Cargill, Inc. v. United States, 3714

• Decision Date: 16 April 1942
• Docket Number: 3725.,No. 3714,3714
• Citation: 44 F. Supp. 368
• Parties: CARGILL, Inc., et al. v. UNITED STATES et al. INLAND WATERWAYS CORPORATION v. SAME.
• Court: U.S. District Court — Northern District of Illinois

44 F. Supp. 368

CARGILL, Inc., et al. v. UNITED STATES et al.

INLAND WATERWAYS CORPORATION v. SAME.

Nos. 3714, 3725.

District Court, N. D. Illinois, E. D.

April 16, 1942.

Luther M. Walter, John S. Burchmore, Robert N. Burchmore, and Nuel D. Belnap, all of Chicago, Ill. (Walter Burchmore & Belnap, of Chicago, Ill., of counsel), for plaintiff Cargill, Inc.

Nuel D. Belnap and Robert N. Burchmore, both of Chicago, Ill. (Walter, Burchmore & Belnap, of Chicago, Ill., of counsel), for plaintiff Inland Waterways Corp.

Leo P. Day, of Chicago, Ill., for defendant New York Central System.

Horace L. Walker, of Richmond, Va., and Bryce L. Hamilton, of Chicago, Ill., for defendant N. Y. C. & St. L. R. Co.

R. S. Brittingham, Jr., Sp. Asst. to Atty. Gen., Daniel H. Kunkel, of Washington, D. C., Atty. Interstate Commerce Commission, J. Albert Woll, U. S. Dist. Atty., of Chicago, Ill., for defendant U. S Frank H. Cole, Jr., of Cincinnati, Ohio, Erich W. Lademann, of Chicago, Ill., for defendant B. & O. R. R. Co.

Clyde E. Shorey, of Chicago, Ill., for defendant Erie R. R.

Theodore Schmidt and George F. Dyche, both of Chicago, Ill., for defendant Penn. R. Co.

Horace L. Walker, of Richmond, Va., and William G. Wise, of Chicago, Ill., for defendant C. & O. Ry. Co.

Kremer, Branand & Hayes, of Chicago, Ill., for intervenors A. L. Mechling, doing business as A. L. Mechling Barge Line.

Haskell Donoho, Senior Atty. U. S. Department of Agriculture, of Washington, D. C., for intervenor Secretary of Agriculture.

Mastin G. White, Sol. U. S. Department of Agriculture, of Washington, D. C., and A. B. Enoch, of Chicago, Ill., for intervenor Alton R. Co.

Before EVANS, Circuit Judge, and WOODWARD and HOLLY, District Judges.

WOODWARD, District Judge.

This cause coming on to be heard and the Court having heard arguments of counsel, and being fully advised in the premises, now makes the following findings of fact:

(1) Presently, and for many years, trunk line railroads operating to the east from Chicago, Illinois, including the carrier defendants herein, have maintained therefrom to eastern destinations proportional or reshipping rates on grain and grain products (hereinafter referred to as grain), in carloads, which are and were lower than the local rates on the same commodities from and to the same points. As a representative example, to New York City, New York, the proportional or reshipping rate is 26 cents per hundred pounds and the local rate is 34.5 per hundred pounds. To destinations east of Buffalo and Pittsburgh the trunk line railroads maintain similar rates, although differing in amounts, all of said rates exhibiting a similar difference of 8.5 cents per hundred pounds between the proportional or reshipping rates, on the one hand, and local rates, on the other. Such proportional or reshipping rates apply upon reshipment from Chicago to grain received at Chicago over any route via a rail or a water transportation line from any origin, from whence the inbound interstate rate via railroad is 8.5 cents per hundred pounds or greater, provided the reshipment takes place within a year after the grain is received at Chicago, and further provided that the billing of the inbound carriers, which is treated as representative of the grain, is recorded with the railroads and is cancelled at the time the grain represented thereby is reshipped. To destinations to the east of Chicago and intermediate to Chicago and Pittsburgh, proportional and reshipping rates lower than local rates are and were also provided. However, to such destinations there were and are three different levels of proportional or reshipping rates, one termed Trans-Mississippi, another Northwest, and another Reshipping. As to grain received at Chicago via rail and reshipped therefrom to said destinations, the application of the Trans-Mississippi, the Northwest, or the Reshipping Proportional or reshipping rate is dependent upon the origin from whence grain moved inbound to Chicago via rail. As to grain received at Chicago via a water transportation line, the Northwest proportional or reshipping rate is applicable, regardless of the origin and regardless of the route of the inbound movement. The local rates of the eastern trunk lines from Chicago to eastern destinations apply on all grain shipped via rail to which the proportional or reshipping rates above described do not by their terms apply.

