Iversen v. United States

• Decision Date: 25 March 1946
• Docket Number: Civil Action No. 32098.
• Parties: IVERSEN et al. v. UNITED STATES et al.
• Court: U.S. District Court — District of Columbia

63 F. Supp. 1001

IVERSEN et al. v. UNITED STATES et al.

Civil Action No. 32098.

District Court of the United States for the District of Columbia.

January 8, 1946.

Judgment Affirmed March 25, 1946.

Haskell Donoho and Ashley Sellers, both of Washington, D. C., and Dale C. Dillon, of Mount Ranier, Md., for plaintiff Gustafus V. Iversen.

Wendell Berge, Asst. Atty. Gen., Edward Dumbauld, Sp. Asst. to the Atty. Gen., and Edward M. Curran, U. S. Atty., of Washington, D. C., for the United States.

J. Stanley Payne and Daniel W. Knowlton, both of Washington, D. C., for defendant Interstate Commerce Commission.

Karl D. Loos and Preston B. Kavanagh, both of Washington, D. C., for intervenor California Fruit Growers Exchange.

K. P. Casey, of Washington, D. C., for intervenor International Apple Association.

Richard H. Field, of Washington, D. C., David F. Cavers, of Cambridge, Mass., and M. D. Miller, of Washington, D. C., for intervenor Chester Bowles, Office of Price Administration.

Before PRETTYMAN, Associate Justice, United States Court of Appeals, District of Columbia, and BAILEY and HOLTZOFF, Associate Justices, District Court of the United States for the District of Columbia, sitting as a statutory three-judge court.

Judgment Affirmed March 25, 1946. See 66 S.Ct. 825.

PRETTYMAN, Justice.

Plaintiffs bring this action praying that the court set aside and enjoin the execution of certain orders of the Interstate Commerce Commission, being Third Revised Service Order No. 180, Fourth Revised Service Order No. 180, Service Order No. 394, and Service Order No. 396. These orders directed changes in demurrage rules and charges on refrigerator cars. They recited that these cars are being delayed unduly while held for orders, loading and unloading, etc., thus impeding and diminishing the use, control, supply, movement, etc., of such cars, and that in the opinion of the Commission an emergency exists requiring immediate action to prevent a shortage of railroad equipment and congestion of traffic. Prior to the issuance of Revised Service Order No. 180 on October 2, 1944, the uniform demurrage practice was no charge for the first two days (excluding Sundays and legal holidays) during which a car was held for loading or unloading, which two days are known as "free time"; a charge of $2.20 per car per day for the first two days after expiration of the free time, and a charge of $5.50 per car per day for each day or fraction thereof thereafter. Revised Service Order No. 180 directed the railroads to supplement their tariffs so as to charge $11 per car per day for the fourth day after the expiration of free time, $22 per car per day for the fifth day, and $44 per car per day for the sixth and all successive days. Third Revised Service Order No. 180, issued May 24, 1945, did not alter that schedule. By Fourth Revised Service Order No. 180, entered December 7, 1945, the Commission ordered the railroads to supplement their tariffs by providing that Sundays and holidays be included in the computation of free time for demurrage purposes; that a charge of $11 per car per day be made for the first day after the expiration of free time, $22 per car per day for the second day, and $44 per car per day for the third and all successive days. By Service Order No. 394, entered December 7, 1945, the Commission ordered the railroads to supplement their tariffs with a general provision that all Sundays and legal holidays be included in computing free time on refrigerator cars. By Service Order No. 396, the Commission directed the railroads to supplement their tariffs by providing that carload shipments of perishables held more than two days, exclusive of Sundays and bank holidays, at any point prior to delivery at the ultimate destination and reforwarded upon request of the consignor, consignee or owner, should be subject to the full local or joint rate to the reforwarding point, plus the tariff rate from the reforwarding point in effect from the point of origin. These orders were made applicable to intrastate as well as to interstate commerce. Third Revised Service Order No. 180 expired by its own terms December 1, 1945, and the prayer for its injunction is, therefore, moot. Fourth Revised Service Order No. 180, Service Order No. 394 and Service Order No. 396 expire by their own terms on February 15, 1946.

Defendants filed motions to dismiss. Both plaintiffs and defendants filed motions for summary judgment.

