Railroad Commission v. Houston Chamber of Commerce, 1215-5575.

• Decision Date: 23 January 1935
• Docket Number: No. 1215-5575.,1215-5575.
• Citation: 78 S.W.2d 591
• Parties: RAILROAD COMMISSION OF TEXAS v. HOUSTON CHAMBER OF COMMERCE et al.
• Court: Texas Supreme Court

78 S.W.2d 591

RAILROAD COMMISSION OF TEXAS v.HOUSTON CHAMBER OF COMMERCE et al.

No. 1215-5575.

Commission of Appeals of Texas, Section B.

January 23, 1935.

Error to Court of Civil Appeals of Third Supreme Judicial District.

Consolidated suits by the Houston Chamber of Commerce and others against the Railroad Commission of Texas and others. Judgment was reversed and rendered on the appeal of the Houston Chamber of Commerce and others [19 S.W.(2d) 583], and the Railroad Commission of Texas brings error.

Affirmed.

Claude Pollard and Robert Lee Bobbitt, formerly Attys.Gen., Jack Blalock, formerly Asst. Atty. Gen., Mart H. Royston, of Galveston, and A. L. Reed, of Dallas, for plaintiff in error.

Fulbright, Crooker & Freeman and Baker, Botts, Parker & Garwood, all of Houston, Chas. C. Huff and A. H. McKnight, both of Dallas, Fred L. Wallace, of Fort Worth, and Terry, Cavin & Mills, of Galveston, for defendants in error.

RYAN, Judge.

This case involves an attack upon the validity of a certain circular of the Railroad Commission of Texas, known as circular No. 7529, issued March 20, 1928, which circular ordered in force group rates on sugar and molasses shipments (intrastate, carloads 60,000 pounds minimum) originating at Galveston, Texas City, Sugarland, Beaumont, Port Arthur, and Houston.

The order of the Railroad Commission was attacked in the trial court in three separate suits, one instituted by the city of Houston, Houston Chamber of Commerce, and other Houston interests; one instituted by the Missouri, Kansas & Texas Railroad Company of Texas and the Trinity & Brazos Valley Railroad Company; and one instituted by the Beaumont, Sour Lake & Western Railway Company and associated railroads.Upon proper motion, the suits were consolidated and tried by the court without a jury, resulting in a judgment in favor of the defendant, upholding the order of the Railroad Commission in all particulars and denying the relief sought by any and all the plaintiffs.Separate appeals were filed by the plaintiffs in the trial court; the Court of Civil Appeals reversed the judgment of the trial court, and canceled and annulled the circular issued by the Railroad Commission of Texas, and perpetually enjoined its enforcement.19 S.W. (2d) 583.

Prior to April 12, 1927, sugar, like most commodities and classes of freight, had been carried by Texas railroads upon what are known as "mileage scales" of rates, generally so arranged that a certain small rate per hundred pounds of freight carried a charge for the first 5 miles and a corresponding increase for each additional 5 miles, reaching a maximum at various distances, the freight being transported for the maximum rate for all distances beyond the end of the mileage scales.

This mileage scale of rates on sugar was so arranged that 9 cents per hundred pounds (over a single line of railroad) and 13½ cents per hundred pounds (jointly over two or more lines of railroad) was charged for distances of 12 miles and less; the scale gradually increased in distances and correspondingly increased in the amount of cents per 100 pounds until it reached its maximum at 185 miles for which the rate was 50 cents per 100 pounds of sugar, in carloads with a minimum carload weight of 36,000 pounds.

On April 11, 1927, the Texas Railroad Commission issued its circular and entered its order (No. 7193) establishing new rates on sugar moving in carloads in intrastate traffic, which continued in effect the prior scale of rates then applicable to carload shipments of sugar with a minimum weight of 36,000 pounds, but established a new mileage scale applicable to carloads of sugar with a minimum weight of 60,000 pounds, to which applied a mileage scale varying from 10 cents per 100 pounds (with a single line of railroad) and 12 cents per 100 pounds (jointly via two or more lines of railroad) for the first 10 miles and increased gradually for each additional 5 miles until the mileage scale reached its maximum of 73 cents per 100 pounds for distances of 975 miles and over.

Under this scale each locality within the state of Texas, as to such sugar shipments, enjoyed rates based upon the distance from such locality to the desired destination; there were no exceptions to this general rule.

