State ex rel. Utilities Commission v. Southern Railway Co.

124 S.E.2d 510, 256 N.C. 359, 1962 N.C. LEXIS 480

• Court: Supreme Court of North Carolina
• Decided: February 28, 1962
• Status: Published

Opinion

Denny, J.

The Interstate Commerce Commission (hereinafter referred to as ICC), on 28 September 1961, found upon the evidence adduced in the hearing before it, which evidence was admitted by agreement in the hearing before the Commission, that the “defendants’ refusal to perform switching service at their interchange in High Point, N. C., is, and for the future will be, unjust and unreasonable; and that defendants’ practice of performing reciprocal switching for other industries at High Point and not for the complainant industries on competitive traffic, is, and for the future will be, unjustly discriminatory against and unduly prejudicial to the complainants, and unduly preferential of the favored industries * *

Based on its findings, the ICC entered the following order: “It is ordered, that the defendants named in the complaint, according as they participate in the transportation, be, and they are hereby, notified and required to cease and desist, on or before January 2, 1962, and thereafter to abstain from practicing the unreasonableness, unjust discrimination, and undue prejudice and preference referred to in the preceding paragraph hereof.

“It is ordered, that the defendants, according as they participate in the transportation, be, and they are hereby, notified and required to establish, on or before, January 2,1962, upon notice of this Commission and to the general public by not less than 30 days’ filing and posting in the manner prescribed under section 6 of the Interstate Commerce Act, and thereafter to maintain and apply, rates, charges, rules, regulations, and practices which will prevent and avoid the unreasonableness, unjust discrimination, and undue prejudice and preference referred to in the first paragraph hereof.”

An order similar to the foregoing order was entered by the ICC in the case of Seaboard Air Line Rwy. Co. v. United States, 254 U.S. 57, 65 L. Ed. 129, involving the Seaboard, the Southern and Chesapeake and Ohio Railroads with respect to the absorption of switching charges within the switching limits of Richmond, Virginia. The Court said: “ ‘Section 2 (of the Act to Regulate Commerce) is primarily directed against discrimination between shippers located in the same community. It is aimed to put all shippers within a switching district upon a substantial equality. It provides that where a carrier receives from any person a greater compensation for any service rendered in the transportation of passengers or property than it receives from any other person for doing for him 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,” — a discrimination which is prohibited and declared to be unlawful. Under this section it is settled that the competition of rival carriers as such does not constitute substantially dissimilar circumstances to justify a difference in treatment.’

“We are of the opinion that the Commission was correct in regarding the service in question as a like and contemporary service rendered under substantially similar circumstances and conditions, and amply sustained as matter of law in Wight v. United States, 167 U.S. 512, 42 L. Ed. 258, 17 Sup. Ct. Rep. 822, and Interstate Commerce Commission v. Alabama Midland R. Co., 168 U.S. 144, 42 L. Ed. 414, 18 Sup. Ct. Rep. 45. The principle established in these cases is that the statute aims to establish equality of rights among shippers for carriage under substantially similar circumstances and conditions, and that the exigencies of competition do not justify discrimination against shippers for substantially like services.” (Emphasis added) See Pennsylvania Co. v. United States, 236 U.S. 351, 59 L. Ed. 616, and Northern P. R. Co. v. United States, 316 U.S. 346, 86 L. Ed. 1521.

It will be noted that these ICC orders and the decisions upholding them go no further than to compel the offending carrier or carriers to cease and desist from continuing the practice or practices found to be unjust, unreasonable, and discriminatory as between shippers. These orders do not explicitly direct that all shippers be accorded the benefits of reciprocal switching and that the line-haul carrier shall absorb the switching charges, but such orders do make it clear and explicit that shippers similarly situated shall be treated alike.

Therefore, the real question before us is whether or not the court below committed reversible error in affirming the order of the Commission entered in this proceeding on 20 December 1960.

The present situation at High Point with respect to switching practices by the Southern and C&NW is discriminatory as between the fifteen complainants and other industries and business establishments located on the Southern or C&NW which are granted reciprocal switching, and is unjust, unreasonable and, therefore, unlawful.

On one side of this controversy we have the Southern and its wholly owned subsidiary the C&NW, together with other connecting carriers, which makes available to industries in High Point located on the Southern or C&NW a vast system of railways. On the other hand, we have the HPT&D, a locally owned road until recently, which connects with the Winston-Salem Southbound (hereinafter referred to as WSS) at High Rock, North Carolina. The WSS is jointly owned by the Norfolk & Western Railway Company and the Atlantic Coast Line Railway Company. The WSS has obtained all of the stock of the HPT&D since the institution of this proceeding. The HPT&D witli its connection with the WSS, connects with the Norfolk & Western at Winston-Salem, the Norfolk & Southern at Norwood, and the Atlantic Coast Line and Seaboard Air Line Railroads at Wadesboro, which makes available to industries and business establishments located on the HPT&D at High Point or Thomasville these transportation facilities, together with other connecting carriers.

For thirty years or more there was little, if any, difficulty in connection with the switching practices at High Point. Approximately six or eight years ago the Southern decided that too many carloads of freight were being shipped to and from High Point over the HPT&D and its connecting lines — freight that could have been shipped to and from High Point over the Southern at the same cost. Therefore, the Southern began to drop from or refused to list in its reciprocal switching tariff the names of the fifteen complaining industries and business establishments which had private or assigned siding on the Southern or its subsidiary the C&NW.

