Great Northern Ry. Co. v. Loonan Lumber Co.

125 N.W. 644, 25 S.D. 155, 1910 S.D. LEXIS 58

• Court: South Dakota Supreme Court
• Decided: March 9, 1910
• Status: Published

Opinions

WHITING, P. J.

This cause is before us upon an appeal from an order overruling a demurrer to defendant’s answer. The complaint sets forth that both parties are corporations; that defendant caused a car load of coal to be delivered to the Wisconsin Central Railway Company at Chicago for shipment by said company to Minnesota Transfer, to be there delivered to a connecting carrier and forwarded by such connecting carrier to Sioux Falls, S. D.; that said car load was so billed when delivered at Chicago; that the said coal was carried to Minnesota Transfer and delivered to plaintiff to carry to Sioux Falls; that such carriage by both companies was to be at regular published tariff rates; that such oar of coál was received by- plaintiff to be carried by it for a consideration, to wit, its proportionate share of the filed and published through tariff rate from Chicago via Minnesota Transfer to Sioux Falls; that when said shipment had reached a division point on plaintiff’s line between Minnesota- Transfer and Sioux Falls its destination was changed by order of defendant and the shipment diverted to Jasper, Minn., a point on plaintiff’s line between such division point and Sioux Falls; that- there is no through tariff rate between Chicago and Jasper for freight originating on said Wisconsin Central Company’s line; that the regularly published -tariff schedule and the only schedule for coal between such points as filed with the Interstate Commerce Commission and posted in the depots of -the two railway companies was the local rates on Minnesota Transfer; that according to such rates the total charge for shipping said car would be $134.30; that plaintiff has paid the Wisconsin Central in full for such shipment; that defendant has paid no part of above $134.30 except $79, and that $55.30 remains due and unpaid, and defendant refuses to pay same — wherefore, -plaintiff prays judgment for said $55.30 and interest. The answer admits all the allegations of the complaint except that defendant denies owing anything to plaintiff. The answer sets forth that Jasper is some 30 miles nearer Minnesota Transfer than is Sioux Falls; that freight from Minnesota Transfer to Sioux Falls over defendant’s line must pass through Jasper; that there exists no reason, “by way of the peculiar geographical position, competition of other transportation facilities or trade or other peculiar conditions, why a greater charge should be made for transporting coal from Minnesota Transfer or from Chicago- via Minnesota Transfer to Jasper than is made for the transportation of such coal from Minnesota Transfer or from Chicago via Minnesota Transfer to Sioux Falls, and that the regular tariff rate on -coal from Chicago to Sioux Falls via Minnesota Transfer was a just, reasonable and sufficient tariff on coal from Chicago to Japser via Minnesota Transfer;” that the defendant paid plaintiff $79 in full satisfaction of plaintiff’s charges for such shipment; that said $79 was received in full satisfaction thereof and a receipt therefore was given; that said $79 was the full tariff rate from Chicago to Sioux Falls via Minnesota Transfer and Jasper. The demurrer alleges that such answer upon its face, does not make denials and allegations sufficient to constitute a counterclaim or defense.

It is appellant’s contention: (1) The only lawful rate that can be received by the carrier and paid by -the shipper is the tariff rate filed, published and posted in accordance with the federal laws regulating interstate commerce. (2) The courts have no jurisdiction to grant relief to an individual shipper in advance of a change in the filed tariffs for an alleged unreasonableness in rates or violation of the long and short haul clause of the act. (3) An accord and satisfaction on the filed and published rate is unlawful, for it is prohibited and penalized by the act.

We think the last proposition is so well established that it needs no consideration by us, and that therefore the taking of the $79 and giving receipt in full cannot be considered in any manner as a defense unless it is the full amount that could legally be collected. We are also fully satisfied that under the provisions of the interstate commerce act (Act. Feb. 4, 1887, c. 104, 24 Stat. 379 [U. S. Comp. St. 1901, p. 3154]), as interpreted by the United States Supreme Court, no court has any power, in the first instance, to inquire into the reasonableness of any rate that has been regularly established by a railway company and filed with the Interstate Commerce Commission and published by posting; that this question of whether or not a rate is reasonable and just is one to be determined in the first instance in a proper proceeding before the said Interstate Commercé Commission (Texas, etc., R. Co. v. Abilene Cotton Oil Co., 204 U. S. 426, 27 Sup. Ct. 350, 51 L. Ed. 553, 9 Am. & Eng. Ann. Cas. 1075) and this is conceded by respondent in its brief. There certainly can be no question at this late date but that the first proposition above stated is true. Gulf C., S. & F. Railroad Co. v. Hefley et al., 158 U. S. 99, 15 Sup. Ct. 812, 39 L. Ed. 910; Texas, etc., v. Mugg, 202 U. S. 242, 26 Sup. Ct. 628, 50 L. Ed. 1011.

