ALTON & SRR v. United States

• Citation: 49 F.2d 414
• Decision Date: 09 February 1931
• Docket Number: No. 2502-L.,2502-L.
• Court: United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
• Parties: ALTON & S. R. R. et al. v. UNITED STATES et al.

49 F.2d 414 (1931)

ALTON & S. R. R. et al. v. UNITED STATES et al.

No. 2502-L.

District Court, N. D. California, S. D.

February 9, 1931.

COPYRIGHT MATERIAL OMITTED

Elmer Westlake, of San Francisco, Cal., R. S. Outlaw, of Chicago, Ill., and James E. Lyons, of San Francisco, Cal., for petitioners.

E. M. Reidy, of Washington, D. C., for Interstate Commerce Commission.

Elmer B. Collins, Sp. Asst. to Atty. Gen., and Geo. J. Hatfield, U. S. Atty., of San Francisco, Cal., for the United States.

Paul E. Blanchard and Ross Dean Rynder, both of Chicago, Ill., for interveners Swift & Co. and another.

Allan P. Matthew, John O. Moran, and McCutchen, Olney, Mannon & Greene, all of San Francisco, Cal., for interveners Pacific States Butter, Eggs, Cheese & Poultry Ass'n and others.

Allan P. Matthew, John O. Moran and McCutchen, Olney, Mannon & Greene, all of San Francisco, Cal., and W. D. Gillis, Atty. Gen., of Idaho, for intervener Public Utilities Commission of Idaho.

Arthur T. George, Ira H. Rowell, and Roderick B. Cassidy, all of San Francisco, Cal., for intervener Railroad Commission of California.

Edson Abel, of San Francisco, Cal., for intervener California Farm Bureau Federation.

Before WILBUR, Circuit Judge, and ST. SURE and LOUDERBACK, District Judges.

WILBUR, Circuit Judge.

This proceeding was instituted by the petitioners to secure the annulment of an order of the Interstate Commerce Commission fixing the cost of icing for shipments of poultry and dairy products originating in the six western states. The action of the Interstate Commerce Commission was invoked by a petition attacking such rate filed by the Pacific States Butter, Egg, Cheese & Poultry Association June 17, 1925. After elaborate hearings and presentations by that association, by the railroads, and by other interested parties, the Interstate Commerce Commission January 22, 1929, made the order now under attack to become effective May 9, 1929. In the hearing before the Interstate Commerce Commission, the 135 railroads, the petitioner therein, and other intervening shippers, petitioners herein, and the public utility rate-regulating bodies of the states of Washington and Idaho, were represented. Some of the parties who appeared before the Interstate Commerce Commission upon the hearing now appear in this court as plaintiffs, defendants, or as interveners.

Upon the hearing, the pleadings and evidence taken before the Interstate Commerce Commission were by stipulation received in evidence, so that the record presented for our consideration is the same that was presented to the Interstate Commerce Commission, excepting that a transcript of the oral argument was objected to by the defendants; a ruling on that objection was reserved until consideration of the entire case. This objection will now be overruled.

While the evidence is voluminous and in some respects conflicting, in the main aspects of the case there is no controversy between the parties, and the issues presented to this court are not only narrowed by the restrictions upon the court in dealing with the findings and conclusions of the Interstate Commerce Commission to which Congress has granted the power and authority to determine the facts involved in rate making, which findings are conclusive upon the courts if based upon substantial evidence, but also by the further fact that the petitioners rely in the main upon the findings of the Interstate Commerce Commission to support the legal conclusions which they press upon the court. These considerations will make unnecessary an elaborate statement of facts or a comprehensive review of the evidence in this opinion. For an elaborate and comprehensive statement thereof we refer to the published opinion of the Interstate Commerce Commission in this case, 151 I. C. C. 244.

It appears without contradiction that in establishing their freight rates throughout the country upon perishable products requiring refrigeration, the railroads have adopted three different types of refrigerating service for which compensation is charged to the shipper. The first type of refrigeration is what is called the "stated charge" for standard refrigeration, published in section 2 of the Perishable Protective Tariff. Broadly speaking, this involves filling the ice bunkers, or refrigerating cars, at each icing station established by the carrier at suitable intervals along the railway. The second type of service rendered, published in section 4 of said tariff, is that wherein, after the initial icing, the cars are re-iced only at such points and in such quantities as may be designated by the shipper at a designated cost of ice per ton. The third type of refrigeration is where, after the initial icing, the perishable product is shipped to its destination without any re-icing, the initial ice to be furnished by the shipper, or by the carrier, on the cost per ton basis; a supercharge under rule 240 is added on long hauls.

