Interstate Commerce Commission v. Harry Diffenbaugh No 285 Interstate Commerce Commission v. Peavey Company No 286 Union Pacific Railroad Company v. Peavey Company No 287 287
| Decision Date | 13 November 1911 |
| Docket Number | Nos. 285,286,s. 285 |
| Parties | INTERSTATE COMMERCE COMMISSION, Appt., v. HARRY J. DIFFENBAUGH, Edmund D. Bigelow, and Charles W. Lonsdale, as Officers and Members of the Board of Trade of Kansas City, et al. NO 285. INTERSTATE COMMERCE COMMISSION, Appt., v. F. H. PEAVEY & COMPANY, Omaha Elevator Company, and Midland Elevator Company. NO 286. UNION PACIFIC RAILROAD COMPANY, Appt., v. F. H. PEAVEY & COMPANY, Omaha Elevator Company, and Midland Elevator Company. NO 287. , and 287 |
| Court | U.S. Supreme Court |
Solicitor General Lehmann and Mr. P. J. Farrell for the Interstate Commerce Commission.
Messrs. Maxwell Evarts, F. C. Dillard, and Henry W. Clark for Union P. R. Co.
Messrs. Frank Hagerman, John Barton Payne, and M. B. Koon for appellees.
Messrs. Robert Dunlap and Gardiner Lathrop for the Atchison, T. & S. F. R. co.
These are appeals from injunctions issued upon bills brought by the appellees against the enforcement of two orders made by the Interstate Commerce Commission. 176 Fed. 409. The stages by which the Commission came to its present conclusion, against its earlier view, will be found reported in 10 Inters. Com. Rep. 309, 12 Inters. Com. Rep. 85, 14 Inters. Com. Rep. 315. See 14 Inters. Com. Rep. 317, 510, 551. In the circuit court these cases were tried upon the same evidence and they raise the same question; but as the Peavey suit presents that question in its initial and simplest form, we will state the facts of that case first.
The Union Pacific Railroad, after passing through a grain country, has its eastern termini at Omaha and Kansas City, on the Missouri river. Much the greater part, nine tenths, more or less, of the grain gathered and carried by the road, passes beyond the termini, especially to points farther east. During the season the Union Pacific needs all its cars to collect the grain, and therefore wants to get them back as quickly as possible from the end of its line. Furthermore, the shipments eastward are made more profitably in heavier loads than can be collected from the local stations. For these reasons the Union Pacific sought to prevent its own cars being carried beyond the termini, over connecting lines, and to have the grain shifted to other cars. To make the change it is commercially necessary to pass the grain through an elevator, where also it is weighed,—another necessary step in the transportation. See 14 Inters. Com. Rep. 317, 318. An additional consideration is that Omaha and Kansas City are great grain markets, where there are sales largely in excess of local needs, and this also requires the grain to pass through elevators at these points. If the Union Pacific could not use these instruments of transfer, it could not compete with other roads that have through lines from the grain fields across the Missouri river to the East. See 14 Inters. Com. Rep. 317, 327.
Acting on these motives, the railroad company, in 1899, made a contract in good faith with Peavey, under which he built an elevator at Council Bluffs, on the other side of the river from Omaha. He was to receive not exceeding 1 1/4 cents per hundred pounds for the first ten years, and 1 cent for the next ten, for grain transferred through his elevator. Later another elevator was brought into the arrangement, now with Peavey & Company, a corporation. Peavey & Company, is a large dealer in grain, and receives the same allowance ance for its own grain that it receives for that of others. It is important to remark that in no case is any additional charge made to the shipper for the elevator service. In 1904 the Interstate Commerce Commission investigated the matter and upheld the contract, including the allowance for Peavey & Company's own grain. 10 Inters. Com. Rep. 309.
The Commission also made a report to Congress, and after further investigation, notwithstanding the fact that the incidental advantages to grain owners from such allowances had been made apparent, Congress passed the act of June 29, 1906, chap. 3591, 34 Stat. at L. 584, U. S. Comp. Stat. Supp. 1909, p. 1149. By this it was provided in § 1, amending the earlier statute, that 'the term 'transportation' shall include . . . all instrumentalities and facilities of shipment or carriage, irrespective of ownership or of any contract, express or implied, for the use thereof, and all services in connection with the receipt, delivery, elevation, and transfer in transit, ventilation, refrigeration, or icing, storage, and handling of property transported; and it shall be the duty of every carrier subject to the provisions of this act to provide and furnish such transportation upon reasonable request therefor, and to establish through routes,' etc. By § 2 the carrier was required to state separately in its schedules all terminal charges and all privileges of facilities granted or allowed, and by § 4, 'If the owner of property transported under this act directly or indirectly renders any service connected with such transportation, or furnishes any instrumentality used therein, the charge and allowance therefor shall be no more than is just and reasonable, and the Commission may, after hearing on a complaint, determine what is a reasonable charge as the maximum to be paid by the carrier or carriers for the service so rendered, or for the use of the instrumentality so furnished.' Thus, Congress clearly recognized that services such as those rendered by Peavey & Company, were services in transportation, and were to be paid for notwithstanding the possibility that some advantage might be gained as a result. Meantime other elevators had sprung up, and in 1906 the Union Pacific extended the allowance made to Peavey & Company, to all elevators in Omaha, Council Bluffs, and Kansas City.
But the Interstate Commerce Commission had begun to change its view upon further reflection. In 1907, upon rehearing, it cut down the allowance to Peavey & Company, to 3/4 of a cent, estimating that to be the actual cost, and being of opinion that to allow any profit would be in effect to permit a rebate. 12 Inters. Com. Rep. 85. The order made required the railroad company to desist from paying more than 3/4 of a cent per hundred pounds, for service rendered in the transfer or elevation of grain at Council Bluffs or Kansas City, to anyone interested in the buying, selling, or shipment of grain at those places, especially naming the appellees. This is one of the orders complained of. The chief object of complaint, however, is an order made in the following year, on June 29, 1908. In that the Commission took the last step, and ordered the Union Pacific to desist from paying any allowance to Peavey & Company, on grain in which they have any interest that is not reshipped from their elevators within ten days, or that has been mixed, treated, weighed, or inspected in any of their elevators at the above-named points. 14 Inters. Com. Rep. 315.
The ground on which the payment to owners of grain finally was held to be a rebate had been considered from the beginning, and, as we have said, had been brought to the mind of Congress. It is that when the owners of the elevators own the grain put into them, they have the opportunity to perform other services to the grain in the way of treatment, or cleaning, clipping, and mixing the grain, which, although not included under the term 'elevation,' or paid for by the railroad, it is an advantage to them to be able to perform at the same time. This advantage is thought to create an undue...
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