The duty of a carrier to ship by the cheapest route in the
absence of shipping instructions is not absolute; it is a duty to
deal fairly with the shipper, with due regard also for the
carrier's own interest and its obligation to the public.
Resort to the more expensive of two of the carrier's routes may
be justified by a reasonable general practice of the carrier.
The Northern Pacific, having two routes between Duluth and other
Minnesota points farther west, one intrastate, with a heavy upgrade
westward, the other interstate, of lighter grades, used, in the
absence of other shipping directions, the former for Minnesota
traffic bound to Duluth and the latter for like traffic in the
other direction. The charges under the interstate tariff were more
than those allowed between the same points by Minnesota law.
Held that the reasonableness of this practice of routing
was an administrative question within the jurisdiction of the
Interstate Commerce Commission, whose decision the state courts had
no jurisdiction to anticipate.
133 Minn. 93,
id., 461, reversed.
Writ of error to review 136 Minn. 468 dismissed.
The cases are stated in the opinion.
Page 247 U. S. 478
MR. JUSTICE BRANDEIS delivered the opinion of the Court.
These three cases were heard together. In each of them, the
plaintiff below sought to recover from the Northern Pacific Railway
Company, in a state district court of Minnesota, an amount equal to
that by which the freight collected for coal carried on an
interstate route from Duluth to some other city in the state
exceeded the rate prescribed by the Minnesota law for carriage
between those points on another route wholly within the state. In
each case, judgment was entered in the trial court for the
plaintiff for such amount, and the judgments were affirmed by the
Supreme Court of Minnesota. Each case comes here on writ of
error.
Carlton is situated on the Northern Pacific Railway, west of
Duluth. Between these Minnesota cities that company operates two
lines of railroad, each mainly single track. The northerly line,
about 20.9 miles in length, lies wholly within Minnesota; the
southerly line, 27.5 miles in length, extends for 11.7 miles
through Wisconsin. The southerly is the original Northern Pacific
line, which was built in 1885. It has relatively light grades. The
northerly line was built by the St. Paul & Duluth Railroad
Company and came under the management of the Northern Pacific in
1900. It has a heavy upgrade from Duluth to Carlton. Since 1900,
both lines have been operated continuously by the Northern
Page 247 U. S. 479
Pacific. Because of these grades, the northerly route has been
used almost exclusively for such Duluth shipments as are in-bound,
and the southerly route has been used for such as are out-bound.
Until June, 1907, the rates were the same over the two routes. They
were duly filed with the Minnesota Railroad and Warehouse
Commission and with the Interstate Commerce Commission.
In 1907, the Legislature of Minnesota fixed for intrastate
carriage of coal maximum rates which were lower than the published
rates theretofore charged. The rates so fixed were to take effect
June 1, 1907, but, before that date, their enforcement was enjoined
by the proceedings which were reviewed in the
Minnesota Rate
Cases, 230 U. S. 352.
This injunction remained in effect until July, 1913, when it was
dissolved pursuant to that decision. Until then, the Northern
Pacific continued to charge the published rates (and therefore the
same rates) on all shipments of coal from Duluth to Minnesota
points, whether moving via the interstate route or the intrastate
route. After dissolution of the injunction, the company refunded on
the few shipments which had moved over the intrastate route the
amount by which the charges actually collected exceeded the charges
which would have been collected had the rates fixed by the
legislature been observed. It refused, however, to make refunds on
shipments made over the interstate route, on the ground that the
state statute did not affect them.
Among such shipments were those involved in these cases, from
Duluth by the interstate route to three Minnesota points,
Hitterdal, Battle Lake, and Hawley, cities on the Northern Pacific
lying west of Carlton. The shipment in each case was delivered to
the Railway without any instruction as to how it should be routed,
but the plaintiffs contended that, in the absence of instructions,
it was the duty of the carrier to select that
Page 247 U. S. 480
route which was for the interest of the shipper, namely the
intrastate route, because it would prove to be the cheaper if the
rates prescribed by the state were upheld. The several shippers
claimed that they were entitled to the same refunds which would
have been made if the coal had been carried on the intrastate
route, and the suits were brought to recover these amounts.
