A shipper who rented tank cars for transporting its products in
interstate commerce brought suit in the District Court against the
car company for the amount by which allowances received by the car
company from carriers for use of the cars exceeded the rental. This
Court, in
General American Tank Car Corp. v. El Dorado Terminal
Co., 308 U. S. 422,
ordered the District Court to stay its hand until the Interstate
Commerce Commission could determine the administrative problems
involved. In response to a petition of the shipper, the Commission
found that an allowance to the shipper in excess of the rental
would be unjust, unreasonable, and unlawful, and ordered the
proceeding before it discontinued.
Held: 1. The action of the Commission was a reviewable
"order," and a suit to enjoin or set it aside was within the
jurisdiction of a District Court of three judges. 28 U.S.C. §§
41(28), 47. P.
328 U. S.
18.
2. The Commission's determination as to what constituted a just
and reasonable allowance to the shipper was valid although it
related to past transactions. P.
328 U. S.
19.
Page 328 U. S. 13
(a) The Commission made its determination as to the lawfulness
of the past practice upon the application of the shipper. P.
328 U. S.
19.
(b) The determination of the Commission was authorized by the
decision of this Court in the
Tank Car case, as well as by
the Interstate Commerce Act. P.
328 U. S.
19.
(c) The Commission was not required in this proceeding to
establish uniform rates for the future for all shippers. P.
328 U.S. 20.
3. The finding of the Commission that the allowance to this
shipper were unjust and unreasonable was based on uniform treatment
of all shipper-lessees, whom the Commission was justified in
treating as a class apart. P.
328
U.S. 20.
4. It is the duty of the Commission to abolish all practices
which result in rebates or preferences. P.
328 U. S.
21.
5. The fact that the freight was paid by the consignee at the
regular rate does not preclude the finding that the practices here
in question involved rebates or preferences to the shipper which
are prohibited by the Interstate Commerce Act and the Elkins Act.
P.
328 U. S.
22.
59 F. Supp. 738 affirmed.
Appellants' suit to set aside an order of the Interstate
Commerce Commission, 258 I.C.C. 371, was dismissed by a District
Court of three judges for want of jurisdiction, 59 F. Supp. 738,
and appellants appealed to this Court.
Affirmed on other
grounds, p.
328 U. S.
22.
Page 328 U. S. 14
MR. JUSTICE BLACK delivered the opinion of the Court.
Appellants filed a complaint in the district court under 28
U.S.C. § 47a, challenging action taken by the Interstate Commerce
Commission allegedly pursuant to instructions contained in an
earlier opinion rendered by this Court in connection with these
proceedings.
General American Tank Car Corp. v. El Dorado
Terminal Co., 308 U. S. 422. The
district court dismissed the complaint for want of jurisdiction on
the ground that the Commission's action did not amount to a
reviewable "order" within the meaning of 28 U.S.C. § 41(28). The
case is before us on direct appeal. 28 U.S.C. § 345.
The following facts constitute the background of this
proceeding:
El Dorado Oil Works, one of the appellants, processes, sells,
and ships coconut oil in interstate commerce. Special kinds of tank
cars are necessary for that distribution. The appellee, General
American Tank Car corporation, [
Footnote 1] owns tank cars which it rents and leases to
various shippers. In 1933, Oil Works made a contract with the Car
Company to rent, for a period of three years, fifty tank cars at
$27.50 per month, and such additional cars as it might need at $30
per month. The outstanding railroad tariffs, prescribing payment by
the railroad of 1 1/2� per mile for the use of tank cars, contained
rules which provided that the mileage would be paid only to the
"party" whose "reporting marks" appeared on the cars. During part
of the rental period here in question, the rules provided that
"mileage for the use of cars of private ownership will be paid . .
. only to the car owner -- not a
Page 328 U. S. 15
lessee." Since, under the agreement, the cars were to bear the
"reporting marks" of the Car Company, and not the Oil Works, and
since Oil Works was a lessee, no tariffs authorized railroad
mileage payments to Oil Works. Nevertheless, under the agreement,
Oil Works was to receive the full mileage allowance prescribed by
the tariffs: the rent Oil Works was to pay to Car Company was to be
taken out by Car Company from the mileage allowances it received
from the railroads, and the balance was to be paid by it to Oil
Works. The railroad payments proved to be greatly in excess of the
rental obligations, and Car Company regularly paid the difference
to Oil Works until July 1, 1934.
