Thompson v. United States (343 U.S. 549)/Opinion of the Court

The sole question before the Court in this case concerns the content of the term 'through route' as used in the Interstate Commerce Act.

The question arises out of a controversy as to the shipment of grain to market from points in Kansas on the Central Branch of the Missouri Pacific Railroad. From Lenora, Kansas, a typical origin point, grain may be shipped eastward to the Kansas City market over Missouri Pacific lines via Atchison, Kansas, at a rate of 19 cents per hundred pounds. The Missouri Pacific also provides service from Lenora to Omaha, Nebraska, via Atchison, at the rate of 25.5 cents. Midway between Lenora and Atchison, at Concordia, Kansas, the Missouri Pacific connects with a line of the Chicago, Burlington & Quincy Railroad running in a northeasterly direction to Omaha. Concordia is listed by the carriers as a point for interchange of traffic and there is evidence that the Missouri Pacific and the Burlington offer through transportation via Concordia from Lenora to points on the Burlington line short of Omaha. But there is no evidence that any shipment has ever been made from Lenora to Omaha via the Burlington line or that the carriers have ever offered through service over that route, although the haul from Lenora to Omaha via the Burlington is approximately the same length as the haul from Lenora to Kansas City over the lines of the Missouri Pacific.

The Omaha Grain Exchange complained to the Interstate Commerce Commission that the rates published by appellant, Trustee for the Missouri Pacific, on grain shipped from Lenora and other Kansas origins are unreasonable and discriminate against Omaha in violation of Sections 1 and 3 of the Interstate Commerce Act. In the complaint it was contended that the route to Omaha via Concordia and the Bulington line 'is a practicable through route as provided in Section 15 of the Interstate Commerce Act, and that the rates to the market of Omaha should be no greater than the rates to the market of Kansas City.'

Section 15(3) of the Act provides that-

'The Commission may, and it shall whenever deemed by it to be     necessary or desirable in the public interest, after full hearing upon complaint or upon      its own initiative without complaint, establish through      routes, joint classifications, and joint rates, fares, or      charges, applicable to the transportation of passengers or      property by carriers subject to this part, *  *  * .' 54 Stat. 911, 49 U.S.C. § 15(3), 49 U.S.C.A. § 15(3).

The Commission's power to establish through routes is limited by a provision of Section 15(4), quoted in the margin, whenever such action would require a carrier to short haul itself. Under that Section, a carrier may be required to short haul itself only where its own line makes the existing through route 'unreasonably long as compared with another practicable through route which could otherwise be established', or where the Commission makes special findings that a proposed through route 'is needed in order to provide adequate, and more efficient or more economic, transportation'. Establishment of a new through route from Lenora to Omaha, via the Burlington, would compel the Missouri Pacific to permit use of the Lenora-Concordia portion of its line in the new through route to Omaha in competition with the Missouri Pacific's own route from Lenora to Omaha via Atchison. As a result, establishment of a new through route as requested by the Omaha Grain Exchange admittedly invokes the restriction against short hauling in Section 15(4).

The parties dispute whether, on the record in this case, there is sufficient basis for making the findings required by Section 15(3) and (4) for the establishment of a through route. We do not reach this question because there was no attempt to make the inquiry and findings required by Section 15, the Commission finding that a through route from Lenora to Omaha via Concordia and the Burlington line was already in existence and, therefore, did not have to be 'established.' The Commission granted relief to the complainant Omaha Grain Exchange by finding that the sum of the local rate from Lenora to Concordia published by appellant and the local rate from Concordia to Omaha published by the Burlington (totaling 30 cents per hundred pounds) is an 'unreasonable' rate over the route from Lenora to Omaha via the Burlington. Appellant was ordered to provide transportation of grain from Lenor to Omaha at rates not exceeding the rates charged by the Miss ouri Pacific on like traffic to Kansas City (19 cents). The Commission did not consider the reasonableness of the rate published by appellant for the route from Lenora to Omaha via Atchison, nor is there any finding that the local rate from Lenora to Concordia published by appellant is itself either unreasonable or discriminatory. 278 I.C.C. 519, affirming Division 2, 272 I.C.C. 368.

Appellant sued in the District Court to enjoin enforcement of the Commission's order on the sole ground that the Commission erred in finding the existence of a through route from Lenora to Omaha via the Burlington with the result that the order, in effect, establishes a new through route without complying with the requirements of Section 15(3) and (4) of the Act. A three-judge District Court, one judge dissenting, sustained the Commission's order and dismissed appellant's complaint. The District Court concluded that 'evidence of physical interchange connection at Concordia, plus long established joint rates to some points on the Burlington short of Omaha, plus combination rates to Omaha,' furnished sufficient evidentiary basis for the Commission's finding of the existence of a through route. 101 F.Supp. 48, 52. The case is here on direct appeal. 28 U.S.C.(Supp. IV) § 1253, 28 U.S.C.A. § 1253.

Under the Interstate Commerce Act, a carrier must not only provide transportation service at reasonable rates over its own lines but has the additional duty 'to establish reasonable through routes with such other carriers, and just and reasonable rates * *  * applicable thereto'. Through routes may be, and ordinarily are, established by the voluntary action of connecting carriers. Since 1906, through routes may also be established by order of the Interstate Commerce Commission. In that year, Congress authorized the Commission to establish through routes 'provided no reasonable or satisfactory through route exists'. In 1910, Congress first empowered the Commission to establish alternate through routes but restricted this power by adding the forerunner of present Section 15(4) to prevent the Commission from establishing any through route requiring a carrier to short haul itself unless the existing route was unreasonably long compared to the proposed route.

