Motor Carriers Ass v. United States

• Decision Date: 07 February 1944
• Docket Number: No. 105,EASTERN-CENTRAL,105
• Citation: 88 L.Ed. 668,321 U.S. 194,64 S.Ct. 499
• Parties: MOTOR CARRIERS ASS'N et al. v. UNITED STATES et al
• Court: U.S. Supreme Court

321 U.S. 194

64 S.Ct. 499

88 L.Ed. 668

EASTERN-CENTRAL MOTOR CARRIERS ASS'N et al.

v UNITED STATES et al.

No. 105.

Argued and Submitted Dec. 15, 16, 1943.

Decided Feb. 7, 1944.

Appeal from the District Court of the United States for the Southern District of New York.

Mr. Charles B. Cotterill, of New York City, for appellants.

Mr. Robert L. Pierce, of Washington, D.C., for appellees the United States and Interstate Commerce Commission.

Messrs. Luther M. Walter, Nuel D. Bel. nap, and John S. Burchmore, all of Chicago, Ill., for intervener, National Industrial Traffic League.

Mr. Justice RUTLEDGE delivered the opinion of the Court.

Appellants are motor carrier associations who seek to put into effect proposed rate schedules in order to meet rail competition. The schedules cover transportation of hard surface floor covering, e.g., linoleum, from points in New England and Middle Atlantic states to various destinations in Middle Western states. The Interstate Commerce Commission, three Commissioners dissenting, rejected the schedules. 34 M.C.C. 641. In so doing it upheld the previous conclusion of its Division 3. 31 M.C.C. 193. A three-judge District Court, 28 U.S.C. § 47, 28 U.S.C.A. § 47, sustained the Commission's decision. 48 F.Supp. 432. The appeal, under 28 U.S.C. §§ 47a, 345, 28 U.S.C.A. §§ 47a, 345, brings the decree here for review. Eastern-Central is the principal appellant. We think the judgment must be reversed.

When the schedules were filed, the motor carriers' rates on carpeting generally were based on minimum weights varying between 16,000 and 20,000 pounds, roughly approximating a truckload. Below this weight the rate was equivalent to 70 per cent of first class. Above it the rate varied somewhat, in the neighborhood of 45 to 50 per cent of first class. Corresponding rail rates then were 70 per cent of first class for shipments of less than 30,000 pounds, (less than carload lots) and 45 per cent for larger shipments. Thus, the differential according to weight was geared in the one case to rail carload capacity and in the other to truckload capacity.¹

Conceiving that these structures gave the railroads an undue competitive advantage on larger shipments, appellants proposed specific rates designed to enable them to compete with the railroads for such shipments. They sought to utilize a new minimum weight. The rates tendered were approximately the equivalent of 70 per cent of first class for shipments of less than 20,000 pounds, 47.5 per cent for 20,000 to 30,000 pounds, and 45 per cent for 30,000 pounds or more. The schedules therefore substantially put rail and motor rates on the same plane for less than 20,000 and more than 30,000 pounds; but placed motor rates substantially lower than rail rates for shipments of 20,000 to 30,000 pounds.

Certain western rail carriers protested. Thereupon the proposed rates were made the subject of investigation and suspension proceedings. 49 U.S.C. § 316(d), (g), 49 U.S.C.A. § 316(d, g), 49 Stat. 558—560, 54 Stat. 924. Hearings were begun before Division 3. While they were pending appellants agreed to make applicable in connection with their proposed rate, minimum 30,000 pounds, a tariff provision that such shipments 'must be received at and transported from the point of origin from one shipper in one day and on one bill of lading.'² The rail protestants therefore presented no evidence and after the hearing withdrew their protest. While the proceedings were pending the rail carriers also reduced their rates minimum 30,000 pounds to 42.5 per cent of first class.

The hearings continued and appellants presented evidence which showed, among other things, that one motor carrier, Brady Transfer and Storage Company, of Fort Dodge, Iowa, had received 'since these rates were suspended, four loads from the Western Trunk Line Territory, instead of 398, and three of those we haven't collected the charges on, because the rate was too high * * *.' It appeared too that the eastbound movement consists largely of dairy products, requiring refrigeration. The bulk of the westbound movement is frozen or salted fish.

Division 3 made findings and conclusions first that, based upon the costs proven and comparison with motor carriers' rates on numerous commodities, the proposed rates 45 per cent were 'just and reasonable provided the minimum that is applicable in connection therewith is reasonable.' Accordingly it examined the reasons advanced in support of the proposed minimum of 30,000 pounds.

