United States v. Associated Air Transport, Inc.

• Decision Date: 08 March 1960
• Docket Number: No. 17607.,17607.
• Citation: 275 F.2d 827
• Parties: UNITED STATES of America, Appellant, v. ASSOCIATED AIR TRANSPORT, INC., Appellee. ASSOCIATED AIR TRANSPORT, INC., et al., Appellants, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

275 F.2d 827 (1960)

UNITED STATES of America, Appellant, v. ASSOCIATED AIR TRANSPORT, INC., Appellee.

ASSOCIATED AIR TRANSPORT, INC., et al., Appellants, v. UNITED STATES of America, Appellee.

No. 17607.

United States Court of Appeals Fifth Circuit.

March 8, 1960.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Howard E. Shapiro, Atty., Dept. of Justice, Washington, D. C., George Cochran Doub, Asst. Atty. Gen., James L. Guilmartin, U. S. Atty., Miami, Fla., Alan S. Rosenthal, Attys., Dept. of Justice, Washington, D. C., for appellant.

William C. Burt, Robert Matthew Beckman, Washington, D. C., Joseph A. Perkins, Jeptha P. Marchant, Miami, Fla., for appellee.

Before RIVES, Chief Judge, and TUTTLE and BROWN, Circuit Judges.

JOHN R. BROWN, Circuit Judge.

This case involves domestic air transportation of military personnel during the Korean defense emergency by chartered air carriers. The immediate question is whether the Government is liable for ferry miles actually flown but which were in excess of the mileage specified in charter bids. Underlying that is the construction and application of the filed tariff. And collateral to this is the question of the right of the Government to invoke equitable estoppel against the Carrier's collecting payment on the basis of the filed tariff.

In a figure indigenous to the case, the District Judge, affirming completely the special master's report,¹ steered an instrument course somewhere between that diversely plotted by the Carrier and the Government. He held straight on the beam, as he was obviously bound to, that the tariff was valid and applicable. But then followed some diversions apparently to avoid apprehended inequitable turbulence. For he held that in order for the Carrier to recover for ferry mileage flown in excess of that bid, the Carrier had to show that, when the bids were received and evaluated, the Government knew that the ferry mileage was estimated only. The question of fact of such knowledge produced another departure. For he determined that the Government did not have that knowledge prior to June 25, 1953. After that date, due to the new requirement that supporting data accompany all billings for completed charter flights, the Government knew generally that ferry mileage bid was an estimate only.

This satisfied no one, and all appeal.² We conclude that the District Court's flight plan was faulty and reverse.

I.

Associated is an irregular air carrier. In 1951 it, along with others, was authorized by the Civil Aeronautics Board to provide common carrier charter service to the military without limit as to frequency or schedules. This, the Government's brief candidly tells us, was to "help satisfy" the "sharply increased need for domestic transportation" with which "the armed forces were faced" because of the "expansion of the National Defense Program following the outbreak of the Korean hostilities." Thereafter Associated and others through their agent IMATA³ entered into joint agreements⁴ with the several armed services which prescribed the procedure for making the individual charters for commercial air movements (called CAM). The Joint Agreements provided that charges were to be computed in accordance with tariffs mandatorily filed with CAB. The tariff, discussed later in detail, prescribed specific mileage rates for charter (live) miles (while the plane was carrying passengers) and ferry miles (while ferrying empty prior and subsequent to the passenger carrying leg).

Individual charter contracts were set up this way. The military post or base requiring transportation made its needs known to its service headquarters at the Pentagon. The service transportation office would then request bids from the agents, such as IMATA, representing air, rail and bus carriers. The bids submitted for air carriers identified the particular carrier and aircraft. Further, they set forth the points of origin and destination, both for ferry flights and the charter (live) flight together with the respective mileages. The dollar cost shown on the bids was the sum of the ferry mileage charge (front and rear ferry miles multiplied by tariff rate for ferry miles) and the charter mileage charge (charter miles multiplied by tariff rate for charter miles).⁵

The bids were evaluated on a comparative basis by the service and a charter was awarded to the carrier best meeting the needs of the military. Comparative cost was a factor, but only a factor. After performance of the transportation, a charter certificate was presented by IMATA to the service for verification and comparison with the bid. After being approved, the certificate was presented to the disbursing officer who paid the carrier subject to post-payment audit by the General Accounting Office and possible refund pursuant to 49 U.S.C.A. § 66 (1952).

