Bear Brothers Mercantile Company v. Denver & Rio Grande Railroad Company

Between July, 1902, and March, 1907, the Baer Brothers Mercantile Company was engaged in the liquor business at Leadville, Colorado. During those years it purchased beer from a brewing company in St. Louis, Missouri, which delivered the same in carload lots to the Missouri Pacific, which acknowledged the receipt of the beer 'in good order to be delivered to the Baer Brothers Company at Leadville, Colorado, via the Denver & Rio Grande.' No through bill of lading was issued, and as the two companies had not established a through route, each shipment was waybilled to Pueblo, Colorado, 923 miles distant, on the Missouri Pacific's local rate of 45 cents per cwt. The car was then delivered to the Denver & Rio Grande with an expense bill which described the shipment and disclosed the charges paid by or due to the Missouri Pacific. The Denver & Rio Grande then forwarded the beer to Leadville, Colorado, 160 miles from Pueblo, at its local rate of 45 cents per cwt., naming the Missouri Pacific as consignor and the Baer Company as consignee. Whether collected in advance at St. Louis or at destination in Leadville, the freight was always divided between the two companies according to their local rates, the Denver & Rio Grande in every instance receiving 45 cents per cwt. on every shipment.

The Baer Company insisted that the rate was unreasonable in fact and unjustly discriminatory, and in 1906 brought suit, in the United States circuit court for the district of Colorado, against both carriers, to recover from them $6,300, the amount of the unreasonable rate alleged to have been paid on beer. That suit was voluntarily dismissed by plaintiff upon the publication of the decision in the Abilene Case, 204 U.S. 426, 51 L. ed. 553, 27 Sup. Ct. Rep. 350, 9 Ann. Cas. 1075. The Baer Company then instituted proceedings before the Commerce Commission in which it prayed that the 90 cent rate should be declared unreasonable and unjust; that the Commission would establish a new and just rate on beer between St. Louis and Leadville, and that the two companies be required to pay plaintiff $7,299 as reparation for excess freight paid on beer shipped over the two lines between July, 1902, and March, 1907.

At the hearing it was admitted that the Missouri Pacific's charge of 45 cents for the haul of 923 miles from St. Louis to Pueblo was reasonable. In view of this admission the subsequent proceedings before the Commission involved an investigation as to the reasonableness of the Denver & Rio Grande's charge of 45 cents for hauling beer a distance of 160 miles, from Pueblo, Colorado, to Leadville, Colorado. The carrier insisted that in each instance the beer had been received by it as an independent shipment at Pueblo, Colorado, where a new waybill was issued and the car forwarded as an intrastate shipment to Leadville on an intrastate rate. It claimed that the Commission had no jurisdiction to inquire as to the reasonableness of such intrastate rate. It further contended that the rate of 45 cents was just and fair.

It appeared that although no through route had been established by the two roads, the regular filed tariff of the Missouri Pacific named 45 cents as the rate on beer between St. Louis and Pueblo. The Denver & Rio Grande had filed no tariff under the commerce act, but, in compliance with the request of the Commission, addressed to all railroads, it had furnished a copy of tariffs showing its intrastate rates generally, and that the local rate on beer from Pueblo to Leadville was 45 cents per cwt.

At the conclusion of the hearing, the Commission held (13 Inters. Com. Rep. 329) that, even though no through route or through rate had been established, the Denver & Rio Grande, in hauling this beer, was engaged in interstate commerce; that the mountainous character of the country through which the road was built and the steep grades made the cost of operation higher than for a similar distance on the Missouri Pacific, but ruled that, while this was true, the rate of 45 cents from Pueblo to Leadville was excessive to the extent of 15 cents per cwt. The report concluded as follows:

'The prayer of the complaint is, among other things, that the Commission fix 'a just rate for the through transportation of beer in carload lots from said city of St. Louis to said city of Leadville.' There is no suggestion either in the complaint or in the prayer looking to the establishment of a joint rate, and that subject was not referred to either upon the trial or in the argument. This being so, we ought not to establish a joint through rate, and we do not think that we should undertake by our order to fix in this proceeding the locals which will make up the charge for the through movement in the future. There has been no practical difficulty in making these shipments over this route in the past. If the Denver & Rio Grande does not reduce its charges in accordance with this report, or if suitable through facilities are denied, the complainant can file its petition asking the establishment of a joint through route and rate.'

