Texas Pacific Railway Company v. American Tie & Timber Company/Opinion of the Court

Basing its cause of action on the act to regulate commerce, the American Tie & Timber Company, defendant in error, hereafter called the tie company, commenced suits in the circuit court of the United States for the northern district of Texas against the Texas & Pacific Railway Company, plaintiff in error, and the Kansas City Southern Railway Company, to recover damages alleged to have resulted from the refusal of the railway companies to furnish, in September, October, and November, 1907, cars for the loading of oak railway cross-ties at various points on the line of the railways in Arkansas and Louisiana for shipment to Linwood, Kansas, beyond the lines of the companies. The cases were consolidated for trial, subject to a plea to the jurisdiction filed by the Kansas City Southern Railway Company, which plea was afterward sustained and the suit as to that company dismissed. There was a trial, however, as to the Texas & Pacific Railway Company, resulting in a verdict and judgment thereon for $17,112.33, and the writ of error now before us is prosecuted by the railway company to a judgment of the court below affirming the trial court. 111 C. C. A. 673, 190 Fed. 1022.

At the close of the evidence a motion was made to dismiss 'because, under the facts and circumstances now disclosed by the record, and compatibly with the act of Congress of the United States to regulate interstate commerce, this court has no power to consider and decide the subject-matters which are complained of, or to award the relief prayed for by plaintiff.' The denial of this motion is assigned as error, and we come at once to consider it, and state only so much of the pleadings and evidence as is necessary to adequately present the issue to be decided.

The amended petition, after averring that the tie company was a Louisiana corporation and that the railway company was a corporation organized under the laws of the United States, alleged in substance that in 1901 the railway company issued and filed with the Interstate Commerce Commission 'its joint through lumber tariff, T. & P. No. 8500-H, applying on lumber, all kinds (except walnut and cherry), laths and shingles and articles taking same rates from points on the Texas & Pacific Railway Company to points in Kansas,' by which a joint through rate of 24 cents per 100 pounds was put into effect from points on the railway company's line in Arkansas and Louisiana to Linwood, Kansas, 'on, amongst other things, oak lumber,' which rate, it was averred, had been continuously in effect from the date of the filing of the said tariff up to the happening of the events complained of.

It was averred that on July 23, 1907, the tie company entered into a contract with the Union Pacific Railway Company to deliver to said company f. o. b. cars Linwood, Kansas, 150,000 oak railway cross-ties of specified dimensions at the rate of 15,000 per month, beginning on or before October 1, 1907, at the price of 86 cents per tie, which contract was by its terms based on the rate of 24 cents per hundred-weight fixed in the tariff filed as above stated in 1901. That, for the purpose of performing said contract, the tie company accumulated at stations on the railway company's line in Arkansas and Louisiana 44,541 oak cross-ties for shipment to Linwood, Kansas, and on October 10, 1907, requested the railway to furnish cars for the loading of the cross-ties at such points. It was alleged that after furnishing three cars, which were loaded by the railway company and shipped at the rate of 24 cents per 100 pounds, the railway company refused to provide further cars, or to receive the cross-ties for shipment, upon the ground, as stated by it, that it had no through rate applicable to oak railway cross-ties from the several points on its line to Linwood, Kansas. The petition charged, however, that the joint through lumber tariff above referred to and the rate of 24 cents thereby established included oak ties, and that the railway's refusal to provide cars and to carry the ties at its published rate was an unjust and unreasonable discrimination against the tie company, against the several places on the railway company's line where the ties had been accumulated, and against the ties as an article of commerce, which discrimination, it was averred, was practised by the railway company with the object of preventing the movement of the cross-ties to points beyond its line, and of thus compelling the tie company to sell the ties which it had accumulated to the railway company. It was alleged that the refusal to transport the ties had resulted in unreasonable prejudice and disadvantage to the tie company and to the traffic in ties, and in benefit to the railway company as a purchaser and consumer of cross-ties, all of which constituted a violation of the act to regulate commerce. It was averred that, in consequence of the refusal of the railway to furnish the cars, and the resulting inability of the tie company to deliver the ties to the Union Pacific Railway under the contract, that company had canceled the contract to buy the ties. And the amount sought to be recovered was alleged to be the loss resulting to the tie company consequent on such cancelation, together with punitive damages based on the 'wilful, wanton, and malicious' conduct on the part of the railway company, and a reasonable attorney's fee.