Counsel for the Railroad Commission say that the adjustment of such rates was related to the adjustment of rates which obtained concurrently from New Orleans and other Louisiana producing points to southwestern destinations, including points within the state of Texas, and was the result of action by the Interstate Commerce Commission involving rates from Louisiana producing points and Texas producing points, as well as other producing points, to points in Oklahoma (Docket 14781, Oklahoma Traffic Association v. Alabama Great SouthernRy. Co., 113 I. C. C. 635); such scale of rates materially reduced the then existing rates from Louisiana producing points to both Texas and Oklahoma destinations as well as the rates from Texas producing points to Oklahoma.

Section 4 of the Interstate Commerce Act(49 USCA § 4) makes it unlawful for any common carrier, subject to its provisions, to charge or receive any greater compensation in the aggregate for a shorter than for a longer distance over the same line or route in the same direction, the shorter being included within the longer distance, or to charge any greater compensation as a through rate than the aggregate of the intermediate rates, or to charge as great a compensation for a shorter as for a longer distance, but the act provides relief upon application to the Interstate Commerce Commission, which may, in special cases, authorize a charge of less for longer than shorter distances, provided it is reasonably compensatory for the service performed.

In docket 14781, rates were established from Louisiana producing points to Oklahoma via routes through Texas, and the Interstate Commerce Commission denied such (so-called) fourth section relief on such movements; the effect of such denial was to require the carriers to publish rates from Louisiana producing points to Texas not higher than those concurrently applied from Louisiana points to Oklahoma.

The publication of the rates under docket 14781, by reason of the denial of fourth section relief, brought about a material reduction in the then existing rates from Louisiana producing points to Texas destinations.

The carriers did not publish concurrently with said tariff the same scale of rates for application from Texas producing points to Texas intrastate destinations.

Counsel for the Railroad Commission say, "Thereupon, the Commission in order to meet the emergency created by the reduction of the rates on sugar from Louisiana to Texas, after conference with the interested shippers and carriers, on April 11, 1927, issued CircularNo. 7193, effective April 12, 1927; otherwise a situation would have arisen in which the Louisiana producers would have had a lower adjustment of rates from Louisiana to Texas than that applying concurrently from Texas producing points to Texas destinations —the sole and only purpose of Circular 7193 was to avoid the destructive effects of such a situation; it was an emergency measure entirely, which could not wait on the decision of Docket 2551 upon the facts as developed at the hearing of that cause which began on March 8, 1927."

In issuing that circular and order, the commission specifically provided that cause No. 2551"be and the same is hereby held open on the docket for such further and/or final orders as may be determined upon."

Circular 7529 issued on March 20, 1928, under attack in this proceeding, was the final order in docket 2551, which is the case in which the Railroad Commission conducted the hearing.

Counsel for the Railroad Commission say that said order (circular 7529) was made and entered under the following circumstances: "On or before March 8, 1927, the Dallas Chamber of Commerce, on behalf of certain shippers, instituted a proceeding before the Commission praying a readjustment of the then existing Texas intrastate rates on sugar and molasses predicated upon a similar readjustment then published and to become effective on sugar, carloads, from New Orleans to Texas destinations.The Chamber of Commerce and Board of Trade of Galveston on behalf of itself and its members, and on behalf of Texas City and its shippers, filed a petition in intervention, the prayer being that should any change be made in the present carload rates on sugar from points in Texas, that Galveston and Texas City be grouped with Houston at the same rates as may be applied from and to Houston and to and from points beyond one hundred miles from Houston."

Interests at Beaumont, Port Arthur, and Sugarland likewise intervened and requested equalization with Houston.

Said circular 7529 amended commodity tariff 33A (Revised) theretofore issued by the commission to govern in connection with the transportation of sugar and molasses, carloads, transported by railroads between points in Texas, by adding there, item 2 as follows:

"Item 2.Houston rates to be observed as maxima:

"(a) Galveston, Texas City and Sugarland.—Mileage rates applicable on sugar, carloads, from Houston to points in Texas distant more than 100 miles from Houston, shall be observed as maxima on shipments of sugar, carloads, from Galveston, Texas City or Sugarland to the same points (See Note).

"(b) Beaumont.—Mileage rates applicable on sugar, carloads, from Houston to points in Texas distant more than 130 miles from Houston, shall be observed as maxima on shipments of sugar, carloads, from Beaumont to the same points (See Note).

"(c) Mileage rates applicable on sugar, carloads, from Houston to points in Texas distant more than 150 miles from Houston, shall be observed as maxima on shipments of sugar, carloads, from Port Arthur to the same points (See Note).

"Note.Rates to points intermediate via the ratemaking route from Houston...