Northern Pac. Ry. Co. v. United States

Decision Date30 December 1946
Docket NumberCivil Action No. 129.
Citation70 F. Supp. 836
CourtU.S. District Court — District of Minnesota



L. B. daPonte and M. L. Countryman, Jr., both of St. Paul, Minn., for plaintiff.

Victor E. Anderson, U. S. Atty., and John W. Graff, Asst. U. S. Atty., both of St. Paul, Minn., and Spencer L. Baird, Dist. Counsel for Bureau of Reclamation, of Amarillo, Tex., for defendant.

BELL, District Judge.

The Case.

The Northern Pacific Railway Company commenced this suit against the United States under the act of Congress of March 3, 1887, 28 U.S.C.A. § 41(20), commonly known as the Tucker Act, to recover a balance claimed due for freight charges on shipments of cement from six points in the state of Washington to Odair, Washington. This action is brought by the Northern Pacific Railway Company as a delivering carrier. The Great Northern Railway Company and the Chicago, Milwaukee, St. Paul & Pacific Railway Company as connecting carriers are interested parties, although not joined as plaintiffs. If recovery is had, these carriers will share therein in accordance with the division agreements between them.

If this suit involved only the claims for unpaid balances on six freight shipments, the problem under the circumstances would be quite sufficient, but it is to establish a precedent for claims of the plaintiff aggregating approximately $2,000,000. Moreover, the defendant entered eight counter claims against the plaintiff for approximately $5,500,000. The answer is sixty-six pages in length; the transcript of the testimony covers nearly ten thousand pages; there are 5,750 exhibits; the defendant filed a brief of two thousand pages and requests for findings of fact that cover two hundred pages. Oral arguments were made April 28 to May 1 inclusive, 1946. The last brief was filed August 25, 1946. The defendant's request for findings was filed and the case finally submitted to the court August 28, 1946.

The Pleadings.

The complaint is in six counts each based on a bill of lading for a shipment from each of the six points to Odair. The plaintiff alleges that land grant rates are applicable and in each count alleges the point of origin, the weight of the shipment, the land grant rate, the freight charges, the payment made and the balance due from the defendant. The facts alleged are summarized as follows:

                Point of Origin    Weight     Land Grant        Charges      Payment     Balance
                                             Rate Per Cwt.                               Claimed
                Metaline Falls     689,604       26.83          $1850.21     $1172.33    $  677.88
                Irvin              364,256       20.81            720.56       450.13       270.43
                Seattle            256,640       21.78            558.96       436.29       122.67
                Bellingham         484,680       25.19           1220.91       823.95       396.96
                Concrete            89,780       24.23            217.54       152.62        64.92
                Grotto             155,368       24.23            376.46       264.13       112.33
                                             Total Balance Claimed Due.................. $1,645.19

The defendant alleges that the land grant rates are not applicable and that the charges for shipment of cement were subject to the provisions of a special rate contract, exhibit II, providing for a rate of 17E per cwt. from each of said points except Irvin which was 13E executed by and between the plaintiff and defendant November 19, 1934, under the Interstate Commerce Act, 49 U.S.C.A. § 22, and that the defendant has paid the plaintiff in full for all freight charges legally incurred.

The plaintiff admits the execution of the said contract but contends that it expired March 21, 1938, which was prior to the shipments of cement on which the charges are claimed in each instance and that the contract rates, therefore, do not apply.

The defendant pleads defenses as follows: (1) A general denial and allegations of payment in full; (2) that the bills of lading on which the complaint is based specified the rate for the transportation charges and, with the allegations of the complaint, constitute an admission of payment in full; (3) the special rate contract and full compliance therewith by the defendant; (4) fraud on the part of the plaintiff in procuring the execution of the rate contract by the defendant; (5) to (9) inclusive, estoppel or that the plaintiff should be denied the right to assert that the special rate contract covered only a portion of the cement used in the construction of the Grand Coulee dam and power plant on the ground that the plaintiff by misrepresentation and fraud induced the defendant to execute said contract and alter its position to its injury.

