Farley Terminal Co., Inc. v. Atchison, T. & S. F. Ry. Co.

• Decision Date: 09 July 1975
• Docket Number: Nos. 74-1872,74-2410,s. 74-1872
• Citation: 522 F.2d 1095
• Parties: FARLEY TERMINAL COMPANY, INC., Plaintiff-Appellant, v. The ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY, Defendant-Appellee. Harold WILLINGER, doing business as Assembly Consolidators, Plaintiff- Appellant, v. The ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1095

522 F.2d 1095

FARLEY TERMINAL COMPANY, INC., Plaintiff-Appellant, v. The ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY,

Defendant-Appellee.

Harold WILLINGER, doing business as Assembly Consolidators, Plaintiff- Appellant, v. The ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY, Defendant-Appellee.

Nos. 74-1872, 74-2410.

United States Court of Appeals Ninth Circuit.

July 9, 1975.

Ira G. Megdal, Washington, D. C., Eric K. Lewis, Fullerton, Cal., for plaintiffs-appellants.

John J. Balluff, Los Angeles, Cal., for defendant-appellee.

OPINION

Before KOELSCH and GOODWIN, Circuit Judges, and WOLLENBERG, ^* District Judge.

PER CURIAM:

In these separate but related actions for damages for breach of contract, Farley Terminal Co., Inc., and Harold Willinger, lessees of TOFC (trailer-on-flatcar) or "piggyback" service equipment under separate but substantially identical lease agreements with the Atchison, Topeka and Santa Fe Railway Company (the Santa Fe), appeal from the district court's granting of summary judgments in favor of the lessor railway. The question presented is whether the Santa Fe's filing of a rate tariff as required by the Interstate Commerce Commission (ICC) which tariff, when approved, imposed on lessees higher rates for the leasing of TOFC equipment than were provided in the preexisting lease agreements constitutes an actionable breach of those agreements. We conclude it does not and therefore affirm.

Briefly, the facts are these: In its decision in Ex parte 230, Substituted Service Charges and Practices of For-Hire Carriers and Freight Forwarders (Piggyback Service), 322 I.C.C. 301 (1964), the ICC promulgated regulations requiring that each railroad providing TOFC service in interstate commerce publish, post, and file tariffs containing all rates and charges for the leasing of its TOFC equipment. See 322 I.C.C. at 415; 49 C.F.R. § 500.7 (1964), redesignated 49 C.F.R. § 1090.7 (1967). ¹ Early in 1967, Farley and Willinger executed separate lease agreements with the Santa Fe whereby each agreed to lease trailers and flatcars from the railway on an availability basis, at rates specified in the agreements. During the following months, each was charged at those rates. However, in July, 1967, the ICC served an order on the Santa Fe and other railroads which provided TOFC service, requiring them to comply with the regulations promulgated in Ex parte 230 by filing appropriate tariffs before August 18, 1967. After obtaining a ninety-day extension, the railroads, including the Santa Fe, filed Trans-Continental Freight Bureau Freight Tariff 2-F, Supplement 41, Section 1, Item 4900-E. This tariff, which established higher rates for the leasing of TOFC equipment than were provided in the preexisting leases, became effective November 17, 1967, after the ICC approved it. Lessees were thereafter charged at the new, higher rates. They brought these actions to recover the difference between the charges they paid under the tariff and those they would have paid under their respective agreements. The district court granted summary judgments in favor of the Santa Fe and these appeals followed.

We commence with the fundamental principle that summary judgment is proper only where there is no genuine issue as to any material fact or where, viewing the evidence and the inferences which may be drawn therefrom in the light most favorable to the adverse party, the movant is entitled to prevail as a matter of law. Rule 56, F.R.Civ.P. Here the district court properly granted summary judgments in favor of the railroad.

Appellants concede, as they must, that once the new tariff rates for TOFC service became effective, the Santa Fe was bound by law to charge those rates. Section 6(7) of the Interstate Commerce Act, 49 U.S.C. § 6(7), prohibits carriers in interstate commerce from receiving "different compensation . . . than the rates, fares, and charges which are specified in the tariff filed and in effect at the time." Moreover, the Elkins Act, 49 U.S.C. § 41 Et seq., provides criminal penalties for departures from the published rates, See 49 U.S.C. § 41(2), and for a carrier's returning to a shipper rebates or offsets against them, See 49 U.S.C. § 41(3).