Respondent contends, however, that there is ’another question involved here; that having alleged that there exists no reason, by way of the peculiar geographical position, competition of other transportation facilities or trade or other peculiar conditions why a greater charge should 'be made for -the shorter than the longer haul, and this being admitted by the demurrer — there is an admission of facts establishing that the rate attempted to be charged to Jasper is unlawful ab initio — and that the provisions for filing schedules, and making them when filed binding on both carrier ■ and shipper, has no application to' rates per se unlawful. Section 4 of the Interstate Commerce Act reads as follows: “Sec. 4. That it shall be unlawful for any common carrier subject to the provisions of this act to charge or receive any greater compensation in the aggregate for the transportation of passengers or of like kind of property, under substantially similar circumstances and conditions, for a shorter than for a longer distance over the the same line, in the same direction, the shorter being included within the longer distance; but this shall not be construed as authorizing any common carrier within the terms of this act to charge and receive as great compensation for a shorter as for a longer distance; provided, however, that upon application to the Commission appointed under the provisions of this act, such common carriers may, in special cases, after investigation by the Commission, be authorized to charge less for longer than for shorter distances for the transportation of passengers or property; and the Commission may from time to time prescribe the extent to which such designated common carrier may be relieved from the operation of this section of this act.”

It will be seen -that respondent’s position is in direct conflict with that part of appellant’s second proposition above stated, namely, that the court has no jurisdiction to- grant relief to a shipper for a violation of the long and short haul clause of the act, in advance of action thereon by the Interstate Commerce Commission. Appellant places the question 'of relief under the long and short haul clause on exactly the same basis as where relief is sought under section 1 of the same act, which section provides that all charges shall be reasonable and just, and that every unjust and unreasonable charge is prohibited and declared to be unlawful. The precise question here raised does not seem' to have ever been passed upon by the federal courts, nor, so far as we are advised, by the court of last resort of any state, and therefore we can look to the decisions of the other courts to assist us only in so far as in treating other features of this federal law their reasoning thereon may seem applicable hereto.

We believe that this cause must be considered just the same as if the two railway companies had filed and published a through rate from Chicago to Jasper, without having applied to the Commission, under the last part of section 4, for leave so to do, and this through rate so established was greater than that from Chicago to Sioux Falls. There can be no question, ufider the authorities, but that, in this case, no action could be brought in this court based on the charge that the short haul rate was unreasonable, but that resort would first have to be had to the Commission for it to review the rate filed. It becomes important, then, to see why the courts have held that no such action could be brought, and to see if the same reasons would necessitate a holding that the question of short haul rate being unlawful could not be determined, in the first instance, by a court, but must be referred for such determination to the Commission. The ’ Commission itself, while always jealous of its rights under the law, early held that, under the first part of said section 4^-jt not being made unlawful to' fix a greater rate for short haul than long one, where difference in “circumstances and conditions” authorized it —the carrier could fix such rate where the different “circumstances and conditions” authorized it and do this without first applying to the Commission for leave. The Commission, in the matter of Trammel v. Clyde Steamship Co., 4 Interst. Com. R. 122, held “The carrier has the right to judge, in the first instance, whether it is justified in making the greater charge for the shorter distance under the fourth section in all cases where the circumstances and conditions arise wholly upon its own line through competition for the same traffic with carriers not subject to regulation under the act to regulate commerce. In other cases under the fourth section the circumstances and conditions are not presumptively dissimilar and carriers must not charge less for the longer distance except upon the order of this Commission.” It will thus be 'seen that the Commission gave a restricted interpreation to the phrase “under substantially similar circumstances and conditions,” thus indicating that they considered that under the phrase “in special cases” the Commission could grant permission to carrier to establish a greater short haul than long haul rate, where the “circumstances and conditions,” would not have justified the carrier to do- so in the first instance. But the United States Supreme Court has overruled the above holding of the Commission, and holds that “circumstances and conditions” includes any and al-1 competition. Interstate Com. Com. v. Alabama M. R. Co., 168 U. S. 144, 18 Sup. Ct. 45, 42 L. Ed. 414; East Tenn., V. & G. Ry. Co. et al. v. Interstate Com. Com., 181 U. S. 1, 21 Sup. Ct. 516, 45 R. Ed. 719. We are thoroughly convinced that the only-proper construction of this whole section is to hold that the phrase “in special cases” was intended to mean the same as cases not “under -substantially similar circumstances and conditions,” and this leaves the last half of section 4 an absolute dead letter — except as to the power therein given to review rates already established — if carriers, under the first part of such 'section, can establish rates which regardles's of the question of difference, in “circumstances and conditions,” will be in full force and effect as against both shippers and carriers until set aside by the Commission, because, under such interpretation, no carrier would ever apply, in t'he first place, to the Commission for authority to- establish a greater rate for short than long haul. We certainly should, if possible, so interpret this section as to- give some effective force to every part thereof.

