Petition — Farley Terminal Co. v. Atchison, Topeka & Santa Fe Railway Co.

Supreme Court brief1975

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IN THE

Supreme Court of the United States

OCTOBER TERM, 1975

757529 |

No.

FARLEY TERMINAL Co., INC.,

Petitioner,

THE ATCHISON, TOPEKA AND SANTA FE

RAILWAY COMPANY

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

RONALD N. COBERT

WILLIAM J. GROVE

WILLIAM J. GROVE, JR.

ROBERT L. COPE

1730 M Street, N.W.

Suite’ 501

Washington, D.C. 20036

Counsel for Petitioner

[ oa

Of Counsel:

GROVE, JASKIEWICZ, GILLIAM

AND COBERT

1730 M Street, N.W.

Washington, D.C. 20036

October 6, 1975

WILSON - EPES PRINTING Co.. INC. - RE 7-6002 - WASHINGTON, D. C. 20001

———

TABLE OF CONTENTS

OPINIONS BELOW ...........---------------------ec-eeeen-nesenennnenncssees

JURISDICTION ...........-----------c--00+--eeceeeenenovsnessnnsssenenenseees

QUESTIONS PRESENTED ..............-----------—--------------

STATUTES INVOLVED ......—...------------------0----0-----n0-eo0e-=

REGULATIONS INVOLVED ..................-----—-----------------

STATEMENT OF CASE .........-.----------------es0--eesesensee-eeeee>

REASONS FOR GRANTING THE WRIT ................----

1. The Decision Below Conflicts With Decisions

Of This Court That A Carrier-Made Rate Is

Not An Approved Lawful Rate ............---.-.-...------ 7

2. The Holding Below Conflicts With The Decision

Of Another Court Of Appeals -.......................--. 8

8 A Carrier Cannot Unilaterally Circumvent A

System-Wide Contract Rate By Mere Publica-

tion Of A Tariff With A Higher Rate -............... 9

4. Santa Fe Had A Duty To Publish Its Own

Tariff Containing Rates Consistent With Exist-

ing Contracts ................-------------ee-eeeen-cosenesenenesenenen 16

ana & BS Nw

CONCLUSION ..........---------c---ceces--sceesneccsncccesnnsnseneonsrennensnnes 18

TABLE OF AUTHORITIES

CASES: Page

Arizona Grocery Co. V. Atchison, Topeka & Santa

Fe Railway Co., 284 U.S. 370 (1932) ................ 7,8

Armour Packing Company Vv. United States, 209

ns I a eatelaiideeeialin 11

Ets-Hopkin & Galvan, Inc. V. Maas Transport,

Inc., 380 F.2d 258 (8th Cir. 1967), cert. denied,

ee es Se ED ae caseigudinenmepmnididietion 15

Keller v. Thornton Canning Company, 59 Cal.

Reptr. 836, 429 P.2d 156 (1967) ......................... 15

Louisville & Nashville Railroad Company V.

Mottley, 219 U.S. 467 (1911) ......................... 10, 11, 12

McCullough Transfer Co. v. Virginia Surety Co.,

213 F.2d 440 (6th Cir. 1954) ...............0.......1...... 15

Middlewest Motor Freight Bureau v. United

States, 4383 F.2d 212 (8th Cir. 1970), cert. de-

State of Georgia Vv. Pennsylvania Railroad Co., 324

U.S. 439, rehearing denied, 324 U.S. 890 (1945).. 16

ADMINISTRATIVE DECISIONS:

Chattanooga Log Rates, 30 1.C.C. 36 (1914) -........ 12

Classification of Plumbers’ Goods In The South,

ne es CO a uiuminemieiinee 13

Contract Rates, Rugs and Carpeting From Am-

sterdam, N.Y. to Chicago, 313 1.C.C. 247

ENS IE EOE Ce Ree See He ec ee 13

Elimination of Baggage Service on Penn Central,

I es 13

Ex Parte 230, Substituted Service—Charges And

Practices of For-Hire Carriers and Freight

Forwarders (Piggyback Service), 322 I.C.C.

Eee. 2, 3, 4, 5, 7, 8, 14, 15, 16, 17

Interchange Switching At Wichita, Kansas, 61

I, OUD = se laamesentelabaabailandauies 13

Rates On Crushed Stone From McCook And Thor-

ton Ill., To Stations In Indiana And Michigan,

Se A enamel 12

TABLE OF AUTHORITIES—Continued

Page

STATUTES:

Interstate Commerce Act, 24 Stat. 379 as amended,

49 U.S.C. §1, et seq.:

Section 5a(6), 49 USC § 5b(6) -............. 3, 6, 7, 16, 17

Section 402(c) (2), 49 USC § 1002(c) (2)... 4

Elkins Act, 32 Stat. 847 as amended, 49 USC

§§ 41-43 Section 1, 49 USC § 41 ......-00.0... 3, 4,12

ADMINISTRATIVE REGULATIONS:

49 C.F.R. 1090 Practices of For-Hire Carriers

Participating in Trailer on Flatcar Service

§ 1090.7(a) Tariff Publication Regulation ........ 4,5

ee ee ee a

IN THE

Supreme Court of the United States

OCTOBER TERM, 1975

No, ————

FARLEY TERMINAL Co., INC.,

Petitioner,

Vv.

THE ATCHISON, TOPEKA AND SANTA FE

RAILWAY COMPANY

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Farley Terminal Company, Inc., (Farley) petitions

for a writ of certiorari to review the judgment and

opinion of the United States Court of Appeals for the

Ninth Circuit entered in this case on July 9, 1975.

OPINIONS BELOW

The judgment of the Court of Appeals, entered July

9, 1975, not reported, appears in Appendix A hereto.

The opinion of the Court of Appeals, entered July 9,

1975, not yet reported, appears in Appendix B hereto.

The Judgement of the United States District Court for

the Central District of California, granting The Atchi-

son, Topeka and Santa Fe Motion for Summary Judge-

ment, entered February 19, 1974, not reported, appears

in Appendix C hereto. The District Court Findings of

Fact and Conclusions of Law, not reported, appear in

Appendix D hereto. Those relevant pages of the Inter-

state Commerce Commission decision in Ex Parte 230,

Substituted Service—Charges and Practices of For-Hire

Carriers and Freight Forwarders (Piggyback Service),

$22 I.C.C. 301 (1964), dealing with trailer-rental con-

tracts, specifically pages 370-372, appear in Appendix

E hereto.

JURISDICTION

The judgement of the Court of Appeals was entered

on July 9, 1975 (Appendix A). This petition is filed

within ninety days of that date. The jurisdiction cf this

Court is invoked under 28 U.S.C. § 1254(1).

QUESTIONS PRESENTED

Prior to the Interstate Commerce Commission (Com-

mission) decision in Ex Parte 230, Substituted Service—

Charges and Practices of For-Hire Carriers and Freight

Forwarders (Piggyback Service), 322 1.C.C. 301 (1964),

The Atchison, Topeka and Santa Fe Railway Company

(Santa Fe) leased piggyback trailers to all its shippers

pursuant to uniform contracts containing the same rate.

Santa Fe had in effect system-wide (system-wide refers

only to the Santa Fe system), uniform contracts regard-

ing trailer leasing. In Ex Parte 230 the Commission, to

remove the possibility of future discrimination between

shippers, ordered all carriers to publish tariff governing

trailer rental. The Commission found the record “al-

most completely devoid of evidence” that any discrimina-

tion between shippers had existed under the uniform

system-wide contract rates. (322 ICC p. 371, Appendix

E, p. 3e) Santa Fe did not publish a tariff providing for

the prior contract rates and charges. Instead, as a

member of the Transcontinental Freight Bureau, it joined

with other railroads in publishing higher conference rates.