The second type of refrigeration charge, designated throughout the record as the "cost of ice" basis; is applied by all the petitioning railroads to certain perishable products in their respective tariffs. It is also applied by all of them to poultry and dairy products originating in all the forty-two states east of the six above-mentioned western states. This method of charging for refrigeration is established by all the petitioners, including those having their termini in the six westernmost states, for all poultry and dairy products which do not originate in those six states on their own lines, as will be hereinafter more particularly pointed out. The purpose of the Pacific States Butter, Egg, Cheese & Poultry Association, as disclosed by its petition to the Interstate Commerce Commission, was to compel the railroads accepting poultry and dairy products for shipment in the six westernmost states to apply to such shipments the same method of charging for refrigeration as is applied by them and by all other railroads in all the other states of the United States; that is to say, railroads having determined in their schedules the cost of ice at their respective icing stations, it is desired that the shipper be permitted to designate the points at which, and the extent to which, such icing should occur, ice to be paid for at the per ton rates thus already fixed by the railroads in their published tariffs as aforesaid. This petition was granted by the Interstate Commerce Commission in the order now under attack.

It would seem at first blush that an order establishing for the six westernmost states the same system of charging for refrigeration applied by the petitioners herein in the rest of the United States would be just and reasonable, but the attack upon this order herein is based upon the admitted fact that the railroads, in establishing the cost of the ice per ton basis, have not included in that cost all the elements making up the cost of refrigeration. In fixing that cost, there has been included in the cost of ice per ton the cost of the manufacture of the ice, of its transportation to the icing station, and the cost of switching the refrigerating cars to the icing station, and the cost of labor of placing the ice in the bunkers of the refrigerating car. See Perishable Fruit Investigation, 56 I. C. C. 449, 470. It is claimed, and the Interstate Commerce Commission finds it to be a fact in this case (151 I. C. C. 264, 265), that the cost of ice basis of charging for refrigeration does not include every element which might, could, or should be included in a proper charge for refrigeration in this, that in the cost of ice basis no addition is made to the cost of the ice per ton by reason of the expenditures involved in transporting the ice together with the refrigerated product in the refrigerating car after icing as distinguished from the cost of hauling the refrigerated product; that no charge is included in the cost of ice basis for the repair of the ice bunkers of the refrigerating car as distinguished from the cost of the repair of the other portion of the car which might, could, or should be included in the proper segregation of the costs of refrigeration as a cost of refrigeration, and that no charge is included in the cost of ice for the expenses of supervision that might be rightly apportioned to the cost of refrigeration. The petitioners rely upon the opinion of the Interstate Commerce Commission in Re Refrigeration Charges from the South, 151 I. C. C. 649, 653.

The contention of the petitioners upon that subject may be briefly and concisely stated as follows: The Hepburn Act, § 2, amending Interstate Commerce Act § 6, par. 1 (49 USCA § 6, par. 1), requires the carrier to separately state certain charges, including, among others, "all * * * icing charges." It is claimed, and is well settled by the decisions of the Supreme Court, that, where a railroad rate is under attack before the Interstate Commerce Commission or before the court, that rate must stand or fall in the test as to its reasonableness, upon the proposition that the rate under attack must itself furnish a reasonable and adequate return for the service rendered, and that a reasonable and adequate return must pay the cost of that service, as distinguished from all other service, plus a reasonable profit thereon. Southern Ry. Co. v. St. Louis Hay & Grain Co., 214 U. S. 297, 29 S. Ct. 678, 53 L. Ed. 1004; Cotting v. Godard, 183 U. S. 79, 22 S. Ct. 30, 46 L. Ed. 92; Interstate Commerce Commission v. Union Pac. R. Co., 222 U. S. 541, 32 S. Ct. 108, 56 L. Ed. 308; Interstate Commerce Commission v. Stickney, 215 U. S. 98, 30 S. Ct. 66, 54 L. Ed. 112; Northern Pac. R. Co. v. North Dakota, 236 U. S. 605, 35 S. Ct. 429, 59 L. Ed. 735, L. R. A. 1917F, 1148, Ann. Cas. 1916A, 1; Northern Pac. R. Co. v. Dept. Pub. Works, 268 U. S. 39, 45 S. Ct. 412, 69 L. Ed. 836; Chicago, M. & St. P. Ry. Co. v. Public Utilities Commission, 274 U. S. 344, 47 S. Ct. 604, 71 L. Ed. 1085.

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