Alexander Sprunt Son v. United States

• Citation: 50 S.Ct. 315,281 U.S. 249,74 L.Ed. 832
• Decision Date: 14 April 1930
• Docket Number: No. 19,19
• Parties: ALEXANDER SPRUNT & SON, Inc., et al., v. UNITED STATES et al
• Court: United States Supreme Court

281 U.S. 249

50 S.Ct. 315

74 L.Ed. 832

ALEXANDER SPRUNT & SON, Inc., et al.,

v UNITED STATES et al.

No. 19.

Argued Oct. 31 and Nov. 1, 1929.

Decided April 14, 1930.

Messrs. John W. Davis, of New York City, and R. C. Fulbright, of Houston, Tex., for appellants.

Mr. J. Stanley Payne, of Washington, D. C., for appellee Interstate Commerce Commission.

Mr. Albert L. Reed, of Dallas, Tex., for appellees Arkansas Cotton Trade Ass'n and others.

[Argument of Counsel from page 250 intentionally omitted] Mr. Justice BRANDEIS delivered the opinion of the Court.

The Interstate Commerce Commission entered, on April 4, 1927, an order directed to the railroads operating in Oklahoma, Arkansas, Texas, and Louisiana, which required them to remove, in a manner prescribed, undue prejudice and preference caused by their rates on cotton shipped from interior points to Houston and other ports on the Gulf of Mexico. Application of Rates on Cotton to Gulf Ports, 100 I. C. C. 159; Id., 123 I. C. C. 685. Two suits, under the Act of June 18, 1910, c. 309, 36 Stat. 539, as amended by Urgent Deficiencies Act of October 22, 1913, c. 32, 38 Stat. 208, 220 (28 USCA § 47), were promptly brought in the federal court for Southern Texas, to enjoin the enforcement of the order and to set it aside. The first suit was brought by Alexander Sprunt & Son, Inc., and others interested in cotton compresses and warehouses located at wharves on the water front. The second, by the Texas & New Orleans Railroad Company and other rail carriers. The two cases were, with the consent of the parties, ordered consolidated as a single cause with a single record. The consolidated case was heard by three judges. An interlocutory injunction issued. Upon final hearing, the District Court sustained the validity of the order; dissolved the injunction; and entered a decree dismissing the bills. 23 F.(2d) 874.

None of the carriers appealed from the decree. Acquiescing in the decision of the District Court, and in the order of the Commission, the railroads promptly established the prescribed rate adjustment; and it is now in force. This appeal was taken by Alexander Sprunt & Son, Inc., and those shippers and associations of shippers which had joined below as coplaintiffs in the bill filed by it. No stay of the decree pending the appeal was granted or sought. And no railroad was made a party to the proceedings on the appeal. At the argument, this court raised the preliminary question whether there is any substantive ground for appeal by the shippers alone. In order to answer that question, a fuller statement is necessary of the matter in controversy before the commission and of the terms of the order entered by it.

From interior points in Texas, Louisiana, Oklahoma, and Arkansas to the several ports on the Gulf of Mexico there were on all the railroads two schedules of rates on cotton-the domestic or city-delivery rates and the export or ship side rates. The latter were, prior to the entry of the order complained of, 3 or 3.5 cents per 100 pounds higher than the former. All rates permit concentration and compression in transit and include free switching, to and from the warehouses and compresses.¹ Complaint was made that in applying these rates the railroads unjustly discriminated against other shippers and in favor of Alexander Sprunt & Son, Inc., and other owners of warehouses and compresses at the wharves, by applying the domestic rates on shipments to their plants of cotton intended for export or for transshipment by vessel coastwise. It was sought to justify this practice on the ground that the conditions which had led to charging the higher rate for export cotton were absent in the case of these water front plants.

The difference of about 3.5 cents per 100 pounds between the domestic and the export rates is approximately equal to the cost of transporting the cotton, by dray or by switching, from uptown concentrating and high density compressing plants in the ports to ship side. This difference served to equalize rates as between the uptown plants and the interior plants. Louisiana Cotton, 46 I. C. C. 451; Galveston Commercial Ass'n v. Alabama & Vicksburg Ry. Co., 77 I. C. C. 388. In 1921, and later, warehouses and high density compressing plants were located at the water-front, almost within reach of the ship's tackle. From these plants, there was no need of local transportation, by dray or switching, to shipside. The lower domestic rates were accordingly applied on cotton shipped to them, even though intended for export.

