Pitzer Transfer Corporation v. Norfolk & W. Ry. Co.

• Decision Date: 28 March 1935
• Docket Number: No. 5450.,5450.
• Parties: PITZER TRANSFER CORPORATION et al. v. NORFOLK & W. RY. CO. et al.
• Court: U.S. District Court — District of Maryland

10 F. Supp. 436

PITZER TRANSFER CORPORATION et al. v. NORFOLK & W. RY. CO. et al.

No. 5450.

District Court, D. Maryland.

March 28, 1935.

Michael Paul Smith, of Baltimore, Md., and Charles E. Cotterill, of New York City, for plaintiffs.

W. Ainsworth Parker, of Baltimore, Md., and John C. Donnally, Legal Department, Virginian Ry. Co., and D. Lynch Younger, both of Washington, D. C., for defendants.

CHESNUT, District Judge.

The question of law presented at this time in the above case relates to the authority of the Interstate Commerce Commission to make a reparation award in favor of the plaintiffs against the defendants for alleged excessive rates collected on coal shipments from West Virginia and Virginia points to Roanoke, Virginia.

The amount awarded by the Commission to the Pitzer Transfer Corporation against the Norfolk & Western Railway was $1,320.77; and against the Virginian Railway Company, $700.89. And to Rosebro there was likewise awarded against the Norfolk & Western $477.70, and against the Virginian, $47.08. These awards were made by the Interstate Commerce Commission by order dated April 23, 1934, payable on or before July 1, 1934, covering carload shipments of coal in the period between September 8, 1930 and March 17, 1933. The rate paid by the plaintiff was $2.00 per ton which was adjudged unreasonable and excessive by the Commission to the extent of ten cents per ton. 200 I. C. C. 720. The case was submitted to the Commission on the record developed in the previous case of State Corporation Commission of Virginia et al. v. Norfolk & Western Railway Co., 190 I. C. C. 325, dealing comprehensively with the subject of "Rates on bituminous coal, in carloads, from mines on the Norfolk & Western and the Virginian railways to points in Virginia," in which the rates were found unreasonable in the past and reparations awarded therein to various shippers, and reasonable rates prescribed for the future.

The two Railway Companies refused to abide by the order of the Commission for the payment of reparations and the plaintiffs have filed this suit for damages as authorized by the Interstate Commerce Act of 1887 with subsequent amendments (49 US CA § 1 et seq.) and particularly sections 16 (2) and (4), 49 USCA § 16 (2, 4) which authorize the filing of such suits in the United States District Court for the district through which the road of the carrier runs and the joining in said suit of joint plaintiffs and joint defendants, in any district where any one of such joint plaintiffs could maintain such suit against any one of the joint defendants. The jurisdictional requirement is gratified in this case by reason of the fact that a portion of the railway of the Norfolk & Western lies in the district of Maryland although that of the Virginian Railway does not.

The defendants have filed general issue plea and several pleas in bar, the averments of which are made fuller and more specific by the statements in the bill of particulars, filed upon the plaintiffs' demand. To these pleas thus particularized the plaintiffs have filed demurrers. There are two defenses set up in the pleas as follows: (1) That the Interstate Commerce Commission was without authority to make the reparation awards because it had in a prior proceeding (Mathieson Alkali Works, Inc., v. Carolina, C. & O. Ry., 77 I. C. C. 150, decided January 15, 1923) approved the reasonableness of the rates charged by the Railways in issue in this case. The defendants contend that they were entitled to rely upon that decision of the Commission and that it may not in a subsequent proceeding ignore its own pronouncement and retroactively repeal its own determination as to reasonableness of the rate by thereafter awarding reparation on shipments which moved under that rate. And (2) alternatively, it is contended that the rates now held unreasonable by the Commission had long been in effect and freely used by shippers without complaint and that the history of the particular rates was such as to justify the defendants in their belief that they were maintaining reasonable rates which had the Commission's approval. It is contended that, therefore, the Commission lacked authority to condemn those rates as to past transactions by an award of reparation on past shipments, which is equivalent to penalizing the defendants for doing that which the Commission had told them they might do.

The defendants rely for their position on Arizona Grocery Co. v. Atchison, Topeka & Santa Fé Ry. Co., 284 U. S. 370, 52 S. Ct. 183, 76 L. Ed. 348, and the interpretation and application thereof made by the Circuit Court of Appeals for the Ninth Circuit in what is called the Second Arizona Grocery Co. Case, more fully entitled Arizona Wholesale Grocery Co. v. Southern Pacific Co., 68 F.(2d) 601.

