Chesapeake & O. Ry. Co. v. Standard Lumber Co.

• Decision Date: 15 July 1909
• Docket Number: 866.
• Citation: 174 F. 107
• Parties: CHESAPEAKE & O. RY. CO. v. STANDARD LUMBER CO.
• Court: U.S. Court of Appeals — Fourth Circuit

174 F. 107

CHESAPEAKE & O. RY. CO. v. STANDARD LUMBER CO.

No. 866.

United States Court of Appeals, Fourth Circuit.

July 15, 1909

This is an action in assumpsit, brought by the Standard Lumber Company, a corporation of the state of Kentucky, against the Chesapeake & Ohio Railway Company, a corporation of the state of West Virginia, to recover $25,000 damages for a breach of contract set out in the declaration, and hereinafter printed in full. The declaration claims the right to recover, first overcharge for freight; second, damages suffered by the Standard Lumber Company by reason of the alleged increase of freight rate over and above the amount set out in the contract; and third, the cost of building a tie hoist at Louisa, Ky., as provided for in the contract. At the time this contract was purported to have been made, the interstate commerce act of 1887 (Act Feb. 4, 1887, c. 104, 24 Stat. 379 (U.S. Comp. St. 1901, p. 3154)) was, in effect, prohibiting the making of any discrimination between shippers by a carrier, and, at the time the suit was brought, the Elkins act of 1903 (Act Feb. 19, 1903, c. 708, 32 Stat. 847 (U.S Comp. St. Supp. 1907, p. 880)) was in force. The contract, as written, was between the Standard Lumber Company, the Chesapeake & Ohio Railway Company, and the Big Sandy Railroad Company; but it does not appear ever to have been executed by the Big Sandy Railroad Company, and the Chesapeake & Ohio Railway Company, by its plea of non assumpsit, puts the plaintiff upon proof of the execution of the contract, and requires that the authority of the party who purported to have signed the same be shown. The alleged contract is as follows:

'This memorandum of agreement made and entered into this 7th day of November, 1899, by and between the Standard Lumber Company, a corporation organized and existing under the laws of the state of Kentucky, party of the first part, and the Chesapeake & Ohio Railway Company and the Ohio & Big Sandy Railroad Company, parties of the second part, witnesseth That the party of the first part is to build a tie hoist and connecting tracks intersecting the main line of the Ohio &amp Big Sandy Railroad Company, just east of their depot in said city, said tracks running through . . . street, in Louisa, and the property leased by George Stevens & Company, of Titusville, Pennsylvania, north to the Big Sandy river, all at its own proper expense, except the rails, which are to be furnished by parties of the second part; and said parties of the first part are to maintain and operate the same and furnish to parties of the second part for transportation ties in car load lots, from time to time, until the matters hereinafter stated are consummated.

In consideration of all of which, the parties of the second part agree that they will transport all ties coming over said hoist, for party of the first part, from Louisa, Kentucky, to Huntington, West Virginia, at a uniform rate of $8.50 per car, and from the net revenue accruing to the C. & O. Ry. Co. from such traffic shall be deducted ten per cent., which shall be refunded to party of the first part in liquidation of said expense for building said hoist and tracks, until the amount refunded shall equal the cost of construction of same, at which time the said hoist and tracks shall be and become the property of parties of the second part. Said cost to be ascertained from actual bills of expense to be furnished said C. & O. Ry. Co. from time to time, as the work progresses.

'In testimony whereof, the parties of the first and second parts have caused their names and seals to be hereto affixed by their properly authorized officers, the day and date first above written.

'Standard Lumber Company,

'Per T. J. Reynolds, Pres.

'The Chesapeake & Ohio Ry. Co.,

By F. M. Whittaker, Frt. Tfc. Mgr.

'Witness:

'E. B. Enslow,

'R. A. Jeffers.'

Upon the hearing, the Chesapeake & Ohio Railway Company, hereinafter referred to as the 'railway company,' the defendant below, demurred to the declaration, which demurrer was overruled, and it then filed the general plea of non assumpsit.

