Barringer Co v. United States

• Decision Date: 03 May 1943
• Docket Number: No. 520,520
• Citation: 319 U.S. 1,63 S.Ct. 967,87 L.Ed. 1171
• Parties: L. T. BARRINGER & CO. v. UNITED STATES et al
• Court: U.S. Supreme Court

319 U.S. 1

63 S.Ct. 967

87 L.Ed. 1171

L. T. BARRINGER & CO.

v UNITED STATES et al.

No. 520.

Argued March 3, 1943.

Decided May 3, 1943.

As Amended on Denial of Rehearing May 24, 1943.

Appeal from the District Court of the United States for the Western District of Tennessee.

Mr. Nuel D. Belnap, of Chicago, Ill., for appellant.

Mr. Roland J. Lehman, of Chicago, Ill., for appellees Atchison, T. & S.F. Ry. Co. et al.

Mr. Robert L. Pierce, of Washington, D.C., for appellees, The United States and Interstate Commerce Commission.

Mr. Chief Justice STONE delivered the opinion of the Court.

This is a suit by appellant, a shipper of cotton over the lines of appellee railroads, brought under 28 U.S.C. § 41(28), 28 U.S.C.A. § 41(28), to enjoin and set aside an order of the Interstate Commerce Commission. The District Court of three judges dismissed the complaint, and the case comes here on direct appeal pursuant to 28 U.S.C. § 47, 28 U.S.C.A. § 47. The question is whether the Commission erred in refusing to set aside tariffs on cotton, filed by the five appellee railroads, as unjustly discriminatory and unduly prejudicial to shippers in violation of §§ 2 and 3(1) of the Interstate Commerce Act, 24 Stat. 379, 380; 49 U.S.C. §§ 2, 3(1), 49 U.S.C.A. §§ 2, 3(1).

From the report of the Commission, on which its order was based, 248 I.C.C. 643, the following facts appear. Appellees carry cotton from points in Oklahoma to ports on the Gulf of Mexico. Their lines also form relatively short parts of the through routes over which cotton moves from Oklahoma to points in the southeastern United States. During recent years carriers of cotton to the Gulf ports have been faced with serious truck competition. To meet it, successive rate reductions have been made. Until about ten years ago the only rates available on cotton were less-than-carload rates, since individual shipments of cotton are seldom, if ever, in carload quantities. As is customary on less-than-carload shipments, the cotton was loaded at the expense of the carrier.¹

During 1932 and 1933 the carriers, in an effort to reduce rates and achieve operating economies, put in effect so-called carload rates for cotton which the Commission, after investigation, approved in Cotton From and to Points in Southwest and Memphis, 208 I.C.C. 677. Under these rates the cotton was typically collected in less-than-carload quantities at the ginning points, carried by rail for short distances to compressors, and after compression assembled in carload quantities for shipment to destination. The shipper paid the local, less-than-carload rate to the compress point, and the local rate from compress point to destination, but on the cotton's arrival at destination the carrier refunded the difference between the freight paid and the through, carload, rate from point of origin to destination. On these rates loading was at the shipper's expense; if the carrier performed the loading service a charge of 5 1/2 cents a square bale was made, which was paid by a deduction from the refund allowed by the carrier on the transit settlement just referred to. This loading charge was stated separately in appellees' tariffs filed with the Commission, pursuant to § 6(1).

Despite the reduction in cost to shippers produced by the adoption of these schedules, truck competition continued to be a serious problem. In 1939 carriers of cotton from Texas points effected a further rate reduction by eliminating the loading charge. The tariffs here under consideration, filed by appellees to be effective on June 11, 1941, similarly eliminate the loading charge for cotton moving from compress points in Oklahoma to certain ports on the Gulf of Mexico,² while retaining it on cotton moving to the Southeast.

Appellant buys cotton in Oklahoma for resale to mills in the Southeast. Under the proposed tariffs it must continue to pay the loading charge on cotton which it ships to the Southeast, while merchants who ship to the Gulf ports, and who compete with appellant in the purchase of cotton, are relieved of that charge. Contending that this situation would create an unjust discrimination under § 2, and would be unduly prejudicial under § 3(1), appellant filed a petition with the Commission under § 15(7) to suspend the proposed tariffs.

