Hawkeye Portland Cement Co. v. Chi., R. I. & P. Ry. Co.

• Decision Date: 11 December 1924
• Docket Number: No. 35381.,35381.
• Citation: 198 Iowa 1250,201 N.W. 16
• Parties: HAWKEYE PORTLAND CEMENT CO. v. CHICAGO, R. I. & P. RY. CO.
• Court: Iowa Supreme Court

198 Iowa 1250

201 N.W. 16

HAWKEYE PORTLAND CEMENT CO.

v.CHICAGO, R. I. & P. RY. CO.

No. 35381.

Supreme Court of Iowa.

Dec. 11, 1924.

Appeal from District Court, Polk County; Hubert Utterback, Judge.

Action at law, in which plaintiff seeks to recover from the defendant certain alleged overpayments on freight shipments by plaintiff from its quarry, near Earlham, Iowa, to its plant at Des Moines over the defendant's railroad.The material facts are stated in the opinion.To the answer of the defendant, plaintiff filed a demurrer, which was overruled, and, having elected to stand upon the pleadings, judgment for costs was entered in favor of the defendant.Plaintiff appeals.Affirmed.Parrish, Cohen, Guthrie & Watters, of Des Moines, and L. F. Crofoot, of Omaha, Neb., for appellant.

W. F. Dickinson, of Chicago, Ill., and J. G. Gamble and R. L. Read, both of Des Moines, for appellee.

DE GRAFF, J.

[1] This appeal presents no controversy as to the facts, since the demurrer admits the well-pleaded averments.Certain questions of law are involved, arising from the allegations of the answer to which the demurrer of plaintiff was interposed.We deem it unnecessary to make answer to all of the matters submitted to the trial court for decision, and will therefore give our attention to the legal propositions which are primary and controlling.Before discussing the law of the case, it is necessary to outline briefly the allegations contained in the pleadings.

The plaintiff-appellant is a corporation engaged in the business of manufacturing and selling Portland cement, with its principal place of business at Des Moines.The defendant is a corporation engaged in business as a common carrier by railroad.

On May 20, 1907, appellant's predecessor and the appellee entered into a contract for a special rate on shipments of rock and shale between Earlham, Iowa, where plaintiff's quarry was located, and Des Moines, where its plant was located.This contract called for a rate of “20¢ per ton, of 2,000 pounds each,” on crushed and quarried stone and shale, or either, to be used by plaintiff in the manufacture and production of Portland cement, and for no other purpose.It was further provided that, during the first year after the plant was completed, not less than 3,000 cars of said materials should be transported to its factory over the lines of the defendant railroad company, and for each and every year thereafter not less than 7,000 cars per year of such material, during the life of the contract or any extension thereof.The terms of the contract were binding upon the parties thereto for 10 years from the date of the completion and initial operation of the plaintiff's plant, with the proviso that the agreement could be extended for an additional term of 10 years after the termination of the contract, at the option of the plaintiff, by serving written notice of its election so to do at least six months prior to the expiration thereof.The agreement was made subject to the approval of the board of railroad commissioners of the state of Iowa, and under and by virtue of the terms and conditions of section 2146 of the Code of Iowa, and should be binding upon the parties, upon the approval by the said board of railroad commissioners.It was so approved in the first instance.The original period defined by the contract expired in 1920, and subsequent thereto there was no resubmission of the contract to the board of railroad commissioners, nor subsequent approval thereof by the board.During the period between November 15, 1920, and February 3, 1921, plaintiff shipped large quantities of shale and rock between the initial and terminal points, as fixed by the contract over the defendant railroad, for which the plaintiff was required to pay freight at the established rate of 35¢ per ton, and it is the difference between the contract rate and the actual rate collected on these shipments that constitutes the amount sought to be recovered in this action, to wit, $11,032.

Defendant, in answer, alleged that the rate collected upon the shipments in controversy was the rate established by law, or pursuant to law, for the transportation of such commodities, and the rate which shippers were required to pay for such service, and further pleaded that the alleged contract was not legally enforceable for the following reasons:

(1) That the rate specified in said contract is discriminatory, and its application to the shipments of the appellant would result in an undue preference and advantage to the appellant, contrary to the statutes of the state of Iowa in such cases made and provided.

