Union Pacific Railroad Co. v. Bartlett & Co., Grain

• Decision Date: 08 May 1975
• Docket Number: 73 CV 293-W-1.,No. 19741-1,19741-1
• Citation: 393 F. Supp. 1347
• Court: U.S. District Court — Western District of Missouri
• Parties: UNION PACIFIC RAILROAD COMPANY, Plaintiff, v. BARTLETT & COMPANY, GRAIN, Defendant (two cases).

393 F. Supp. 1347

UNION PACIFIC RAILROAD COMPANY, Plaintiff, v. BARTLETT & COMPANY, GRAIN, Defendant (two cases).

Nos. 19741-1, 73 CV 293-W-1.

United States District Court, W. D. Missouri, W. D.

May 8, 1975.

Michael W. Lerner, Stinson, Mag. Thomson, McEvers & Fizzell, Kansas City, Mo., for plaintiff.

Charles E. Patterson, Watson, Ess, Marshall & Enggas, Kansas City, Mo., for defendant.

MEMORANDUM AND ORDER

JOHN W. OLIVER, District Judge.

These jury-waived cases involve actions brought by plaintiff railroad pursuant to 28 U.S.C.A. § 1337 to collect certain unpaid demurrage charges allegedly owned by the defendant grain company. Counsel, with highly commendable cooperation, have agreed to extensive factual stipulations dealing with the complex issues involved herein. We adopt those stipulations by this reference as part of our findings of fact. Additional findings will be made in the course of this memorandum opinion, all of which shall constitute additional findings of fact and conclusions of law in accordance with F.R.Civ.P. 52.

I.

The general factual circumstances of each of these cases may be briefly summarized. Both cases involve deliveries by plaintiff of loaded grain cars to defendant's River Rail Elevator in Kansas City, Kansas, located adjacent to plaintiff's so-called Fairfax Yard. Under the applicable tariff agreement, B. B. Maurer's Freight Tariff 4-I, defendant had forty-eight hours of "free-time" for unloading each car after it was "placed" on the siding designated by the defendant. Often times, when cars consigned to the defendant reached the Yard defendant's siding would already be filled to capacity. In such situations, Rule 5-A-1 of the tariff provided that:

When delivery of a car . . . cannot be made on account of the inability of consignee to receive it or because of any other condition attributable to the consignee, such car will be held at destination, or, if it cannot reasonably be accommodated there, at an available hold point, notice shall be sent or given the consignee in writing or, in lieu thereof, as otherwise agreed to in writing, that the car is held and that this railroad is unable to make delivery. This will be considered constructive placement.

If cars were detained for more than forty-eight hours after actual or constructive placement, the tariff provides that plaintiff can collect a further surcharge called "demurrage." The present actions involve claims by plaintiff for $10,480.00 and $5,880.00 in such demurrage charges, for the period from October 25, 1968 to January 9, 1969, and from April 24, 1970 to May 13, 1970, respectively.

Defendant does not deny that it failed to unload cars consigned to it within forty-eight hours of constructive placement. But defendant does contend that this delay was caused by plaintiff's failure to fill defendant's siding with cars, thereby making it impossible for defendant to complete its unloading within the free time. Specifically, defendant alleges that plaintiff was under "duty to provide two switches per day to defendant's River Rail Elevator." This duty required plaintiff "to fill defendant's south tracks with as many cars as those tracks would hold at each switch," and "to so fill those south tracks within the time it usually had done so according to the practice which had developed between the parties."

Defendant argues that plaintiff failed to meet its obligations in this regard, and therefore no demurrage charges may properly be assessed.

II.

Plaintiff initially argues that, as a matter of law, defendant cannot prevail on its defenses. It is argued that plaintiff was under no duty to provide two switches at certain times during the day since, even if a practice to this effect had developed between the parties, it could not be binding on plaintiff. This argument is based on plaintiff's contention that the development of routine switching schedule would violate Section 3(1) of the Interstate Commerce Act, 49 U.S.C.A. § 3(1), which states in part that:

It shall be unlawful for any common carrier subject to the provisions of this chapter to make, give, or cause any undue or unreasonable preference or advantage to any particular person, company, firm, corporation . . ..

