Armour & Co. v. Atchison, Topeka & Santa Fe Ry. Co.

• Decision Date: 06 May 1958
• Docket Number: No. 12195.,12195.
• Citation: 254 F.2d 719
• Parties: ARMOUR AND COMPANY, a corporation, Plaintiff-Appellee, v. The ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

254 F.2d 719 (1958)

ARMOUR AND COMPANY, a corporation, Plaintiff-Appellee, v. The ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY et al., Defendants-Appellants.

No. 12195.

United States Court of Appeals Seventh Circuit.

May 6, 1958.

Edward R. Gustafson, William C. Leiper, Noah Walker, Chicago, Ill., J. T. Clark, Kemper Dobbins, Cleveland, Ohio, for appellant.

John L. Bordes, Charles Marcus Whiting, Weymouth Kirkland, of Kirkland, Fleming, Green, Martin & Ellis, Chicago, Ill., for plaintiff-appellee, George E. Leonard, Jr., Chicago, Ill., of counsel.

Before DUFFY, Chief Judge, and HASTINGS and PARKINSON, Circuit Judges.

HASTINGS, Circuit Judge.

An order of the Interstate Commerce Commission directed appellants, a number of railroads, to make reparation to appellee, Armour and Company, of freight rate overcharges aggregating $225,907.62 found to have been charged and paid on numerous shipments of fresh meat from Kansas City, Kansas, South St. Joseph, Missouri and South Omaha, Nebraska to numerous destinations in the East from May 6, 1948 through September 5, 1949. Armour and Company brought this action under Section 16(2) of the Interstate Commerce Act, 49 U.S. C.A. § 16(2) to enforce the Commission's order. This appeal is by the railroads from a judgment of the district court entered on findings favorable to Armour and Company on the issues involved.

Rates on fresh meat from producing points in the West to various eastern destinations are made on the basis of aggregates of rates published to and from intermediate points along the Mississippi river which are known as Iowa border points and Mississippi river crossings. Through (one factor) rates are contained in the class rate tariffs published by the railroads but, in practice, are never paid because of the aggregate-of-intermediates rule set forth in appellants' tariff which provides:

"If the aggregate of separately established (joint, local or proportional) rates¹ applicable on interstate traffic contained in tariffs lawfully on file with the Interstate Commerce Commission applicable via any route over which the through rates published in this tariff apply, produces a lower charge on a shipment than the rates published herein, such aggregate of rates will apply via all routes over which the rates shown in this tariff are applicable, and the through rate published in this tariff has no application to that shipment."

There is always some aggregate of rates applicable from the origins to the destinations here involved lower than the through class rates and, consequently, the effective rate at all times is based on some aggregate of the intermediate rates. The lowest aggregate of intermediate rates becomes the published rate.

During the reparation period there were thirteen west bank Mississippi river crossings, thirteen east bank crossings and thirty-three Iowa border points. Commodity rates on fresh meats in carloads were published from the origins involved in this case to all these points; similarly, commodity rates were published from all these points to the destinations involved. Rates from all these points were on the same level except during the reparation period when the flat rate from Hurst Mill Spur, one of the Iowa border points, was inadvertently made lower than the rates from the other border points and river crossing.² As a result, the aggregate through rate based on Hurst Mill Spur was lower than the aggregate rate through the other intermediate points. This situation continued to exist until, effective September 6, 1949, the rate from Hurst Mill Spur was made to coincide with that from the other points. Although appellee discovered or became aware of the lower aggregate based on Hurst Mill either late in 1948 or early in 1949, it continued to pay the higher rates without protest throughout the reparation period.

Appellants contend that the claimed aggregate rates through Hurst Mill Spur were not legally applicable during the reparation period for the reason that that station had, in effect, been abandoned with no facilities for handling freight; and that the district court erred in its finding that the station was "a valid existing station * * * during the reparation period * * *" and in its conclusion that "the aggregate of rates published to and from Hurst Mill Spur were the applicable rates * * *."

Hurst Mill Spur is characterized by appellants as having had no physical existence whatsoever during the reparation period, existing only as words in a tariff. The station took its name from a siding constructed in 1919 from the main line of the Chicago, Milwaukee, St. Paul & Pacific Railroad (Milwaukee Road) to a saw mill owned by Alfred Hurst. In 1927 part of the siding was removed and in 1933 the remainder of the siding and all other rail facilities were removed leaving only the railroad's main line tracks running along the west bank of the river. There are presently no facilities, rail or non-rail, existent at the location.

From the fact of non-existence of facilities appellant argues the abandonment of the station and its consequent unavailability for rate making purposes. The obligation of a railroad to charge no more than the published rates relates, it is contended, only to rates covering transportation between existent points or stations.³ In this connection, however, it should be noted that the Hurst Mill Spur station, although claimed to have been actually abandoned by the Milwaukee Road in 1933, was not eliminated from the tariff of the railroad as required by Commission Rule 10(i) of Tariff Circular 20 as amended by Supplement No. 5.⁴ The rule in question requires a notice of abandonment in the Official List of Open and Prepay Stations and an elimination of the station from the rate tariff in the next supplement to the tariff after the effective date of abandonment. Hurst Mill Spur station was not eliminated from the rate tariff or shown as abandoned in the Official List of Open and Prepay Stations until September 1, 1952. The only notation in regard to the station in the Official List was that no facilities existed at the station for handling local shipments.

Appellants insist that their failure to comply with the rule governing abandonment does not alter the fact that the station was actually abandoned and the rate from the station invalid. It is their position that the retention of the invalid rate in the tariff may constitute a violation of Rule 10(i) and subject them to penalties under 49 U.S.C.A. § 6(10). Further, that the holding out of the invalid rate could make them liable for any damages occasioned by shippers making shipments in reliance on such rates. It is urged, however, that the invalid rate does not and cannot become valid and applicable merely because of the failure to comply with the rule.

We do not reach this last question, however, since we find that there is a complete lack of authority for the proposition that the disappearance of a station's rail facilities renders invalid any rate which may be published from that station.

Appellee introduced convincing testimony to establish that the lack of loading and unloading facilities or other station facilities does not necessarily evidence an intention to abandon a station. The Assistant Manager of appellee's rate department testified that there are railroad stations to or from which no local freight or passengers ever moved or were intended to be moved. He indicated that stations are often used as interchange points where freight is changed from one railroad to another, no freight being accepted or delivered from these points. Others are used for basing point purposes. The rates from or to these basing points are used in constructing through rates between other points. These stations as listed in the Official List of Open and Prepay Stations are noted to indicate that there are no facilities for handling freight or that they are for basing point purposes only. The witness referred specifically to East Burlington, Illinois, a station on the Chicago, Burlington and Quincy Railroad and one of the river crossings which like Hurst Mill Spur has no facilities other than a through track. Like Hurst Mill Spur it is noted in the official list as not having facilities for handling freight. There is no note indicating that it is used for basing point purposes only. Although there are no rail facilities at East Burlington, it is a significant basing point over which rates on livestock are made from western origins to points east of the Illinois-Indiana state line. The witness indicated that these rates could not be made to and from nearby Burlington, Iowa because the rates to Burlington are published as higher flat rates rather than proportional rates.⁵

It seems clear that there is no requirement that a point must have facilities for handling freight before valid rates to and from such points can be established. As indicated in the Commission's report in this case (291 I.C.C. 223), the...