Atchison, T. & S.F. Ry. Co. v. United States - 232 U.S. 199 (1914)
U.S. Supreme Court
Atchison, T. & S.F. Ry. Co. v. United States, 232 U.S. 199 (1914)
Atchison, Topeka & Santa Fe Railway
Company v. United States
Argued December 1, 2, 1913
Decided January 26, 1914
232 U.S. 199
Whatever transportation service or facility the law requires the carriers to supply they have the right to furnish.
Under § 15 of the Act to Regulate Commerce, as amended by the Hepburn Act, the carrier has not only the duty, but the right, to furnish all ice needed in refrigeration.
A carrier cannot be compelled to keep facilities for the benefit of shippers and the shippers allowed to furnish these facilities themselves.
The carrier cannot compel a shipper of fruit to have it refrigerated.
When ice is actually needed and used in transportation of fruit, it depends upon the circumstances of each case whether the icing is a part of preparation which can be done by the shipper or part of refrigeration which the carrier has the exclusive right to furnish.
Neither the carrier nor the shipper can insist upon wasteful or expensive service in transportation for which the consumer must ultimately pay. In this regard, the court will consider the interests of the public.
Loading the car, by whomsoever done, must be such as to prepare the freight for shipment, and a consignor may, in the absence of a regularly filed tariff covering this work, not only put perishable freight, such as fruit, in a car placed at his warehouse, but may do all other acts, including icing, necessary to fit the fruit for shipment and filling bunkers in the car with ice for its preservation.
Filing a tariff withdrawing a privilege to shippers affects a practice and a rule within the meaning of the Act to Regulate Commerce, and the Commission has power under § 15, as amended by the Hepburn Act, to determine after a hearing whether the new rate is unreasonable, and if so what is just, and require the carrier to conform to the rates and practice prescribed by it.
An order of the Commission fixing carload rates apparently excluding any compensation for hauling the ice necessary for refrigerating is not confiscatory when it appears that the rate for the fruit itself practically includes the rate for the ice.
In a suit based entirely on reasonableness of carload rates, the issue of whether it discriminates against shippers of small lots will not be
considered when that issue is not presented on any assignment of error in this Court.
What are proper rates for transportation and fair charges for facilities furnished and services rendered, and differences between carload and less than carload lots, are all ratemaking matter committed to the Commission and within its discretion.
The courts have no power to fix rates or establish practices, and cannot interfere with those fixed and established by the Commission except in cases where the orders are void. Interstate Commerce Commission v. Un. Pac. R. Co., 222 U. S. 547.
204 F. 647 affirmed.
In 1909, associations representing California fruit growers filed with the Commerce Commission complaints against numerous railroad companies attacking the freight and refrigeration charges on citrus fruit shipped from California to Eastern points. Much testimony was taken, from which it appeared that the orange crop amounted to about 50,000 cars per annum, of which the 20,000 shipped in warm weather required some form of refrigeration in order to keep the fruit in condition for use at the end of the journey. At the close of the first hearing, June 11, 1910, the Commission held (19 I.C.C. 148) that $1.15 per cwt. was a reasonable freight rate on oranges. Other questions in the case were postponed until January 14, 1911, when the Commission made a report (20 I.C.C. 106) as to the reasonableness of the carriers' charges of $62.50 per car for refrigeration and $30 for services in shipments pre-cooled by the consignor.
The Commission found that, in refrigeration by the carriers, they furnished all the ice and performed all of the services, including reicing en route. It found that there was a total of about 11 tons of ice furnished, but, owing to the melting, the average weight of the ice hauled was 8,000 lbs., the freight on which to Chicago was $.25 per 100. It cost something to repair the bunkers, and the Commission recognized the right to include an additional sum to cover risk and profit.
The total revenue of $345.30 from such shipments was made up of the following items:
Freight on 27,200 lbs. of oranges at $1.15. $312.80
Cost of 11 tons of ice. . . . . . . . . . . $30.00
Freight on 8,000 lbs. average weight of
ice hauled at $.25. . . . . . . . . . . . 20.00
Damage to bunkers . . . . . . . . . . . . . 5.00
Sum to cover risk and profit. . . . . . . . 7.50
Gross receipts. . . . . . . . . . . . . . . $375.30
Less cost of ice. . . . . . . . . . . . . . 30.00
Freight and refrigeration charges $345.30
The Commission found that the charge of $62.50 for refrigeration services was reasonable.
It further appeared that the government had conducted certain experiments with a view of determining whether an advantage would not be derived from pre-cooling the fruit before the bunkers were filled with ice. There was testimony that the carriers had reached the conclusion that, if the fruit was pre-cooled before the movement of the car began, there would be a corresponding saving in the amount of ice needed in the bunkers. They accordingly had erected plants at which the fruit could be pre-cooled, and included such pre-cooling service in the regular refrigeration charge of $62.50.