— a Se Se

Petitioner filed suit against Santa Fe for breach of

contract to recover the difference between the contract

rate and the published tariff rate. Petitioner, in support

of its Motion for Summary Judgement, alleged, inter

alia, that Section 5a(6) of the Interstate Commerce

Act (49 USC §5b(6)) guaranteed Santa Fe the free

and unrestrained right of independent action within any

rate conference, and that Santa Fe was under a duty

to exercise that right and to publish a tariff containing

the contract rates. The District Court granted Sum-

mary Judgement to Santa Fe and the Court of Appeals

affirmed. The questions presented are:

1. Whether a tariff which is merely filed with the In-

terstate Commerce Commission is a commission ap-

proved rate which bars a shipper from asserting

that the tariff raie exceeds prior uniform contract

rates.

2. Whether a carrier can unilaterally void uniform

system-wide contract rates by mere publication of a

tariff with a higher rate.

3. Whether Ex Parte 230, which the District Court

found did not express an intent to negative existing

rate contracts, nevertheless voided existing rate con-

tracts.

4. Whether a carrier can avoid its contractual obliga-

tions by refusing to exercise the free and unre-

Strained right to take independent action in accord-

ance with Section 5a(6) of the Interstate Commerce

Act and publish its own tariff containing existing

contract rates.

STATUTES INVOLVED

Title 49 United States Code, Section 5b(6) and § 41

are set forth in Appendix F hereto.

REGULATIONS INVOLVED

Title 49 C.F.R. Section 1090.7(a), formerly 49 C.F.R.

Section 500.7, is set forth in Appendix G hereto.

STATEMENT OF CASE

Petitioner, Farley, is a shippers’ agent conducting

itself under the regulatory exclusion found in Section

402(c) (2), Interstate Commerce Act (49 U.S.C. § 1002

(c)(2)). Farley consolidates two piggyback trailers

(trailers transported on railroad flatcars), each trailer

belonging to a separate shipper, into a single shipment

with one bill of lading. This consolidated shipment per-

mits the piggyback trailers to be transported under a

lower tariff rate than that which would be charged each

individual shipper for a single trailer. In the perform-

ance of its services as a shippers’ agent, Farley ships,

as rail consignor, numerous piggy-back trailers over the

lines of Santa Fe. Santa Fe is a common carrier by

railroad subject to the provisions of the Interstate Com-

merce Act. (49 U.S.C. §1, et seq.)

This case involves the leasing of trailers by Farley

for use in piggyback or trailer on flatear (TOFC)

service. Prior to Ex Parte 230 Santa Fe merely pro-

vided a transportation service under applicable tariff

provisions. Farely was required to furnish its own

trailers and its own railroad flatcar. Since Santa Fe

owned numerous trailers and flatears, Farley leased

trailers and flatears from Santa Fe. In accord with the

custom and practice within the industry the leasing

by Farley was governed by a contract. Although one

railroad might charge a different rate than that charged

by another railroad, Santa Fe charged all of its shippers

the same rate.

In 1962, the Interstate Commerce Commission in-

stituted a general investigation into trailer-on-flatear

(TOFC) or piggyback service. The Commission issued

its final report in 1964, Ex Parte 230, Substituted Serv-

ice—Charges and Practices Of For-Hire Carriers And

Freight Forwarders (Piggyback Service), 322 ICC 301

(1964).* One of the issues considered in Ex Parte 230

involved consideration of whether trailer leasing charges

should be required to be included in tariffs in the future.

The Commission did not find that the generally accepted

practice of contracting for trailer rental had resulted in

any prior violations of the Elkins Act. In order to

eliminate any opportunity for future abuse, however,

the Commission required Santa Fe and other rail car-

riers to publish their trailer leasing charges in tariffs

in accordance with Rule 500.7 of Ex Parte 230, (322

ICC at 415, et seq., now 49 C.F.R. § 1090.7/a)).

In Ex Parte 230 the Commission nowhere stated that

it had intended to negative or render null and void out-

standing contracts, and did not prescribe the level of

rates to be contained in the tariffs required to be filed.

Santa Fe, as a member of the Transcontinental Freight

Bureau (Freight Bureau), joined with other railroads

in publishing tariffs governing rental to shippers of

piggyback trailers. Such tariffs did not contain the

rates established in existing contracts; instead, the tariff

contained substantially higher rates.

On August 3, 1975, Farley filed its complaint for

breach of contract in United States District Court for

the Central District of California. Santa Fe, in its

Answer, did nov plead as an affirmative defense that it

was required to file higher rates because the existing

contract rates were non-compensatory and thus unjust

1 Ex Parte 230 was challenged on other grounds and reversed in

A.T. & S.F. Ry. Vv. United States, 244 F. Supp. 955 (N.D. II.

1965). This decision, in turn, was reversed and Ex Parte 230 was

affirmed in American Trucking Association v. A.T. & S.F. Ry. Co.,

387 U.S. 847 (1967).

and unreasonable. Rather it contended that, as a matter

of law, Ex Parte 230 nullified all pre-existing contracts.

That court granted a Santa Fe motion for summary

judgement, dismissed the Farley complaint, and entered

judgement for Santa Fe. The district court specifically

found (Appendix D, p. 2d):

That the rates provided in said tariff, as a matter

of law, rendered null and void the rates contained

in the Lease Agreement . . .; although Ex Parte 230

did not express an intent to negative existing rate

contracts.

Farley appealed to the Court of Appeals for the

Ninth Circuit which affirmed the district court in Farley

Terminal Co., Inc. v. The Atchison, Topeka and Santa

Fe Railway Company, No. 74-1872, July 9, 1975.

The main thrust of the Court of Appeals decision

centered around its finding that a contract, although valid

when made, is nevertheless rendered void by a subse-

quently published tariff. This holding was premised

upon findings that the published rate was a Commission

approved rate, and that a tariff has the effect of a

statute for all purposes. Thus, the Court of Appeals

reasoned that if a statute can void prior inconsistent

contracts, it follows that a carrier-published tariff can

likewise void prior inconsistent contracts. The court

did not even mention the failure by Santa Fe to exercise

its free and unrestrained right, guaranteed to it by

Section 5a(6) of the Interstate Commerce Act, to take

independent action and publish a tariff providing the

same uniform system rates and charges contained in

existing contracts.

REASONS FOR GRANTING THE WRIT

Questions presented are of major importance and

nationwide applicability in the administration of the

Se SS

numerous Acts regulating commerce, particularly the In-

terstate Commerce Act. The issues relate to basic prin-

ciples regarding carrier-made and Commission-made rates

and to the implementation of Section 5a(6) of the In-

terstate Commerce Act regarding the right and duty

of each member of a Rate Bureau to file its own tariff

applicable to its own transportation services.

1. The holding below rests upon principles of law in

conflict with Arizona Grocery Co. v. Atchison, To-

peka & Santa Fe Railway Co., 284 U.S. 370

(1932); and Middlewest Motor Freight Bureau Vv.

United States, 483 F.2d 212 (8th Cir. 1970), cert.

denied 402 U.S. 999 (1971).

2. Whether a tariff published pursuant to an Ex

Parte 230 type order will, by the mere fact of

publication, void prior uniform system-wide contract

rate provisions, presents an issue affecting basic

principles of rate regulation which should be de-

cided by this Court.

3. Whether Section 5a‘(6) of the Interstate Com-

merce Act imposes a duty upon, as well as pro-

vides the right to, each member of a Rate Bureau

to publish its own tariff establishing uniform

rates, applicable to its own system and consistent

with contract obligations, is a question affecting

proper regulation and proper conference rate-mak-

ing which should be decided by this Court.