The defendant alleged that it was induced to execute the rate contract by the misrepresentation and fraud of the plaintiff at the Denver Conference and in subsequent negotiations as follows:

1. Misrepresentations: a. The plaintiff represented to the defendant that there was no interchange gateway at Adrian, b. as there was no interchange gateway at Adrian, it would be necessary for the plaintiff to transport the cement from the West Coast points to Adrian via the long instead of the short route, c. if the government would build a branch railroad from Odair to the project site, the plaintiff would transport cement at sufficiently low rates to recompense the defendant, d. if the high dam were constructed, the plaintiff would build the branch line of railroad and make much lower rates than if only the low dam were constructed.

2. Concealments: a. an agreement between the plaintiff and the Great Northern Railway Company that neither would construct a branch line from Odair to the project site, b. the agreement between the plaintiff and the Great Northern Railway Company to open the Adrian gateway and transport cement from all West Coast points via the short route, c. the plaintiff's computations on land grant rates from the six Washington points which were correct and which averaged approximately 2.73E less per cwt. than computations by the Bureau of Reclamation which were erroneous but on which the defendant relied, d. that the land grant rates from Trident, Montana, and Portland, Oregon, were lower than from the six Washington points except Irvin, e. that the plaintiff owns 60,000 acres of land in the irrigable area.

The defendant alleged that in reliance on the misrepresentations and without the knowledge of the facts concealed by the plaintiff when it was under a duty to divulge them the defendant altered its position to its detriment as follows: a. its forbearance to build and operate a cement plant at the project site, b. its construction of the branch railroad thus eliminating all competition in transportation and giving the plaintiff a monopoly, c. abandonment of negotiations with other railroad systems and truck lines for the transportation of materials, d. agreement to rates that were not fair and reasonable to the defendant.

The defendant alleged counter claims as follows: (1) Sums paid by the defendant to the plaintiff in excess of fair and reasonable rates on shipments from the various Washington points to Odair, (2) sums paid by the defendant to the plaintiff in excess of fair and reasonable rates based on the cost of the transportation service to the plaintiff, (3) sums representing the difference in the cost of transporting the cement and materials over a long and circuitous route and the short direct route actually used, (4) sums in excess of 11E cwt. from Irvin and 15E cwt. from the other Washington points to Odair on shipments of cement, (5) cost of construction of the branch railroad from Odair to the project site in the sum of $646,400, (6) cost of maintaining and operating said railroad in the sum of $800,000, (7) overpayment to the plaintiff of freight charges on transportation of materials in the sum of $3,380,000, and (8) overpayment of freight charges on iron and steel supplies and shipment of numerous articles other than cement amounting to $417,661.54.

The defendant prays that the plaintiff's complaint be dismissed with costs; that the special rate contract be reformed, or, in the alternative, that it be rescinded and that the court fix the value of the plaintiff's transportation services on a quantum meruit basis; that the defendant have an accounting; that the defendant have judgment against the plaintiff for $5,500,000; for costs and for general relief.

The defendant moved for summary judgment on the pleadings, and the motion was overruled.

The validity and applicability of the special rate contract, exhibit II, hereafter called the rate contract, is the crux of this suit. Under the pleadings, it was deemed necessary to receive a mass of evidence not pertinent to the validity and applicability of the contract but bearing on other issues raised by the pleadings. The purpose and background of the contract will be helpful in understanding the controversy.

The Project.

An empire within the state of Washington has remained almost wholly undeveloped for lack of moisture. The soil is exceedingly fertile, the climate ideal for the production of foods, yet only crops indigenous to semi-arid lands have been produced and the country now is sparsely populated and the lands are of little value. Men of vision for decades have sought a remedy for this situation. They have dreamed of a verdant countryside, comfortable homes, a larger population, beautiful cities and additional wealth. Strangely enough the necessary moisture has been at hand. The mighty Columbia River and its tributaries gather the waters of rains and melting snows from a vast area of plains and mountains and carry it in tremendous volume within easy reach of the thirsty soil.

However, a dam of mammoth proportions was necessary to capture and utilize the...

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