Plaintiff's contention is not tenable. The purpose of Congress in enacting Section 3 was to prevent unjust discrimination between various shippers. See Central Railroad Co. v. United States, 257 U.S. 247, 42 S.Ct. 80, 66 L. Ed. 217 (1921). Thus, a contract by a carrier to furnish cars to a customer at a specific time is void in the absence of a specific tariff provision providing for such service. A contrary holding would allow railroads to extend particularly advantageous services to certain shippers while denying them to other, less favored, competitors. See Consumers Mutual Oil Co. v. Schaff, 59 F.2d 730 (7th Cir. 1932).

But these provisions do not prohibit railroads and shippers from arranging work schedules compatible with the needs of both parties, so long as the rights of other shippers are not prejudiced. Section 1(11) of the Act, 49 U.S. C.A. § 1(11) provides:

It shall be the duty of every carrier by railroad subject to this chapter to furnish safe and adequate car service and to establish, observe, and enforce just and reasonable rules, regulations, and practices with respect to car service; and every unjust and unreasonable rule, regulation, and practice with respect to car service is prohibited and declared to be unlawful.

Section 1(10) of the Act further provides:

The term "car service" in this chapter shall include the use, control, supply, movement, distribution, exchange, interchange, and return of locomotives, cars, and other vehicles used in the transportation of property, including special types of equipment, and the supply of trains, by any carrier by railroad subject to this chapter.

These provisions indicate that Congress anticipated that railroads would establish orderly procedures for providing services to their customers, including mutually agreeable schedules for switching services in situations such as presented by this case. Section 3 was designed not to prohibit such practices, but rather to insure that they were carried on in a non-discriminatory manner.¹

III.

Plaintiff also argues that this Court must find in its favor as a matter of law since "the applicable tariff does not provide for the reduction of detention charges because of irregular or delayed switching and, therefore, no reduction can be made."

In answer to this argument defendant points to Rule 8-E-1 of the tariff, which provides in part that:

SECTION E. — Error of any railroad named in the bill of lading contract or participating in the transportation transaction, which prevents acceptance, proper tender or delivery

1. Under this Rule, demurrage will be charged on the basis of the amount that would have accrued but for such error.

Defendant's reliance on this Rule is misplaced. The term "error," as used in Rule 8-E-1, does not include failures by the railroad to provide switching services in accordance with a predetermined schedule. Instead, the Rule is applicable to actual switching mistakes, such as "run-arounds,"² or the placement of cars of another shipper on the defendant's siding. See National Trucking & Storage Co. v. Pennsylvania Railroad Co., 270 I.C.C. 539 (1948), modified 277 I.C. C. 109 (1950), modified 283 I.C.C. 395 (1951), affirmed in part and reversed in part, 228 F.2d 23 (1955).

But this finding does not mean that a consignee has no defense in an action to collect demurrage charges caused by the failure of a railroad to provide timely switching services. In Union Bag & Paper Corp. v. Director General, 61 I.C.C. 424 (1921), the Interstate Commerce Commission was faced with a claim by a consignee for a refund of demurrage charges, allegedly resulting from the railroad's failure to place cars for unloading by the consignee's crews.³ In discussing the principles to be applied, the Commission stated that:

Unless actual tender of cars is made or the consignee has informed the carrier that no more cars can be received, the rule requires the carrier in fact to place cars to the full extent of the consignee's physical capacity to receive them. The carrier under its rule must place cars constructively only because of the act or neglect of the consignee or the inability of the latter to receive them. In the instant case there was no actual tender; and complainant did not inform defendant that no more cars could be received. Defendant, before making constructive placement of cars, should have placed at complainant's disposal all the cars which complainant's sidings would hold. If complainant could on any day have received more cars than were delivered by defendant the demurrage debits and the resulting charges must be adjusted accordingly; but as delivery was made daily over an extended period, complainant should show that it could have unloaded more cars daily had they been actually instead of constructively placed. 61 I.C.C. at 426

Applying those principles to the facts of that case, the Commission found that a fire at the consignee's facilities made it impossible for the consignee to unload more cars from August 1 to August 9, 1918. Subsequent to that time, however, conditions at the plant "were again normal." Since, during July of that year the consignee had unloaded an average of 55 cars per day, the Commission initially concluded that:

The demurrage charges collected on all other cars embraced in the issues were unlawful to the extent that the charges collected exceeded those that would have accrued had cars been delivered at the rate of 55 cars per day for the period subsequent to August 9. Id. at 431

Upon petition for reconsideration, however, the Commission amended these findings. Union Bag & Paper Corp. v. Director General, 69 I.C.C. 711 (1922). It noted that its statement of general principles was intended to emphasize:

The

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