Justice Shiras speaking for the court in the case of Interstate Commerce Commission v. Alabama M. R. Co., supra, says: “As the third section of the act, which forbids the making or giving any undue or unreasonable preference or advantage to any particular person or locality, does not define what, under that section, shall constitute a preference or advantage to- be undue or unreasonable, and as the fourth section, which fox-bids the chax-ging or receiving greater compensation in the aggregate for the transportation of like kinds of property for a shorter than for a longer distance over the same line, under substantially similar circumstances and conditions, does not define or describe in what the similarity or dissimilarity of circumstances and conditions shall consist, it cannot be doubted that whether, in particular instances, there has been an undue or unreasonable prejudice or perference, or whether the circumstances and conditions of the carriage have been substantially similar or otherwise, are questions of fact depending on the matters proved in each case.” Justice Shiras delivering the opinion for the United States Circuit Court in the case of Van Patten v. C., M. & St. P. Ry. Co. (C. C.) 81 Fed. 545, discussed very fully the reasons that control the court in holding that it was not the intention of Congress to leave the question of reasonableness of rates to the uncertain!}' of jury decisions. In concluding his discussion, among other things he says: “If the contention of plaintiff be sound, every schedule of rates posted by carriers under the provisions of the act should have attached thereto the memorandum 'Subject to change in accordance with the verdicts of juries which may hereafter be rendered.’ ” It can be argued with much show of reason that, this same uncertainty, resulting from varying verdicts of juries, precludes any construction of section 4 that will leave question of difference in “circumstances and conditions” to be determined by juries; but Justice Shiras in the above opinion, after calling attention to the many divers things that must be taken into consideration in determining the reasonableness of a rate — matters beyond the possibility of proper measurement and weighing except by persons peculiarly qualified — 'said: “It is contended, however, on part of plaintiff, that as the first section of the act declares that the rates charged must be reasonable, and as section 8 declares that the carrier shall be liable to any person injured for the damages resulting from the doing of any act or thing prohibited, it is open to the plaintiff to now show that the schedule rates charged and paid without demur during the past five years were unreasonable; and that, if this be not’so, then the provisions of the act providing the right to sue for and recover damages for violation of the act are meaningless. If the carrier, after ■adopting, printing, an-d posting the schedule of rates as required by the act, should charge or exact from a shipper in any form or by any devise a rate greater than that fixed in the schedule, an action for damages would be maintainable, and in such case there would be no difficulty in defining the rule of damages, to-wit, the difference between the schedule rate and that actually exacted. So, also, if the schedule on its face provided for the imposition of unfair and inequitable rates — as, for instance, if it should require the payment of a greater charge for the transportation of freight for a shorter than for a longer distance, other things being equal — an action might be maintained, and in that case a rule of damages could be based upon the provisions of the schedule itself, by taking the schedule rate for the longer distance as the basis for determining what the proper rate for the shorter distance should be.” This whole act is based upon the theory that competition at competing points, will, by the natural results flowing therefrom, fix the lowest rates at competing points 'that are reasonable, which rates so fixed voluntarily by the carrier can be taken as a basis for fixing rates at other points, and that such competing rates shall control unless it can be established that, owing to different “circumstances and conditions,” it is reasonable to allow a greater charge for hauls to noncompeting points.