It is contended by the complainant that, at and prior to the time of the making of the contract above mentioned, the lumber company was engaged in the purchase and manufacture of railroad cross-ties on and along the Big Sandy river in the state of Kentucky. The lumber company, in order to get its ties to market, floated the same down the Big Sandy river to its mouth, where it empties into the Ohio river, at which point they were distributed by railroad or the Ohio river to the various purchasers. At that time the railroad company had built a branch line from Cattlettsburg, Ky., to the Big Sandy river, to a place called Louisa, which is on the said river and about 25 miles from its mouth, and thus came in competition with transportation by means of the said Big Sandy river. It is also insisted by the plaintiff that the motive of the railroad company in entering into the contract was to secure the business which had theretofore been transported by the river, and that, accordingly, in compliance with the terms of the contract, the lumber company constructed, at great expense, a tie hoist and connecting track at Louisa, and commenced the delivery of ties to the railroad company in cars furnished by it; that this continued for about a year, when the railroad company advanced the rate of $8.50 per car of 200 ties, the cars having a capacity of from 300 to 400 ties. Later on the rate was changed to 5 cents per tie, making the rate from $10 to $17 and $18 per car; that the lumber company continued to ship ties, but by reason of the contract paid the increased rate under protest, and finally, not being able to continue its business at a profit at the rates given, it sold out its tie business. The complainant below seeks to recover from the railroad company the freight charges in excess of the amount set out in the contract, the damages suffered by reason of its being unable to fulfill certain contracts made upon the faith of the contract rate, and expenses incurred by it in building the tie hoist.

The court below held that the contract on its face was a valid contract, and that the fact that it was not executed by all the parties was not sufficient ground for demurrer, but that it was a question for proof as to whether it had been agreed to and carried into effect by the action of the railroad company; but the court further held that the railroad company had a right to change its freight rates, notwithstanding the contract, and that the lumber company was not entitled to recover anything for overcharge or damages growing out of the change of rates, but that it could recover under the contract whatever the jury might find from the evidence it was entitled to for building the hoist. The case was submitted to the jury under instructions from the court, and a verdict was found in favor of the lumber company in the sum of $4,439.54.

F. B. Enslow (Simms, Enslow, Fitzpatrick & Baker, on the brief), for plaintiff in error.

C. N. Davis (C. W. Campbell, G. S. Wallace, and E. A. Marsh, on the brief), for defendant in error.

Before GOFF and PRITCHARD, Circuit Judges, and DAYTON, District Judge.

PRITCHARD Circuit Judge (after stating the facts as above).

The first and second assignments of error are as follows:

'First. The contract is shown to be incomplete upon its face, and there were no allegations in the declaration that the signatures of the Ohio & Big Sandy Railroad Company were waived by either of the parties, or that it was agreed upon and acquiesced in by the defendant without ever having been signed by the Ohio & Big Sandy Railroad Company; because, if the said contract had been ratified by the parties thereto, the declaration should have so stated, and suit should have been brought against both parties; because the contract shows on its face that, under the laws and statute governing railways and railway rates, the said contract was contrary to the statute, and incapable of being enforced, and not binding on either party. The trial court, however, taking the view of the statute contrary to the defendant's contention, overruled said demurrer and permitted the contract to go to the jury as evidence of the alleged agreement, holding that, although the railroad company could not be permitted to make a contract as to rates, and would have a right to change the same, still the plaintiff might recover in the action the money expended by it. The overruling of the demurrer and this view of the court as to the effect of the contract is assigned as the first error.

'Second. At the time the contract was claimed to have been executed namely, in November, 1899, up to the time of the first shipment of ties over said road, the legal rate on ties shipped over the Ohio & Big Sandy Railroad and the Chesapeake & Ohio Railway, from Louisa, Ky., to Huntington, W. Va., was 3 cents per 100 pounds, or about 6 cents per tie. The tariff arranged under the contract for ties over the hoist in question was $8.50 per car, or about 4 1/2 cents per tie, while the rate per car not taken over the hoist was $10, the difference of about one-half cent per tie in favor of the plaintiff, who operated the hoist. The tariff sheets introduced in evidence on the examination of W. F. Hite, division freight agent, showed this to be the fact, and showed the discrimination in favor of the plaintiff. The defendant, taking the view that the contract under the circumstances was illegal, and the illegality vitiated the same entirely and prevented the plaintiff from recovering on it, sought to show, in addition to the published rates, that the special rate allowed to the plaintiff and provided for in the contract was a...