July 2, 1934, the Interstate Commerce Commission, after an
exhaustive investigation, handed down its findings, opinion, and
conclusion in
Use of Privately Owned Refrigerator Cars,
201 I.C.C. 323. It there drew a distinction between car owners as a
class and car renters as a class. It found that car owners must
have sufficient rental allowances, whether they rented to railroads
or to shippers, to pay a reasonable return on investment, taking
into consideration cost of maintenance, idle cars, etc. On the
other hand, the Commission found that car renters had no such fixed
costs. The Commission's conclusion was that costs of rented cars to
a shipper, including rent and incidentals, was the maximum
allowance the shipper-lessee should receive from a railroad,
directly or indirectly, and that, if he receives more, the cost of
transportation to him would be less than the cost of transportation
to shippers generally, especially those who use cars furnished by
the carriers. To make the railroad pay more for use of a car rented
by a shipper than the rent he had to pay was, according to the
Commission, a violation of Section 15(13) of the Interstate
Commerce Act, 49 U.S.C. § 15(13), in that it required the railroad
to pay more for the car than was
Page 328 U. S. 16
"just and reasonable." The Commission was of the opinion that
refunds of car mileage in excess of the rent charged the
shipper-lessee was the equivalent of an unlawful concession or
rebate, prohibited by the Elkins Act. While the Commission's
findings were limited to refrigerator cars, it stated that "the
general principles enunciated apply equally to all other types of
private cars."
Id. at 382.
After the Commission's decision in the refrigerator case, the
Car Company declined to pay over to Oil Works any part of the
excess mileage. In 1935, Eldorado Terminal Company, one of the
appellants acting as assignee of Oil Works, brought suit against
the Car Company to recover accrued excess mileage earnings. Car
Company defended on the ground that further refunds would violate
Interstate Commerce legislation, particularly the Elkins Act. 49
U.S.C. § 41. The district judge found that the contract was in
violation of the Elkins Act, and rendered judgment for the Car
Company. The Circuit Court of Appeals reversed.
El Dorado
Terminal Co. v. General American Tank Car Corp., 104 F.2d 903.
The Car Company filed a petition for certiorari which was supported
here by the Solicitor General and the Interstate Commerce
Commission. Their claim that the Circuit Court of Appeals erred
rested on the following major grounds: (1) the railroad's payments
to Car Company, which provided no facilities to the railroad, were
unauthorized; (2) since no published tariff authorized payments to
a shipper-lessee such as Oil Works, its only recourse to collect
allowances for the cars it had furnished was to institute
proceedings before the Commission for recovery of a reasonable
allowance; (3) payment to Oil Works of excess mileage earnings
received by Car Company would violate the Elkins Act. In reply to
the Commission's brief urging certiorari, Oil Works contended that
the case did not raise a question "within the administrative or
primary control of the Commission."
Page 328 U. S. 17
We granted certiorari and reversed the judgment of the Circuit
Court of Appeals.
General American Tank Car Corp. v. El Dorado
Terminal Co., 308 U. S. 422.
While we rejected the Commission's contention that the district
court had no jurisdiction to hear the case, we accepted its
contention that determination of the validity of the challenged
past practices was for the Commission. We pointed out that the
tariffs approved by the Commission fixed no uniform rate to be paid
by railroads to the shipper directly for the use of cars originally
rented by the shipper. We pointed out further that Oil Works had
never "applied to the Commission for its decision as to what was a
proper allowance for the cars furnished by it." We said that the
Oil Works was "entitled under the plain terms of § 15(13) [of the
Interstate Commerce Act] to be paid by the carrier a just and
reasonable allowance" for providing the cars. The opinion stated
that questions such as whether the shipper were "reaping a
substantial profit from the use of the cars" and whether, on the
one hand the "allowances and practices" were lawful and reasonable,
or, on the other hand, violated the Elkins Act, were all
administrative problems calling for investigation and determination
by the Commission. The District Court was accordingly ordered to
stay its hand so that the Commission could render its decision.