1. The Decision Below Conflicts With Decisions Of This

Court That A Carrier-Made Rate Is Not An Approved

Lawful Rate.

The decision of the court below is in conflict with

principles of law established by this Court in Arizona

Grocery Co. V. Atchison, Topeka & Sante Fe Ry. Co.,

284 U.S. 370 (1932). This Court in Arizona Gro-

cery clearly enunciated the differing legal effects of

carrier-made and Commission-made rates. The court be-

low has failed to apply principles of law applicable to a

carrier-made legal rate and, instead, has viewed the

issues as relating to a Commission-made lawful rate.

The court below has premised its ultimate holding

upon a preliminary determination that the tariff in issue

was an “approved” tariff. The statement of the issue

before it assumes a tariff “when approved”. (Appendix

B, p. 2b). The statement of fact recites that:

“(T)he railroads, including the Santa Fe, filed [a]

Trans-Continental Freight Bureau Freight Tariff ....

This tariff, which established higher rates for the

leasing of TOFC equipment than were provided in

the pre-existing leases, became effective November

17, 1967, after ICC approved it. (Emphasis added)

(Appendix B, p. 3b).

The tariff in this case was filed in purported com-

pliance with Ex Parte 230. The rates were carrier-made

rates, not “approved” Commission-made rates.

In Arizona Grocery, supra, at p. 352, this Court stated:

“In order to render rates definite and certain, and to

prevent discrimination and other abuses, the statute

required the filing and publishing of tariffs specifying

the rates adopted by the carrier, and made these the

legal rates, that is, those which must be charged to

all shippers alike. . .. Although the Act thus created

a legal rate, it did not abrogate but expressly af-

firmed, the common-law duty to charge no more than

a reasonable rate, and left upon the carrier the bur-

den of conforming its charges to that standard. Jn

other words, the legal rate was not made by statute

a lawful rate,—it was lawful only if it was reason-

able. Under $6 the shipper was bound to pay

the legal rate, but if he could show that it was un-

reasonable he might recover reparation. (Emphasis

added).

a er re eer.

Recognition that once a tariff is unilaterally pub-

lished and becomes effective, the rate provided therein

is the only rate which a carrier can lawfully charge

shippers on its system, does not require the conclusion,

asserted by the court below, that such a carrier-made

tariff rate cannot be attacked by a shipper as either un-

lawful or as a unilateral rate publication made in excess

of the uniform system contract rate.

The resulting legal consequences of applying prin-

ciples of law properly related to carrier-made rates rather

than Commission-made rates should be reviewed and

resolved by this Court.

2. The Holding Below Conflicts With The Decision Of

Another Court Of Appeals.

The holding below rests upon principles of law in

conflict with the decision of the Court of Appeals for

the 8th Circuit in Middlewest Motor Freight Bureau v.

United States, 433 F.2d 212 (8th Cir. 1970), cert. denied

402 U.S. 999 (1971).

In Middlewest Motor Freight Bureau v. United States,

supra, the court, recognizing the principles in Arizona

Grocery regarding carrier-made rates, stated (p. 238):

“But merely because the carrier is bound to charge

the filed rate, it does not follow that he is necessarily

entitled to keep it.”

Thus, Santa Fe is not entitled to keep that amount of

money charged in its tariff which exceeds the contract

rate.

The published tariff rate was the legal rate which

Santa Fe was obligated to charge all shippers alike,

including Farley. But, if Farley could show that such

legal rate was in excess of the contract rate and, there-

fore, Santa Fe had breached its contract, Farley was

entitled to recover damages for breach of contract. The

court below, however, failed to recognize the fundamental

principle that a legal rate can be attacked by a shipper

in a proceeding before a federal district court for breach

of contract.

8. A Carrier Cannot Unilaterally Circumvent A System-

Wide Contract Rate By Mere Publication Of A Tariff

With A Higher Rate.

The court below ruled, for the first time, that a valid

system-wide contract rate is rendered void by mere

publication of tariff rates. This holding is a direct

consequence of the failure of the court to comprehend

the fundamental principle that a legal rate can be at-

tacked by a shipper as being unreasonable or, as in the

instant case, as in excess of the contract rate. Petitioner

does not dispute that a published tariff rate is the legal

rate and is binding on carrier and shipper alike. How-

ever, a shipper is not precluded from asserting that the

rate constitutes a breach of the contract rate.

The court below assumed that since a legal rate has

the force of statute it, like a statute, will nullify prior,

inconsistent contract rates. The only case cited by the

Court of Appeals in support of its novel theory. Louis-

ville & Nashville Railroad Company v. Mottley, 219

U.S. 467, 477-486 (1911), dealt with a valid contract

which was voided by the subsequent passage of the

Interstate Commerce Act.

Mottley is clearly inapposite. The Louisville and Nash-

ville contracted with Mr. and Mrs. Mottley in 1871 to

provide free transportation passes in return for their

release of the railroad from all damages for injuries

received in a train collision. After enactment of the

Interstate Commerce Act in 1906, Section 1 of which

prohibited the issuance of free passes, the railroad re-

fused to honor its contract, and this Court upheld its

position. The instant case rests upon entirely different

facts. Mottley did not deal with tariff rates, which are

by their very nature creatures of carriers and not of

Congress. Mottley dealt with legislative action which

voided prior contracts. Thus, Mottley is applicable only

if tariff rates are considered statutes for all purposes.

This, however, is not the law. A published tariff rate

has the force and effect of statute only insofar as it is

the legal rate which must be charged all shippers. Thus,

shippers are not precluded from attacking the carrier-

made tariff rate as unreasonable or in excess of the

contract rate.

Armour Packing Company v. United States, 209 U.S.

56, 81-83 (1908) is also inapposite. In Armour the

carrier had pre-existing tariff rates in effect at the time

it entered into a transportation contract with a single

shipper, Armour. This Court merely held that when the

tariff rate was later increased it was the legal rate which

was required to be charged each shipper, including

Armour, and that the carrier and shipper were subject

to criminal sanctions if the Jegal published rate was not

charged and paid. This is not the situation in the in-

stant case. Armour involved a criminal action for fail-

ure to apply the published rate. It was in no respect

a civil action for breach of contract. This Court, there-

fore, did not address the question of whether a carrier

could nullify a contract by merely publishing a tariff.

The only question in Armour was: Once a tariff is

published, may less than the legal, published rate be

charged?

In Armour the contract was between the carrier and a

single shipper. Here, the contract rate was a uniform

rate for the entire Santa Fe system. All shippers who ship-

ped within the Santa Fe system did so at the same con-

tract rate. While enforcement of the lower contract rate

would have permitted the single shipper in Armour to ship

his goods at a lower rate than other shippers, such is not

the case here. Since the contract rate was a uniform

rate throughout the entire Santa Fe system, all shippers

are entitled to the lower contract rates.* Also, in Armour,

the shipper contracted with the carrier at a rate equal

to the then existing tariff rate. While the shipper in

Armour could be said to have contracted subject to any

increase in the tariff rate, the same principle is not

applicable to the instant case where there was no ex-

isting tariff rate. This is especially true since in the

instant case the contract rate was a system-wide rate.

Armour and Mottley are clear examples of specific

Congressional action which proscribe effectiveness of con-

tractual undertaking.