The railway answered in the first two cases that at, the time of
the shipments, the rates published were (because of the injunction
in effect) identical on the two routes; that,
"in the ordinary and proper and economical operation of its
property, it was necessary to move, and this defendant in general
did and does now, move all out-bound shipments from Duluth via the
interstate line and all in-bound shipments into Duluth via the
intrastate line, and that to have carried the shipments referred to
in the complaint to their destination . . . via said intrastate
line instead of via the interstate line over which they were
actually carried would have entailed great additional expense upon
this defendant,"
and that these rates were just and reasonable for the service
performed, and were collected pursuant to the tariffs published and
filed with the Interstate Commerce Commission. In the third case,
the answer alleged in addition that, on December 24, 1915, and
prior to the commencement of that action, the Interstate Commerce
Commission had, in Holmes & Hallowell Co. v. Great Northern
Railway Company, 37 I.C.C. 627, decided that the practice of
defendant in routing its westbound shipments from Duluth over its
interstate line was a proper and reasonable practice, and had
denied the application for reparation on shipments of coal made
over that route.
The judgments entered were upon demurrers to the answers. That
in No. 205 was entered May 28, 1916; that in No. 206 on May 23,
1916; that in No. 526 on May 2, 1917. 133 Minn. 93; 133 Minn. 461;
136 Minn. 468.
Page 247 U. S. 481
In each case, it is assigned as error that the state court held
that the cause of action therein is not affected by the federal
statute regulating interstate commerce, and also that the state
court assumed jurisdiction in advance of a determination by the
Interstate Commerce Commission as to whether the practice of the
Northern Pacific Railway, in sending via its interstate route all
shipments of the character involved in these cases, was reasonable.
In the third case, the additional error is assigned that the court
held that the intrastate rate should be applied, although the
Interstate Commerce Commission had found that the practice of
routing outbound shipments from Duluth via the interstate route was
proper and reasonable. The objection that the court lacked
jurisdiction to entertain the proceeding was not made in the
answers in the trial court, but it was insisted upon before the
Supreme Court of Minnesota, was considered and overruled by that
court (133 Minn. 93, 97), and is available here. In numbers 205 and
206, judgment was entered before the Act of September 6, 1916. A
federal question is involved, and the cases are properly here under
ยง 237 of the Judicial Code. In No. 526, the judgment was entered
after the Act of September 6, 1916, c. 448, 39 Stat. 726, took
effect. In that case, there was not drawn in question the validity
of a statute or treaty, nor the validity of any authority exercised
under the state.
Philadelphia & Reading Coal & Iron Co.
v. Gilbert, 245 U. S. 162;
Ireland v. Woods, 246 U. S. 323;
Stadelman v. Miner, 246 U. S. 544. The
writ of error in No. 526 must therefore be dismissed, although the
defendant in error has not objected to the jurisdiction of this
Court.
We proceed to consider Nos. 205 and 206. In those cases, the
Supreme Court of Minnesota declared that the carrier's duty was
governed by the common law, and it stated the applicable principle
as follows (p. 96):
Page 247 U. S. 482
"Where a railroad company operates two lines of railroad between
the same points, and the freight rate over one line is less than
such rate over the other line, if other conditions are reasonably
equal, it is the duty of the company to transport shipments between
those points over the line which will give the shipper the benefit
of the cheaper rate. To justify transporting such shipments over
the other line, and thereby compel the shipper to pay the higher
rate, the company must show that such line was chosen by the
shipper, or that the circumstances or exigencies were such that a
proper regard for the interests of the shipper precluded the use of
the cheaper line."
