Sonken-Galamba Corporation v. Union Pac. R. Co.

• Decision Date: 13 November 1944
• Docket Number: No. 2929.,2929.
• Citation: 145 F.2d 808
• Parties: SONKEN-GALAMBA CORPORATION v. UNION PAC. R. CO.
• Court: U.S. Court of Appeals — Tenth Circuit

145 F.2d 808 (1944)

SONKEN-GALAMBA CORPORATION v. UNION PAC. R. CO.

No. 2929.

Circuit Court of Appeals, Tenth Circuit.

November 13, 1944.

Harry L. Jacobs, of Kansas City, Mo., for appellant.

O. B. Eidson, of Topeka, Kan., and N. E. Snyder, of Kansas City, Kan. (T. M. Lillard, of Topeka, Kan., on the brief), for appellee.

Before PHILLIPS, HUXMAN, and MURRAH, Circuit Judges.

MURRAH, Circuit Judge.

Appellee, the Union Pacific Railroad Company, as carrier, brought this suit to collect the difference between the prescribed freight rate on scrap iron (17c per hundred pounds), which had been charged and collected, and a higher freight rate applicable to steel plates (44c per hundred pounds), on four carloads of metal shipped over its railroad from Tulsa, Oklahoma, to Topeka, Kansas by appellant, Sonken-Galamba Corporation, and consigned to itself, there.

Based upon facts which are not materially in dispute, the trial court concluded that the metal thus shipped was not scrap iron, as defined in a note to the traffic regulations prescribing commodity rates for scrap iron and scrap steel in carload lots, which provides that "rates on scrap iron or steel apply only on pieces (separate or combined) of iron or steel having value for remelting purposes only." It accordingly gave judgment for the Railroad Company, and the shipper has appealed contending that the trial court's interpretation of the definition and application of the facts thereto is clearly erroneous.

Appellant is a scrap dealer located at Kansas City, Kansas, and its affiliate Sonken-Galamba Supply Company at Tulsa, Oklahoma, is engaged in handling scrap, selling steel plates, pipes, tanks and refinery equipment. Prior to 1939, the Sonken-Galamba Supply Company wrecked some oil storage tanks at Ramona, Oklahoma, the bottom plates of which were of a lighter grade of steel than the sides or ring plates, and due to the many years of use were rusted and pitted. From June 8 to September 11, 1939, appellant consigned four carloads of these tank bottom plates from Tulsa, Oklahoma to itself at Topeka, Kansas. They were "thrown loosely in an open car" without any blocking or dunnage, and were billed as "scrap iron." All of the metal thus shipped was sold by appellant to Henry Dietrich, a "junk dealer" in Topeka, Kansas, for $20 per net ton, F.O.B. Topeka. One car was retained by Dietrich and unloaded at his junk yard, where an undetermined part of it was sold to individuals for various uses, and the remainder sold for remelting purposes. Three of the carloads were sold to the Wentz Equipment Company at Topeka, manufacturers of road machinery, for $23 to $26 per ton, depending upon the quality of the material. 50 to 75% of the metal purchased by Wentz was used in the manufacture of sub-standard road culverts, sometimes called "junk culverts", and sold to the State, counties and municipalities as such — that which was unfit for culverts was sold by Wentz to scrap dealers.

The Wentz Equipment Company had previously purchased other tank bottoms from Dietrich and the Supply Company in Tulsa for use in the manufacture of sub-standard culverts and a "few" small storage tanks. It had also unsuccessfully attempted to use the tank bottoms in the manufacture of snow plows. Two or three of the Wentz Company's competitors in the vicinity had also used some of the tank bottoms in the manufacture of road culverts, but there was no other recognized market for the use of this material in the manufacture of finished products, and less than 5% of these tank bottoms were sold for anything other than remelting purposes. During the period in which these shipments were made, 1,200 tons of this material was shipped directly to the mills for remelting purposes, and there was evidence to the effect that approximately 3% of all scrap iron is sold for purposes other than remelting.

Of course, we do not establish the tariff rate, nor do we judge its reasonableness, rather it is our limited province to apply the prescribed reasonable rate to the factual situation before us, and in so doing we are often required to legally interpret the definitions given us by the rate making and regulating authority. In the discharge of our limited responsibilities, we must not forget that tariffs and rates are promulgated and established for the use of laymen in the course of their business affairs, and the interpretation must be susceptible of practical and ready application. Sonn v. Magone, 159 U.S. 417, 16 S.Ct. 67, 40 L.Ed. 203; Sonken-Galamba Corporation v. Atchison, T. & S. F. R. Co., 8 Cir., 124 F.2d 952; Union Wire Rope Corporation v. Atchison T. & S. F. R. Co., 8 Cir., 66 F.2d 965.

The rate making and regulating authority has by apt and revealing words defined "scrap iron" as used in its prescribed tariff as that class of metal which has value for remelting purposes only, and it has amplified that definition by describing "scrap iron" as consisting of "old, worn-out, obsolete, broken, and cut iron, or dismantled machinery, and parts thereof, entirely unfit for original use and having no commercial value except for remelting purposes." Klotz Bros. v. Chesapeake & Ohio, 177 I. C. C. 557. See also 21 F. Supp. 931, affirmed 98 F.2d 457; Vol. 38, Words and Phrases, Perm. Ed., p. 364.

Making application of the definition to particular facts, the Commission has held that old boiler flues and tubes which were damaged and unfit for further use in the manufacture or repair of boilers, but which "after being cleaned, trimmed and otherwise reconditioned," could be utilized without remelting as pipe, fence posts, or other purposes, had a recognized commercial value other than the elementary metal from which they were manufactured, and were therefore not properly described as scrap iron. Schwartz v. St. Louis, San Francisco R. Co., 51 I. C. C. 145. In Chase Companies, Inc., v. Director General, 81 I. C. C. 207, three carloads of cartridge-brass discs were held to have value for purposes other than remelting only, notwithstanding an agreement to the effect that they would be remelted while in the possession of the shipper, and would not be used for any purpose until they had been remelted. The Commission said that although the articles shipped were valuable to the shipper as scrap brass and for remelting purposes only, "it is the character of an article from a transportation standpoint, and not the use to which parties may contract that it shall be put, that determines the rate or rating applicable". See also Crancer v. Lowden, 8 Cir., 121 F.2d 645.

In Alaska Junk Co. v. Spokane, P. & S. R. Co., 98 I. C. C. 551, shipments of unused steel ship rivets and nuts, and washers which remained on hand at the shipyards after the building of steel ships was discontinued there, were held not to carry the scrap iron rate although thus billed, and were sold at scrap iron prices to be remelted only, since it was admitted that if there had been a market for the rivets, they would have been sold as such instead of scrap. The Commission again said value for remelting purposes only defines the nature of the article, and the rate to be applied is not dependent upon the use to which the articles are put. The Commission thought that these articles had a recognized commercial value and were therefore not properly within the description of scrap steel.

In Knight Iron & Metal Co. v. Gulf, M. & N. R. Co., 101 I. C. C. 623, ten carloads of iron bars, ranging in length from 10 to 27 feet, approximately 1 to 1½ inches in diameter, which had been used for reinforcing concrete in an old concrete ship, sold by the United States as scrap, were shipped from Mobile to Birmingham, Alabama, and billed as scrap iron. After arriving in Birmingham, the shipment was inspected by the Weighing and Inspection Bureau, and the original billing changed from scrap iron to iron bars by a representative of the Bureau on three of the carloads, and higher freight charges were...