Appellants nevertheless urge their entitlement to damages based on the variance between the tariff rates they were charged and those specified in their pre-existing agreements with the railway. We are not persuaded. It is well recognized that the principal congressional purpose in enacting the Interstate Commerce Act was to obtain a uniformity of rates and an end to discriminatory practices. As the Court early noted in New Haven Railroad Company v. I.C.C., 200 U.S. 361, 391, 26 S.Ct. 272, 277, 50 L.Ed. 515 (1906) "It cannot be challenged that the great purpose of the act to regulate commerce, whilst seeking to prevent unjust and unreasonable rates, was to secure equality of rates as to all and to destroy favoritism, these last being accomplished by requiring the publication of tariffs, and by prohibiting secret departures from such tariffs, and forbidding rebates, preferences, and all other forms of undue discrimination. To this extent and for these purposes the statute was remedial and is, therefore, entitled to receive that interpretation which reasonably accomplishes the great public purpose which it was enacted to subserve."

Where, as here, a conflict exists between published tariff rates and rates enumerated in pre-existing agreements, we think it well established that the tariff rates must prevail. Were we to permit enforcement of the inconsistent contractual rates, we would significantly undercut the clear policy of the Act to secure equal rates for all, as well as condone one discriminatory situation such as the Act was intended to remedy. See, e. g., Louisville and Nashville Railroad Company v. Mottley, 219 U.S. 467, 477-486, 31 S.Ct. 265, 55 L.Ed. 297 (1911); Armour Packing Company v. United States,209 U.S. 56, 81-83, 28 S.Ct. 428, 52 L.Ed. 681 (1908); Texas and Pacific Railway Company v. Mugg, 202 U.S. 242, 245, 26 S.Ct. 628, 50 L.Ed. 1011 (1906); New Haven Railroad Company, supra, 200 U.S. at 390-393, 26 S.Ct. 272. ² Cf. American Trucking Association, Inc. v. A., T. & S. F. R. Co.,387 U.S. 397, 406, 87 S.Ct. 1608, 18 L.Ed.2d 847 (1967).

In this connection, a tariff, rate, or charge, duly established in accordance with the Act, is the legal rate; it has the force of statute and is binding on carrier and shipper alike. See Lowden v. Simonds-Shields-Lonsdale Grain Co., 306 U.S. 516, 520, 59 S.Ct. 612, 83 L.Ed. 953 (1939); Pennsylvania Railroad Company v. International Coal Mining Company,230 U.S. 184, 196-197, 33 S.Ct. 893, 57 L.Ed. 1446 (1913); Robinson v Baltimore and Ohio Railroad Company, 222 U.S. 506, 508-510, 32 S.Ct. 114, 56 L.Ed. 288 (1912). ³ And a contract valid when made is nevertheless rendered void by subsequently established tariff rates which are inconsistent, at least to the extent of the inconsistency. See Mottley,supra, 219 U.S. at 480-486, 31 S.Ct. 265. ⁴ Moreover, a shipper's knowledge of duly published tariff provisions is presumed. American Railway Express Company v. Daniel, 269 U.S. 40, 42, 46 S.Ct. 15, 70 L.Ed. 154 (1925); Kansas City Southern Railway Company v. Carl, 227 U.S. 639, 653, 33 S.Ct. 391, 57 L.Ed. 683 (1913); Chicago & Alton Railroad Company v. Kirby,225 U.S. 155, 166, 32 S.Ct. 648, 56 L.Ed. 1033 (1912); Mugg, supra, 202 U.S. at 245, 26 S.Ct. 628. ⁵

Appellants' remaining contention that the Santa Fe was required under the circumstances to establish a tariff rate identical to that enumerated in its pre-existing agreements with appellants is without merit. It is well settled that a carrier is entitled to initiate rates, and to adopt such policy of rate-making as it deems wise, subject to the revisory powers conferred upon the ICC. See Diamond Tank Transport v. United States, 23 F.Supp. 497, 501 (W.D.Wash., N.D.1938) (three-judge court), Affirmed, 305 U.S. 567, 59 S.Ct. 149, 83 L.Ed. 357 (1938); United States v. Illinois Central Railroad Company,263 U.S. 515, 522, 44 S.Ct. 189, 68 L.Ed. 417 (1924). And in light of the congressional intention,...