On this, it found in No. M-1445³ that linoleum shipments which move by rail to the Ohio points generally are consigned to warehouses having rail sidings, while linoleum is tendered to the appellant motor carriers in quantities weighing from 18,000 pounds upward. If found also, and the finding is not questioned, that it is physically impossible to load 30,000 pounds of linoleum into a single unit of equipment operated by appellants. While some of it can transport 25,000 pounds, 'the normal trucking load of linoleum approximates 22,000 pounds.' Rejecting appellants' contention based on Carpets and Carpeting from Official to Southern Territory, 237 I.C.C. 651, the Division stated:

'The Commission has found repeatedly that carload minimum weights should be established by rail carriers with reference to the loading capacity of their freight cars and has condemned minimum weights in excess of the loading possibilities of the rail equipment. The respondents (appellants here) have not presented to us a valid reason from the point of view of economy in transportation or otherwise, such as we have found to exist in connection with certain trainload movements,⁴ why they should be permitted to establish a minimum weight greater than is physically possible to load in the motor equipment usually used by them, and, in our opinion, no such reason exists. Strictly speaking, the proposed minimum weight of 30,000 pounds is not a truckload minimum weight but rather is a volume minimum weight, which necessitates the use of more than one unit of equipment to load and transport that quantity of linoleum. We adopt as a policy the condemnation as unreasonable of a volume minimum weight, unless it is shown clearly that, as a result thereof, motor carriers can handle the traffic at the volume minimum weight at costs per 100 pounds which are less than the costs incurred at a reasonable truckload minimum weight.' (Italics supplied.)

The Division then found that, on the record, a reasonable truckload minimum on linoleum is 20,000 pounds and there was no showing of operating economies which would result if the proposed rates were restricted to apply only when 30,000 pounds are tendered. It concluded that the proposed schedules 'are just and reasonable and otherwise lawful except to the extent that they propose to establish a minimum of 30,000 pounds; that the proposed minimum of 30,000 pounds is unjust and unreasonable; and that a minimum of 20,000 pounds would be just and reasonable.' The proposed schedules therefore, to the extent found not just and reasonable, were ordered cancelled 'without prejudice to the establishment * * * of truckload rates on linoleum, minimum 20,000 pounds, which are not less than 45 per cent of the corresponding first-class rates.' 31 M.C.C. 193.

Thereafter oral argument was had before the full Commission. At this stage the National Industrial Traffic League intervened and supported the Division's position.⁵ The Commission affirmed the Division's findings 'that the proposed rates 45 and 47.5 per cent of first class are not unjust or unreasonable except to the extent that the proposed rates, 45 per cent of first class, are subject to a minimum of 30,000 pounds.' Both rates, it said, 'are within the zone of reasonableness.' But 'the proposed rates, minimum 30,000 pounds, would give an unjust advantage to shippers of 30,000 pound lots and be unjustly discriminatory to shippers of 20,000-pound lots.' Since at that time the tariffs disclosed appellants' rates were either 45 or 47.5 per cent of first class, minimum 20,000 pounds, no order for the future was made. The Commission, in concluding its discussion, said:

'We are mindful of the fact that we approved certain (motor carrier) rates subject to a minimum weight of 30,000 pounds on linoleum in Carpets and Carpeting, Official to Southern Territory, supra. However, our report therein expresses our doubt as to the propriety of establishing a minimum of 30,000 pounds in connection with the proposed column 45 basis because it would require more than one unit of equipment to transport 30,000 pounds. That report was issued over a year ago and now we are convinced that not only were our doubts as expressed therein well founded, but that for the future we shall follow the policy announced in the prior report herein with respect to minimum weight in excess of the loading capacity of the equipment customarily used by the motor carriers.' (Italics supplied.)

The District Court, sustaining the Commission's findings and decision,⁶ held that the extent to which competi- tion should be recognized in arriving at just rates is a matter, within reasonable limits, for the expert judgment of the Commission and that, in exercising its discretion, that body had met the requirements of Section 216(i) of the Motor Carrier Act.⁷ 49 U.S.C. § 316(i), 49 U.S.C.A. § 316(i).

I.

Notwithstanding the apparent difference between the Division and the full Commission, in the former's view that the proposed rate minimum 30,000 pounds is unreasonable and the latter's that it is both unreasonable and unduly discriminatory, the net effect is that the rate is unlawful, as a matter of policy which condemns all volume minimum rates unless it is clearly shown they will operate at costs per 100 pounds less than the costs incurred at reasonable loading capacity rates.

Whether this policy is now intended to apply to all forms of transportation, rail, motor and water, without...