Chicago & Eastern Illinois Railroad Company, an Indiana Corporation v. Southern Railway Company, a Virginia Corporation

261 F.2d 394
CourtCourt of Appeals for the Seventh Circuit
DecidedJanuary 12, 1959
Docket12354
StatusPublished
Cited by19 cases

This text of 261 F.2d 394 (Chicago & Eastern Illinois Railroad Company, an Indiana Corporation v. Southern Railway Company, a Virginia Corporation) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Chicago & Eastern Illinois Railroad Company, an Indiana Corporation v. Southern Railway Company, a Virginia Corporation, 261 F.2d 394 (7th Cir. 1959).

Opinion

SCHNACKENBERG, Circuit Judge.

Chicago & Eastern Illinois Railroad Company, herein also called plaintiff, has appealed from that portion of a judgment entered by the district court which dismissed its amended complaint (for the period subsequent to August 1, 1944), and allowed a recovery (for the period from August 1, 1944 through May 31, 1957), by defendants from plaintiff of $132,151 on defendants’ amended counterclaim. This case was tried by the court without a jury.

Plaintiff’s amended complaint sought recovery of sums collected by defendants on freight shipments originating on plaintiff’s lines “since 1940” which were delivered by plaintiff to Southern Railway at Princeton, Indiana, for transportation to final destinations on the lines of defendants, or its connections, which sums it is alleged defendants withheld from plaintiff which is entitled to them.

By defendants’ amended counterclaim they sought recovery from plaintiff of sums collected by it on northbound shipments from points on defendants’ lines, moving via defendants’ lines to Princeton, Indiana, and thence to final destination on lines of plaintiff or its connections.

No question as to the pleadings, including responsive answers and replies, has been raised.

As far as here involved, a line of plaintiff’s railroad extends from Chicago, Illinois, through Princeton, Indiana, to Evansville, Indiana, while defendants’ lines extend from Princeton, Indiana and Evansville, Indiana, via Louisville, Kentucky, to Birmingham, Alabama and other southern points. For example, a consignor at Chicago may execute one bill of lading to plaintiff, covering a freight shipment from Chicago to Birmingham, *396 and the shipment will be delivered at Birmingham by defendants without the consignor or consignee taking possession of the shipment at the junction point of either Princeton or Evansville. To compensate the railroads for such services, an allocation of the freight charges received is required. This allocation depends upon either (1) a combination of the local rates, if there be no joint through rate, (2) a type of through rate involving proportional rates, which contemplates that either the originating carrier or the destination carrier may have a lower rate applicable to or from the junction point which differs from its local rate but applied only if the traffic moves from points beyond, or to points beyond, the junction point, 1 or (3) joint through rates or joint rates.

Generally, the charges, which the shipper or receiver must pay to cover the through transportation, are submitted and paid as one bill. In the case of a combination rate, (to use an example) if the rate on pig iron from Chicago to Evansville via plaintiff’s line is $1.00 and from Evansville to Birmingham via defendants’ lines is $2.00, the total charge would be $3.00 and the plaintiff would receive $1.00 and defendants $2.00. In the case of a proportional rate, 2 assuming plaintiff has a $.90 rate on pig iron from Chicago to Evansville applying only if the pig iron moves beyond Evansville, this rate added to defendants’ rate from Evansville to Birmingham, would make a through charge of $2.90, which would be divided $.90 to plaintiff and $2.00 to defendants.

In the case of a joint through rate or joint rate agreed upon by the carriers for the entire movement from Chicago to Birmingham, where plaintiff and defendants had agreed upon a through charge of $2.85, it is customary for the parties • to the rate to agree on the share each is to receive for its services, since there is no natural basis for dividing the charges as there is in the case of combination charges or proportional charges. One method, as an example, is to prorate the total charges on the basis of the local rates to and from the junction point. In the example discussed, where plaintiff’s local charge was $1.00 and defendants’ $2.00, prorating a joint through rate or joint rate of $2.85 on that basis would give plaintiff % of $2.85 or 95 cents and defendants % of $2.85 or $1.90. The respective proportions to be received under joint through rates are known as divisions of joint rates or merely as divisions. 3

The divisions of joint through rates on shipments moving both north and south of the Ohio River are a result of the historical development of rail transportation, in the early stages of which much traffic began or ended at the River. The rates were usually made in view of that fact. When traffic began to move all rail in continuous movement both north and south of the River, the combination of the rates to and from the River were generally used as the rate basis. As joint through rates developed, the divisions of the rates were generally made over the Ohio River crossings. Division of Rates, Official and Southern Territories, 234 I.C.C. 175, 179. When joint through rates covering the entire movement were established on shipments moving both north and south of the Ohio River, the divisional agreements usually would provide that the primary division of the rate would be made at the Ohio River, and the portions north of, and south of, the River would be divided .in accordance with the local divisions of rates from origin to the Ohio River crossing. This procedure contin *397 ued, even though subsequently a railroad operating on one side of the Ohio River later acquired or constructed a line of railroad on the other side of the River.

Against this basic historical background, defendants operate a system of railroad extending both north and south of the River, crossing it at one point, Louisville, Ky., and reaching another Ohio River crossing, Evansville, Indiana, where they do not cross the River, but where they do connect with plaintiff’s line. In addition, a line of defendants’ running from Louisville to St. Louis, Missouri, crosses plaintiff’s line at Princeton, Indiana. Plaintiff’s line meets the lines of Louisville & Nashville Railroad Company and the Illinois Central Railroad Company at Evansville, and those railroads operate south of the Ohio River from Evansville. Thus, if plaintiff has a carload of freight originating at a point on its line of railroad, destined for Birmingham, Alabama, it can haul that shipment to Evansville, going through Princeton, and turn it over to the Louisville & Nashville Railroad or the Illinois Central Railroad, both of which railroads have lines extending to Birmingham. In that case, plaintiff will receive the entire division of the rate belonging to the carriers handling the traffic north of the Ohio River. Plaintiff contends that, to be on a competitive basis, defendants for a long time have given the same division at Evansville to the roads from the north bringing the traffic to Evansville as do the other southern railroads, even though they carry the shipment north. of the Ohio River to Louisville where it crosses the River; in other words, that defendants have treated Evansville, for divisional purposes, as an Ohio River crossing even though they do not cross the Ohio River there. 4

According to plaintiff’s theory, it was because of the above facts that the parties hereto made an agreement on September 14, 1916, providing:

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Cite This Page — Counsel Stack

Bluebook (online)
261 F.2d 394, Counsel Stack Legal Research, https://law.counselstack.com/opinion/chicago-eastern-illinois-railroad-company-an-indiana-corporation-v-ca7-1959.