The Oneida Farmers Shipping Association v. The St. Joseph & Grand Island Railway Company
| Citation | 133 P. 883,90 Kan. 264 |
| Decision Date | 05 July 1913 |
| Docket Number | 18,297 |
| Court | United States State Supreme Court of Kansas |
| Parties | THE ONEIDA FARMERS SHIPPING ASSOCIATION, Appellee, v. THE ST. JOSEPH & GRAND ISLAND RAILWAY COMPANY, Appellant |
Decided July, 1913.
Appeal from Nemaha district court.
Judgment affirmed.
SYLLABUS BY THE COURT.
COMMON CARRIERS--Interstate Railroads--Grain Shipments Within the State with "Milling in Transit" Privileges and "Proportional Rates" on Reshipment to Points Beyond State--Power of State to Enforce Penalty for Delays in Transportation. In an action under section 7205 of the General Statutes of 1909 by a shipper against an interstate railroad to recover a penalty for delays in the transportation of grain in carload lots from Oneida, Kan., to Elwood, Kan., held, (a) Under the facts stated in the opinion the action may be maintained. (b) Whether the shipment be regarded as completed when the grain was unloaded into the elevator of the purchaser at Elwood, Kan., and therefore intrastate, or whether it was interstate in character--because of a custom and arrangement, of which the plaintiff had no notice or knowledge, which existed between the carrier and the owner of the elevator giving the latter "milling in transit" privileges and "proportional rates" on grain of like quality and quantity when reshipped to points outside the state nevertheless the state, in the proper exercise of the police power, may enact and enforce reasonable regulations designed to prevent unnecessary delays in such transportation occurring within its borders. (c) Section 7205 of the General Statutes of 1909 is a proper exercise of the police power and, applied to the facts of this case, does not place an unreasonable burden upon interstate commerce.
R. M. Emery, of Seneca, R. A. Brown, and L. J. Easton, both of St. Joseph, Mo., for the appellant.
Horace M. Baldwin, of Seneca, for the appellee.
The plaintiff in its petition states a cause of action for the recovery of a penalty under the provisions of section 7205 of the General Statutes of 1909 for an aggregate of twenty-eight days' delay at five dollars per day on fourteen cars of grain loaded at Oneida, Kan., and shipped over defendant's railroad line to the Elwood Grain Company at Elwood, Kan. The answer set up facts showing that the defendant is an interstate railroad engaged in the business of interstate commerce, and alleged that the several cars of grain mentioned in the petition were received for transportation beyond the boundaries of the state of Kansas, and were interstate shipments which were controlled and governed exclusively by the laws regulating interstate commerce. The case was tried to the court and plaintiff was given judgment for the statutory penalty, from which the defendant appeals.
The case was submitted upon a stipulation covering most of the material facts, supplemented by the testimony of the manager of the Elwood Grain Company. The defense to the action is based upon the contention that the shipments of grain became interstate commerce by reason of the subsequent disposition of them by the Elwood Grain Company. The main question discussed, and from the standpoint of the defendant the only question to be determined, is whether the shipments constitute interstate commerce. The ultimate question is whether the nature of the shipments is such that the state has no power to enforce the penalty prescribed by section 7205 of the General Statutes of 1909.
The undisputed facts are: The shipments, which were of grain in carload lots, originated at Oneida, Kan., and so far as plaintiff had any notice or knowledge terminated at Elwood, Kan. Regular bills of lading were issued showing that the cars were billed by plaintiff to the Elwood Grain Company, f. o. b. Elwood, Kan. On the arrival of the cars at Elwood they were received by the grain company and unloaded into its elevator. The freight charges were paid and deducted from the sales account and the balance of the purchase price remitted to the plaintiff. The grain after being unloaded into the elevator was not consumed there, but was from time to time resold by the Elwood Grain Company and shipped to points outside the state. By an agreement between the grain company and the defendant railroad company the former was given what is known as "transit privileges" and "proportional rates" and "tonnage" allowances for the purpose of giving it a through tariff rate on grain received by it and afterwards reshipped to other points. The method of procedure was for the grain company to surrender the inbound bills--in this case the expense bill of the shipment from Oneida to Elwood. New bills of lading were then issued to the new consignee, and the grain company was allowed a through rate upon the commodity under the tariff regulations in effect at the date of the respective shipments, and was given credit on the new shipment to the amount of freight paid by the plaintiff on the shipment from Oneida to Elwood. By its arrangement with the defendant railroad company, the grain company was entitled to free rates to certain points beyond the state, and to other points of reshipment it was entitled to "proportionate rates." It was shown that the particular cars of grain were not kept separate in the elevator and afterwards loaded and reshipped as individual cars of grain, but grain received from various points was thrown together in the elevator bins. When it was desired to reship, grain of like character and quantity was loaded in cars; and by the arrangement with the defendant the grain company had and used the privilege of "splitting the tonnage"; so that in several distinct reshipments to outside territory it was given credit of a through tariff and the benefit of the tonnage of the shipments from Oneida to Elwood. The surrender of the inbilling expense bills and crediting the amount upon the new expense bills was solely for the purpose of giving the Elwood Grain Company better transportation rates from Elwood to certain outside points.
There was evidence that the method described resulted in a lower freight rate which inured to the benefit of the producer or shipper; that the privileges derived from transit and proportional rates had a part in fixing the value of grain at St. Joseph or Elwood, and as illustrating this advantage it was shown that the rate from Oneida to Kansas City was the same as the rate from Oneida to St. Joseph, and that, by the surrender of the inbound expense bill from Oneida, the transit to Gower (a point en route between St. Joseph and Kansas City) could be made without cost. It was admitted that the plaintiff had nothing to do with the subsequent transactions, and had no knowledge of them.
The practice of allowing "transit privileges" upon shipments of the character in question has the approval of the Interstate Commerce Commission, and the defendant takes the position that it necessarily follows from this recognition and approval of the methods by which it allowed such privileges to the grain company, that the shipments involved herein were interstate and therefore not subject to the penalty prescribed by the state for unreasonable delay in transportation. The regulations permitting such privileges appear from Bulletin No. 6, of the Conference Rulings of the Commission, issued April 1, 1913, the substance of which was in force at the time the shipments in question were made. Rule No. 203 is as follows:
(p. 58.)
Rule No. 204 reads:
"It is the sense of the Commission that no transit privilege should extend beyond one year." (p. 59.)
In a case involving the application of the principle of "milling in transit" to the manufacture of logs into lumber, Commissioner Prouty said in the opinion:
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