The Interstate Commerce Commission has consistently

observed that a contract rate, especially where, as here,

the contract rate is uniform and system-wide, can only

be nullified where the contract rate is an unlawful rate,

that is, an unjust and unreasonable rate, as for ex-

ample being non-compensatory. Beginning with Rates on

Crushed Stone From McCook and Thornton, Ill., To

Stations In Indiana and Michigan, 29 I.C.C. 136 (1914),

the Commission has held that the fact that contracts have

been entered into will not preclude carriers from in-

creasing their rates if an increase is required to receive

a fair return. In Chattanooga Log Rates, 30 I.C.C. 36

(1914), the Commission again adopted this position,

holding:

. shippers have no interest in a rate by reason

of contract . . . such that this fact standing alone

would preclude the raising of a rate if same were

2 The Elkins Act, Interstate Commerce Act, Sections 49 U.S.C.

§§ 41-43, required that those shippers who did not have a contract

with the Santa Fe also be entitled to the benefits of the lower con-

tract rates.

Ee ety A Ae

found unreasonably low. (30 1.C.C. 39) (Emphasis

added )

Recently, the Commission confirmed that only if a con-

tract rate is unjust or unreasonable can the carrier pub-

lish higher rates:

Moreover, the provision in the contract that no

increase could be made in the contract rates during

the effectiveness of the contract unless otherwise or-

dered by the Commission even though changed con-

ditions might warrant such an increase, appears to

be inconsistent with the continuing obligation of

common carriers to establish and maintain just, rea-

sonable and otherwise lawful rates. Contract Rates,

Rugs and Carpeting From Amsterdam, N.Y., To

Chicago, 313 I.C.C. 247, 252 (1961).

The Commission has also consistently held that the

burden of proof regarding any change in rates is upon

the carrier. Classification of Plumbers’ Goods in the

South, 214 I.C.C. 305, 308 (19386), Elimination of Bag-

gage Service on Penn Central, 335 1.C.C. 215, 221 (1969).

In Interchange Switching at Wichita, Kansas, 61 I.C.C.

205 (1921), the Commission held:

In connection with proposed increases in rates or

charges carriers should be prepared to sustain the

burden of justification which the law has placed

upon them. (61 I.C.C. at 207).

Thus, in the instant proceeding, after Farley filed its

complaint for breach of contract, the burden was upon

Santa Fe to plead and prove, by way of affirmative de-

fense, that the contract rate was unjust and unreason-

able. This it did not do. The district court had juris-

diction to decide the breach of contract issue.

Since Santa Fe failed to plead such affirmative de-

fense, the only issue to be decided was whether the

uniform system-wide contracts were breached. Sum-

mary judgement was erroneously entered against Farley.

The court stated, in footnote 4 of its opinion, (Ap-

pendix B, pp. 6b-7b) that Farley had presented no showing

that the published rate was unreasonable. The court mis-

construed the law. As previously demonstrated, Santa

Fe did not raise the issue of whether the contract rates

were unjust and unreasonable. The issue was not before

the court. But even if the issue had been raised, the

burden of proof was upon Santa Fe to prove that the

contract rate was unjust and unreasonable, not that

the published rate was just and unreasonable.

Petitioner does not contend that the Santa Fe, once it

published a tariff containing higher rates than those

in the contract, could still charge the contract rate.

Petitioner does contend that a shipper is not precluded

from attacking a published tariff rate as being in excess

of a prior uniform system-wide contract rate. Ex Parte

230 required Santa Fe to publish a tariff governing the

leasing of trailers. It did not require that a rate higher

than the existing contract rate be published. Petitioner

contends that the uniform, system-wide contracts re-

quired Santa Fe to publish its tariff at the contract

rate.

The Commission specifically found shipper contracts,

in effect at the time of Ex Parte 230, to be the prevalent

practice in trailer leasing by railroads and that there

was no evidence of unfair practices. The Commission

sought only to prevent possible future unfair practices,

and did not declare, either expressly or by implication,

such agreements to be null and void. Ex Parte 230

did not, expressly or by implication, authorize a uni-

lateral breach of contract leasing rates through pub-

lication of higher tariff rates and charges.

The district court, affirmed by the Court of Appeals,

held that Ex Parte 230, as a matter of law, voided the

uniform system-wide contracts. The district court also

held that Ex Parte 230 “did not express an intent to

negative existing rate contracts.” These two findings

are legally inconsistent. Ex Parte 230 required carriers

to publish tariffs to eliminate any potential future abuse.

It did not find that any rate discrimination had taken

place. Since no rate discrimination between shippers had

taken place there was no need to void the then existing

contract rates. Thus, publication of tariff rates iden-

tical to the contract rates was required to comply with

the letter and spirit of the regulations promulgated

pursuant to Ex Parte 230. In short, there was absolutely

no reason to nullify the existing contract rates. Ex

Parte 230 required only that the then existing contracts

be published in tariff form.

The Court of Appeals for the 6th and 8th Circuits

have held that a contract will not be nullified by sub-

sequent legislation unless the legislature evidences an

intention to negative the contract. See Et-Hokin & Gal-

van, Inc. V. Maas Transport, Inc., 380 F.2d 258 (8th

Cir. 1967), cert. denied, 389 U.S. 977 (1967); McCul-

lough Transfer Co. v. Virginia Surety Co., 213 F.2d 440

(6th Cir. 1954). As the district court properly held,

Ex Parte 230 evidences no such intent. See also: Keller

v. Thorton Canning Company, 59 Cal. Rptr. 836, 429

P, 2d (1967).

Whether a carrier may nullify a uniform system-wide

contract rate by mere publication of a tariff containing

a higher rate has never before been decided by this

Court. The issue is one of general importance to proper

rate regulation and merits review by this Court, par-

ticularly since compliance with the order directing a

tariff filing did not disapprove existing contracts and

practices pursuant thereto.

4. Santa Fe Had A Duty To Publish Its Own Tariff

Containing Rates Consistent With Existing Contracts.

Santa Fe did not publish a tariff which contained

the same rates and charges provided for in its uniform

system-wide contracts. Instead, Transcontinental Freight

Bureau Tariff 2-F Supplement 41, Section 1, Item 4900-

E, filed on behalf of numerous railroads, including Santa

Fe, established higher rates for the leasing service than

were provided in the Santa Fe-Shipper Contracts.

As shown above, Ex Parte 230 did not void existing

contract rates but required only that Santa Fe publish

a tariff providing all terms and conditions and rates and

charges for its TOFC service. Santa Fe, by exercising

the free and unrestrained right to take independent action

guaranteed to it by Section 5a(6) of the Interstate

Commerce Act (49 U.S. § 5b(6)) should have published

its own tariff reflecting the uniform system-wide con-

tract rates and charges.

Section 5a of the Interstate Commerce Act was en-

acted by Congress in 1948 in response to the decision

of this court in State of Georgia v. Pennsylvania Rail-

road Co., 324 U.S. 439 (1945) rehearing denied 324 U.S.

890 (1945) to permit agreements between two or more

carriers relating to rates, which agreements if approved

by the Commission would relieve the parties from the

operation of the anti-trust laws. Section 5a/6) specific-

ally provides:

“The Commission shall not approve under this

section any agreement which establishes a procedure

for the determination of any matter through joint

consideration unless it finds that under the agree-

ment there is accorded to each party the free and

unrestrained right to take independent action either

before or after any determination arrived at through

such procedure.”

Where, as here, Santa Fe could have, by exercise

of the right guaranteed by Section 5a(6), published its

tariff and provided for the uniform system-wide con-

tract rate and complied fully with Ex Parte 230, there

is a duty upon Santa Fe to exercise that right. In

failing to do so, and in joining with other members of

the Freight Bureau and publishing a higher tariff rate,

Santa Fe not only committed a breach of the Santa Fe-

Farley contract, but also, Petitioner submits, acted con-

trary to the intention of Congress when it provided for

the exemption from the anti-trust laws. If other rail-

roads had differing system-wide rates prior to Ex Parte

230, the end result of the failure of Santa Fe to publish

its own tariff consistent with its contracts was to have

only one rate instead of several competitive rates.