The Commission's effort to limit by construction the impact of the short-hauling restriction on its power to establish through routes was rejected by this Court in United States v. Missouri Pacific R. Co., 1929, 278 U.S. 269, 49 S.Ct. 133, 73 L.Ed. 322. Following this decision, the Commission asked Congress to delete completely the short-hauling restriction. In the Transportation Act of 1940, Congress refused to eliminate the restriction against short hauling, but adopted a compromise under which the restriction against short hauling was retained subject to a new exception applicable only where the Commission makes the special findings listed in the amended Section 15(4).

Confronted with this consistent legislative refusal to eliminate the short-hauling restriction on its power to establish through routes, the Commission justifies its order on the ground that a 'through route' from Lenora to Omaha via the Burlington was already in existence. If the Commission has correctly applied the term 'through route' in this case, the Commission's restricted power to 'establish' through routes under Section 15(3) and (4) is not relevant to this case. The statutory term 'through route,' used throughout the Interstate Commerce Act, has been defined by this Court as follows:

'A 'through route' is an arrangement, express or implied,     between connecting railroads for the continuous carriage of      goods from the originating point on the line of one carrier      to destination on the line of another. Through carriage     implies a 'through rate.' This 'through rate' is not      necessarily a 'joint rate.' It may be merely an aggregation      of separate rates fixed independently by the several carriers      forming the 'through route'; as where the 'through rate' is      'the sum of the locals' on the several connecting lines or is      the sum of lower rates otherwise separately established by      them for through transportation. Through Routes and Through Rates, 12 I.C.C. 163,     166.'

The Commission decision cited by the Court was summarized as follows in the Commission's 21st Annual Report to Congress:

'A through route is a continuous line of railway formed by an     arrangement, express or implied, between connecting carriers. * *  * Existence of a through route is to be determined by the      incidents and circumstances of the shipment, such as the      billing, the transfer from one carrier to another, the      collection and division of transportation charges, or the use      of a proportional rate to or from junction points or basing      points. These incidents named are not to be regarded as     exclusive of others which may tend to establish a carrier's      course of business with respect to through shipments.'

In short, the test of the existence of a 'through route' is whether the participating carriers hold themselves out as offering through transportation service. Through carriage implies the existence of a through route whatever the form of the rates charged for the through service.

In this case there is no evidence that any through transportation servicehas ever been offered from Lenora to Omaha via the Burlington. The carriers' course of business negatives the existence of any such through sroute. The fact that appellant's line connects with the Burlington at Concordia does not aid the Commission in proving the existence of a through route since the power to establish through routes, under Section 15(3) and (4) also presupposes such physical connection. And the showing that appellant publishes a local rate from Lenora to Concordia and that the Burlington publishes a local rate from Concordia to Omaha proves only that each carrier complies with the statutory duty to publish rates for transportation service between points on its own lines.

The only remaining evidence urged in support of the Commission's finding that a through route from Lenora to Omaha via the Burlington already exists is the showing that the Missouri Pacific and the Burlington offer through service from Lenora to points on the Burlington line short of Omaha. Under Section 1(4) of the Interstate Commerce Act, the Missouri Pacific is required to establish reasonable through routes. In conformity with that Section, the Missouri Pacific furnishes through service from Lenora to Omaha on its own lines via Atchison and, since its own lines do not serve points on the Burlington line short of Omaha, offers through service to such points in conjunction with the Burlington. Through service to points short of Omaha cannot be used as evidence of the existence of a through route of Omaha unless we are to hold that compliance with Section 1(4) causes the Missouri Pacific to lose its right to serve Omaha via its own lines, a right guaranteed by Section 15(4). We reject the Commission's argument that the existence of through routes from Lenora to points on the Burlington line short of Omaha proves the existence of a through route to Omaha via the Burlington as requiring an unwarranted distortion of the statutory pattern.

The United States, having joined in defense of the Commission's order in the District Court and on motion to affirm in this Court, has filed a memorandum conceding that the Commission erred in finding that through routes over the Burlington line already exist. The Commission continues to support its order, but the logical conclusion of the theory advanced by the Commission is that through routes exist between all points throughout the country wherever physical rail connections are available. If there is no through carriage over any combination of connecting carriers, the Commission under its present theory would never have to establish through routes under Section 15(3) and (4) but could divert traffic to any route between two points by ordering reduction of the sum of the local rates over that route. Acceptance of this argument would mean that Congress' insistence on protecting carriers from being required to short haul themselves could be evaded whenever the ommission chose to alter the form of its order. The Com mission, by using the form of order employed in this case, could also divert traffic from existing through routes to the lines of a weak carrier solely to assist that carrier to meet its financial needs, thereby evading completely the applicable prohibition of Section 15(4), before the Court in United States v. Great Northern Ry. Co., 343 U.S. 562, 72 S.Ct. 985. In short, acceptance of the Commission's argument would mean that the acts of Congress since 1906 granting the Commission only a carefully restricted power to establish through routes have been unnecessary surplusage.

We hold that the Commission's efforts to support its finding that a through route from Lenora to Omaha via the Burlington line already exists are inconsistent with the meaning of the term 'through route' as used in the Interstate Commerce Act. Since there is admittedly no evidence that the Missouri Pacific ever offered through transportation service over the route in question, the Commission's order is without evidentiary support under the accepted tests for determining the existence of a through route. Accordingly, the judgment of the District Court dismissing appellant's complaint must be reversed.