Laurel Cotton Mills v. Gulf & S.I.R. Co.

• Decision Date: 06 June 1904
• Parties: LAUREL COTTON MILLS v. GULF & SHIP ISLAND RAILROAD COMPANY
• Court: Mississippi Supreme Court

37 So. 134

84 Miss. 339

LAUREL COTTON MILLS v. GULF & SHIP ISLAND RAILROAD COMPANY

Supreme Court of Mississippi

June 6, 1904

FROM the circuit court of Jones county, HON. JOHN R. ENOCHS Judge.

The Laurel Cotton Mills, appellant, was plaintiff, and the Gulf &amp Ship Island Railroad Company, appellee, defendant in the court below. From a judgment sustaining a demurrer to the declaration and dismissing the suit the plaintiff appealed to the supreme court.

The suit was originally begun in the circuit court of, first district, Hinds county, but by consent of parties the venue was changed to the circuit court of Jones county. The suit was for an alleged breach of the following written contract--viz.:

"This memorandum of contract, made this seventh day of February 1900, by and between the Laurel Cotton Mill Company, a corporation under the laws of the state of Mississippi, of Laurel, Mississippi, party of the first part, and the Gulf &amp Ship Island Railroad Company, of Mississippi, party of the second part,

"Witnesseth The Laurel Cotton Mill Company, or party of the first part, proposes to construct and operate a cotton mill at Laurel, Jones county, Mississippi, and in consideration of the covenant herein agreed to be kept and performed by the parties of the second part, it agrees to locate and build the said cotton mill and warehouses belonging to same on the ground now staked out as agreed upon, accessible from the said Gulf & Ship Island Railroad Company, and further agrees to furnish the right of way for necessary switches to connect the track of the Gulf & Ship Island Railroad from both directions with the cotton mill grounds and buildings.

"The party of the second part, in consideration of the performance of the above-named covenant of the party of the first part, agrees to maintain in effect rates on manufactured goods produced by the said Laurel Cotton Mills, not exceeding, to competitive points, the rates effective from Stonewall and Meridian, Mississippi, on the dates.

"And further agrees to maintain in effect a milling-in-transit arrangement for the cotton to be manufactured at the said Laurel Cotton Mills--that is to say, any freight charges that may be paid on cotton shipped from stations between Hattiesburg and Jackson, or on the Laurel Branch on the lines of the said Gulf & Ship Island Railroad Company, to the Laurel Cotton Mills, shall be allowed and credited, pound for pound, as part payment of freight charges on the manufactured goods or products when shipped to market over the lines of the said Gulf & Ship Island Railroad Company. This arrangement to continue for a period of ten years.

"Party of the second part further agrees to deliver at New Orleans rates all materials, machinery, and supplies used in the construction of the said cotton mills as first built, or future additions thereto of main buildings, or additional machinery, that increases the capacity of the plant, when shipped from points north or east of Birmingham, and in case coal should be required by the said Laurel Cotton Mills, and provided they wish to ship same by the New Orleans & Northeastern Railroad to Laurel, the charges for switching from said railroad to the Laurel Cotton Mills shall not exceed two dollars and fifty cents ($ 2.50) per car.

"In witness whereof the said parties have hereunto set their hands on the day and year first above written.

"[Signed] LAUREL COTTON MILLS.

"GULf & SHIP ISLAND RAILROAD COMPANY."

Judgment reversed, demurrer overruled and cause remanded.

Howe, Spencer & Cocke, and Catchings & Catchings, for appellant.

It will be seen at a glance that the rates provided for by the contract are not by its terms made exclusive. In other words, so far as the contract is concerned, the Gulf & Ship Island Railroad Company is at liberty to give the same rates to any other cotton factory, or, indeed, to any other industry of any kind whatsoever, or, if it thinks best, to give even lower rates to other persons. Its only purpose and its only effect is to guarantee to the Laurel Mills that it shall, during the period of its currency, enjoy a certain rate without the least regard to the rates enjoyed by other persons.

It will also be seen that so far as the contract is concerned, the rate provided for is not a secret rate, but that it may, without offense to the provisions of the contract, be published and made known to all the world. It further appears that the rate provided for is not based upon any other rate--that is to say, the Laurel Mills are not promised a rate less than, or in any way different from, the published rates; and that so far as the contract is concerned, the rates provided for may in fact be the published and established rates.