In view of the failure of Santa Fe to publish its

own tariff, this Court should grant review to determine

the effect of such action as the same relates to the § 5a

exemption from the anti-trust laws.

a caesium eae mma niall i eae aaa Nia.

CONCLUSION

For the above reasons, the Petition for Writ of Cer-

tiorari to the United States Court of Appeals for the

Ninth Circuit should be granted.

Respectfully submitted,

RONALD N. COBERT

WILLIAM J. GROVE

WILLIAM J. GROVE, JR.

ROBERT L. COPE

1730 M Street, N.W.

Suite 501

Washington, D.C. 20036

sen mt APPENDIX

GROVE, JASKIEWICZ, GILLIAM

AND COBERT

1730 M Street, N.W.

Washington, D.C. 20036

October 6, 1975

JUDGMENT

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

No. 74-1872

DC #73-1818

FARLEY TERMINAL COMPANY, INC.,

Plaintiff-A ppellant,

vs.

ATCHISON, TOPEKA & SANTA FE RAILWAY COMPANY,

Defendant-A ppellee

No. 74-2410

DC #73-1806

HAROLD WILLINGER AS ASSEMBLY CON.,

Plaintiff-A ppellant,

Vs.

; ATCHISON, TOPEKA & SANTA FE RAILWAY COMPANY,

Defendant-A ppeilee.

APPEAL from the United States District Court for

| the Central District of California.

THIS CAUSE came on to be heard on the Transcript

of the Record from the United States District Court for

the Central District of California and was duly sub-

mitted.

ON CONSIDERATION WHEREOF, It is now here

ordered and adjudged by this Court, that the judgment

of the said District Court in this Cause be, and hereby

is AFFIRMED.

74-1872

With costs in this court in favor of the Ap-

pellee and against the Appellant in the amount

I sania ieasca aa iaelnae a aadlet nian ttstaanientinialiinbniniiniatia $326.84

Cost of printing Appellee’s brief $326.84 |

Filed and entered July 9, 1975

APPENDIX

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

No. 74-1872

FARLEY TERMINAL COMPANY, INC.,

Plaintiff-Appellant,

vs.

THE ATCHISON, TOPEKA AND SANTA FE

RAILWAY COMPANY,

Defendant-A ppellee.

No. 74-2410

HAROLD WILLINGER, doing business as

ASSEMBLY CONSOLIDATORS,

Plaintiff-Appellant,

vs.

THE ATCHISON, TOPEKA AND SANTA FE

RAILWAY COMPANY,

Defendant-A ppellee.

OPINION

[July 9, 1975]

Appeal from the United States District Court

for the Central District of California

Before: KOELSCH and GOODWIN, Circuit Judges, and

WOLLENBERG,”* District Judge.

PER CURIAM:

In these separate but related actions for damages for

breach of contract, Farley Terminal Co., Inc., and Harold

Willinger, lessees of TOFC (trailer-on-flatear) or “piggy-

back” service equipment under separate but substantially

identical lease agreements with the Atchison, Topeka and

Santa Fe Railway Company (the Santa Fe), appeal from

the district court’s granting of summary judgments in

favor of the lessor railway. The question presented is

whether the Santa Fe’s filing of a rate tariff as required

by the Interstate Commerce Commission (ICC)—which

tariff, when approved, imposed on lessees higher rates

for the leasing of TOFC equipment than were provided

in the pre-existing lease agreements—constitutes an ac-

tionable breach of those agreements. We conclude it does

not and therefore affirm.

Briefly, the facts are these: In its decision in Ex parte

230, Substituted Service—Charges and Practices of For-

Hire Carriers and Freight Forwarders (Piggyback Serv-

ice), 322 1.C.C. 301 (1964), the ICC promulgated regu-

lations requiring that each railroad providing TOFC

service in interstate commerce publish, post, and file

tariffs containing all rates and charges for the leasing

of its TOFC equipment. See 322 I.C.C. at 415; 49 C.F.R.

§ 500.7 (1964), redesignated 49 C.F.R. § 1090.7 (1967).

*The Honorable Albert C. Wollenberg, United States District

Judge for the Northern District of California, sitting by desig-

nation.

1A challenge to Ex parte 230, on grounds not relevant to this

appeal, was sustained in A., T. & S. F. R. Co. v. United States, 244

F. Supp. 955 (N.D. Ill. 1965) (three-judge court), and then reversed

sub nom. American Trucking Associations, Inc. v. A., T. & S. F. R.

Co., 387 U.S. 397 (1967)

Early in 1967, Farley and Willinger executed separate

lease agreements with the Santa Fe whereby each agreed

to lease trailers and flatears from the railway on an

availability basis, at rates specified in the agreements.

During the following months, each was charged at those

rates. However, in July, 1967, the ICC served an order

on the Santa Fe and other railroads which provided

TOFC service, requiring them to comply with the regu-

lations promulgated in Ex parte 230 by filing appropriate

tariffs before August 18, 1967. After obtaining a ninety-

day extension, the railroads, including the Santa Fe,

filed Trans-Continental Freight Bureau Freight Tariff

2-F, Supplement 41, Section 1, Item 4900-E. This tariff,

which established higher r> tes for the leasing of TOFC

equipment than were provided in the pre-existing leases,

became effective November 17, 1967, after the ICC ap-

proved it. Lessees were thereafter charged at the new,

higher rates. They brought these actions to recover the

difference between the charges they paid under the tariff

and those they would have paid under their respective

agreements. The district court granted summary judg-

ments in favor of the Santa Fe, and these appeals fol-

lowed.

We commence with the fundamental principle that

summary judgment is proper only where there is no

genuine issue as to any material fact or where, viewing

the evidence and the inferences which may be drawn

therefrom in the light most favorable to the adverse

party, the movant is entitled to prevail as a matter of

law. Rule 56, F. R. Civ. P. Here the district court prop-

erly granted summary judgments in favor of the railroad.

Appellants concede, as they must, that once the new

tariff rates for TOFC service became effective, the Santa

Fe was bound by law to charge those rates. Section 6(7)

of the Interstate Commerce Act, 49 U.S.C. § 6(7), pro-

hibits carriers in interstate commerce from receiving

“different compensation . . . than the rates, fares, and

charges which are specified in the tariff filed and in

effect at the time.” Moreover, the Elkins Act, 49 U.S.C.

$§ 41 et seg., provides criminal penalties for departures

from the published rates, see 49 U.S.C. § 41(2), and for

a carrier’s returning to a shipper rebates or offsets

against them, see 49 U.S.C. § 41(3).

Appellants nevertheless urge their entitlement to dam-

ages based on the variance between the tariff rates they

were charged and those specified in their pre-existing

agreements with the railway. We are not persuaded. It

is well recognized that the principal congressional pur-

pose in enacting the Interstate Commerce Act was to

obtain a uniformity of rates and an end to discrimina-

tory practices. As the Court early noted in New Haven

Railroad Company Vv. 1.C.C., 200 U.S. 361, 391 (1906):

“It cannot be challenged that the great purpose

of the act to regulate commerce, whilst seeking to

prevent unjust and unreasonable rates, was to se-

cure equality of rates as to all and to destroy favor-

itism, these last being accomplished by requiring the

publication of tariffs and by prohibiting secret de-

partures from such tariffs, and forbidding rebates,

preferences and all other forms of undue discrimina-

tion. To this extent and for these purposes the stat-

ute wus remedial and is, therefore, entitled to receive

that interpretation which reasonably accomplishes

the great public purpose which it was enacted to

subserve.”

