Atchison, T. & SF Ry. Co. v. Judson F. Forwarding Co.

• Decision Date: 22 April 1943
• Docket Number: No. 2265-BH.,2265-BH.
• Citation: 49 F. Supp. 789
• Court: U.S. District Court — Southern District of California
• Parties: ATCHISON, T. & S. F. RY. CO. v. JUDSON FREIGHT FORWARDING CO. et al.

49 F. Supp. 789

ATCHISON, T. & S. F. RY. CO. v. JUDSON FREIGHT FORWARDING CO. et al.

No. 2265-BH.

District Court, S. D. California, Central Division.

April 22, 1943.

Jonathan C. Gibson, M. W. Reed, L. W. Butterfield, and William F. Brooks, all of Los Angeles, Cal., for plaintiff.

Hugh Gordon, Arlo D. Poe, and J. Edward Haley, all of Los Angeles, Cal., for defendants.

HARRISON, District Judge.

This is an action by the plaintiff carrier against the defendant shippers for alleged undercharges on 105 separate shipments of household goods, and arises over the fact that each shipment was transported in two forty-foot cars instead of one fifty-foot car.

The question for determination is whether the shippers should have been billed for two forty-foot cars on each shipment instead of one fifty-foot car. Originally, the shippers were billed on the theory that in each instance a fifty-foot car had been ordered and that the two forty-foot cars had been furnished at carrier's convenience under what is commonly known as the two for one rule. Thereafter, the carrier determined, after an investigation by the Interstate Commerce Commission, that the lawful tariff on each shipment had not been collected, hence this litigation.

The issues are:

1. Were the two forty-foot cars furnished at carrier's convenience?

2. Is the determination of convenience of the carrier at the time of the shipment conclusive upon the parties or is it subject to re-determination by the carrier and review by this court at this late date?

3. Was a fifty-foot car ordered by the shipper in each instance?

4. Was the furnishing of two forty-foot cars in lieu of one fifty-foot car the result of a collusive agreement in violation of 49 U.S.C.A. §§ 2, 3(1) and 6(7)?

The two for one rule is set forth in Item 503 of Trans-Continental Freight Bureau East-Bound Tariff No. 3, Series I.C.C. No. 1431, and in part is in the following language:

"Section I

"Cars Furnished at Variance with Shippers' Orders at Carriers' Convenience

"Except where specifically provided to the contrary in individual items of this tariff, carrier will furnish car of dimensions or weight carrying capacity ordered by shipper, but if carrier for its convenience furnishes car of different dimensions or weight carrying capacity, the following rules will govern. * * *"

"When car of smaller dimensions or less weight carrying capacity is furnished, actual weight applies provided it is loaded to its full visible capacity or as heavily as loading conditions will permit; the balance of the shipment will be taken in another car at actual weight and carload rate, and the entire shipment will be subject to car-load minimum weight applicable to the car of dimensions or weight carrying capacity ordered (Subject to Notes 1 and 2). * * *"

While this tariff provision, in modified form, has been in effect for over thirty years, no reported cases have been found wherein the interpretation of this rule has been an issue. "Carriers' convenience" is a common term in the transportation world, yet it never has been judicially defined.

Under the two for one rule, "carrier will furnish car of dimensions or weight carrying capacity ordered by shipper". Thus, it would appear that primarily it is the duty of the carrier to furnish the equipment ordered and the shipper is entitled to have his order filled in accordance with such order without deviation, "but if carrier for its convenience furnishes car of different dimensions or weight carrying capacity, the following rule will govern". No responsibility for the substitution of equipment is placed upon the shipper. This is the sole responsibility of the carrier, and completely within its control. The said rule cannot be brought into play until the carrier has received an order for a car of specified size and if no order for such car is placed, the carrier has nothing before it for consideration. Therefore, if two forty-foot cars were appropriated by the shippers without having first ordered a fifty-foot car, the shippers would not be entitled to the benefits of the two for one rule.

