Terminal Warehouse Co. v. United States

• Decision Date: 10 April 1929
• Docket Number: No. 1472.,1472.
• Citation: 31 F.2d 951
• Parties: TERMINAL WAREHOUSE CO. OF BALTIMORE CITY v. UNITED STATES et al.
• Court: U.S. District Court — District of Maryland

31 F.2d 951 (1929)

TERMINAL WAREHOUSE CO. OF BALTIMORE CITY v. UNITED STATES et al.

No. 1472.

District Court, D. Maryland.

April 10, 1929.

James W. Carmalt, of Washington, D. C., and R. E. Lee Marshall, of Baltimore, Md., for Terminal Warehouse Co. of Baltimore City.

Elmer B. Collins, Sp. Asst. Atty. Gen., Wm. J. Donovan, Asst. Atty. Gen., and Amost W. W. Woodcock, U. S. Atty., of Baltimore, Md., for the United States.

J. Stanley Payne, of Washington, D. C., for Interstate Commerce Commission.

John J. Hickey, of Washington, D. C., for McCormick Warehouse Co.

Before PARKER, Circuit Judge, and SOPER and COLEMAN, District Judges.

SOPER, District Judge.

The Terminal Warehouse Company of Baltimore filed a bill in equity in this case, under the provisions of the Act of October 22, 1913 (38 Stat. 219; 28 USCA § 47), to enjoin and set aside an order of the Interstate Commerce Commission of November 22, 1928. The order required the Pennsylvania Railroad Company to cease and desist from publishing or making allowances to the warehouse company for the performance of terminal services in connection with the loading and unloading of carload package freight at Baltimore (except hay, straw, and flour at its hay and flour warehouses), and to cancel tariff provisions which make the Terminal warehouses a part of the railroad's station facilities in that city. The order was designed to remove what the Commission considered an unjust discrimination in favor of the Terminal Warehouse Company and against the McCormick Warehouse Company, also of Baltimore. It was provided by the Commission that the order should become effective on or before January 10, 1929, but this date was subsequently postponed to April 12, 1929.

The parties in the case before the Commission were the McCormick Warehouse Company, complainant, and the Pennsylvania Railroad Company, respondent. The Terminal Warehouse Company was allowed to participate as intervener. The present case was brought by the Terminal Warehouse Company against the United States, the Interstate Commerce Commission, and the Pennsylvania Railroad Company, and the McCormick Warehouse Company has been allowed to intervene. The two warehouse companies are competitors in the merchandise warehouse business in Baltimore. They receive shipments of merchandise over the railroads entering Baltimore for storage or distribution, and attend to shipments of merchandise from their respective warehouses over the railroads to points outside of Baltimore city. The case turns upon the complaint that the Pennsylvania Railroad Company, in violation of sections 2 and 3(1) of the Interstate Commerce Act, as amended (41 Stat. 479; 49 USCA §§ 2, 3(1), pays to the Terminal Warehouse Company, as an allowance, 35 cents per net ton on freight received by and forwarded from its warehouses in Baltimore, but refuses to make a similar allowance to the McCormick Warehouse Company on freight received by or forwarded by it. Speaking broadly, it is the contention of the Terminal that the sum so paid constitutes compensation for transportation services rendered by it to the carrier in loading and unloading freight, whereas the McCormick Warehouse Company asserts that, while the services paid for are ostensibly rendered to the carrier, they are in reality performed for the benefit of the owners of merchandise intrusted to the warehouse for storage or distribution.

Consideration of the question involved began in 1921, when it was brought to the attention of the Commission by informal correspondence. Subsequently, on November 28, 1923, a formal complaint was filed by the McCormick Warehouse Company against three carriers, namely, the Pennsylvania Railroad Company, the Baltimore & Ohio Railroad Company, and the Western Maryland Railway Company. It was shown that each of them made payment of similar allowances upon carload shipments to a preferred warehouse in Baltimore. The Baltimore Chamber of Commerce and the Philadelphia Chamber of Commerce were allowed to intervene in defense of the practice. A report and an order of the Commission, filed January 12, 1925 (95 I. C. C. 301), directed the dismissal of the complaint. But on March 21, 1927, the matter was reopened upon the petition of the McCormick Warehouse Company, and a report was filed November 22, 1928 (148 I. C. C. 299), in which the Commission reversed its former holding and passed the order which is the subject-matter of this suit. The testimony taken in these cases has been filed as part of the record in the case at bar, and, when considered in connection with the findings of the Commission in its two reports, discloses the situation hereinafter described.

