287 U.S. 358 (1932), 53, Great Northern Ry. Co. v. Sunburst Oil & Refining Co.

Docket Nº:No. 53
Citation:287 U.S. 358, 53 S.Ct. 145, 77 L.Ed. 360
Party Name:Great Northern Ry. Co. v. Sunburst Oil & Refining Co.
Case Date:December 05, 1932
Court:United States Supreme Court

Page 358

287 U.S. 358 (1932)

53 S.Ct. 145, 77 L.Ed. 360

Great Northern Ry. Co.


Sunburst Oil & Refining Co.

No. 53

United States Supreme Court

Dec. 5, 1932

Argued November 11, 1932



1. Where the state law prescribes freight rates through a Board but allows a shipper who has paid at a rate so fixed an action for overcharges when the Board, afterwards, on his complaint and on sufficient evidence, finds such rate excessive and lowers it for the future, judgment for the shipper does not impair any federal right of the railroad, since the law, making the rate thus tentative, was the basis of the contract of shipment. Pp. 360-361.

2. The result is the same whether the tentative character of the rate, and the right of recovery, are expressed in the words of the statute or were attached to it by a construction of the state supreme court before the parties contracted. P. 362.

3. If a statute as construed by the state court does not impair a party's federal right, a decision applying the construction to him on the ground of stare decisis but rejecting it for future cases cannot do so. P. 363.

4. It is for the state courts to decide whether changes in their views of the common or statutory law shall apply to intermediate transactions. P. 364.

5. A federal claim first raised by petition for rehearing in a state court is in time, for purposes of review, if the occasion for it arose unexpectedly from the grounds of the state court's decision. P. 366.

91 Mont. 216, 7 P.2d 927, affirmed.

Certiorari to review the affirmance of a judgment against the railway company in a suit for overcharges.

Page 359

CARDOZO, J., lead opinion

MR. JUSTICE CARDOZO delivered the opinion of the Court.

Sunburst Oil & Refining Company, the respondent, brought suit against petitioner, Great Northern Railway Company, to recover payments claimed to be overcharges for freight. The charges were in conformity with a tariff schedule approved by the Railroad Commission of Montana for intrastate traffic. After payment had been made, the same commission which had approved the schedule held, upon a complaint by the shipper, that the rates so approved were excessive and unreasonable. In this action to recover the excess so paid, the shipper recovered a judgment which was affirmed upon appeal. 7 P.2d 927. The question, broadly stated, is whether the annulment by retroaction of rates valid when exacted is an unlawful taking of property within the Fourteenth Amendment. A writ of certiorari brings the case here.

By a statute of Montana, the Board of Railroad Commissioners is empowered to fix rates of carriage for intrastate shipments. The rates thereby established are not beyond recall. They may be changed by the board itself, on the complaint either of shipper or of carrier, if found to be unreasonable. Revised Codes of Montana, § 3796. In an action against the board, they may be set aside upon a like showing by a judgment of the court. §§ 3809, 3810. Until changed or set aside, they "shall prima facie be deemed to be just, reasonable, and proper." § 3810.

The meaning of the statute was considered by the Supreme Court of Montana in a cause determined in May, 1921. Doney v. Northern Pacific Ry. Co., 60 Mont. 209, 199 P. 432. A shipper of lumber brought suit [53 S.Ct. 147] against a carrier to recover transportation charges which were alleged to be unreasonable, though they were in accordance

Page 360

with the published tariff. He did this without a preliminary application to the board to modify the schedule. He did it without a preliminary suit in which the board, being brought into court as a defendant, would have opportunity to sustain the schedule and resist the change. The court held that, until one of these preliminary conditions had been satisfied, no action for restitution could be maintained against the carrier. It coupled that decision with the statement that, upon compliance with one or other of the conditions, the excess, thus ascertained, might be the subject of recovery.

The procedure there outlined was followed by this respondent. It filed a complaint with the board to the effect that the existing tariff for the carriage of crude petroleum distillate was excessive and unreasonable, in that the rate of 20 1/2 cents was based upon an estimated weight of 7.4 pounds per gallon, whereas the actual weight is not more than 6.6 pounds per gallon. The board sustained the complaint. In doing so, it ruled, in conformity with the decision in the Doney case, that the published schedule prescribed the minimum and the maximum to which carrier and shipper were required to adhere while the schedule was in force, but that, by the true construction of the statute, the duty of adherence was subject to a condition or proviso whereby annulment or modification would give a right of reparation for the excess or the deficiency. The revision of the tariff was followed by this suit against the carrier, and later by a judgment for the shipper which is now before us for review.

The appeal to the Supreme Court of Montana was heard at the same time as an appeal in another cause involving a like question, and the two were decided together, though with separate opinions. Montana Horse Products Co. v. Great Northern Ry. Co., 7 P.2d 919; Sunburst Oil & Refining Co. v. Great

Page 361

Northern Ry. Co., 7 P.2d 927. The court held that the ruling in the Doney case was erroneous, and would not be followed in the future; that a rate established by the commission had the same effect as one established by the legislature; that the statute giving power to the Commission or the court to declare a rate unreasonable was not to be read as meaning that a declaration of invalidity should apply to intermediate transactions; but nonetheless that the ruling in the Doney case was law until reversed, and would constitute the governing principle for shippers and carriers who, during the period of its reign, had acted on the faith of it. An opinion handed down upon a motion for rehearing restates the rationale of the decision, and perhaps with greater clearness. 7 P.2d 927, 929. We are thus brought to the inquiry whether the judgment thus rendered does violence to any right secured to the petitioner by the federal Constitution.

The subject is likely to be clarified if we divide it into two branches. Was a federal right infringed by the action of the trial court in adhering to the rule imposed upon it in the Doney case by the highest court of the state? If there was no infringement then, did one come about later when the Supreme Court of Montana disavowed the rule of the Doney case for the future, but applied it to the past?

1. The trial court did not impair a federal right by giving to a statute of the state the meaning that had been ascribed to it by the highest court of the state, unless such impairment would have resulted if the meaning had been written into the statute by the legislature itself. But plainly no such consequence would have followed if that course had been pursued. The Doney case was decided, as we have seen, in 1921. The transactions complained of occurred between August, 1926, and August, 1928. Carrier and shipper understood at that time that

Page 362

the rates established by the commission as the delegate of the legislature were provisional and tentative. Valid for the time being the rates indubitably were, a prop for conduct while they stood, but the prop might be removed, and...

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