The status of the fifteen complainants who have been removed from or refused inclusion in the Southern’s list which would entitle them to be included in its reciprocal switching tariff, may be illustrated by the following: For example, a carload shipment of lumber is made by a consignor at Wilmington, North Carolina, to Heritage Furniture Company located on the Southern at High Point. The car having originated on the Atlantic Coast Line Railroad, was moved to High Point over the Atlantic Coast Line, the WSS, and the HPT&D, an established through route. On arrival at High Point, the HPT&D tenders the car to the Southern Railway at their jointly owned interchange tracks, a very short distance from the Heritage private industrial track served by the Southern. The Southern refuses to switch the car to the Heritage plant. Heritage must accept delivery on an HPT&D team track and dray the lumber to its plant, at extra expense, or have the car shipped by rail through Thomasville, and back over the Southern to High Point, and pay extra line-haul charges.

If, however, Heritage Furniture Company had not been dropped from the list of Southern’s reciprocal switching tariff, when the carload of lumber was tendered to the Southern on the interchange track at High Point, the Southern would have promptly placed the car on the private siding of the Heritage Furniture Company, and the HPT&D would have paid the Southern the reciprocal switching charge of $13.71 and would have absorbed such charge.

There is no controversy in this proceeding among the defendants over the reasonableness of the amount of the reciprocal switching charge of $13.71 per car within the High Point switching area.

The evidence on this record reveals the fact that the Southern and other railroads, in former years, obtained agreements from industries and business concerns located on their lines, to the effect that such industries and business concerns would ship all their freight over the line serving them on their private or assigned siding. It is conceded by the Southern that such agreements were and are null and void and under the law could not be enforced. It was further conceded that a shipper has the right to route his traffic. Therefore, it would seem to follow that when a shipper is refused switching service in an effort to force him to ship over the railroad that serves his private or assigned siding, it is an effort to do indirectly what cannot be done legally under a contract directly with the shipper.

We think the evidence in this proceeding supports the conclusion that the removal of the names of the fifteen complainants whose industries or business establishments are located on the Southern or the C&NW from the list of those included in the reciprocal switching tariff, and the refusal to switch cars consigned to these complainants unless the cars are taken to Thomasville and turned over to the Southern there and brought back to High Point over its lines and delivered to the consignee, is the result of a deliberate effort to force the discontinuance of carload shipments to and from High Point over the HPT&D and its affiliates by these complainants.

The evidence is to the effect that the re-routing of a car from High Point to Thomasville and back to High Point over the Southern, costs anywhere from $50.00 to $100.00 per car, depending on the weight, classification, etc.

A member of the Commission propounded to one of the Southern’s principal witnesses the following: “You are telling me simply and plainly, it is because you want to make a shipper ship over the Southern without regard to what a shipper wants to do.” The witness replied, “In substance, that is what I mean.”

There is further evidence tending to show that these complainants were removed from the Southern’s reciprocal switching list because the Southern felt that too many cars were being routed to and from these industries and business concerns via the HPT&D and its connecting carriers, when the cars could have been shipped into or from High Point over the Southern at the same cost to the shipper or consignee. The Southern in its explanation of why the complainants were removed from its reciprocal switching tariff, offered testimony to the effect that the HPT&D was owned by local people and, naturally, they were inclined to favor property in which they had an interest. However, this situation no longer exists, as we have heretofore pointed out.

Further, in the instant proceeding, the Southern in discussing the question as to what it considered its fair share of the line-haul, the witness said: “A fair share is pretty difficult to define. As a rule of thumb, we have not disturbed anyone, generally speaking, where we got as much as 80 to 85 percent of their cars.”

In Northern P. R. Co. v. United States, supra, it is said: “It was further found that the carriers’ absorption practices at the complaining markets were supported neither by revenue considerations nor sound transportation factors, and that the widespread absorption of switching charges on noncompetitive traffic at other important markets was strong evidence of the reasonableness of such practice and of the unreasonableness of the carriers’ refusal to absorb such charges at the complaining markets. * * (Emphasis added).

The Commission’s order in this proceeding apparently requires the defendants to do no more than they did voluntarily and without objection for thirty years or more, preceding the last six or eight years. This would seem to be “strong evidence” of the reasonableness of the practice to which they adhered for so many years.

It is provided in G.S. 62-26.10: “ * * Upon any appeal to the superior court, the rates fixed, or any rule, regulation, finding, determination, or order made by the Commission under the provisions of this Chapter (Chapter 62, Utilities Commission), shall be prima facie just and reasonable. * ‘ *” Utilities Commission v. Ray, 236 N.C. 692, 73 S.E. 2d 870; Utilities Commission v. Municipal Corporations, 243 N.C. 193, 90 S.E. 2d 519; Utilities Commission v. Casey, 245 N.C. 297, 96 S.E. 2d 8.

As a practical matter, it is difficult to comprehend how the industries and business concerns in High Point may be benefited to any appreciable extent by having competing railroads rather than a single road, unless there is some practical and enforceable arrangement whereby carload shipments going into or out of High Point may be switched to or from industries and business concerns located on private or assigned sidings served by a railroad other than the line-haul carrier.

In our opinion, the findings of the Commission are supported by competent, material and substantial evidence, and the Commission is vested with the authority to enter the challenged order. General Statutes of North Carolina, Ch. 62, Sections 27, 28, 30, 39, 55, 70, 74, 75, 122, 128, 137 and 143. Therefore the order of the court below affirming the order of the Commission entered on 20 December 1960, is

Affirmed.