Hygrade Food Products Corp. v. CHICAGO, M., ST. P. & PR CO.

• Decision Date: 25 April 1935
• Citation: 10 F. Supp. 767
• Parties: HYGRADE FOOD PRODUCTS CORPORATION v. CHICAGO, M., ST. P. & P. R. CO. et al.
• Court: U.S. District Court — Southern District of New York

10 F. Supp. 767

HYGRADE FOOD PRODUCTS CORPORATION v. CHICAGO, M., ST. P. & P. R. CO. et al.

District Court, S. D. New York.

April 25, 1935.

Hornblower, Miller, Miller & Boston, of New York City (Edward M. Boyne, of New York City, of counsel), for plaintiff.

Cravath, De Gersdorff, Swaine & Wood, of New York City (Bruce Bromley and Littleton Groom, both of New York City, of counsel), for defendants Chicago, M., St. P. & P. R. Co. and New York, C. & St. L. R. Co.

Jacob Aronson, for defendant Indiana Harbor Belt R. Co.

RIPPEY, District Judge.

Complaint was made by the Allied Packers, Inc., to the Interstate Commerce Commission against various railroad companies, including the defendants in this action, alleging overcharges on shipments of hogs in single-deck and double-deck carloads from points in South Dakota and elsewhere via Chicago to Buffalo, N. Y. between March 15, 1924, and November 15, 1925, on which the shipper was compelled to pay full combination of intermediate rates plus double flat rate increase wherein the shipper claimed that the charge should have been a combination of intermediate rates plus a single flat rate of 8½ cents increase only computed in accordance with the Jones Tariff Rule (B. T. Jones Tariff 228, I. C. C. U. S. 1) as construed in Sligo Iron Store Co. v. W. M. R. Co., 62 I. C. C. 643, and approved on rehearing in 73 I. C. C. 551. After full hearing, the Interstate Commerce Commission held that the shipper was entitled to reparation (Allied Packers, Inc., et al. v. B. & O. R. Co. et al., 153 I. C. C. 714), and an order was made on January 12, 1931, directing payment on or before February 27, 1931, of the various overcharges with interest from the several dates of shipment at the rate of 6 per cent. per annum. The carriers failed to make reparation as ordered. The plaintiff here acquired by assignment all claims of the Allied Packers, Inc., and thereupon began five actions against the various railroad companies involved under section 16 (2) of the Interstate Commerce Act (49 USCA § 16 (2) to recover the amounts of overcharge so awarded. These actions were regularly reached on the law calendar of this court for trial and moved by plaintiff on November 19, 1934, whereupon all parties waived trial by jury and submitted the cases to the court upon the pleadings, the order of the Interstate Commerce Commission, and an agreed statement of facts to be submitted to the court with briefs on February 1, 1935. The statement of facts and briefs have been furnished. It was also agreed that this case should serve as a test case, and that decision should be made and judgment docketed in the other four cases in accordance with the decision in this case. The court has considered freight tariffs and proceedings before and rulings by the Interstate Commerce Commission deemed relevant.

This particular action is brought to recover the overcharge for shipments over defendants' lines of one single-deck carload of hogs from Mitchell, S. D., on December 4, 1924, to Buffalo, N. Y., and of four double-deck carloads of hogs from Platte, S. D., to Buffalo during the months of April and May, 1925. The initial carrier between Mitchell and Platte to Chicago was the Chicago, Milwaukee & St. Paul Railroad Company (known and hereinafter referred to as the St. Paul), which later became, in proceedings duly had, the Chicago, Milwaukee, St. Paul & Pacific Railroad Company, one of the defendants herein. The intermediate carrier was the Indiana Harbor Belt Railroad Company. This company was the switching carrier at Chicago, carrying the shipments between the termini of the initial and final carriers. It did not participate in fixing the combination rates for the shipments. Its charges were absorbed by the two main carrying roads pursuant to the terms of Lowrey's Division Sheet No. X-12-E, effective July 1, 1922, and supplements thereto. Nevertheless, it received compensation from the charges made by the two main carriers and paid by plaintiff's assignor, and is a proper and necessary party to this proceeding. The final carrier from Chicago to Buffalo was the defendant, the New York, Chicago & St. Louis Railroad Company, hereinafter referred to as the Nickel Plate.