Rule 27 of the Consolidated Freight Classification, applicable to railroad carriers, which has been in effect for a long time throughout the United States, provides that carload traffic carried at carload rates shall be loaded and unloaded by the shippers or owners. The most common, if not the standard, form of delivery for carload freight is the setting of the car on the so-called team tracks of the carrier, where it can be conveniently unloaded by the consignee. A common substitute for team track delivery is the switching of a car to the private siding of a consignee, whose place of business is contiguous to the trunk line of the carrier clear of the main track. U. S. Cast Iron Co. v. Director General, 57 I. C. C. 677, 682; Los Angeles Switching Case, 234 U. S. 294, 311, 34 S. Ct. 814, 58 L. Ed. 1319.

There are, however, exceptions to this classification applicable at a few points of shipment. A tariff published by the Pennsylvania Railroad Company and other lines serving Baltimore provides that the carriers will load and unload carload package freight through certain designated public freight stations of the carriers, without charge to shipers. This practice has been in effect for a long time, and is said to have been brought about by competition with water carriers, and by the desire to secure prompt release of equipment. It is in effect, not only in Baltimore, but also at New York, Philadelphia, and Washington, and at the time of the first report of the Commission it was also in effect at Chicago, Cleveland, Pittsburg, Buffalo, Rochester, Troy, and Green Island, N. Y. In the last-mentioned places it was subsequently canceled. Loading and Unloading Carload Freight, 101 I. C. C. 394.

The Commission said in its first report that, with the increase in the volume of package freight moving at carload rates, the carriers serving Baltimore found it to their advantage to employ additional facilities, through which the freight could be loaded and unloaded, to supplement their public freight stations and platforms, and that to this end the Pennsylvania employed the facilities of the Terminal Warehouse Company. The Terminal commenced to operate warehouses in 1893 or 1894, since which time, under contracts with the Pennsylvania, it has received compensation from the carrier for loading and unloading carload freight at its warehouses. The second report shows that the warehouses operated by the Terminal are generally referred to as the Monument Street Stores, the Flour, the Hay, and the Bond Street Warehouses. With regard to hay and flour, the Commission said that the record was not sufficient to warrant a finding in respect to the lawfulness of the allowances paid for loading and unloading shipments at the hay and flour warehouses, which appeared to be the carrier's only stations for the receipt and delivery of such commodities at Baltimore, and therefore these allowances were not further referred to or considered.

The tariff of the Pennsylvania Railroad Company containing the exceptions to rule 27 declares that package freight in carloads, carried at carload rates, received or delivered at designated stations in Baltimore, will be loaded into and unloaded from cars by carriers, and follows this statement with the designation of five stations, including Calvert Station. It is further declared that Calvert Station includes the facilities of the Terminal Warehouse Company. As a matter of fact, none of the Terminal's warehouses adjoins the Calvert Station. The Monument Street Stores are nearest Calvert Station, but several business concerns are located between the two. The Bond Street Warehouse and its annex appear to adjoin the Jackson Wharf Station of the carrier, but are about two miles from Calvert Station. The land on which all of the warehouses are located, and the Monument Street Stores and Bond Street Warehouse, are owned by a subsidiary of the carrier and leased to the Terminal. The same subsidiary owns one-third of the Terminal's capital stock.

The Terminal handles a very large quantity of freight. For a representative period, the Terminal loaded and unloaded about 20 per cent. of all carload package freight shipped to and from Baltimore over the carrier's lines, including package freight handled from and to team tracks and private sidings. From February 20, 1926, to June 30, 1927, the Terminal handled 9,548 cars, of which 8,603 were inbound and 945 outbound, on all of which it received allowances from the carrier. The allowances in February, 1927, were $3,600.61 and in March, 1927, $4,415.14.

The services for which the allowances were paid are thus described in the first report: "The service for which the allowance is made includes loading, unloading, sending notice of arrival of shipment to the consignees, holding and insuring the freight for not exceeding 48 hours' free time, collecting freight charges, taking receipts from consignees for shipments, and handling incidental matters pertaining to claims."

The McCormick Warehouse Company, at the time of the Commission's first report, operated three warehouses in the industrial districts of Baltimore, but in the interval between the two reports was obliged to sell one of them. One of the remaining warehouses is not served by the rails of any carrier....