The railway company, besides denying generally the allegations of the amended petition, alleged that its joint through lumber tariff did not include a rate on oak railway cross-ties, but that cross-ties were a separate and distinct and well-recognized freight commodity, and that at the time mentioned in the petition it had not filed with the Interstate Commerce Commission any tariff under which it could lawfully accept for interstate shipment, at a through rate, the cross-ties offered by the tie company. The answer further denied that its failure to have in effect such a rate was a discrimination against cross-ties or the tie company or any locality, and alleged that oak cross-ties had never before been offered to it in Arkansas and Louisiana for shipment to interstate points on its lines or connections so as to render it advisable to establish such a rate. It was averred that when the railway company first learned, in September, 1907, of the purpose of the tie company to ship cross-ties, it at once notified the tie company that it had no through rate on ties, and therefore would not be able to offer such a rate, but would seek to establish a through rate of 50 cents per hundredweight if sufficient time was allowed it to give the public notices of the filing of the tariff as required by the statute. It was then alleged that thereafter the first intimation that the railway company had of the purposes of the tie company was a letter transmitted to one of its officers from the Interstate Commerce Commission, informing the railway company of the fact that the tie company had filed an informal complaint with the Commission on the ground that, although the railway company's tariff on lumber embraced cross-ties, it had announced its intention not to receive them under the lumber schedule, and protesting in advance against permitting the railway company to file a specific tariff on cross-ties at 50 cents per hundredweight, because, as compared with the 24-cent lumber rate, it would be unreasonable. That at once, to avoid difficulty, the railway company applied to the Interstate Commerce Commission to be allowed immediately to put into effect a cross-tie rate at 24 cents per 100 pounds, the same as the lumber rate, and such request was refused by the Commission. Request was then made to put in such a rate after five days' notice, which was likewise refused, and thereupon in January, 1908, the railway company issued and filed with the Interstate Commerce Commission a joint through lumber tariff amended so as to include at the lumber rate 'wood railroad cross-ties, all kinds, carloads.' The answer then charged that at no time until such tariff became effective, February 13, 1908, could the railway company have lawfully accepted and carried oak railway cross-ties under the provisions of the act to regulate commerce. Referring to an averment in the petition concerning the acceptance of three cars of cross-ties at about this time for shipment at the lumber rate, the answer averred that if the facts were true, it furnished no basis for recovery, as the receipt of the ties inadvertently or otherwise, in the absence of a rate, would have been a violation of law, and afforded no ground for inferring the obligation to continue to do so, and, besides, did not aid the plaintiff's case, which was based upon the refusal of the railway company to take freight at an established and existing rate, not upon any supposed obligation by estoppel to do so when there was no established rate. And by an amendment to the answer it was insisted that under § 9 of the act to regulate commerce the plaintiff could not prosecute its action because, by making a complaint, as it had done, to the Interstate Commerce Commission, concerning the failure to treat the lumber tariff as embracing a rate on cross-ties, the plaintiff had elected to proceed before the Commission.

The evidence at the trial tended to support the allegations of the amended petition as to the making of the contract with the Union Pacific Railway Company, the accumulation of cross-ties at the several stations on the railway's line, the request for cars for the shipment of the ties to Linwood, Kansas, the refusal of the railway to provide the cars, the cancelation of the contract by the Union Pacific Railway Company, and the consequent loss to the tie company. The railway company's joint through lumber tariff was introduced in evidence, and it was not disputed that by it a rate of 24 cents per 100 pounds was established on oak lumber, and that oak railway cross-ties were not specifically mentioned. The railway company also introduced in evidence the correspondence between it and the Interstate Commerce Commission, showing, among other things, the request to be allowed to put immediately into effect the cross-tie rate, and the refusal of the Commission to grant the request, and the other facts and circumstances stated in the answer. It is not disputable that the pivotal question in the case was whether oak railway cross-ties were included in the filed tariff fixing a through lumber rate of 24 cents per hundredweight, and so far as the solution of that inquiry depended upon the views of men engaged in the lumber and railroad business, as developed in the testimony, it is equally indisputable that there was an irreconcilable conflict. And this conflict at once leads to a consideration of the principle which dominates the controversy, and upon which its decision, therefore, depends.