This phrase “under substantially similar circumstances and conditions” is found in section 2 of the same act which reads as follows: “Sec. 2. That if any common carrier subject to the 'provisions of this act shall, directly or indirectly, by any -special rate, rebate, drawback, or other device, charge, demand, collect, or receive from any person or persons a greater or 1-ess compensation for any service rendered or to be rendered in the transportation of passengers or property, subject to the provisions of this act, than it charges, demands, collects, or receives from any other person or persons for doing for them a like and contemporaneous service in the transportation of a like kind of traffic, under substantially similar circumstances and conditions, such common carrier shall be deemed guilty of unjust discrimination, which is hereby, prohibited and declared to be unlawful.” The right to bring action and submit to the jury the question of similarity of “circumstances and conditions” seems to be recognized by the federal courts in the case of Kinnavey v. Terminal R. Ass’n of St. Louis (C. C.) 81 Fed. 802. This was an action brought by a shipper against a railway company to recover part of the charges that had been paid by the shipper to such company for shipments made. The petition charged not only that the rates were unreasonable and unjust, but further that they were different from and greater than rates charged to and collected from another company, for shipments made of same commodity “under substantially similar circumstances and conditions,” and that such charges against the plaintiff were an unjust discrimination and in violation of said section 2. A demurrer was interposed to the complaint and sustained so far as the claim of unreasonableness of rate was concerned. The court held that this came under section 1 of the act, and that under such section the rate filed is presumed to be reasonable, and therefore no cause of action was stated without alleging that such rate charged was greater than the rate filed; but the court held that the complaint was sufficient under section 2 wherein it alleged a charge of different rates “under substantially similar circumstances,” thus holding that there could go to a jury for determination not only the question of the shipments and rates charged therefor, but also the question as 'to whether the ¡shipments were “under substantially similar. circumstances.” The court says that this right of action under such section 2 is not affected by the question as to whether the rate charged plaintiff was reasonable; that the question of reasonableness is not necessarily involved in question as to whether there is an unjust discrimination. So, in case at bar, it is not a question as to whether the rate charged from Chicago to Jasper is reasonable, but solely a_ question as to whether it is lawful, and its being lawful, in view of the lower rate from Chicago to Sioux Falls, depends, under section 4, on' either one of two things; either on the fact that the Commission has authorized it, or, where there has been no action on part of Commission, it depends on the fact that shipments to Jasper are under substantially dissimilar conditions from those to Sioux Falls. Plaintiff by its demurrer admits facts that render the rate to Jasper unlawful, and it has wholly failed to allege facts bringing its claimed rate under the exception provided for by latter part of section 4. The answer herein not only states facts showing the rate claimed to be unlawful, but such facts are facts which under the law could be submitted for determination to a jury in an action of 'this nature.

In conclusion we would state that in construing section 4 in connection with the whole law, it should be held that when, under the first part of said section, any carrier or carriers have fixed a rate for short haul greater than for long, without first obtaining authority from the Commission, such rate is left. open to attack by any party feeling aggrieved, which attack can be made, in a proper case, by direct action to recover unlawful charges paid, leaving to the jury, not the fixing of what is a reasonable rate, but solely the determination of the fact of the existence or nonexistence of “practically similar circumstances and conditions.” If the jury determine that the “circumstances and conditions” render the short -haul rate unlawful, the carrier shall only be entitled to recover or retain the long haul rate; that when the carrier has fixed his short haul rate by virtue of authority received from the Commission such rate can only be questioned by proceedings brought in the first place before such Commission. Such construction gives life to the whole of section 4, and is in harmony with the decisions of the federal- courts on analogous matters. Under this view the respondent -has a complete defense if he can ■prove the allegations of his answer, no- question being raised but the allegations of said answer are equivalent to alleging that the transportation to Jasper was “under practically similar circumstances and conditions” as it would be to Sioux Falls.

The order- of the trial court overruling the demurrer to the answer herein is affirmed.