Atchison Ry Co v. United States

• Decision Date: 03 June 1929
• Docket Number: No. 466,466
• Citation: 279 U.S. 768,73 L.Ed. 947,49 S.Ct. 494
• Parties: ATCHISON, T. & S. F. RY. CO. et al. v. UNITED STATES et al
• Court: U.S. Supreme Court

279 U.S. 768

49 S.Ct. 494

73 L.Ed. 947

ATCHISON, T. & S. F. RY. CO. et al.

v UNITED STATES et al.

No. 466.

Argued April 11, 1929.

Decided June 3, 1929.

[Syllabus from pages 768-770 intentionally omitted] Messrs. R. S. Outlaw and Elmer Westlake, both of Chicago, Ill., for appellants.

The Attorney General and Mr. D. W. Knowlton, of Washington, D. C., for Interstate Commerce Commission.

Mr. Frank H. Towner, of Chicago, Ill., for Kansas City Southern Ry. Co. and others.

Mr. Justice BRANDEIS delivered the opinion of the Court.

This suit was brought in the federal court for northern Illinois, under the Urgent Deficiencies Act of October 22, 1913, c. 32, 38 Stat. 208, 220 (28 USCA § 47), to enjoin and annul an order of the Interstate Commerce Commission entered July 6, 1927. That order directed the Atchison, Topeka & Santa Fe and two other railroads to cancel proposed tariffs increasing the respective grain rates from numerous country points in Colorado, Kansas, and Nebraska to Kansas City, Mo., and Wichita, Kan. Grain and Grain Products from Colorado, Kansas, and Nebraska to Gulf Ports for Export, 129 I. C. C. 261. Those three carriers are the plaintiffs. Besides the United States and the Commission, the Kansas City Southern and certain other carriers, which compete with the plaintiffs for the grain export traffic from Kansas City to Gulf ports, are the defendants. The District Court, three judges sitting, denied the injunction and dismissed the bill. 33 F.(2d) 345. The case is here on direct appeal from the final decree. We are of opinion that it should be affirmed.

The legal question presented is not dependent upon the fact that the tariffs challenged are those of three inde- pendent railroads; nor upon the fact that the rates are different for wheat than for some other grain; nor upon the fact that the tariff of each railroad includes differing rates from numerous country points in each of the three states; nor upon the fact that some of the rates from those points are for transportation to Kansas City, and some to Wichita; nor upon the fact that there are several railroads which, as competitors of the plaintiffs for traffic from those cities to several Gulf ports, are affected by the rates challenged. The statement of the facts may therefore be simplified by limiting it to a single rate of one of the plaintiff carriers for wheat to Kansas City, and showing the effect of that increased rate on one of that carrier's competitors for traffic from that market to a single Gulf port.

The Santa Fe has a line direct from Dodge City, Kan., to the Gulf, via which its through rate on wheat for export is 47 cents per 100 pounds. It has also a line from Dodge City, via Kansas City, to the Gulf, on which its through rate, prior to 1924, was 51 cents, being the sum (or sombination) of the local rate from Dodge City to Kansas City (20.5 cents) and the standard proportional rate from Kansas City to the Gulf (30.5 cents).¹ Usually, the volume of grain in storage at Kansas City is large, as it is an important primary grain market. The Kansas City Southern has no line from Dodge City to Kansas City. But it has a line from Kansas City to the Gulf, and its standard proportional rate also is 30.5 cents per 100 pounds. Prior to 1924 the Southern was in a position to compete on equal terms with the Santa Fe for the transportation to the Gulf of the grain from Dodge City on storage in Kansas City. In that year, the Santa Fe reduced its through rate from Dodge City to the Gulf via Kansas City to 47 cents. Thereby the Santa Fe's net proportional rate from Kansas City to the Gulf was reduced 4 cents; that is, from 30.5 cents to 26.5 cents. For, under a practice prevailing at primary grain markets, known as the through rates with transit privilege, one who reships grain on the same railroad which had brought it into the market is entitled to reship on what is called the balance of the through rate. That is, a discount is allowed equal to the difference between the through rate from the point of its origin to the destination ultimately selected and the sum of the standard inbound and outbound rates.