There is no room for controversy that the law required a tariff, and therefore, if there was no tariff on cross-ties, the making and filing of such tariff conformably to the statute was essential. And it is equally clear that the controversy as to whether the lumber tariff included cross-ties was one primarily to be determined by the Commission in the exercise of its power concerning tariffs and the authority to regulate conferred upon it by the statute. Indeed, we think it is indisputable that that subject is directly controlled by the authorities which establish that, for the preservation of the uniformity which it was the purpose of the act to regulate commerce to secure, the courts may not, as an original question, exert authority over subjects which primarily come with the jurisdiction of the Commission. Texas & P. R. Co. v. Abilene Cotton Oil Co. 204 U.S. 426, 51 L. ed. 553, 27 Sup. Ct. Rep. 350, 9 Ann. Cas. 1075; Baltimore & O. R. Co. v. United States, 215 U.S. 481, 54 L. ed. 292, 30 Sup. Ct. Rep. 164; Robinson v. Baltimore & O. R. Co. 222 U.S. 506, 56 L. ed. 288, 32 Sup. Ct. Rep. 114; Mitchell Coal & Coke Co. v. Pennsylvania R. Co. 230 U.S. 247, 57 L. ed. 1472, 33 Sup. Ct. Rep. 916; Morrisdale Coal Co. v. Pennsylvania R. Co. 230 U.S. 304, 57 L. ed. 1494, 33 Sup. Ct. Rep. 938. No question is made as to the controlling effect of the doctrine as a general rule, but it is urged that it is not applicable to this case for the following reasons:

(a) The foundation upon which the doctrine rests, it is insisted, is the necessity of a uniform enforcement of the interstate commerce act and the danger of diversity and conflict arising if questions concerning the existence of tariffs or their reasonableness, of discriminations and preferences, were left to be originally determined by courts of general jurisdiction, thus giving rise to the possibility of one rule in one jurisdiction and another in another. But the argument proceeds to insist that upon the principle that where the reason for the application of a law ceases to exist the law itself ceases to apply, the settled construction of the act to regulate commerce, announced and enforced in the Abilene and other cases, has here no application because it is so plain that oak cross-ties were included in the lumber rate as fixed in the tariff of the railway company that there is no reason for proceeding primarily before the Commission, as there is no possibility of difference on the subject if left to the consideration of the courts. We need not pause to point out the palpable error of law which the proposition involves, since, on the face of the record, it is apparent that the assumption of fact upon which it rests is absolutely without foundation. We say this because nothing could more clearly demonstrate such result than does the conflict and confusion in the testimony concerning whether cross-ties were included in the filed lumber tariff. And indeed, the same demonstration arises from a consideration of some decided cases; as, for instance, American Tie & Timber Co. v. Kansas City Southern R. Co. 99 C. C. A. 44, 175 Fed. 28, 33, presumably a report of this case, where it appears that at the first hearing the trial judge was so clearly of the opinion that cross-ties were not lumber that he so charged the jury, and directed a verdict for the railroad company. See also Greason v. St. Louis, I. M. & S. R. Co. 112 Mo. App. 116, 86 S. W. 722, where it is apparent that the same conclusion was reached.

(b) Because the question has been determined by the Interstate Commerce Commission in Reynolds v. Western New York & P. R. Co. 1 I. C. C. Rep. 393, 1 Inters. Com. Rep. 685. An examination of that report, however, discloses that the railway had in effect a published rate on cross-ties eo nomine, and the complaint was that it was unreasonable because it was higher than the rate on lumber. The ruling of the Commission was not that the lumber rate included a rate on ties, but that the rate on ties was unreasonable as compared with the lumber rate, and should be reduced.

(c) Because the railway company, by loading and carrying the three cars of ties under the 24-cent rate, had itself recognized the applicability of the lumber rate to cross-ties, and was concluded thereby. But, without stopping to consider the tendency of the proof establishing the want of foundation for the proposition, we think it is wanting in merit for this obvious reason: If, as we have seen, the question of whether cross-ties were embraced in the filed tariff concerning lumber was involved in such conflict and doubt as to require the action of the Interstate Commerce Commission, the situation was such that the railway company could not do by indirection that which the statute permitted it to do only by compliance with the law; that is, filing its tariffs in the regular way. Nothing could better serve to demonstrate this self-evident truth than by recurring to the fact that, at the very inception of the controversy the request made by the railway company to the Interstate Commerce Commission to be allowed to immediately put in the rate on cross-ties was refused by that body.

(d) Because the railway company did not refuse to transport the ties in good faith, and insisted upon the absence of a scheduled rate simply as a pretext and device for preventing the shipment of the ties and their delivery in performance of the contract with the Union Pacific Railway, and with the ulterior and wrongful motive of keeping the ties on its line, so as to be able to purchase them itself from the tie company. But without pausing to do more than direct attention to the fact that this proposition is necessarily disposed of by what we have said, that is, by the lawfulness, in view of the state of the existing and filed tariff, of the refusal until the Commission had acted, we think all the contentions under this last head are completely answered by the statement that the suit was based upon the unlawfulness of the action of the railway company in refusing to carry the ties in view of the filed tariffs, and therefore the contentions are not open for our consideration.

It results that error was committed by the court in declining to sustain the motion to dismiss for want of jurisdiction, and therefore it is our duty to reverse.

Reversed.

Mr. Justice Pitney dissents.