(2) Grain presently entitled to the proportional or reshipping rates arrives at Chicago via three different characters of transportation services, i.e., (1) via rail; (2) via barge over the Illinois River and connecting waterways and rivers; and (3) via lake steamer over the Great Lakes. The terms "ex-rail", "ex-barge", and "ex-lake" are used as referring to grain received via the respective means just stated, and also to grain that is reshipped upon the cancellation of the ex-rail ex-barge, and ex-lake inbound billing.

(3) Little or no grain moves into and out of Chicago in continuous through movement. Rather, the inbound service via rail, via barge, or via lake steamer comes to an end by delivery of the grain into an elevator at Chicago, title to the grain commonly passing to a purchaser at that point, and the outbound reshipment comes later as an independent transaction.

(4) The Inland Waterways Corporation, operating the Federal Barge Lines, plaintiff in No. 3725, operates a barge line as a common carrier by water in interstate commerce on the Illinois waterways and the Mississippi and Missouri Rivers, and has heretofore transported ex-barge grain to Chicago, which ex-barge grain has been reshipped therefrom at the proportional or reshipping rates above described.

(5) Cargill, Incorporated, Norris Grain Company, Rosenbaum Brothers, Santa Fe Elevator Corporation, and Continental Grain Company, plaintiffs in No. 3714, each operates a general grain business and public elevators at Chicago. In the course of that business, they buy grain received via rail, via barge, and via lake on the basis of prices delivered Chicago, store that grain in public elevators awaiting sale, and subsequently sell and reship such grain via lake and via rail for consumption in eastern territory.

A. L. Mechling, doing business as A. L. Mechling Barge Lines, his position being the same as that of the Inland Waterways and the Secretary of Agriculture, intervened both before the Interstate Commerce Commission and in this Court.

(6) The purchase of grain by the plaintiffs in No. 3714 at Chicago on a delivered price basis results in imposing on the shipper of the grain the cost incurred in connection with the inbound transportation, and when a particular mode of transportation provides a saving in transportation costs as against some other mode of transportation, that saving accrues to the inbound shipper.

(7) Two of the plaintiffs in No. 3714, i.e., Continental Grain Company and Norris Grain Company, operate elevators on the banks of the Illinois waterways, some of which have no facilities for rail shipments. These plaintiffs accumulate grain at such elevators for shipment to Chicago via barge with a view to storage at that point and subsequent merchandising and reshipment.

(8) The Baltimore and Ohio Railroad Company, Erie Railroad, the New York Central Railroad Company, the New York, Chicago and St. Louis Railroad Company, the Pennsylvania Railroad Company, and the Chesapeake and Ohio Railway Company, carrier defendants in the above-entitled causes, are among the eastern trunk lines which maintain the proportional or reshipping rates and the local rates above described.

(9) By tariffs filed with the Interstate Commerce Commission to become effective October 15, 1939, the carrier defendants and others propose to change their existing tariffs so as to make the above-described proportional or reshipping rates maintained by them inapplicable on the reshipment of grain arriving at Chicago via the Illinois waterways, the proposal being to continue the application of such proportional or reshipping rates on ex-rail and ex-lake grain. The plaintiffs in these causes, with others, protested this change in rate application on the ground that it would result in rates which would be unreasonable in violation of Section 1 of the Interstate Commerce Act, 49 U.S.C.A. § 1, unjustly discriminatory in violation of Section 2 of said Act, unduly prejudicial and preferential in violation of Section 3(1) of said Act, and unlawfully discriminatory as between defendants' connecting lines in violation of Section 3(4) thereof. Responsive to such protests, the Commission by order of October 14, 1939, suspended the proposed change in rates and instituted an investigation into the lawfulness thereof in a proceeding before it entitled I. & S. Docket No. 4718, Grain Proportionals, Ex-Barge to Official Territory. By the order mentioned, the change was suspended until May 15, 1940. The investigation proceedings were not, however, concluded at that time and the defendant carriers voluntarily postponed the effective date of the proposed change until the Commission could conclude its investigation and enter an appropriate order, and to date no change has been made in said rates.

(10) After hearings in said investigation and suspension proceeding, in which the plaintiffs participated as parties thereto, the Commission, by Division 2, issued its report and order of July 31, 1941, officially reported in 246 I.C.C. 353, 381. In that report and order, the Commission concluded that no change in rates would in fact be produced by the suspended tariff schedules, this on the stated ground that the existing tariff schedules did not make legal provision for the application of proportional or reshipping rates to ex-barge grain. Consistent with that theory of the case, Division 2 entered a conclusion reading: "We conclude that the proportional rates here in issue have never been applicable on this barge traffic moving on unfiled rates,...