In the absence of shipping instructions, it is ordinarily the
duty of the carrier to ship by the cheaper route. But the duty is
not an absolute one. The obligation of the carrier is to deal
justly with the shipper, not to consider only his interests and to
disregard wholly its own and those of the general public. If, all
things considered, it would be unreasonable to ship by the cheaper
route, the carrier is not compelled to do so. The duty is upon the
carrier to select the cheaper route only "if other conditions are
reasonably equal." Resort to the more expensive route may be
justified. And the justification may rest either upon the peculiar
circumstances of a particular case or upon a general practice. In
the cases before us, the justification is rested upon a general
practice. The answers allege that, because of the grades of the two
lines, all outbound shipments were and are in general moved over
the southerly route on account of the very great expense which
another arrangement would entail. It may well be, under such
circumstances, that carriage over the interstate route would be
justified, even if it appeared that it was feasible to haul freight
out of Duluth over the intrastate line. Whether the practice of the
carrier of shipping over the interstate route was reasonable, when
a lower
Page 247 U. S. 483
intrastate route was open to it presents an administrative
question, one of perhaps considerable complexity.
The railway contends that, since the administrative question
upon which its liability depends involves the reasonableness of a
practice in interstate commerce and the traffic actually moved in
interstate commerce, the court had no jurisdiction to adjudicate
the controversy until that administrative question had been
determined by the Interstate Commerce Commission. The shipper, on
the other hand, urges that the rule which requires such preliminary
determination of administrative questions by the Commission applies
only to those cases where the question involved is whether a
particular rate is unreasonable or whether a particular practice is
discriminatory. But the rule is not so limited. It applies likewise
to any practice of the carrier which gives rise to the application
of a rate.
Texas & Pacific Ry. Co. v. American Tie &
Timber Co., Ltd., 234 U. S. 138,
234 U. S. 147;
Pennsylvania R. Co. v. Puritan Coal Co., 237 U.
S. 121,
237 U. S. 131;
Pennsylvania R. Co. v. Clark Brothers Coal Mining Co.,
238 U. S. 456,
238 U. S. 469.
The Interstate Commerce Commission has frequently entertained
proceedings for refunds for misrouting under such circumstances.
* Indeed, long
before these suits were filed, proceedings had been begun before
the Interstate Commerce Commission against this and other railroad
companies to secure the refunds of amounts paid for shipment over
the interstate routes between Minnesota points in excess of that
which would have been payable if shipment had been made over the
intrastate routes. Holmes & Hallowell Co. v. Great Northern Ry.
Co., 37 I.C.C. 627,
Page 247 U. S. 484
630, 645, 649. And before the judgments were entered by the
Supreme Court of Minnesota in these cases, the Interstate Commerce
Commission had determined that, under the circumstances, "the
carrier was not required by law to change its methods of operation
and abandon the use of its more favorable interstate line," and had
refused to grant refunds in respect to the shipment of other
commodities under circumstances precisely like those presented
here.
The fact that the administrative question presented involves an
intrastate as well as interstate route does not prevent the
application of the rule that the courts may not be resorted to
until the administrative question has been determined by the
Commission. It is sufficient that one of the routes is interstate.
Compare Minnesota Rates Cases, 230 U.
S. 352,
230 U. S.
419-420;
Houston, E. & W. Texas Ry. Co. v.
United States, 234 U. S. 342.
In Nos. 205 and 206 judgments reversed.
In No. 526 writ of error dismissed.
* Willman & Co. v. St. Louis, Iron Mountain & Southern
Ry. Co., 22 I.C.C. 405; Lathrop Lumber Co. v. Alabama Great
Southern R. Co., 27 I.C.C. 250; Texarkana Pipe Works v. Beaumont,
Sour Lake & Western Ry. Co., 38 I.C.C. 341; McCaull-Dinsmore
Co. v. Great Northern Ry. Co., 41 I.C.C. 178; Cardwell v. Chicago,
Rock Island & Pacific Ry. Co., 42 I.C.C. 730.