These service orders of the Commission were issued without hearing. Plaintiffs contend that the Commission was without power to issue such orders without hearing.

The existence of the emergency is not denied and the reasonableness of the charges established by the orders is not challenged in this proceeding. The question presented concerns the statutory power of the Commission.

The emergency powers of the Commission which permit it to issue certain orders without hearing, are conferred by Section 1(15) of the Interstate Commerce Act, 49 U.S.C.A. § 1(15). This section of the statute authorizes the Commission, whenever it is of opinion that shortage of equipment, congestion of traffic or other emergency exists, to suspend, with or without notice or hearing, the operation of "rules, regulations, or practices then established with respect to car service" and to make such just and reasonable "directions with respect to car service" during the emergency as in its opinion will best promote the service in the interests of the public and the commerce of the people. Car service is defined by Section 1(10) of the Act to include the use, control, supply, movement and distribution of cars.

The question in the case at bar is whether the computation of "free time" and the scale of demurrage charges are rules¹ with respect to the use, supply or movement of cars. If so, the orders of the Commission, involved in this action, were within its emergency powers; if not, they are invalid because issued without hearing

Demurrage was originally a maritime term. The right of a railroad to make a demurrage charge was originally challenged as beyond its power except by contract. The right was sustained by the courts upon the ground that a common carrier has the right to adopt and enforce any reasonable regulation for the conduct of its business, where the purpose and effect are the protection of the carrier and the benefit of the public.² As early as 1891, the Railroad Commissioners of Kansas issued a circular to the general managers of the railroads in Kansas, saying:

"In view of the present flattering prospect for abundant crops of farm produce in Kansas, and as a means to avoid the possibility of a shortage in transportation facilities, the commission desires to respectfully impress upon you the importance of a thorough and uniform system for the apportionment and distribution of cars among the several stations and shippers along the line of your road. As a means to this end we beg leave to submit the following suggestions, and ask if they meet with your approval, that instructions be issued to your agents accordingly, viz.:

* * * * * *

"Seventh: A demurrage charge should be rigidly collected when cars are held an unreasonable time for loading."³

In 1894 the Virginia Supreme Court of Appeals considered the validity of a demurrage charge in view of a state statute which forbade a railroad to charge any fee or commission "other than the regular transportation fees, storage, and other charges authorized by law." The official report of the matter says:

"The company had made a rule, of which plaintiffs had notice, that a charge of $1 per car per day would be made for every detention of a car for the purpose of loading or unloading beyond seventy-two hours from the time that the car was placed at the disposal of the shipper or consignee, as the case might be."

The court said:

"It the demurrage charge is neither a transportation charge, nor a storage charge, nor a terminal charge, nor a subterfuge for adding to the cost of transportation in excess of the rates prescribed."

The court sustained the charge on the ground that after allowance of a reasonable time for unloading, the railroad "can make reasonable rules and regulations and charges for such service as bailee, as it may see fit," and said, "Such charges are not carrier charges in the meaning, intendment, or prescription of the statute."⁴

Thus, the original support for the right of a railroad to impose a demurrage charge was that such charge constituted a reasonable rule and regulation in respect to the use of the car, the purpose being to prevent delay in loading and unloading.

The Interstate Commerce Commission early referred to demurrage charges as car-service rules. For example, in Cudahy Packing Co. v. Chicago & Northwestern Ry. Co., 1907, 12 I.C.C. 446, it said, "The car-service rules of the defendant provide for a demurrage charge of $1 per day if cars are not unloaded within forty-eight hours," and repeatedly used the expression "car-service rules" throughout that report.⁵

The demurrage charges of the railroads and the enactments by the several states in respect to them were so conflicting that in 1908 the National Association of Railway Commissions appointed a committee which drafted a Uniform Demurrage Code, which was approved by the Interstate Commerce Commission in December, 1909. The recited primary purposes of this Code were to promote the prompt release of cars and to prevent unreasonable detention of equipment. While this Code has been amended from time to time, it is still in effect, the latest general publication being December 28, 1944. As now published, it is entitled "Freight Tariff No. 4-Y, Naming Car Demurrage Rules and Charges — Storage Rules and Charges." Section 1 of this publication contains "Demurrage Rules and Charges" and covers many subjects under that heading. Rule No. 1 specifies the cars subject to the rules; Rule No. 2 describes the free time allowed; ...