(2) That appellee is not authorized to grant to the appellant a special rate for the transportation of its shale and rock, because the appellant was not at the times involved in this case, and it is not now, a new industry within the state, within the meaning of the statutes of this state.

(3) That the said alleged contract was not at the times involved in this case enforceable, because it is contrary to the public policy of the state, as expressed in the statutes of the state, and particularly sections 2124 to 2146, inclusive, of the Code of Iowa, as amended; and for the further reason that the said contract does not comply with the terms of the proviso of section 2146, in that the rate specified therein is not made applicable to any agreed number of carloads.

(4) That the rate specified in said contract had not been approved by the board of railroad commissioners of Iowa as applicable to the period involved in this action.

(5) That, by virtue of the exercise of the powers in him vested by the Federal Control Act of March 21, 1918(U. S. Comp. St. 1918, U. S. Comp. St. Ann. Supp. 1919, §§ 3115 3/4a-3115 3/4p) the President of the United States initiated rates on shale and rock, such rate for the distance of shipments involved in this action being 25 cents per ton, which rate was, by the terms of section 208a of the Transportation Act of February, 1920(U. S. Comp. St. Ann. Supp. 1923, § 10071 1/4d), continued in force until changed by the board of railroad commissioners of the state of Iowa; that said board on, to wit, August 17, 1920, changed said rate by adding thereto 35 per cent. thereof; and that such acts have superseded and rendered null and void the instrument or alleged contract counted on by appellant.

(6) That the railway line of the appellee is an instrumentality of interstate commerce, and is devoted to such use simultaneously with the conduct of its business as a common carrier of intrastate commerce.That the duty was imposed by the provisions of section 15a of the Transportation Act(U. S. Comp. St. Ann. Supp. 1923, § 8583a) upon the Interstate Commerce Commission to fix just and reasonable rates which would yield a fair return upon the fair value of the property of common carriers engaged in interstate commerce, and in order so to do the whole business of such interstate instrumentalities must be given consideration, and, if the rate specified in said alleged contract was enforced, it would constitute a discrimination against interstate commerce, in that interstate commerce would have to bear a greater and undue and unreasonable proportion of the burden of producing such fair return; that the Interstate Commerce Commission, in the exercise of its power in the premises, determined that rates in the rate group, within which the property of the appellee is situated, should be increased 35 per cent., in order that the aggregate of the revenues should meet the duty imposed by said act, and that pursuant to such determination the board of railroad commissioners of the state of Iowa did enter its order on, to wit, August 17, 1920, increasing the rates on shale and rock as applicable to the shipments involved in this action by 35 per cent., and that such acts and action superseded the said alleged contract.

(7) That the said rate so specified in said alleged contract results in the giving to the appellant an undue preference, and that such rate has in fact been revoked by the subsequent action of the board of railroad commissioners of the state of Iowa, authorizing an increase in the rate on such commodity.

To these matters, as pleaded in the answer, plaintiff demurred, and with the correctness of the ruling of the trial court in overruling the demurrer this appeal is concerned.Two primary propositions are involved: (1) Does the contract in question grant a special rate for a common carrier's service contrary to the provisions of the statutes of this state, and therefore void?(2) Was the contract subject to the regulatory power of the state and the federal government over rates for public service, and were the appellant's rights to enjoy special contract rates lawfully terminated by the exercise of this power?An affirmative answer to either of these questions works an affirmance of the judgment entered by the trial court.

[2] I. Appellant asserts a right to a special privilege under its contract with a common carrier, and the burden is upon the appellant to bring itself within the provisions of the statute upon which the special rate of carriage is predicated.The statute provides:

“But for the protection and development of any new industry within the state, such railroad company may grant concessions or special rates for any agreed number of carloads, which rates shall first be approved by the board of [[[railroad] commissioners, and a copy thereof filed in its office.”Section 2146,Code 1897.

It is the plain intent of the provisions of our Code to prohibit the granting of discriminatory rates.Sections 2124-2146.These statutes recognize that it is not the proper business of a common carrier to foster particular enterprises or to build up new industries, and that the carrier is bound to deal fairly and impartially with the public, and to place all patrons upon the plane of absolute equality.Central Trust Co. v. Railroad, 156 Iowa,...