In the First Arizona Grocery Co. Case the Supreme Court by Mr. Justice Roberts said, 284 U. S. at page 390, 52 S. Ct. 186, 76 L. Ed. 348:

"Where the Commission has, upon complaint and after hearing, declared what is the maximum reasonable rate to be charged by a carrier, it may not at a later time, and upon the same or additional evidence as to the fact situation existing when its previous order was promulgated, by declaring its own finding as to reasonableness erroneous, subject a carrier which conformed thereto to the payment of reparation measured by what the Commission now holds it should have decided in the earlier proceeding to be a reasonable rate."

In that case the Supreme Court was dealing with a reparation order made by the Commission against railroad carriers which had conformed their rates to a prior order of the Commission prescribing maximum reasonable rates, rather than specific rates. The opinion points out the now well established distinction between semi-judicial and legislative or administrative functions of the Commission. As is well known, by the Hepburn Amendment to the Interstate Commerce Act and by the Transportation Act, Congress granted to the Commission first, power to fix the maximum reasonable rate and second, to prescribe a named rate, or the maximum or minimum reasonable rate, or the maximum and minimum limits within which the carriers' published rates must come. And when the Commission does so fix rates it is acting in its legislative capacity; while, when it determines that a rate previously fixed by the carrier itself (and not by the Commission) is unreasonable and awards reparation for past excessive charges, it is acting in a quasi-judicial capacity. The distinction is clearly perceived when it is borne in mind that a judicial determination necessarily has regard to the past or present and not to the future; while a legislative act is effective (by reason of constitutional limitation) as to the future only. See Baer Bros. Mercantile Co. v. Denver & R. G. R. Co., 233 U. S. 479, 34 S. Ct. 641, 58 L. Ed. 1055; Interstate Commerce Commission v. Cincinnati, N. O. & T. P. Ry. Co., 167 U. S. 479, 499, 17 S. Ct. 896, 42 L. Ed. 243; and Prentis v. Atlantic Coast Line Co., 211 U. S. 210, 29 S. Ct. 67, 69, 53 L. Ed. 150; Rosslyn Gas Co. v. Fletcher (D. C.) 5 F. Supp. 25. In the Prentis Case the distinction is succinctly and comprehensively stated by Mr. Justice Holmes as follows:

"A judicial inquiry investigates, declares and enforces liabilities as they stand on present or past facts and under laws supposed already to exist. That is its purpose and end. Legislation on the other hand looks to the future and changes existing conditions by making a new rule to be applied thereafter to all or some part of those subject to its power. The establishment of a rate is the making of a rule for the future, and therefore is an act legislative not judicial in kind. * * *"

Stated in other words, the distinction made is marked by the difference between the nature of the Commission's functions when dealing with a carrier made rate, and with a commission made rate. While the Commission is now authorized to prescribe rates for the future, as a matter of fact the great majority of all rates are still carrier made because the power to initiate rates still resides with the carriers unless and until the Commission has acted. In determining whether a carrier made rate was reasonable for the past, as when the Commission is passing on a complaint asking reparations, the Commission is acting in its quasi-judicial capacity; but when it prescribes or fixes a rate for the future, then the Commission is acting in a legislative capacity. Confusion may result in reading the cases unless the distinction is borne in mind; and it is apt to result by the reason of the not infrequent practice of the Commission to adjudicate in one order unreasonableness of the carrier made rate in the past and to prescribe for the future a commission made rate.

What the Supreme Court decided in the First Arizona Grocery Co. Case was that, while a commission made rate is in effect, that is, until it is changed by the Commission itself, rates charged by a carrier in accordance therewith cannot by subsequent determination of the Commission be adjudicated unreasonable and, therefore, reparation orders may not be issued against railroads which have conformed to the commission made rate while it was in force. It is apparent, however, as a result of the distinction pointed out that where the Commission does not prescribe a rate for the future, but merely exercises its semi-judicial function in passing on the reasonableness in the past of carrier made rates, its action is not binding for the future on the Commission itself as an adjudication by way of estoppel or otherwise, nor is it available as a protection to the carrier in the continuance of carrier made rates for the future. That is to say, a mere determination by the Commission in say 1923, that carrier made rates then prevailing were not unreasonable, without fixing the rate for the future, is obviously no adjudication binding on the Commission in 1933 that...