On remand, Oil Works and Terminal Company filed a petition with
the Commission praying that it hold hearings and enter an order to
the effect that Car Company could pay the mileage earnings to Oil
Works without violating the Elkins Act, and that such payment would
not constitute a rebate or concession. The Commission found that a
just and reasonable allowance to Oil Works would be the cost
incurred by it in furnishing the cars -- namely, the monthly rental
to the Car Company, that any amount in excess of that would be
unjust and unreasonable in violation of sec. 15(13), and would
"constitute a rebate and discrimination and involve a departure
from the tariff
Page 328 U. S. 18
rules applicable, prohibited by Sec. 1 of the Elkins Act, and
Section 6(7) of the Interstate Commerce Act. . . . [
Footnote 2]"
The Commission further ordered that the proceeding before it be
discontinued. On this appeal, both sides argued the jurisdictional
question as well as questions going to the merits.
Before we reach the merits of the controversy, we must at the
outset briefly dispose of the jurisdictional question. As the facts
already stated reveal, the Commission's findings and determination,
if upheld, constitute far more than an "abstract declaration."
"Legal consequences"
Page 328 U. S. 19
would follow which would finally fix a "right or obligation" on
appellants' part. These findings are more than a mere "stage in an
incomplete process of administrative adjudication," for the
Commission here has discontinued further proceedings. We therefore
think that the Commission's action falls within the class of
"orders" which
Rochester Telephone Corp. v. United States,
307 U. S. 125,
held to be reviewable by a district court of three judges. The
district court erred in dismissing the complaint for want of
jurisdiction.
On the merits, appellant's major contention is that the
Interstate Commerce Act and our earlier opinion in this case do not
authorize the Commission to determine, as it here has done, the
justice and reasonableness of mileage allowances which appellants
were to receive on past transactions. The contention is that both
our opinion and the Act authorize the Commission to do no more than
determine what uniform allowance shippers as a class would be
permitted to charge in the future. In part, the argument is that,
insofar as the order is based on a treatment of shipper-lessees as
a class apart, and on a limitation of their allowance to the cost
to them of the cars they furnish, the order is invalid in that it
neither rests on nor brings about a uniform rate to all shippers,
or even all shipper-lessees. We cannot agree with the above
contentions.
First, it must be noted that the Commission made its
determination as to the lawfulness of these past practices on the
basis of appellants' own application, asking the Commission to do
so. Second, our previous opinion, as well as the Interstate
Commerce Act, authorized the Commission to make this determination.
The question before us when this case was first here did not relate
to future, but to past, allowances. Relying on past decisions, we
held that the "reasonableness and legality" of the past dealings
here involved were matters which Congress had entrusted to the
Commission.
See e.g., 259 U. S.
Page 328 U. S. 20
Co. v. Merchants Elevator Co., 259 U.
S. 285,
259 U. S. 291,
and other cases cited in our previous opinion. And we rejected
appellants' petition for rehearing which presented substantially
the argument now repeated -- namely, that any order the Commission
might make "could only be effective as to the future," that the
Commission's determination "could not affect the contract in this
case," that the Commission's action would be "futile," and that,
consequently, our judgment and opinion would provide no "guidance"
for the district court. Our first opinion, buttressed by our
rejection of the motion for rehearing, was a plain authorization
for the Commission to determine the justice and reasonableness of
the past allowances to this shipper. The Commission did not have to
establish future uniform rates to determine the questions we sent
to it. Consequently, insofar as appellants' argument is that the
Commission failed to treat all shippers or all shipper-lessees
uniformly because it did not fix future uniform rates, the answer
is that it was not required to do so.
Insofar as appellants' argument as to lack of uniform treatment
of shippers and shipper-lessees seeks to attack the basis of the
Commission's finding that the past allowances here were unjust and
unreasonable, it also lacks merit. We think the Commission's
finding was based on a uniform treatment of all shipper-lessees.
While it is true, as appellants contend, that, under the
Commission's rule, different shipper-lessees might receive
different allowances, the rule is uniform in that it permits no
shipper-lessee to receive allowances exceeding the rental he pays.
All shipper-lessees are prohibited from making profits at the
expense of the railroads on cars rented to transport goods in
interstate commerce. Since the facts before the Commission were
enough to enable it to find that such profits amount to rebates to
shipper-lessees which result in a discrimination against shippers
that own cars or use
Page 328 U. S. 21
cars furnished by the railroad, the Commission was justified in
treating shipper-lessees as a class apart. As the Commission
pointed out in its Refrigerator opinion, the history of railroad
practices shows that rebates, concessions, and favoritism have
frequently grown out of the private car system. Notwithstanding the
very great transportation service supplied by private cars,
designed and equipped to meet special needs, the Commission acts
within its power when it attempts to regulate their use so as to
put a stop to existing prohibited evils. It must test violations of
the Interstate Commerce Act by results.