Where, as here, a conflict exists between published

tariff rates and rates enumerated in pre-existing agree-

ments, we think it well established that the tariff rates

must prevail. Were we to permit enforcement of the

inconsistent contractual rates, we would significantly un-

dercut the clear policy of the Act to secure equal rates

for all, as well as condone one discriminatory situation

such as the Act was intended to remedy. See, e.g., Louis-

ville and Nashville Railroad Company v. Mottley, 219

U.S. 467, 477-486 (1911); Armour Packing Company V.

United States, 209 U.S. 56, 81-83 (1908); Texas and

Pacific Railway Company v. Mugg, 202 U.S. 242, 245

(1906) ; New Haven Railroad Company, supra, 200 U.S.

at 390-393.2 Cf. American Trucking Association, Inc. V.

A., T. & S. F. R. Co., 387 U.S. 397, 406 (1967).

2 For example, the Court observed in Armour Packing Company,

supra, 209 U.S. at 81-82, as follows:

“It [the law regulating interstate commerce] has provided

for the establishing of one rate, to be filed as provided, sub-

ject to change as provided, and that rate to be while in force

the only legal rate. Any other construction of the statute

opens the door to the possibility of the very abuses of unequal

rates which it was the design of the statute to prohibit and

punish.

“_. This feature of the law, it is insisted, puts the shipper

in many kinds of trade at the mercy of the carrier, who may

arbitrarily change a rate, upon the faith of which contracts

have been entered into. But the right to m ‘“e such regulations

is inherent in the power of Congress to legislate respecting

commerce, and such consideration of inconvenience or hardship

address themselves to the law-making branch of the Govern-

ment. ...

“The statute being within the constitutional power of Con-

gress, and being in force when the contract was made, is read

into the contract and becomes a part of it.

“If the shipper sees fit to make a contract covering a definite

period for a rate in force at the time he must be taken to have

done so subject to the possible change of the published rate

in the manner fixed by statute, to which he must conform

or suffer the penalty fixed by law.”

The Court further said in Mottley, supra, 219 U.S. at 482-483:

“The agreement between the railroad company and the

[plaintiffs] must necessarily be regarded as having been made

subject to the posibility that, at some future time, Congress

might so exert its whole constitutional power in regulating

interstate commerce as to render that agreement unenforceable

or impair its value. That the exercise of such power may be

hampered or restricted to any extent by contracts previously

made between individuals or corporations, is inconceivabie.

In this connection, a tariff, rate, or charge, duly estab-

lished in accordance with the Act, is the legal rate; it

has the force of statute and is binding on carrier and

shipper alike. See Lowden v. Simonds-Shields-Lonsdale

Grain Co., 306 U.S. 516, 520 (1939) ; Pennsylvania Rail-

road Company Vv. International Coal Mining Company,

230 U.S. 184, 196-197 (1913); Robinson v. Baltimore and

Ohio Railroad Company, 222 U.S. 506, 508-510 (1912).°

And a contract valid when made is nevertheless rendered

void by subsequently established tariff rates which are

inconsistent, at least to the extent of the inconsistency.

See Mottley, supra, 219 U.S. at 480-486.‘ Moreover, a

The framers of the Constitution never intended any such state

of things to exist.

‘. . . After the commerce act came into effect no contract

that was inconsistent with the regulations established by the

act of Congress could be enforced in any court. The rule upon

this subject is thoroughly established.”

’ Appellants rely heavily on Macco Construction Company V. Farr,

137 F.2d 52 (9th Cir. 1943), and Ets-Hokin & Galvan, Inc. Vv.

Maas Transport, Inc., 380 F.2d 258 (8th Cir. 1967), cert. denied,

389 U.S. 977 (1967). We think both decisions are inapposite. In

Macco, we held that a contract which incidentally violated a Cali-

fornia licensing statute was not thereby rendered unerforceable

because the California legislature did not intend that such violations

void otherwise legal contracts. 137 F.2d at 55. And in Ets-Hokin,

which relied in part on Macco, the Eighth Circuit held that a con-

tract which violated the Motor Carrier provisions of the Interstate

Commerce Act was not unenforceable because Congress, in passing

those provisions, did not intend “that contracts resulting in vio-

lations of that portion of the Act be illegal and void.” 380 F.2d

at 260-261. Here, however, as noted in the cited cases, Congress

did intend to render void rates inconsistent with those established

in conformity with the Act.

* Appellants cite Chicago, Milwaukee, St. Paul & Pacific Railroad

Company V. Alouette Peat Products, 253 F.2d 449 (9th Cir. 1957),

for the proposition that, even though shippers are required to pay

carriers the rate on file with the ICC, a showing that such a rate

was not lawfully established would entitle them to recover the

difference between what they had thus paid and the lawfully estab-

lished rate. Here, however, appellants have presented no showing

that the published rate was u ureasonable or otherwise established

el A A se OOD Bre

shipper’s knowledge of duly published tariff provisions

is presumed. American Railway Express Company V.

Daniel, 269 U.S. 40, 42 (1925); Kansas City Southern

Railway Company v. Carl, 227 U.S. 639, 653 (1913) ;

Chicago & Alton Railroad Company v. Kirby, 225 U.S.

155, 166 (1912); Mugg, supra, 202 U.S. at 245.°

Appellants’ remaining contention—that the Santa Fe

was required under the circumstances to establish a

tariff rate identical to that enumerated in its pre-existing

agreements with appellants—is without merit. It is well

settled that a carrier is entitled to initiate rates, and to

adopt such policy of rate-making as it deems wise, sub-

ject to the revisory powers conferred upon the ICC. See

Diamond Tank Transport v. United States, 23 F. Supp.

497, 501 (W.D. Wash., N.D. 1938) (three-judge court),

affirmed, 305 U.S. 567 (1938); United States v. Illinois

Central Railroad Company, 263 U.S. 515, 522 (1924).

And in light of the congressional intention, already

noted, that pre-existing agreements be abrogated by sub-

sequently promulgated regulations, at least to the extent

of the inconsistency, we think it clear that a carrier’s

decision fixing a proposed tariff rate to be charged uni-

formly to all should not be foreclosed by its pre-existing

obligation to charge a different rate to a few.

AFFIRMED.

in violation of the Act. The mere fact that the published rate is in-

consistent with a rate enumerated in pre-existing contracts does

not render it violative of the Act.

5 Southern Pacific Company v. Miller Abattoir Company, 454

F.2d 357 (3d Cir. 1972), relied on by appellants, is not to the con-

trary. That decision merely held that a provision in a shipping

contract, requiring that the railroad immediately notify the con-

signee if a cargo of livestock were stopped in transit by quarantine,

was not satisfied by the railroad’s publication of a tariff explicitly

stating that screw worms existed in Arizona and that livestock

leaving that state would be stopped for inspection. See 454 F.2d at

361-362.

APPENDIX

JOHN J. BALLUFF

Davip E. PARRY

448 Santa Fe Building

121 East Sixth Street

Los Angeles, California

628-0111, EXTension 22624

Attorneys for Defendant,

THE ATCHISON, TOPEKA AND

SANTA FE RAILWAY COMPANY

IN THE UNITED STATES DISTRICT COURT

FOR THE CENTRAL DISTRICT OF CALIFORNIA

Civil Action No. 73-1818-EC

FARLEY TERMINAL Co., INC.,

Plaintiff,

Vs.

THE ATCHISON, TOPEKA AND SANTA FB

RAILWAY COMPANY,

Defendant.

JUDGMENT

This action came on for hearing before the Court,

Avery E. Crary, District Judge. presiding, and the is-

sues having been duly heard and a decision having been

duly rendered,

IT IS ORDERED AND ADJUDGED, that the plain-

tiff take nothing and that the action be dismissed on

the merits.

DATED at Los Angeles, California, this 19th day of

February, 1974.

