Hohenberg v. Louisville & NR Co., 5932.

• Decision Date: 16 February 1931
• Docket Number: No. 5932.,5932.
• Citation: 46 F.2d 952
• Parties: HOHENBERG et al. v. LOUISVILLE & N. R. CO.
• Court: U.S. Court of Appeals — Fifth Circuit

46 F.2d 952 (1931)

HOHENBERG et al. v. LOUISVILLE & N. R. CO.

No. 5932.

Circuit Court of Appeals, Fifth Circuit.

February 16, 1931.

Bernard Lobman, of Montgomery, Ala. (Sternfield & Lobman, of Montgomery, Ala., of counsel), for appellants.

W. A. Northcutt, of Louisville, Ky., and Robert E. Steiner, Jr., of Montgomery, Ala. (Steiner, Crum & Weil, of Montgomery, Ala., of counsel), for appellee.

Before BRYAN and WALKER, Circuit Judges, and HOLMES, District Judge.

HOLMES, District Judge.

This is a suit to enforce an award of the Interstate Commerce Commission for overcharges which the commission found were paid the carrier on cotton moving in interstate commerce. It was brought by the appellants, M. Hohenberg & Company, against the appellee, Louisville & Nashville Railroad Company, and involves the construction of the lawfully published interstate tariffs, particularly the applicability of the Jones-Kelley combination rule, on shipments originally made from Greenville and other stations in Alabama south of Montgomery. The cotton was concentrated and compressed at Montgomery and reshipped to New Orleans, Mobile, and Pensacola for export as originally intended.

The shipments were made at different times between July 1, 1922, and October 1, 1924, and as the cotton was simply billed to Montgomery, the carrier originally collected only the intrastate local rate from Greenville and other points to the apparent destination. It was there accorded transit privileges and reshipped over the defendant's line with an outbound interstate rate added to the charges already collected.

After the charges so computed were paid, the carrier claimed that they were not the lawful charges provided by the tariffs, and that the shipper would have to pay the difference between the charges actually paid and what it contended was the correct amount, namely, the interstate rate to Montgomery plus the outbound interstate rate to the ports mentioned. Thereupon, the shipper claimed that, if it was an interstate movement, the through rates from points south of Montgomery to the ports of export must be constructed by the use of the combination rule set forth in the tariffs, and, as there were no such through rates via Montgomery, that the lawful rates on cotton concentrated for compression at that point would be a combination of the local interstate rates to Montgomery plus the reshipping rates to Mobile, or other ports of export, subject to the so-called Jones-Kelley combination rule. This rule provided that in the construction of a through rate, which was the combination of two or more factors, a certain deduction should be made from each factor and only one of these deductions added back to the result. In the instant case the amount to be added and deducted accordingly was 18 cents. It was devised to meet a situation which was brought about by General Order No. 28, made by the Director General of Railroads on June 25, 1918, in order to increase railroad revenues which directed a horizontal raise of 25 per cent. in many rates but a flat increase of 15 cents a hundred pounds on cotton, and, later, on August 26, 1920, by an order of the Interstate Commerce Commission which increased the then existing rates by 25 per cent., making a total increase in cotton rates of 18 cents a hundred. By virtue of these orders each cotton rate was automatically increased by a total of 18 cents. This was easy to apply when cotton moved only once or when there was an applicable through rate, for, whether it moved in intrastate or interstate commerce, if it was a through, continuous, and single movement from beginning to end, there was added to the previously published through rate the sum of 18 cents. However, when there was no such published through rate and two or more commodity rate factors had to be combined to arrive at the total through rate by rail, it is obvious that, if each of the rate factors contained the rate increase of 18 cents, then, if all were added together, this would result in more than one 18-cent increase. Accordingly, the Jones-Kelley rule was published to prevent this inequitable result and to provide a formula to be used when, in order to get a through rate, it was necessary to combine two or more separate rates which contained the 18¢ increase. This rule, as it appears in the tariff, is as follows:

"Section 1. Where no published through rates are in effect from point of origin to destination on a commodity specified in section 2, and two or more commodity rate factors are used in arriving at the through rate for a continuous rail shipment thereof, such through rate will be arrived at in the following manner: (1) Each separately established commodity rate factor will be reduced by the amount shown in section 2 opposite the name of the commodity; (2) the reduced commodity rate factors will then be added together; (3) to the sum of the separately established commodity rate factors thus obtained, add the amount shown in section 2 opposite the name of the commodity.

"Section 2. Cotton, any quantity (incl. cotton which has been accorded transit, in cents per 100 pounds) 18."

The revenue tariff further provides, in rule 1, that, in the absence of specific provision to the contrary, shipments will be subject to all terminal charges and allowances relating to transit privileges, and, in rule 4, that, "except as otherwise indicated," rates are subject to the Jones-Kelley rule. This rule itself provides: "Except as otherwise indicated herein, and where specific reference hereto is made in tariffs, rules provided herein apply in connection with rates made subject to the rules and embodied herein."

In November, 1924, the plaintiffs filed a complaint with the Interstate Commerce Commission contending: (1) That the rate paid was unreasonable and asking that it be reduced; (2) in the alternative, if the proper method of arriving at the legal rate was not by combining the local intrastate rate to Montgomery with the outbound interstate rate from Montgomery to the ports, that then the two interstate factors were subject to the above set forth Jones-Kelley rule. The contention that the rate was unreasonable was dismissed by...