United States v. Baltimore Ohio Railroad Company

• Decision Date: 01 December 1913
• Docket Number: No. 385,385
• Citation: 58 L.Ed. 218,231 U.S. 274,34 S.Ct. 75
• Parties: UNITED STATES, Interstate Commerce Commission, and Federal Sugar Refining Company, Appts., v. BALTIMORE & OHIO RAILROAD COMPANY et al
• Court: U.S. Supreme Court

231 U.S. 274

34 S.Ct. 75

58 L.Ed. 218

UNITED STATES, Interstate Commerce Commission, and Federal Sugar Refining Company, Appts.,

v BALTIMORE & OHIO RAILROAD COMPANY et al.

No. 385.

Argued January 16 and 17, 1913.

Decided December 1, 1913.

Solicitor General Bullitt for the United States.

[Argument of Counsel from page 275 intentionally omitted] Mr. P. J. Farrell for the Interstate Commerce Commission.

[Argument of Counsel from page 276 intentionally omitted] Mr. Ernest A. Bigelow for the Federal Sugar Refining Company.

[Argument of Counsel from pages 277-280 intentionally omitted] Messrs. George F. Brownell and H. A. Taylor for the Railroad companies.

Mr. William N. Dykman for the Jay Street Terminal and Arbuckle Bros.

Mr. H. B. Closson for the Brooklyn Eastern District Terminal.

Mr. Justice Lurton delivered the opinion of the court:

This appeal involves the legality of an order made by the Interstate Commerce Commission, holding that certain allowances made by the appellees to Arbuckle Brothers on sugar shipped by them over one or another of the railroad companies' lines constitute an illegal preference or discrimination in violation of the act to regulate commerce. The order of the Commission required the railroad companies to cease and desist from paying such allowances, 'while at the same time paying no such allowances to the Federal Sugar Refining Company,' on its sugar brought by it on lighters to the carriers at the same rail terminals. 20 Inters. Com. Rep. 200. The carriers affected filed a bill in the commerce court, alleging the invalidity and illegality of the order, and sought an injunction pendente lite and a permanent injunction against its enforcement. An injunction until the cause could be finally heard was granted by the commerce court. This was appealed from by the United States and the injunction sustained as within the sound discretion of the court below. 225 U. S. 306, 56 L. ed. 1100, 32 Sup. Ct. Rep. 817. Thereupon the cause was finally heard upon motion of the appellants to dismiss the bill for want of equity, all answers and pleas theretofore filed having been withdrawn. The commerce court denied this motion and sustained the equity of the bill. The appellants declining to further defend, the temporary injunction was made permanent. From that decree this appeal is prosecuted.

The situation out of which the questions for decision arise, shortly stated, is this:

The railroad companies held by the Interstate Commerce Commission to have discriminated in favor of Arbuckle Brothers and against the Federal Sugar Refining Company are interstate trunk lines whose freight rail terminals are at the New Jersey shore of the harbor of New York. Transportation of freights into and out of the city of New York is practicable only by means of car floats, barges, and steam lighters, operating between the city and the New Jersey shore.

To meet this condition the appellee railroads have long held themselves out as extending transportation of freights bound east to a defined area along the river front of the city, and as beginning such transportation westbound when freight is delivered at designated points within the same area. The necessary lighterage service is performed without additional cost or charge, the flat rate into or out from such points being identical with that applicable at the New Jersey rail terminals. The limits within which such lighterage service is performed as a part of the transportation assumed have long been defined and published in the several filed rate sheets of the carriers. The district embraces substantially the commercial and manufacturing river front of Greater New York, and within it the railroads hold themselves out as undertaking to receive or deliver freight at any public dock, or at any accessible private dock where the shipper shall arrange for the use of the dock. Within this lighterage zone each of the appellees has established and long maintained public freight terminal stations, at which it will deliver eastbound freights and receive freights bound west. Some of these stations are owned or managed solely by one of the railroads, and some are union stations operated for the joint use of two or all of the railroads. Some of them are operated by third persons, who manage and operate them under contracts as agents for one or more of the railroads. But whether operated under contract or directly by the company or companies using them, they are represented to be public delivery and receiving stations, and are so set out in the filed tariff sheets of the companies interested.