/s/ E. Avery Crary

United States District Judge

APPENDIX

JOHN J. BALLUFF

DAVID E. PARRY

448 Santa Fe Building

121 East Sixth Street

Los Angeles, California

628-0111, EXTension 22624

Attorneys for Defendant,

THE ATCHISON, TOPEKA AND

SANTA FE RAILWAY COMPANY

IN THE UNITED STATES DISTRICT COURT

FOR THE CENTRAL DISTRICT OF CALIFORNIA

Civil Action No. 73-1818-EC

FARLEY TERMINAL Co., INC.,

Plaintiff,

VS.

THE ATCHISON, TOPEKA AND SANTA FE

RAILWAY COMPANY,

Defendant.

PROPOSED FINDINGS OF FACT AND

CONCLUSIONS OF LAW

The Court, having duly heard defendant’s Motion for

Summary Judgment on February 11, 1974, does hereby

make the following findings of facts and conclusions of

law:

That on February 20, 1967, plaintiff and defendant

executed a Lease Agreement, wherein defendant would

lease to plaintiff, on an availability basis, TOFC equip-

ment (flat cars and trailers) at rates specified in the

terms of the aforementioned Lease Agreement;

That prior to November 17, 1967, defendant charged

plaintiff for lease and use of such equipment pursuant

to the aforementioned Lease Agreement;

That subsequent to November 17, 1967, Trans-Con-

tinental Freight Bureau Tariff Supplement 41 to Freight

Tariff 2F, Item 4900, Section I, was approved by the

Interstate Commerce Commission and filed and became

effective;

That the aforementioned tariff had the force and

effect of law and was the proper tariff for defendant

to charge plaintiff for plaintiff’s use of defendant’s

TOFC equipment in Interstate Commerce;

That the rates provided in said tariff, as a matter

of law, rendered null and void the rates contained in

the Lease Agreement, dated February 20, 1967; [al-

though Ex Parte 230 did not express an intent to

negative existing rate contracts]

That, therefore, as a matter of law, the proper rates

for defendant to charge plaintiff for its use of defend-

ant’s TOFC equipment for eastbound movements in In-

terstate Commerce, were the rates contained in the

aforedescribed tariff.

It is ordered, therefore, that defendant’s Motion for

Summary Judgment be and the same hereby is granted

and that said Judgment be entered herein in the de-

fendant’s favor, dismissing this action with costs to be

taxed by the Clerk in favor of the defendant and

against the plaintiff.

DATED: Feb. 19, 1974

/s/ E. Avery Crary

United States District Judge

APPENDIX

EX PARTE No. 230

SUBSTITUTED SERVICE—CHARGES AND PRAC-

TICES OF FOR-HIRE CARRIERS AND FREIGHT

FORWARDERS

(PIGGYBACK SERVICE)

Decided March 16, 1964

It is apparent that this state of affairs places a

preminum on a shipper’s having a sophisticated traffic

department, capable of assessing the various available

services, charges, and allowances, and of determining

what combination offers the best transportation bargain

in moving a particular shipment. We think that carriers

should be encouraged to use as simple a method of

tariff publication as possible, and should be discouraged

from permitting the kind of situation illustrated. It

is also clear that the general practice by which rail-

roads and their affiliates trip lease trailers to shippers

for immediate use in TOFC service contains potential

seeds of discrimination. Unless the same opportunity

to lease equipment is made available to all similarly

situated shippers at the same price, the leasing of a

trailer to a favored shipper can become a concession

violative of the Elkins Act.

While we recognize that there are opportunities for

discrimination in present rate publication and equip-

ment leasing practices, we cannot agree with the A.T.A.

that the only available cures are a straitjacket for TOFC

tariffs and major surgery to excise trailer leasing. The

contentions that rail carriers are required by statute

to publish rates only for a “complete” service and that

they are obligated to furnish trailers whenever TOFC

service is provided were disposed of in Eastern Central

M. Carriers Assn. Vv. Baltimore & O. R. Co., 314 L.C.C. 5,

45-47, aff'd. sub nom. Cooper-Jarett, Inc. v. United States,

F.Supp. (W. D. Mo. 1964) (civil action No.

13469, February 6, 1964). The basic flaw in the A.T.A.’s

legal argument, which was also pointed out in that

decision, appears to be the false assumption that a

highway trailer necessarily is an “instrumentality of

transportation” which carriers must furnish. This can,

of course, be the case when a railroad holds out a service

which by its nature requires performance of some motor

carriage. But it need not hold out to perform more

than rail service, and in that case the trailer, tendered

for transportation by a shipper, is nothing more than

a container—an “article of commerce.”

We must point out here that we are not holding

that the service which a carrier holds out to perform

can only be ascertained from the actual words of its

tariff. When a rail carrier offers a ramp-to-ramp TOFC

service, ostensibly confined to the line-haul rail trans-

portation of loaded highway trailers tendered at its

terminal by shippers, but then proceeds to lease trailers,

and to provide drayage, loading, and other “accessorial”

services, we think that it is in fact holding out a com-

plete door-to-door service. In such a case, all the serv-

ices it provides become transportation services rather

than mere accessorial services, and they are required

to be the subject of its tariff publications. This, we

think, disposes of the New York Central’s argument

that we have no authority to require the publication

of accessorial services. To agree with the Central’s

position would be to allow any carrier, by self-imposed

limitations contained in its tariffs, to designate what

it considers to be transportation services and what it

considers nontransportation services. This distinction is,

we believe, a matter of fact and not one that can™ be

impused by fiat. The nature of piggyback—the fact that

its advantage lies in its being a combination of rail

and motor transportation—makes rail carriers tend to

offer to their customers services which were traditionally

provided only by motor carriers and which can phy-

sically be performed only with motor vehicles. Such

services, we believe, will normally be transportation serv-

ices when offered in connection with TOFC transportation.

The existence of opportunities to engage in discrimina-

tory practices, standing alone, will not, in our opinion,

justify our requiring a strict format for TOFC rate

publications or striking down the prevalent practice of

trailer leasing by railroads. The record before us is

almost completely devoid of evidence that these oppor-

tunities for discrimination have been misused. In spite

of the variety and complexity of all-rail TOFC tariffs,

they seem to be serving their purpose effectively, and

we would not be justified in imposing a new scheme of

publication in the absence of specific shipper complaints.

The same appears to be true of trailer leasing. Where

complaints of discrimination have been made, as in the

case of certain midwestern meatpackers, the railroads

involved have taken steps to correct the situation. We

agree with the examiners that tariff rules providing

for the publication of charges for leasing trailers and

for other special TOFC services will eliminate many of

the present opportunities for abuse. Should this ap-

proach prove ineffective, additional steps can be taken

at some future time. At present, we conclude that they

are not needed, and that regulations substantially similar

to those recommended will suffice. The only significant

change we think necessary in the recommended tariff

rules is to provide for publication by rail carriers of

the leasing charges of affiliates. To omit the practices

of rail-affiliated leasing companies from the effect of the

leasing rule would obviously be to create a legal loop-

hope and to allow the doing by indirection of what

could not be done directly. The following rules will be

adopted :

7 Tariff publication regulations.

(a) Each railroad performing or holding out to per-

form TOFC service shall publish, post, and file tariffs

(itself or through an agent) which shall contain in

clear and explicit terms all of the rates and charges for

and the rules governing the leasing of equipment to

any person using its TOFC service (whether by the

railroad itself or by any person affiliated with or con-

trolled by the railroad or any agents of the railroad),

and other special services or practices, including charges

for pickup or delivery service when such charges are in

addition to line-haul transportation charges. Such tariffs

shall also contain, in clear and explicit terms, all amounts

to be paid to any shipper for the lease of any empty

truck, trailer, or semitrailer (or the container portion

of any truck, trailer, or semitrailer having a demount-

able chassis) when such empty equipment is being trans-

ported incidentally to its prior or subsequent use in

TOFC service.