Division 3 of the Commission, after a hearing in which appellant participated, issued its report and order, refus- ing to set aside the proposed rates. It found that truck competition had continued to increase during 1940, so as to justify appropriate efforts by the carriers to meet such competition;³ that the loading charge caused annoyance to shippers; that the cost of performing the loading service was in most cases nominal and its performance by the carrier would result in loading to maximum capacity, so that elimination of the charge was a suitable method of achieving a needed reduction in rates which were already low; that carriers in states further East opposed the extension into their territory of the practice of free loading, and the elimination by appellees of the loading charge on cotton moving into that territory; that the 'rates to the Southeast are already lower relatively than they are to the Texas ports'; and that 'there is no trucking of cotton from Oklahoma * * * to the Southeast.' Accordingly it found that the proposed elimination of the loading charge 'is just and reasonable and not shown to be otherwise unlawful.' Appellant's petition for reconsideration was denied by the full Commission, and the proposed rates, which had been suspended while under consideration by the Commission, became effective.

Appellant's principal contention is that in considering the validity of the proposed tariffs under § 2, the Commission could look only at the charge for the loading service and was not entitled to consider conditions relating to the through line-haul rates. Section 2 of the Act declares it to be an 'unjust' and prohibited discrimination for any carrier 'directly or indirectly, by any special rate, rebate, drawback, or other device', to charge one person more or less than another for 'a like and contemporaneous service in the transportation of a like kind of traffic under substantially similar circumstances and con- ditions.' It is undoubted that the loading service here involved is a transportation service to which § 2 applies. § 1(3)(a); Merchants' Warehouse Co. v. United States, 283 U.S. 501, 511, 51 S.Ct. 505, 509, 75 L.Ed. 1227.

Section 2 is aimed at the prevention of favoritism among shippers. See Sharfman, Interstate Commerce Commission, vol. III-B, pp. 360, 361. Where the transportation services are rendered under substantially similar conditions the section has been thought to prohibit any differentiation between shippers on the basis of their identity, Interstate Commerce Commission v. Baltimore & O.R. Co., 225 U.S. 326, 342, 32 S.Ct. 742, 746, 56 L.Ed. 1107; Interstate Commerce Commission v. Delaware, L. & W.R. Co., 220 U.S. 235, 252, 31 S.Ct. 392, 398, 55 L.Ed. 448, or on the basis of competitive conditions which may induce a carrier to offer a reduction in rate to one shipper while denying it to another similarly situated, Wight v. United States, 167 U.S. 512, 516-518, 17 S.Ct. 822, 824, 42 L.Ed. 258; Interstate Commerce Commission v. Alabama Midland R. Co., 168 U.S. 144, 166, 18 S.Ct. 45, 48, 42 L.Ed. 414. Compare Seaboard Air Line R. Co. v. United States, 254 U.S. 57, 62, 41 S.Ct. 24, 25, 65 L.Ed. 129. But differences in rates as between shippers are prohibited only where the 'circumstances and conditions' attending the transportation service are 'substantially similar'. Whether those circumstances and conditions are sufficiently dissimilar to justify a difference in rates, or whether, on the other hand, the difference in rates constitutes an unjust discrimination because based primarily on considerations relating to the identity or competitive position of the particular shipper rather than to circumstances attending the transportation service, is a question of fact for the Commission's determination. Hence its conclusion that in view of all the relevant facts and circumstances a rate or practice either is or is not unjustly discriminatory within the meaning of § 2 of the Act will not be disturbed here unless we can say that its finding is unsupported by evidence or without rational basis, or rests on an erroneous construc- tion of the statute. Seaboard Air Line R. Co. v. United States, supra, 254 U.S. at page 62, 41 S.Ct. at page 25, 65 L.Ed. 129; Interstate Commerce Commission v. Delaware, L. & W.R. Co., supra, 220 U.S. at page 251, 252, 31 S.Ct. at page 398, 55 L.Ed. 448; Louisville & N.R. Co. v. United States, 282 U.S. 740, 758, 51 S.Ct. 297, 304, 75 L.Ed. 672; Merchants' Warehouse Co. v. United States, supra, 283 U.S. at page 508, 51 S.Ct. at page 508, 75 L.Ed. 1227; Baltimore & O.R. Co. v. United States, 305 U.S. 507, 524, 59 S.Ct. 284, 290, 83 L.Ed. 318.

In considering the circumstances and conditions attending the transportation service the Commission was not required to ignore the fact that the loading charges, although separately stated in the tariffs, are in each case a component part of the total line-haul cost to the shipper and inseparable from it. All the carrier loading costs not compensated for by the loading charges, if any, to shippers, are necessarily absorbed by the carrier out of the line-haul charges which shippers pay. The loading charge is not paid until the line haul is completed and the ultimate destination known, and then only by a reduction of the refund payable by the carrier on the transit settlement prescribed by the tariffs. And where cotton moves on less-than-carload rates the cost of loading is absorbed by the carrier, although the loading services performed by the carrier are the same. In these circumstances the net effect, on the shipper's line-haul cost, of the remission by the tariff of any part of the loading charge...