"Carriers' convenience" is a difficult term to define and has been so recognized. Lake Shore & M. S. Ry. Co. v. Smith, 173 U.S. 684, 19 S.Ct. 565-568, 43 L.Ed. 858. Shippers argue that the ordinary meaning of the phrase should be accepted, while carrier believes that in the transportation field it has a technical meaning. Originally, the two for one rule first allowed a substitution when the carrier "is unable" to furnish the car ordered; later, the rule allowed the substitution "if practicable". When the causes of action herein accrued, it became a matter of "carriers' convenience". Under an amendment effective December 8, 1941, the carrier "will endeavor" to furnish the car ordered. Unquestionably, the word "convenience" is used to give the carrier wide discretion in the operating problems in meeting shippers' orders for varying types of equipment, but it certainly means more than at carriers' pleasure or will. The fickle whim of the carrier would not be the controlling factor in determining whether the shipper would receive the specified equipment. Most assuredly "carriers' convenience" was never intended as a loophole for favoritism. The term must have a definite fixed meaning otherwise uniformity of rates would be impossible. In my opinion, the carrier before making a substitution for the car ordered must balance its operating advantages with the disadvantages. To me the term signifies that the car ordered is not readily available and not operatively advantageous for the carrier to furnish, before it is justified in making a substitution.

Irrespective of the precise meaning of the term, before the carrier can disregard its duty to furnish the equipment ordered, a determination of convenience must be made by an agent of the carrier. The evidence discloses the Los Angeles freight agent was authorized to exercise this discretion.

The carrier contends that its agent made an erroneous determination of convenience; that fifty-foot cars were at all times readily available and there was no reason whatsoever for the failure of the agent to furnish fifty-foot cars. The shippers introduced evidence tending to establish that the convenience of the carrier had been subserved by furnishing smaller cars. The evidence establishes the fact that under the circumstances indicated carrier's agent might have been justified in arriving at either conclusion in determining whether to furnish one larger or two smaller cars. In the absence of collusion, I would hold that the agent had not abused the discretion vested in him by substituting the smaller cars.

Carrier contends: "The policy of the law in favor of the absolute and inflexible enforcement of the tariff requires that the correctness of this determination should be subject to review at any time within the statute of limitations. If it has reason to believe the original determination with respect to carrier's convenience to be erroneous, it is the duty of the carrier to reexamine the question and to bring suit if necessary for such undercharges as may be discovered. It is not precluded from recovery by any estoppel or by any recitals in the bill of lading which may be contrary to the true facts. This may be a hard rule as respects the shipper who is sued under such circumstances, but this is what the law requires.", and cites Union Pacific Railroad Co. v. United States, 313 U.S. 450, 61 S.Ct. 1064, 85 L.Ed. 1453; Baltimore & Ohio R. Co. v. United States, 305 U.S. 507, 59 S.Ct. 284, 83 L.Ed. 318; Vandalia R. Co. v. United States, 7 Cir., 226 F. 713. I feel that these citations are not applicable for the reason that each covers an agreement between the carriers and the shippers, giving the shippers by its terms a preference, while under the so-called two for one rule, the substitution is the sole act of the carrier and the shipper has no control over the substitution and is required to accept equipment different from that ordered. The shipper is not liable for an act to which he is not a party.

I therefore hold that when the agent of a carrier determines to substitute two cars for the one ordered under the so-called two for one rule, in good faith and dealing with the shipper at arm's length, said determination is conclusive and is not subject to re-determination by the carrier and review by the courts. I believe this conclusion is in harmony with St. Louis Southwestern Railway Co. v. Spring River Stone Co., 236 U.S. 718, 35 S.Ct. 456, 458, 59 L.Ed. 805, wherein the court said: "In effect the railway company now contends that, as the evidence fails affirmatively to show the notations required by rule 81, the law imposes an absolute obligation upon the shipper to pay charges estimated upon the marked capacity of cars utilized, notwithstanding the settlement and good faith of all parties. To this position we cannot give assent. In the circumstances the initial carrier was charged with the duty of making these notations; and for the purposes of this suit the shipper might assume compliance with that duty, — he was not required to establish actual performance. He only sought and received what was authorized by the tariff on file. Larger cars than he requested were supplied for the carrier's special accommodation, and the commands of the applicable rule addressed to the latter imposed the clerical task of recording information within its peculiar knowledge upon documents for whose preparation it was responsible."

To hold otherwise would destroy the object of the rule since a shipper might and probably would refuse to accept the substituted cars because of the hazards of litigation during the statutory period. The shipper has the right to know when his shipment is accepted and the exact transportation charges; and no act of the carrier should be permitted to make effective a schedule of charges which is not within the published tariffs....