(b) No allowance shall be payable by a rail carrier

to any shipper, freight forwarder, or consignee which

renders any service or furnishes any instrumentality in

connection with TOFC service unless (1) such service

is one that the rail carrier is obligated to perform or

provide under the applicable rate and (2) the amount

of the allowance is published in tariffs on file with the

Interstate Commerce Commission.

(ec) The area within which pickup and delivery serv-

ice will be performed by a rail carrier offering to pro-

vide TOFC service shall be described specifically and the

description published in clear and explicit terms in the

tariff. It is not permissible to refer to decisions of the

Commission for the description nor to state that the

area within which pickup and delivery service will be

performed is that defined by the Commission in a formal

proceeding.

(d) All rail tariffs containing rates for TOFC trans-

portation of property shall specify the extent to which

such rates do or do not include the loading and un-

loading of property from or to the highway vehicle

by the carrier. When charges in addition to the line-

haul TOFC transportation charges or in addition to

pickup or delivery charges, if any, are made for the

loading or unloading of property, they shall be published

in appropriate tariffs and filed with the Interstate Com-

merce Commission.

(e) Highway vehicles or rail cars provided by ship-

pers or freight forwarders in connection with all-rail

TOFC service, while on railroad premises, shall be sub-

ject to the storage or demurrage rules, regulations, and

charges published in tariffs on file with the Interstate

Commerce Commission.

APPENDIX

49 USC § 5b(6)

(6) The Commission shall not approve under this

section any agreement which establishes a procedure

for the determination of any matter through joint con-

sideration unless it finds that under the agreement there

is accorded to each party the free and unrestrained right

to take independent action either before or after any

determination arrived at through such procedure.

* * * .

49 USC § 41

Sec. 1. [February 19, 1903 amended June 25, 1906.)

[49 U.S.C. $41 (1).] That anything done or omitted

to be done by a corporation common carrier, subject

to the Act to regulate commerce and the Acts amenda-

tory thereof, which, if done or omitted to be done by

any director or officer thereof, or any receiver, trustee,

lessee, agent, or person acting for or employed by such

corporation, would constitute a misdemeanor under said

Acts or under this Act, shall be held to be a misde-

meanor committed by such corporation, and upon con-

viction thereof it shall be subject to like penalties as

are prescribed in said Acts or by this Act with reference

to such persons, except as such penalties are herein

changed. The willful failure upon the part of any

carrier subject to said Acts to file and publish the tariffs

or rates and charges as required by said Acts, or

strictly to observe such tariffs until changed according

to law, shall be a misdemeanor, and upon conviction

thereof the corporation offending shall be subject to a

fine of not less than one thousand dollars nor more

than twenty thousand dollars for each offense; and it

shall be unlawful for any person, persons, or corpora-

tion to offer, grant, or give, or to solicit, accept, or re

ceive any rebate, concession, or discrimination in respect

to the transportation of any property in interstate or

foreign commerce by any common carrier subject to said

Act to regulate commerce and the Acts amendatory

thereof whereby any such property shall by any device

whatever be transported at a less rate than that named

in the tariffs published and filed by such carrier, as is

required by said Act to regulate commerce and the Acts

amendatory thereof, or whereby any other advantage is

given or discrimination is practiced. Every person or

corporation, whether carrier or shipper, who shall, know-

ingly, offer, grant, or give, or solicit, accept, or receive

any such rebates, concession, or discrimination shall be

deemed guilty of a misdemeanor, and on conviction

thereof shall be punished by a fine of not less than one

thousand dollars nor more than twenty thousand dollars:

Provided, That any person, or any officer or director of

any corporation subject to the provisions of this Act,

or the Act to regulate commerce and the Acts amenda-

tory thereof, or any receiver, trustee, lessee, agent, or

person acting for or employed by any such corporation,

who shall be convicted as aforesaid, shall, in addition

to the fine herein provided for, be liable to imprison-

ment in the penitentiary for a term of not exceeding

two years, or both such fine and imprisonment, in the

diseretion of the court. Every violation of this section

shall be prosecuted in any court of the United States

having jurisdiction of crimes within the district in which

such violation was committed, or through which the trans-

portation may have been conducted; and whenever the

offense is begun in one jurisdiction and completed in

another it may be dealt with, inquired of, tried, de-

termined, and punished in either jurisdiction in the same

manner as if the offense had been actually and wholly

committed therein.

Sec. [1] [February 19, 1903, June 29, 1906.) [49 U.S.C.

§ 41(2).] In construing and enforcing the provisions of

this section, the act, omission, or failure of any Officer,

agent, or other person acting for or employed by any

common carrier, or shipper, acting within the scope of his

employment, shall in every case be also deemed to be the

act, omission, or failure of such carrier or shipper as well

as that of the person. Whenever any carrier files with

the Interstate Commerce Commission or publishes a par-

ticular rate under the provisions of the Act to regulate

commerce or Acts amendatory thereof, or participates in

any rates so filed or published, that rate as against such

carrier, its officers or agents, in any prosecution begun

under this Act shall be conclusively deemed to be the

legal rate, and any departure from such rate, or any offer

to depart therefrom, shall be deemed to be an offense

under this section of this Act.

Sec. [1] [June 29, 1906.] [49 U.S.C. § 41(3).) Any

person, corporation, or company who shall deliver prop-

erty for interstate transportation to any common carrier,

subject to the provisions of this Act, or for whom as

consignor or consignee, any such carrier shall transport

property from one State, Territory, or the District of

Columbia to any other State, Territory, or the District

of Columbia, or foreign country, who shall knowingly by

employee, agent, officer, or otherwise, directly or indi-

rectly, by or through any means or device whatsoever,

receive or accept from such common carrier any sum of

money or any other valuable consideration as a rebate or

offset against the regular charges for transportation of

such property, as fixed by the schedules of rates provided

for in this Act, shall in addition to any penalty pro-

vided by this Act, forfeit to the United States a sum of

money three times the amount of money so received or

accepted and three times the value of any other consid-

eration so received or accepted, to be ascertained by the

trial court; and the Attorney-General of the United

States is authorized and directed, whenever he has rea-

sonable grounds to believe that any such person, corpo

ration, or company has knowingly received or accepted

from any such common carrier any sum of money or

other valuable consideration as a rebate or offset as a fore-

said, to institute in any court of the United States of

competent jurisdiction, a civil action to collect the said

sum or sums so forfeited as aforesaid; and in the trial of

said action all such rebates or other considerations so

received or accepted for a period of six years prior to the

commencement of the action, may be included therein,

and the amount recovered shall be three times the total

amount of money, or three times the total value of such

consideration, so received or accepted, or both, as the

case may be.

APPENDIX

oO OEE Pet

49 CFR § 1050.7(a)

§ 1090.7 Tariff publication regulations.

(a) Each railroad performing or holding out to per-

form TOFC service shall publish, post, and file tariffs

(itself or through an agent) which shall contain in clear

and explicit terms all of the rates and charges for and

the rules governing the leasing of equipment to any per-

son using its TOFC service (whether by the railroad it-

self or by any person affiliated with or controlled by the

railroad or any agents of the railroad), and other special

services or practices, including charges for pickup or de-

livery service when such charges are in addition to line-

haul transportation charges. Such tariffs shall also con-

tain, in clear and explicit terms, all amounts to be paid

to any shipper for the lease of any empty truck, trailer,

or semitrailer (or the container portion of any truck,

trailer, or semitrailer having a demountable chassis)

when such empty equipment is being transported inci-

dentally to its prior or subsequent use in TOFC service.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.