The 'allowance' to Arbuckle Brothers referred to in the order of the Commission is the consideration paid by the railroad companies to them for instrumentalities and facilities furnished and services performed in the maintenance of one of these public stations, known as the Jay street terminal, and for the lighterage of all freight between that station and the railroad terminals on the New Jersey shore. Arbuckle Brothers, a copartnership, are large refiners of sugar and dealers in coffee. Much of their product of sugar finds a market in the west at points upon the lines of the railroads here involved. Their refinery is upon the water front of Brooklyn. They also own a contiguous property fronting upon East river some 1,200 feet. Upon this property they have erected a dock, piers, and large warehouses for the receipt of freight intended for transportation to the railroad terminals on the New Jersey shore, or received from such terminals for consignees nearby. They also own steam lighters, car floats, barges, etc., constructed for the transfer of cars, loaded or unloaded, between this dock and the New Jersey terminals. The premises were peculiarly adapted for use as a public union freight station, and for the purpose of extending transportation by their several lines to this portion of the commercial and manufacturing water front of Greater New York, the appellee railroad companies, in 1906, entered into separate, but identical, contracts with Arbuckle Brothers, the latter contracting under the business name and style of 'The Terminal Company.' The contracts are too lengthy to be set out. Their essential points may be thus summarized:

1. The Terminal Company agrees to maintain the premises in good order and condition for the receipt of freight, and to provide all necessary boats, car floats, docks, and piers, adequate at all times to receive, discharge, transfer, and deliver freights, loaded and unloaded, adequate to accommodate the business contemplated.

2. The Terminal Company will receive at the New Jersey terminals all freights, in or out of cars, intended for delivery at the aforesaid freight station, and safely convey the same to the premises, and there make delivery to the consignees. It will also receive and load into cars all freights which may be delivered to it at its said premises for transportation over the lines of any of said railroad companies, and carry and deliver the same to said railroad company's New Jersey rail terminals.

3. For the facilities supplied and the services performed each of the railroad companies agrees to pay on freight in and out of the station, a compensation measured by the tonnage handled for each such railroad of 4 1/5 cents per hundred pounds on freight originating at or destined to points west of what is called 'trunk line territory,' and on freight originating at or destined to points east thereof, 3 cents per hundred pounds.

Under these contracts, consignments to or by Arbuckle Brothers are handled in the same manner as the shipments of the general public, and comprise a part of the tonnage in and out of that station by which the compensation paid to the Terminal Company is measured. This fact was the basis of the complaint made by the Federal Sugar Refining Company, whose sugar seeks the same market, and who claimed that as it lightered its sugar from its own shipping dock to the terminals at the New Jersey shore, the so-called 'allowance' made in respect to the sugar of Arbuckle Brothers, handled under the contracts referred to above, was an unjust and an illegal discrimination unless a like allowance was made to it.

The order of the Commission does not forbid the allowance to Arbuckle Brothers as in itself illegal or unreasonable, but forbids it only as a discrimination unless a like allowance is made to the Federal Sugar Refining Company. That there is no undue discrimination against the Federal Sugar Refining Company in refusing to make a like allowance to it will appear when the conceded circumstances and conditions are considered. This latter company is a competitor of Arbuckle Brothers in the sale and shipment of sugar to the same markets. Its refinery is located at Yonkers on the Hudson river, a point some 10 miles beyond the limits of the free lighterage district. It owns its docks and piers upon the river, but has never enjoyed the free lighterage privilege accorded to all shippers from docks and piers inside the free zone under the tariff sheets of the carriers. It has therefore been compelled to furnish its own means for lightering shipments from its docks to the New Jersey shore. This is an undoubted disadvantage in competing with Arbuckle Brothers, as well as with all other refiners and shippers of sugar within the lighterage district. For many years it had an arrangement with the Ben Franklin Transportation Company, an independent transportation company, by which the latter transported its sugar directly from its Yonkers dock to the railway terminals on the New Jersey shore. There it was delivered to one of the appellees and a bill of lading signed. The freight rates under such bills were identical with the flat rate from stations and piers within the free lighterage district. This disadvantage arising from its location was made the subject of a prior complaint before the Commission, wherein it sought to have the...