It should also be noted that it appears from the very face of the contract that the rate provided for was not intended to, and could not, go into immediate effect. The consideration of the contract was the future building of the Laurel Mills, and of course no shipments could be made by the mills until they were built.

A mere glance at secs. 2 and 3 of the interstate commerce act suffices to demonstrate that their purpose and effect were not to render unlawful all discriminations. Under sec. 2 the discrimination to be unlawful must be between shippers of "a like kind of traffic under substantially similar circumstances and conditions," while under sec. 3 to be unlawful the discrimination must subject some particular person or locality to "an undue or unreasonable prejudice or disadvantage." It is too plain for argument that the expression of these qualifications is an affirmance that it was not intended to render all discriminations unlawful. This has been held many times by the courts. Texas & Pacific Ry. Co. v. Interstate Commerce Commission, 162 U.S. 197; Interstate Commerce Commission v. Ala. M. R. Co., 168 U.S. 177.

Not only does the contract here in controversy not show, in the light of these decisions, an undue or unreasonable preference or discrimination, but it does not even show a preference or discrimination, whether just or unjust.

The supreme court has held that the question of unjust discrimination is a question of fact. How, then, could such a question be determined on demurrer to a declaration which discloses none of the facts which the supreme court says must be taken into consideration? McNees v. Railway Co., 22 Mo. App., 224; Bayles v. Kansas Pacific R. Co., 22 P. 341.

Certainly, we think, under the decisions in Louisville & Nashville R. R. Co. v. Commonwealth of Kentucky, 57 S.W. 508; Hoover v. Penn. R. R. Co., 47 A. 283 (s. c., 156 Pa. St., 220); Commonwealth v. L. & N. R. R. Co., 68 S.W. 1103, the rate provided for in the contract would be justifiable as against all other persons who are not in precisely the same condition as the Laurel Cotton Mills. In those cases it was expressly declared that it was not an undue preference to give a manufacturing establishment a rebate on the coal to be consumed by it which was denied to dealers in coal, inasmuch as a manuacturer was not a competitor in the business of dealing in coal with a coal dealer and inasmuch as the railroad expected increased compensation for handling the manufactured products. If it was allowable to give a rebate to manufacturers on coal consumed by them in manufacturing, it would of course be allowable to haul their coal free. In those cases, and we think their reasoning unanswerable, it was held that the railroads had the right to make the contracts in question, as they resulted in establishing important manufacturing industries on their lines whose products they would haul to market; that the manufacturing concerns as purchasers of coal not being competitors with dealers in coal, and not being shown that they had any rivals in the manufacturing business to whom the rebates were denied, the result of the contracts was to benefit the manufacturers and the carriers without injury to other persons. We invite the careful attention of the court to these cases, as we regard them as of the highest importance in illustrating what is meant by unjust discrimination.

It is difficult to see how the question of legality, under sec. 6, can be raised on demurrer in view of the fact that neither the contract nor the declaration contains a word or a line on the subject of the filing of rates.

Aside from the question of pleading the primary and radical defect of appellee's argument seems to be the idea that the rate published as required by sec. 6 must be rigidly and unqualifiedly uniform. As we have seen, the whole act must be construed together, and secs. 2 and 3, by prohibiting unjust discriminations, impliedly authorize discriminations and preferences which are just. Indeed, the whole question of uniformity is exhausted by secs. 2 and 3. The whole and only purpose of sec. 6 being to require publicity, the rates published in accordance therewith can contain rebates and discriminations ad libitum, and that section will not be offended.

Altogether aside from the question of pleading, we deny that there can be any presumption that the appellee has filed any rates with the interstate commerce commission. The court will take judicial notice that the Gulf & Ship Island Railroad is wholly within the limits of the State of Mississippi. It has been repeatedly held, and necessarily so, that the interstate commerce law and the interstate commerce commission have no application to and no concern with rates other than inter-state rates. The Gulf & Ship Island Railroad can have no inter-state rates unless it makes joint rates with some other carrier. The interstate commerce act does not require carriers to make joint rates; it merely provides that when such rates are made they shall be filed,...