Indeed, it was at the GAO where the carrier ran into heavy weather. Almost from the beginning of the operation the GAO took the position which the Department of Justice still asserts here: (a) for ferry miles actually flown in excess of the bid, the bid controls; (b) for ferry miles actually flown less than the bid, the bid is disregarded, and actual mileage alone counts. The District Court's action only complicated it further. The Court agreed with (b) and ordered the refunds on the Government's cross claim. As to (a) it established a ceiling of June 25, 1953. On all CAM's prior thereto, it agreed with the GAO that the bids set the maximum charge; on those subsequent it disagreed with the GAO and agreed with the carrier that the ferry mileage bid was an estimate only.

II.

The tariff is, as all recognized, crucial. Because each of the parties emphasizes one rather than the other, of various pertinent sections, it facilitates easy reference in our discussion to set them out separately, but in the order they appear in the tariff. By reading the notes (6 to 13) together, as must be done, the whole tariff can likewise be sensed. After limiting it to carriers participating in the tariff and defining miltary traffic and transportaton covered,⁶ the tariff set forth the definition of "charterer,"⁷ "charter flight,"⁸ "charter miles,"⁹ "ferry miles,"¹⁰ "application of rates and charges,"¹¹ "computation of mileage" for charter mileage¹² and ferry mileage.¹³

Filed as it was under compulsion of § 403(a) of the Civil Aeronautics Act of 1938, the tariff carried the statutory mandate of § 403(b) that it and it alone was to be the sole standard for services to be rendered and charges assessed and collected.¹⁴ In the implementation of this stringent legislative policy, the courts have been equally emphatic that the basis for the charge or credit must be found in the tariff. If it is not in the tariff, it is not allowable. It is not a mere matter of contract. For "a rate once regularly published is no longer merely the rate imposed by the carrier, but becomes the rate imposed by law." Louisville & N. R. Co. v. Dickerson, 6 Cir., 1911, 191 F. 705, 709. "Such tariffs, at least those which are factors in determining the carrier's charges, have the force and effect of statutes." American Ry. Express Co. v. American Trust Co., 7 Cir., 1931, 47 F.2d 16, 18. The tariffs are both conclusive and exclusive; they may not be added to through reference to outside contracts or agreements or understandings or promises.¹⁵

As a natural corollary to such a dynamic policy prohibiting the possibility or temptation to preferential discrimination — frequently asserted by the sovereign in the punitive enforcement of the Elkins and similar Acts — is the equally uncontradicted legal proposition that estoppel cannot be invoked against a common carrier to avoid a tariff provision. "Neither the intentional nor accidental misstatement of the applicable published rate will bind the carrier or shipper. The lawful rate is that which the carrier must exact and that which the shipper must pay." Kansas City Southern Ry. Co. v. Carl, 1913, 227 U.S. 639, 653, 33 S.Ct. 391, 395, 57 L.Ed. 683, 688. It is clear that no "act or omission of the carrier" can "estop or preclude it from enforcing payment of the full amount" of the tariff charges, Louisville & N. R. Co. v. Central Iron & Coal Co., 1924, 265 U.S. 59, 65, 44 S.Ct. 441, 442, 68 L.Ed. 900, 902. And "equitable considerations may not serve to justify failure of carrier to collect, or retention by shipper of, any part of lawful tariff charges," Baldwin v. Scott County Milling Co., 1939, 307 U.S. 478, 485, 59 S.Ct. 943, 948, 83 L.Ed. 1409, 1414. Pittsburgh, C., C. & St. L. Ry. Co. v. Fink, 1919, 250 U.S. 577, 40 S.Ct. 27, 63 L.Ed. 1151.

III.

The Government does not really challenge this, as indeed it could not. Rather, accepting these propositions its contentions are twofold. First, the tariff contemplates reference to an outside standard, namely, the bids. Second, if not, then the asserted estoppel arises not because of representations or misrepresentations of the terms of the tariff. Rather the estoppel comes into play because of representation of matters outside the tariff and incapable by their nature of being a part of it, namely, points of ferry mile origin and destination. To discuss the first means inevitably that we simultaneously consider Associated's basic contention that the tariff is sufficient, exclusive, and contemplates actual ferry miles flown, whether more or less than bid.

Underlying the Government's delicate process of intrinsic construction of the tariff is the assertion that, as a legal proposition, the tariff, to be valid and effective, must enable a prospective user at the time of shipment to calculate to the last penny the charges which will be payable if the service is employed. On that foundation, it then proceeds to demonstrate that since points of origin and destination for front and rear ferry legs are not shown in the tariff,¹⁶ nor can they be, it is obvious that the tariff itself affirmatively contemplated the use of "outside"...