Thus the Southern was disabled from competing with the Santa Fe for the transportation from Kansas City to the Gulf of grain in storage at Kansas City which had come from Dodge City. For the Santa Fe refused to establish a similar through route via the Southern from Kansas City, and the Commission did not order it. Compare St. Louis Southwestern R. Co. v. United States, 245 U. S. 136, 38 S. Ct. 49, 62 L. Ed. 199. The Southern undertook to help itself. It filed a tariff with what is called a varying proportional rate, by lowering to 26.5 its own rate from Kansas City to the Gulf on such grain as had come to Kansas City from Dodge City.² The Santa Fe protested to the Com- mission against the Southern's varying proportional rate; but the Commission refused to suspend it.³ Then the Santa Fe , in order to exclude the Southern, filed the tariff here in question, imposing the 4-cent addition to its Kansas City rate on any Dodge City grain that should later be reshipped over the Southern's line. It is this conditional addition of 4 cents to the Dodge City-Kansas City rate which the Commission ordered canceled.

The order followed extensive hearings before the Commission, had after suspension of the tariffs pursuant to paragraph 7 of section 15 of the Interstate Commerce Act (49 USCA § 15(7). Since the proposed tariff involved an increase in the rate, the burden of justifying the increase before the Commission was imposed upon the carrier by paragraph 7 of section 15, if applicable. Moreover, to make an additional charge for having brought merchandise into a city, if it should afterwards be shipped out, is on its face unreasonable. And it is discriminatory to make that additional charge only if the outbound shipment is over one of several possible railroads. The Santa Fe made no attempt to justify the increase. It contended that the general rules of law concerning reasonableness of rates are not applicable, and that the Commission lacked power to order the rate canceled, because by so doing it compelled the Santa Fe to participate in a through route and rate, and thereby shorthaul itself, in disregard of the limitations imposed by paragraph 4 of section 15 upon the Commission's power to establish through routes. Compare United States v. Missouri Pacific R. R., 278 U. S. 269, 49 S. Ct. 133, 73 L. Ed. —.

The Santa Fe , regarding the grain in storage at Kansas City as tonnage which, although temporarily held in abeyance, is in the course of a through movement and, as such, is to be held on its lines, makes this argument: At the time that the canceled tariff was filed, the Santa Fe had a through route on its own lines from Dodge City via Kansas City to the Gulf, and there existed no through route from Dodge City to the Gulf via the Southern from Kansas City. The Santa Fe was therefore legally entitled to carry to the Gulf at the through rate all Dodge City grain stored at Kansas City, which had been brought in by it. The Southern's varying proportional rate on Dodge City grain enabled the Southern to secure some of this grain. The Santa Fe's proposed varying rate was essential to prevent that invasion of its right not to be short-hauled on Dodge City grain. By ordering its proposed tariff canceled, the Commission made possible a through route via the Southern which compelled the Santa Fe to short haul itself. As the Commission was prohibited by paragraph 4 of section 15 from establishing a through route via the Southern, which would short-haul the Santa Fe , Congress must have intended to deny to it also the power to cancel as unreasonable a tariff which was essential to the preservation of the Santa Fe's long haul.

A supplemetal argument is made by the Santa Fe to overcome the finding of the Commission that at the time when the tariff here in question was filed, there already existed (without any order by the Commission) a through route for grain over the Santa Fe from Dodge City to Kansas City and thence to the Gulf via the Southern. Compare St. Louis Southwestern Ry. Co. v. United States, 245 U. S. 136, 139, 38 S. Ct. 49, 62 L. Ed. 199; Virginian Ry. v. United States, 272 U. S. 658, 666, 47 S. Ct. 222, 71 L. Ed. 463. The supplemental argument is this: Since the Commission could not have ordered this through route via the Southern, it could not prevent the Santa Fe's withdrawing from the same.⁴ Its proposed tariff was in effect a withdrawal; for, as the bill alleges, the rates were 'published, not for the purpose of facilitating movement via the routes in connection with which they were published, but were published by plaintiffs to preclude and prevent movement via such routes.' We have no occasion to consider the issue of fact whether there was in existence, when the Santa Fe filed its proposed tariff, a through route from Dodge City via the Southern from Kansas City; nor need we consider the issue of law whether, if there was such a route in existence, the Commission would have been powerless, by reason of paragraph 4 of section 15, to prevent the Santa Fe's withdrawal from it. For we are of opinion that, although the Santa Fe brought the grain into Kansas City, there is nothing in the situation which precluded the Commission from canceling the Santa Fe 's proposed tariff as being unreasonable.

First. In ordering cancellation of the proposed tariff the Commission exercised only its function of determining the reasonableness of rates. It made a rate order to which the matter or routing was merely an incident. The Santa Fe calls the proposed rate, by which it undertook to add 4 cents to the Dodge City-Kansas City rate, if the grain should be reshipped on the Southern, proportional. To call it proportional is misleading.⁵ But, if it were truly a part of a through rate, the fact would be without legal significance. The Commission's power to...