Union Pacific R. Co. v.
United States, 313 U. S. 450,
313 U. S. 462.
It is the duty of the Commission to nullify practices that result
in rebates or preferences, "whatever form they take and in
whatsoever guise they may appear,"
O'Keefe v. United
States, 240 U. S. 294,
240 U. S. 297.
[
Footnote 3]
The appellants' remaining contentions challenge the sufficiency
of the evidence. They rest primarily on the premise that the
Commission lacked authority to determine what we had directed it to
find. Insofar as these contentions rest on that premise, they have
been disposed of by what we have already said. The only contention
as to alleged insufficiency of evidence that requires further
Page 328 U. S. 22
attention is that there could be no finding that the practices
here involved resulted in rebates or concessions to Oil Works,
since the freight on the oils transported was not paid by it, but
was allegedly always paid by the consignees and at the regular
rate. Oil Works, however, was a shipper who supplied cars to be
used as facilities for transportation. For supplying these cars, it
could not, consistently with Section 15(13), receive from the
railroad, directly or indirectly, more than a "just and reasonable"
allowance. This allowance was "in respect to transportation."
See Union Pacific R. Co. v. United States, supra,
313 U. S. 462.
Payment by the railroad of more than the just value of the services
inevitably resulted in its carrying Oil Work's product at less than
the regular freight rate, even though it collected the full rate
from the consignees. The reduced rate at which Oil Works could thus
have its products transported justified the Commission's finding
that Oil Works got a concession and an advantage over other
shippers who made no such profits on tank cars. Whether Oil Works
or its consignees paid the freight makes no difference.
Cf.
Elgin, J. & E. R. Co. v. United States, 253 F. 907, 911. A
practice which accomplishes this result is prohibited by the
Interstate Commerce and the Elkins Act.
The judgment dismissing the complaint is affirmed, but on the
ground that the Commission's order is valid, and that the
petitioners were consequently not entitled to the relief prayed
for.
Affirmed.
MR. JUSTICE JACKSON took no part in the consideration or
decision of this case.
[
Footnote 1]
General American Transportation Corporation has become the
successor of the General American Tank Car Corporation.
[
Footnote 2]
The Commission did not rule that a shipper-lessee would always
be entitled to allowances equal to the cost to him of the cars he
rented. The Commission's opinion makes it clear that a
shipper-lessee is only entitled to receive a just and reasonable
allowance for cars while they are actually used by the railroad,
even though this allowance might be less than the car rent paid by
the shipper. On that subject the Commission said:
"In administering the provisions of section 15(13), we have
consistently adhered to two principles, bearing in mind that we
were to prescribe the maximum amount which the carrier might pay:
(1) the amount paid should not be more than was just and reasonable
for the service or instrumentality furnished, and (2) that the
amount which might be paid should not exceed the reasonable cost to
the owner of the goods of performing the service or furnishing the
instrumentality used. Whichever of these sums was the lower marked
the maximum the carrier might pay."
Here, the Commission has applied these uniform criteria in such
a way as to permit the shipper-lessee to receive as much as the
full rental he paid. Were it not for these proceedings resulting
from the Car Company's refusal to continue payments to the shipper,
the railroad would have had to pay, as it did pay, 1 1/2� per mile,
which proved far in excess of the rental. It may be that, in other
cases, a just and reasonable rate would fall below the rental. It
may be that, in this case, the rental exceeded what would be a just
and reasonable allowance with respect to the use of the cars by the
railroad. But this would serve to further reduce the rate to which
petitioner was actually entitled; petitioner therefore has no
interest in challenging the Commission's order on this point.
[
Footnote 3]
Appellants contend that, if the car rental cost is the maximum
allowable payment, the mileage payments to the Car Company were
unlawful. That these payments by the railroad to Oil Works were
"apparently" unlawful and recoverable by the railroad was the
position taken by the Commission in their brief filed when this
case was first before us. And, in our opinion, we stated that,
since the shipper, not the Car Company, had furnished the cars to
the railroad, "[i]t seems clear that no rule or regulation of the
carrier may provide for the payment of such allowance to any other
person" except Oil Works. But petitioners cannot benefit from the
unlawfulness of payments to the Car Company. On the contrary, such
a conclusion would strengthen the position of the Commission --
namely, that a "just and reasonable" allowance to Oil Works must be
determined by the Commission without regard to the mileage payments
to Car Company.
MR. JUSTICE DOUGLAS, dissenting in part.
I do not think it should be left to the shipper and the car
owner to determine what portion of the tariff paid by the railroad
should be paid to the shipper. But that is
Page 328 U. S. 23
exactly what the Court permits when it measures the shipper's
allowance by the amount of rental he has agreed to pay the car
owner.
As Commissioner Splawn pointed out in his dissent from the
opinion of the Interstate Commerce Commission (258 I.C.C. 371, 382,
383), the Commission, in following this course, failed to comply
with our opinion in
General American Tank Car Corp. v. El
Dorado Terminal Co., 308 U. S. 422. We
there said (pp.
308 U. S.
429-430):
"As the Circuit Court of Appeals has pointed out, different
shippers may have differing costs in respect of privately owned
cars furnished the carriers. Nevertheless, as the allowances to be
made them by the carriers for the use of such cars must be the
subject of published schedules, and must be just and reasonable,
the Commission is compelled to ascertain in the light of past and
present experience a fair and reasonable compensation to cover such
costs and prescribe a uniform rate which will reflect such
experience. It is inevitable that some shippers may be able to
furnish facilities at less than the published allowance, while
others may find their costs in excess of it. This fact, however,
does not militate against the fixing of a uniform rate applicable
to shippers properly classified by the Commission. [
Footnote 2/1]"
Unless that courts is followed, a situation is sanctioned in
which concessions and discriminations condemned by § 1
Page 328 U. S. 24
of the Elkins Act, 32 Stat. 847, 34 Stat. 587, 49 U.S.C. § 41,
are likely to thrive.
There is a further objection to the course which the Court
sanctions. As stated by Commissioner Splawn in his dissenting
opinion (258 I.C.C. at 384):
"It is elementary that the form of an allowance for the use of
cars must be such as to reflect the extent of the use by the
railroads of the facilities furnished. Whenever we have had
occasion to determine such allowances, we have prescribed either
per diem or mileage allowances. The railroads cannot be
held responsible for the amount of rent reserved by the Car
Corporation in an agreement with the shipper, as the car may be
left idle during the entire period. The car has value to the
railroad only when it is used in transporting lading and results in
the payment of freight charges."
Any allowance based on cost to the shipper, rather than on the
use of the facility furnished, violates that principle.
Only an appropriate uniform rate would obviate both of the
objections I have mentioned. [
Footnote
2/2] I would remand the
Page 328 U. S. 25
case to the Commission so that it could now do what, according
to my understanding, we originally intended it to do in accordance
with the requirements of § 15(13) of the Interstate Commerce Act.
[
Footnote 2/3]
[
Footnote 2/1]
Sec. 15(13) of the Interstate Commerce Act, 49 U.S.C. § 15(13),
provides:
"If the owner of property transported under this chapter
directly or indirectly renders any service connected with such
transportation, or furnishes any instrumentality used therein, the
charge and allowance therefor shall be published in tariffs or
schedules filed in the manner provided in this chapter and shall be
no more than is just and reasonable, and the commission may, after
hearing on a complaint or on its own initiative, determine what is
a reasonable charge as the maximum to be paid by the carrier or
carriers for the services so rendered or for the use of the
instrumentality so furnished, and fix the same by appropriate
order, which order shall have the same force and effect and be
enforced in like manner as the orders above provided for under this
section."
[
Footnote 2/2]
The Commission's finding was
"That the rental paid or to be paid by El Dorado Oil Works to
General American Tank Car Corporation under the terms of the lease
agreement between those parties, dated September 28, 1933, was the
only cost incurred by the former in furnishing the tank cars in
which its shipments moved. A just and reasonable allowance as a
maximum to have been paid by the respondents, rail carrier or
carriers, to the Oil Works for the furnishing of such cars would
have been an amount not to exceed such rental. Such an amount and
allowance has been paid to the Oil Works through credits made to
the account of the Oil Works by the Tank Car corporation."
There are no facts of record which show the relationship between
the rental paid and the extent of the use by the railroads of the
facilities furnished. The Commission made no findings in that
regard.
Whether a uniform rate which is just and reasonable would be
greater or less than the rental is wholly conjectural on the
present record.
[
Footnote 2/3]
328 U.S.
12fn2/1|>Note 1,
supra.