653. 'The method of publication may be briefly explained by the statement that proportional rates are provided from Kansas City in varying amounts, depending upon the point of origin of the grain, which, when added to the local rates into Kansas City, are equal to the specific rates published by the lines which originate the grain. If these varying proportionals or balances were not maintained, the lines which serve Kansas City, but not the grain fields, would be compelled to apply the flat proportional rate of 30.5 cents from that market to the Gulf ports. That flat proportional exceeds the balances maintained by other lines, and therefore would attract little, if any, traffic. By providing these varying proportionals, the lines serving Kansas City have placed themselves on a competitive basis for the outbound movement of grain stored at that point.' Compare Grain and Grain Products from Kansas and Missouri to Gulf Ports, 115 I. C. C. 153.
Footnote 4 In support of this proposition, the Santa Fe relies upon Marble Rates from Vermont Points, 29 I. C. C. 607; Ogden Gateway Case, 35 I. C. C. 131; Ocean and Rail Rates to Charlotte, N. C., 38 I. C. C. 405; West Coast Lumber Mfgs. Ass'n v. S. P. & S. Ry. Co., 45 I. C. C. 230; Routing on Sheep from K. C., M. & O. Texas Points, 69 I. C. C. 4; Restrictions in Routings over S. L. & U. R. R., 115 I. C. C. 357; Port of New York Authority v. Atchison, Topeka & Santa Fe Ry. Co., 144 I. C. C. 514. But see Lake & Lake Rate Cancellations, 42 I. C. C. 513, 516; Western Pacific R. R. v. Southern Pacific Co., 55 I. C. C. 71, 73; Routing on Coal from Western Maryland Ry. Mines, 66 I. C. C. 103; Armour & Co. v. D., L. & W. R. R., 66 I. C. C. 445; Fruits and Vegetables from Texas Points, 74 I. C. C. 575, 578, 579.
Footnote 5 See note 1.
Footnote 6 Compare Cairo Board of Trade v. C., C., C. & St. L. Ry. Co., 46 I. C. C. 343; Atchison Board of Trade v. A., T. & S. F. Ry. Co., 80 I. C. C. 350; Basing Rates on Paving Brick, 100 I. C. C. 390.
Footnote 7 Act of June 29, 1906, c. 3591, 4, 34 Stat. 584; Act of June 18, 1910, 12, c. 309, 36 Stat. 539; Act of August 9, 1916, c. 301, 39 Stat. 441, 49 USCA 20(11); Act of August 9, 1917, c. 50, 4, 40 Stat. 270; Act of February 28, 1920, c. 91, 418, 41 Stat. 484, 49 USCA 15(1-7); Joint Resolution, approved January 30, 1925, 43 Stat. 801, 49 USCA 55; Act of March 4, 1927, c. 510, 2, 44 Stat. 1446 (49 USCA 15).
Footnote 8 See Interstate Commerce Commission v. Northern Pacific Ry., , 30 S. Ct. 417; Louisville & Nashville R. R. v. United States, 238 U.S. 1, 18, 35 S. Ct. 696; St. Louis S. W. Ry. Co. v. United States, , 38 S. Ct. 49; Manufacturers' Ry. Co. v. United States, 246 U.S. 457, 38 S. Ct. 383; New England Divisions Case, 261 U.S. 184, 43 S. Ct. 270; United States v. Illinois Central R. R., 261 U.S. 515, 44 S. Ct. 189; United States v. Missouri Pacific R. R., 278 U.S. 269, 49 S. Ct. 133, 73 L. Ed. -.
Footnote 9 See cases in note 4; also, Schmidt & Peters v. A. & S. Ry. Co., 28 I. C. C. 376; Restriction in Routing of Traffic from Pacific Northwest, 73 I. C. C. 305; Lemen-Cove-Woodlake Ass'n v. A., T. & S. F. Ry. Co., 139 I. C. C. 239.
Footnote 10 If the then owner has directed delivery of the car to some local elevator, not on the line of the carrier which brought the grain to Kansas City, he pays the switching charge.
Footnote 11 The outbound proportional as so reduced is spoken of as the transit balance. The proof that the shipper brought grain into the market entitling him to the reduction is made by presentation of what is called 'expense bills.' This substitution has by some carriers been extended to grain coming from other country points with rates equally favorable to the carrier. The validity of that practice has at times been questioned. See In re Substitution of Tonnage at Transit Points, 18 I. C. C. 280, 284, 285. Compare Alleged Unlawful Rates, 7 I. C. C. 240, 244; Transit Case, 24 I. C. C. 340, 350; Lathrop-Marshall Grain Co. v. Chicago & Northwestern Ry. Co., 144 I. C. C. 227, 228. As to ratebreaking points, see Wichita Board of Trade v. Abilene & Southern Ry. Co., 29 I. C. C. 376; Mississippi R. R. Commission v. Alabama & Vicksburg R. Co., 93 I. C. C. 435, 444.
Footnote 12 Compare Nonapplication of Transit Privileges on Deficiencies in Weight of Grain, 69 I. C. C. 19; Southern Kansas Grain Assn. v. Chicago, Rock Island & Pacific Ry. Co., 139 I. C. C. 641, 646; Lathrop-Marshall Grain Co. v. Chicago & Northwestern Ry. Co., 144 I. C. C. 227; Omaha Corporation Commission v. Abilene & Southern Ry. Co., 148 I. C. C. 316, 320.
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