Thereupon the following reparation order was entered April 6, 1908:

'This case being at issue upon complaint and answers on file, and having been duly heard and submitted by the parties, and full investigation of the matters and things involved having been had, and the Commission having, on the date hereof, made and filed a report containing its conclusions thereon:

'It is ordered that the defendant, the Denver & Rio Grande Railroad Company, be and it is hereby notified and required to pay unto the complainant, the Baer Brothers Mercantile Company, of Leadville, Colorado, on or before the 1st day of June, 1908, the sum of $3,438.27, with interest thereon at the rate of 6 per cent per annum from May 6, 1907, as reparation for excessive and unreasonable charges for the transportation of 2,292,178 pounds of beer from Pueblo, Colorado, to Leadville, Colorado, as part of a through transportation from St. Louis, Missouri, to said Leadville, as more fully and at large appears in the report of the Commission in this case.'

The Denver & Rio Grande refused to pay the amount of reparation awarded, and thereupon the Baer Company brought suit against it in the United States circuit court for the district of Colorado, attaching to the complaint a copy of the award of the Commission.

By demurrer and plea the defendant attacked the jurisdiction of the Commerce Commission to pass upon the reasonableness of its rate between Pueblo and Leadville. It further contended that the Commission could not make an order of reparation unless at the same time, and as a part of such order, it fixed a through rate to be charged in the future. These objections were overruled, and thereupon the plaintiff introduced the report and order of the Commission, proved the weight of the beer shipped, the rate of freight paid, and that the freight on beer for the longer distance between St. Louis and Salt Lake City, via the Missouri Pacific and the Denver & Rio Grande, was 70 cents per cwt.

The defendant then offered evidence to show that Leadville was not on the through line, and was reached by a road 4 2/1 miles long, the operation of which was unusually expensive because of the very steep grade throughout its entire length.

Defendant also introduced testimony for the purpose of showing that the beer, though forwarded by the Missouri Pacific to be delivered in Leadville, was actually received at Pueblo by the Denver & Rio Grande as an independent shipment, as though originating at Pueblo, and was then forwarded as an intrastate shipment on a local waybill. The court overruled the various contentions of the defendant, and directed a verdict for the plaintiff for $3,761.45, being amount of the reparation order, with interest. The court also allowed attorney fees to the plaintiff. The case was then taken by the Denver & Rio Grande to the circuit court of appeals which held (109 C. C. A. 337, 187 Fed. 486) that it was not necessary to decide whether the Interstate Commerce Commission had jurisdiction to pass upon the reasonableness of the rate of 45 cents from Pueblo, Colorado, to Leadville, Colorado, saying that 'an order of reparation without such an establishment of a reasonable maximum rate is beyond the power of the Commission and void; and as no such rate was prescribed and no order forbidding the future use of an excessive rate was made in the case in hand, the Commission's order of reparation in this case was beyond its power and void. This conclusion disposes of the case in hand and renders it impossible for a judgment to be obtained against the railroad company upon the reparation order of the Commission upon which the action is based. It is therefore unnecessary to consider the other questions in the case and the judgment below is reversed.' A mandate issued in which it was 'ordered that this case be and the same is hereby remanded to the said circuit court with direction for further proceedings in accordance with the views expressed in the opinion of this court.'

The Baer Brothers Company then brought the case here by writ of error.

Mr. William B. Harrison for plaintiff in error.

Messrs. E. N. Clark, Joel F. Vaile, and J. G. McMurry for defendant in error.

Statement by Mr. Justice Lamar:

[Argument of Counsel from pages 484-486 intentionally omitted]

Mr. Justice Lamar, after making the foregoing statement of facts, delivered the opinion of the court: