Pennsylvania Company v. Kittaning Iron & Steel Manufacturing Company/Opinion of the Court

The Uniform Demurrage Code discussed in Swift & Company v. Hocking Valley Railway Company, 243 U.S. 281, 283, 37 Sup. Ct. 287, 61 L. Ed. 722, was duly published as a part of the freight tariffs of the Pennsylvania Railroad prior to November 1, 1912. From time to time during the months of December, 1912, and February and March, 1913, the Kittaning Iron & Steel Manufacturing Company received from the railroad an aggregate of 227 cars of iron ore, all interstate shipments, and on account of them the railroad claimed $1,209 for demurrage. The company refused to pay these, among other, demurrage charges, whereupon this action was brought in a state court of Pennsylvania to recover the amount. The trial court disallowed the claim. The judgment there entered was affirmed by the Supreme Court of the state, and a petition by the railroad for a writ of certiorari was granted, 249 U.S. 595, 39 Sup. Ct. 260, 63 L. Ed. 794.

Before receipt of any of the cars the Kittaning Company had entered into an average agreement with the railroad as provided in rule 9. The aggregate number of days detention of these cars after they reached the company's interchange tracks (in excess of the free time under the average agreement), was 1209; and the demurrage charge fixed by rule 7 was $1 for each day, or fraction thereof, that a car is detained after the expiration of the free time. The ore in these cars was frozen in transit; and the company insisted that this detention of the cars beyond the 'free time' had resulted from this fact and claimed exemption from demurrage charges under rule 8, section A, subdivision 2, which declares that none shall be collected--

'when shipments are frozen while in transit so as to prevent     unloading during the prescribed free time. This exemption     shall not include shipments which are tendered to consignee      in condition to unload. Under this rule consignees will be     required to make diligent efforts to unload such shipments.'

The Kittaning Company had at its plant a device for thawing cars of frozen ore through 'steaming.' By this means it was able to unload as much as 5 cars of frozen ore a day. The daily average number of cars of frozen ore received during the three months was far less than 5 cars; but the number received on single days varied greatly. On many days none were received; on some only 1 or 2; and on soe, as many as 35. The railroad contended that the standard to be applied for determining, under the rule here in question, whether unloading within the prescribed free time was prevented by the shipments being frozen, was, as in other cases under the Code, the conditions applied to the car treated as a unit. It insisted, therefore, that the determination in any case whether a detention was due to the fact that the contents of a car was frozen could not be affected by the circumstances that a large number of such cars happened to have been 'bunched,' and that, as each car considered separately could have been unloaded within the free time, the consignee must bear whatever hardship might result from many having arrived on the same day, unless relief were available to him either under the 'bunching rule' or under the 'average agreement.' The question presented is that of construing and applying the frozen shipments clause. But in order to determine the meaning or effect of that clause, it is necessary that it be read in connection with others.

The purpose of demurrage charges is to promote car efficiency by penalizing undue detention of cars. The duty of loading and of unloading carload shipments rests upon the shipper or consignee. To this end he is entitled to detain the car a reasonable time without any payment in addition to the published freight rate. The aim of the Code was to prescribe rules, to be applied uniformly throughout the country, by which it might be determined what detention is to be deemed reasonable. In fixing the free time the framers of the Code adopted an external standard; that is, they refused to allow the circumstances of the particular shipper to be considered.

When they prescribed 48 hours as the free time they fixed the period which, in their opinion, was reasonably required by the average shipper to avail himself of the carrier's service under ordinary circumstances. The framers of the Code made no attempt to equalize conditions among shippers. It was obvious that the period fixed was more than would be required by many shippers most of the time, at least for certain classes of traffic; and that it was less than would be required by some shippers, most of the time, for any kind of traffic. Among the reasons urged for rejecting consideration of the needs or merits of the individual shipper, was the fear that, under the guise of exempting shippers from demurrage charges because of conditions peculiar to them, unjust discrimination and rebates to favored shippers might result.

In applying the allowance of free time and the charges for demurrage the single car was treated throughout as the unit, just as it is in the making of carload freight rates. Compare Darling & Co. v. Pittsburgh, etc., Ry. Co., 37 Interst. Com. Com'n R. 401. The effect on the charges of there being several cars involved was, however, provided for by two rules: (1) The bunching rule, under which the shipper is relieved from charges, if by reason of the carrier's fault, the cars are accumulated and detention results. (2) The average agreement rule, under which a monthly debit and credit account is kept of detention and the shipper is relieved of charges for detaining cars more than 48 hours by credit for other cars released within twenty-four hours.

It was urged that the use in this rule of the word 'shipment' and not 'car,' implies that the whole consignment is to be considered in determining whether the delay was caused by the ore being frozen. Obviously the word 'shipment' was used because it is not the car, but that shipped in it, which is frozen. Furthermore the agreed facts do not state whether the cars, which by their number prevented unloading within the 48 hours, came in one consignment or in many.

Excessive receipts of cars is a frequent cause of detention beyond the free time even where shipments are not frozen. From the resulting hardship either the bunching rule or the average agreement ordinarily furnish relief. If the compan had not elected to enter into the average agreement, the bunching rule might have afforded relief under the circumstances which attended the deliveries here in question. Since any 1 of the 227 cars on which demurrage was assessed might have been unloaded within the 48 hours free time, the undue detention was not the necessary result of the ore therein being frozen, but was the result of there being an accumulation of cars so great as to exceed the unloading capacity. Compare Riverside Mills v. Charleston and Western Carolina Ry. Co., 20 Interst. Com. Com'n R. 153, 155; Central Penn. Lumber Co. v. Director General, 53 Interst. Com. Com'n R. 523. It does not seem probable that those who framed and adopted the frozen shipment rule and the Interstate Commerce Commission, which approved it, intended therein to depart from the established policy of treating the single car as the unit in applying demurrage charges as well as in applying carload freight rates. Such was the conclusion reached in the informal ruling of the commission to which counsel called attention.

The judgment of the Supreme Court of Pennsylvania is

Reversed.