This practice gave to the water front plants an obvious advantage over those located up town in the ports and over those located in the interior. Widespread complaint of undue prejudice and preference led the Commission to institute, upon its own motion, a general investigation concerning the lawfulness of the practices of the carriers in connection with the application of the city-delivery and ship side rates, with a view to determining, among other things, 'whether any change should be made in existing tariff regulations or rates in order to avoid or remove such undue preference, if any, that results or may result in favor of said water-front shippers or localities.' ² Practically all the railroads operating in the four southwestern states were made respondents to that proceeding.

After extended hearings, the Commission found that the existing adjustment of rates to ports was unduly prejudicial to the warehouses and compresses uptown and in the interior; that it was unduly preferential of those at the water front; and that the rates should be readjused so that one rate would apply for all deliveries within the usual switching limits of the respective ports, except that the export rates should be made higher than the domestic rates by an amount equal to the wharfage. The Commission did not, at first, specify the particular rate adjustment to be established to accomplish the result directed. Without inquiring into the reasonableness of the rates, it stated that the equality of treatment might be effected by any readjustment which would preserve, but not increase, the carriers' revenues. 100 I. C. C. 159, 167. But upon reopening the proceeding, pursuant to petitions therefor, the Commission prescribed specifically what the rate adjustment should be. It fould that 'for the purposes of this case a fair and reasonable basis for equalizing the city-delivery and ship-side rates will be to increase the city-delivery rates 1 cent per 100 pounds and reduce the ship-side rates exclusive of wharf or pier terminal charges equivalent to 2 cents per 100 pounds, to the basis of the increased city-delivery rates.' 123 I. C. C. 685, 695.

First. The appellants contend that there is no basis for the Commission's finding of undue prejudice and preference. We are of opinion that appellants have no standing, in their own right, to make this attack. In so far as the order directs elimination of the rate differential previously existing, it worsened the economic position of the appellants. It deprived them of an advantage over other competitors of almost 3.5 cents per hundred pounds. The enjoyment of this advantage gave them a distinct interest in the proceeding before the Commission under section 3 of the Interstate Commerce Act (49 USCA § 3). For, their competitive advan- tage was threatened. Having this interest, they were entitled to intervene in that administrative proceeding. And, if they did so, they became entitled under section 212 of the Judicial Code (28 USCA § 45a) to intervene, as of right, in any suit 'wherein is involved the validity' of the order entered by the Commission.³ But that interest alone did not give them the right to maintain an independent suit, to vacate and set aside the order. Such a suit can be brought by a shipper only where a right of his own is alleged to have been violated by the order. And his independent right to relief is no greater where by intervention or otherwise he has become a party to the proceeding before the Commission or to a suit brought by a carrier. In the case at bar, the appellants have no independent right which is violated by the order to cease and desist. They are entitled as shippers only to reasonable service at reasonable rates and without unjust discrimination. If such service and rates are accorded them, they cannot complain of the rate or practice enjoyed by their competitors or of the retraction of a competitive advantage to which they are not otherwise entitled. The advantage which the appellants enjoyed under the former tariff was merely an incident of, and hence was dependent upon, the right, if any, of the carriers to maintain that tariff in force and their continuing desire to do so.

Why the carriers filed the new rate structure now in force is no concern of the appellants. If the carriers had done so wholly of their own motion, obviously these shippers would have had no ground of complaint, before any tribunal, unless the new rates were unreasonable or unjust. If they were believed by the appellants to be so, a complaint before the Commission would be the appropriate remedy. Texas & Pacific Ry. Co. v. Abilene Cotton Oil Co., 204 U. S. 426, 27 S. Ct. 350, 51 L. Ed. 553, 9 Ann. Cas. 1075; United States v. Merchants' & Manufacturers' Traffic Association, 242 U. S. 178 188, 37 S. Ct. 24, 61 L. Ed. 233; Great Northern Ry. Co. v. Merchants' Elevator Co., 259 U. S. 285, 295, 42 S. Ct. 477, 66 L. Ed. 943. The appellants' position is legally no different from what it would have been if the carriers had filed the rates freely, pursuant to an informal suggestion of the Commission or one of its members; or if the filing had been made by carriers voluntarily after complaint filed before the Commission, which had never reached a hearing, because the rate structure complained of was thus superseded.⁴ The carriers who were respondents before the Commission filed the new rates, presumably because they now...