Certain shippers claimed that better results were obtained where the fruit was pre-cooled immediately after it was taken from the grove and before it was placed in the car. They therefore adopted a method in which the shipper chills the fruit, cools the car, furnishes the ice, and fills the bunkers at a cost to himself of $32.50. The carrier, for its services in connection with hauling such pre-cooled shipment, charged $30, intending thereby to make the rates on
pre-cooled fruits the same, whether the pre-cooling was by the shipper or the carrier. In determining whether this $30 was a reasonable charge for service rendered by the carrier in hauling fruit pre-cooled by the shipper, the Commission said (20 I.C.C. 120) that no reicing was necessary en route, and that
"it would be a liberal estimate to put the average weight of ice during the entire journey at 5,000 lbs. For the hauling of this ice, the carriers are entitled to fair compensation, as they are in the case of standard refrigeration."
There is also an
"expense in providing and keeping in repair the ice bunkers. . . . The carrier is therefore entitled to this additional cost, which is about $5 per car per trip one way."
Where the fruit is pre-cooled by the shipper, the boxes are packed so much closer together that the load is one sixth greater than in case of shipments pre-cooled and refrigerated by the carrier. The result is that the revenue from a car of fruit pre-cooled by the shipper would be
Freight on 33,000 lbs. of oranges at $1.15 . . . . . . . . $379.50
Freight on 5,000 lbs. of ice at 25 cents per hundred . . . 12.50
Damages to bunkers (and profit allowed?) . . . . . . . . . 7.50
or $54 more than the revenue of $345.30 from a car pre-cooled and refrigerated by the carrier.
The Commission further said:
"As bearing upon the reasonableness of the rate, the carriers showed the cost of the movement of these oranges per gross ton -- that is, per ton of combined weight of car and of contents, as compared with other articles -- claiming that this was the true basis upon which to fix rates. So treating these pre-cooled shipments, it will be found that the carrier receives more per gross ton for handling the pre-cooled car than for either the ventilated or the refrigerated shipment. By every canon of ratemaking which has been applied by carriers in the past, or which is relied upon by them now,
these pre-cooled shipments at the standard rate, without additional compensation, are better business than either the ventilated or the refrigerated movement. Clearly, these growers who have devised and perfected this system of shipment should not be compelled to pay for the privilege of using it more than the fair cost to the carrier of providing the additional facilities which are not included in the ventilated rate, with a fair profit."
The report concluded as follows:
"We are of the opinion that the pre-cooling charge of $30 per car is unreasonable, and that this charge should not exceed $7.50 per car, . . . but the defendants may, as a condition of making this charge, require that pre-cooled cars be loaded seven tiers wide and two tiers high, and may provide by their tariffs a proper minimum to accomplish this result, the amount of which would depend upon the length of the car."
20 I.C.C. 121, 123.
The carriers, in obedience to this order, put in a tariff of $7.50 for pre-cooling services, but at once filed another tariff, effective July, 1911, reciting that
"the privilege heretofore permitted to shippers of citrus fruit to pre-ice carload shipments is withdrawn, the carriers retaining and exercising the exclusive right and control of furnishing and doing all icing and refrigeration of citrus fruit in all cases where shipper does not specifically request or direct shipments to move solely under ventilation."
Immediately thereafter, the orange-growers associations filed proceedings to cancel this withdrawal tariff, and to compel the carriers to continue to extend to shippers the old privilege of pre-cooling at the new rate of $7.50. At the hearing, the evidence and report of the Commission in the former case were stipulated into the record, and, on April 8, 1912 (23 I.C.C. 267, 271), the Commission held that the shippers had the right to the pre-cooling
privilege, and again ruled that $7.50 was a reasonable charge for the services rendered by the carriers.
The railroad companies then filed a petition in the Commerce Court attacking the original order of January 14, 1911 (fixing $7.50 as a reasonable charge on pre-cooled shipments), and the last order of April 8, 1912 (requiring the roads to permit pre-cooled shipments at that sum), contending that shippers had no right to ice the bunkers. They also insisted that the $7.50 rate was confiscatory, and did not equal the $17.50, which the Commission itself had found to be the actual cost of services rendered in connection with pre-cooled shipments. The carriers thereupon prayed that both orders should be annulled and set aside.
The Commerce Court (204 F. 647) adopted the finding of the Commission that in pre-cooled shipments the revenue was $54 greater than in the railroad's method of refrigeration, and concluded by saying that, in view of that fact, "we do not think that the petitioners have any valid complaint to make of the charge of $7.50 per car, established by the Commission." It further held that, under the facts appearing in the record, the shipper had the right to furnish the ice in pre-cooled shipments, and thereupon it dismissed the petition. The case was then brought here by appeal.