Atlantic Coast Line R. Co. v. Baltimore & OR Co.

• Decision Date: 08 November 1935
• Docket Number: No. 2325.,2325.
• Citation: 12 F. Supp. 711
• Parties: ATLANTIC COAST LINE R. CO. v. BALTIMORE & O. R. CO.
• Court: U.S. District Court — District of Maryland

12 F. Supp. 711

ATLANTIC COAST LINE R. CO. v. BALTIMORE & O. R. CO.

No. 2325.

District Court, D. Maryland.

November 8, 1935.

Arthur W. Machen, H. Vernon Eney, and Armstrong, Machen & Allen, all of Baltimore, Md., for plaintiff.

Charles R. Webber, of Baltimore, Md., Gen. Counsel for Baltimore & O. R. R., for defendant.

CHESNUT, District Judge.

In this case the plaintiff is seeking an accounting from the defendant and, based thereon, a fair division of joint rates for transportation of citrus fruit from Florida collected by the defendant from consignees on the delivery of the freight. The case is perhaps a natural sequel to Baltimore & Ohio Railroad Co. v. United States, 9 F. Supp. 181, where a three-judge district court, for the Eastern District of Virginia, refused to annul and set aside an order of the Interstate Commerce Commission determining the proper division between northern and southern carriers (with gateway at Richmond, Virginia) of joint rates for through carriage of citrus fruit from Florida to points north of Washington, D. C. As there classified the plaintiff here is a southern carrier, and the defendant a northern carrier. The order of the Commission, made effective June 1, 1934, also required readjustment between the carriers of the divisions as thus fixed to the prior date of November 22, 1930, at which time the complaint of the southern carriers for determination of the divisions was filed with the Commission. See Atlantic Coast Line R. R. Co., et al. v. Arcade & Attica R. R. Corp. et al., 194 I.C.C. 729; Id., 198 I.C.C. 375. The joint rates as to which divisions were thus made by the Commission, had been prescribed by the Commission effective November 9, 1928. R. R. Com'rs v. Aberdeen & Rockfish R. Co., 144 I.C.C. 603. As the order of the Commission for readjustment between the carriers was not effective antedating November 22, 1930 (and could not have been made effective for an earlier period, by reason of the limitation contained in the Interstate Commerce Act, § 15(6), as amended by the Transportation Act of 1920, § 418, 49 USCA § 15 (6), the plaintiff is now seeking an extension of the readjustment as made by the Commission or as otherwise may be properly determined to be just and reasonable for the period between November 9, 1928, when the new prescribed rate became effective, and November 22, 1930, when the complaint was first filed with the Commission. The opinion of the three-judge case above referred to (9 F.Supp. 181) was filed December 1, 1934. An appeal therefrom is now pending in the Supreme Court of the United States. The instant suit was filed April 18, 1935.

The defendant's motion to dismiss the bill of complaint presents a three point defense: (1) The court is without jurisdiction of the cause; (2) limitations, and (3) defect of parties. They will be discussed in this order.

The first defense is the principal one and the one of most general importance. The answer to it must be found in the proper construction and effect of section 15(6) of the Interstate Commerce Act as amended by the Transportation Act of February 28, 1920, c. 91, § 418, 41 Stat. 486. See U.S.C., title 49, § 15(6), 49 USCA § 15(6). By this section the Commission is authorized to prescribe the just, reasonable and equitable divisions of joint rates, fares or charges in interstate commerce (whether the rates were agreed upon by the carriers or otherwise established); "and in cases where the joint rate, fare, or charge was established pursuant to a finding or order of the commission and the divisions thereof are found by it to have been unjust, unreasonable, or inequitable, or unduly preferential or prejudicial, the commission may also by order determine what (for the period subsequent to the filing of the complaint or petition or the making of the order of investigation) would have been the just, reasonable, and equitable divisions thereof to be received by the several carriers, and require adjustment to be made in accordance therewith."

It will be observed that the Commission is not given power to make the readjustment effective antedating the filing of the complaint before it. In this respect the amendment changes the particular statute as it was in force from 1910 to 1920 which authorized the Commission (but only on failure of the carriers to agree) to prescribe the proper divisions of joint rates "which order shall take effect as a part of the original order." 36 Stat. 551, § 12. That is to say, the statute formerly authorized the Commission in making proper division of joint rates, to require adjustment as between the carriers back to the date of the original order of the Commission prescribing the particular joint rate. The statute as amended in 1920 was considered at some length by the Supreme Court in Brimstone R. & Canal Co. v. United States, 276 U.S. 104, at page 121, 48 S.Ct. 282, 286, 72 L.Ed. 487, where Mr. Justice McReynolds, speaking for the Court said:

"Section 15(6) should be construed in the light of the recognized difficulties. Under the earlier act a clear distinction was made between joint rates `agreed upon' and those `determined and prescribed' by the Commission after full hearing `to be thereafter observed.' The Commission had power to declare proper divisions of those in the latter category by order `which shall take effect as part of the original order' — that is from the date the rate was prescribed. Whether it could determine divisions of agreed rates for the future was not clear; but certainly it could not require readjustments of divisions of such rates for past periods. Morgantown & Kingwood Divisions, 40 I.C.C. 509, Id., 49 I.C.C. 540, 551. Section 15(6) established the right to prescribe future divisions of agreed rates, but we think the studied purpose was to grant no power to require readjustments of past receipts from agreed joint rates. Theretofore power in respect of past divisions existed only when rates had been determined and prescribed after full hearing — that is: where the Commission had passed upon the reasonableness of the rate and required observance. Obviously a carrier may have assented to a through rate only because of the divisions accorded to it: to permit the Commission to change this arrangement as to past transactions would be exceedingly harsh, if not wholly unreasonable. Ordinarily, divisions of a particular rate are not of public interest if the rate itself is reasonable. Probably aware of hardships under the old rule, the new act shortened the time during which readjustment might be required — limited its beginning to the commencement of investigation or filing of complaint."

Clear as this language is with respect to the factual situation before the court, in its explanation of the limitation as to the period for required adjustment of divisions, the language used would seem not to have application to the quite different situation involved in the present case. There the court was dealing with the readjustment of rates previously agreed upon but here the situation is quite different and would seem not to have been in contemplation in the language used in the Brimstone Case. The divisions here as made by the B. and O. Railroad, which are now sought to be readjusted, were never agreed upon by the northern and southern carriers, but on the contrary the proper divisions were a constant source of dispute and negotiation from the period when the joint rate as prescribed by the Commission took effect on November 9, 1928, until November 22, 1930, when the southern carriers filed their complaint with the Commission. At the request of the court, counsel in this case have been at pains to make an examination of the legislative history of section 15(6) as amended in 1920 but the result of the search is substantially negative with respect to the particular amendment with which we are here concerned as to the period during which readjustments can be required by the Commission. The situation with which we are here dealing does not appear to have been given consideration, or at least was not the subject of any recorded comment or discussion.

We are not here concerned with the history of joint rates for citrus fruit from Florida to northern points prior to the rate prescribed by the Commission effective November 9, 1928. This history is stated at some length by Judge Soper in Baltimore & O. R. Co. v. U. S. (D. C.) 9 F.Supp. 181. It is also repeated substantially by the plaintiff in its bill of complaint in this case. For present purposes it is sufficient to state that joint rates between northern and southern carriers had been agreed upon by them prior to the reduction in the joint rates as prescribed by the Commission effective November 9, 1928. The order of the Commission fixing a new and lower rate naturally terminated the prior agreement between the carriers. A new agreement was necessary and indeed required by the Interstate Commerce Act, § 1(4), as amended, 49 USCA § 1(4).

"It shall be the duty of every common carrier * * * in case of joint rates, fares, or charges, to establish just, reasonable, and equitable divisions thereof as between the carriers subject to this chapter participating therein which shall not unduly prefer or prejudice any of such participating carriers."

Despite the fact that the joint rate, the division of which had previously been agreed upon by the carriers, was reduced by the Commission, the northern carriers insisted on a revised basis of division between themselves and the southern carriers which yielded to the northern carriers absolutely higher rates than they had been receiving under the prior agreed upon division, although the joint rates were reduced. The situation in this respect was summarized by Judge Soper in Baltimore & Ohio R. Co. v. U. S. (D.C.) 9 F.Supp. 181, 185, as follows:

"According to a test covering the shipping season of 1928-1929, the northern lines, as collectors of the freight, retained in...