There were no joint through rates in effect when the shipments were made. The through rates were combinations of the rates on the St. Paul from Mitchell and Platte to Chicago of 49.5 and 51 cents per CWA, respectively, under its supplement No. 5 to its tariff G. F. D. 12970-D (I. C. C. No. B-4831), effective November 10, 1923, under which the combination rule laid down in B. T. Jones Tariff No. 228 I. C. C. U. S. 1 was stated to be inapplicable to shipments of hogs to Chicago and on the Nickel Plate from Chicago to Buffalo of 44.5 cents per CWA under its tariff G. F. D. No. 619-E (I. C. C. No. 4552), under which the Jones combination rule was specifically stated to be applicable. The rates therefore charged and collected on the through shipments from Mitchell and Platte to Buffalo were 94 and 95.5 cents per CWA, whereas plaintiff claims the legal rates would reduce the total charge by the amount claimed through application of the Jones combination rule. It is the claim of defendants that the Jones combination rule of computing through rates is not applicable because the initial and intermediate carriers did not concur in, but rather expressly excluded, the application of that rule. This claim the defendants cannot successfully maintain.

On May 25, 1918, the Director General of Railroads issued General Order No. 28, effective June 25, 1918, generally increasing freight rates on live stock and other commodities throughout the United States. It was found that the flat rate increases allowed, when making up combination through rates, resulted in an amount in excess of the prescribed increase provided by General Order 28, and that it worked out as intended only on single line hauls. In the case of a combination rate over two lines, the flat rate increase would be added to the basic rate of each line, thus bringing about the addition to the basic combination rate of double the flat rate increase intended. To correct this situation the Director General published and put into effect rules for constructing combination rates on commodities (including live stock) enumerated in tariff as amended, for a continuous rail shipment between points on railroads shown as participating carriers, made up by B. T. Jones, agent of the Central Freight Association Tariff Bureau (Tariff No. 228, I. C. C. U. S. 1). This rule provided that the addition of the flat increase to the combined basic rates of the participating carriers could be made but once. From time to time, supplements to this tariff were made and supplement 14 was in effect from January 1, 1923, and during the period of the shipments in question.

Up to November 10, 1923, the St. Paul Railroad Company operated under this rule. It is claimed here that it ceased to be bound by this rule after that date as to shipments going anywhere in the United States because of the order of the Interstate Commerce Commission entered on February 13, 1923, in docket No. 12268 (Board of Railroad Commissioners of State of South Dakota v. Chicago & N. W. R. Co. et al., 77 I. C. C. 451), and that it had the right to refuse to concur in the application of the rule on all shipments going to points east of Chicago as well as to points west of Chicago. The decision of the Interstate Commerce Commission clearly indicates that it was not intended to and did not apply in the way defendants claim. The Commission has not only so held in this case (Allied Packers, Inc., v. Baltimore & O. R. Co., 153 I. C. C. 714), but in every case where the point has been raised. In docket No. 12268, it was held, on the only issue presented, that the rates in existence at the time of the filing of the complaint for shipment of live stock from South Dakota points under the then existing tariffs to her markets and intermediate points in the states of Minnesota, Wisconsin, Illinois, Iowa, Missouri, and Nebraska were unreasonable and unduly prejudicial to South Dakota shippers, and reasonable and nonprejudicial maximum rates and minimum weights were prescribed. The complaint had reference only to South Dakota markets in the specific states mentioned and especially to direct shipments on a single line to her principal markets in Sioux City, Omaha, Chicago, and St. Paul. The case had no reference to or bearing upon shipments to points east of...