Petition for Writ of Certiorari — Atlantic Coast Line R. Co. v. Standard Oil Co. of Ky.

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Supreme Court of the United States

OCTOBER TERM, 1926.

STANDARD OIL COMPANY, INCORPORATED IN

KENTUCKY, . - - - - Petitioner,

us.

ATLANTIC COAST LINE RAILROAD COMPANY, Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES CIRCUIT COURT OF

APPEALS FOR THE SIXTH

CIRCUIT.

CHARLES G. MIDDLETON,

EDWARD P. HUMPHREY,

WILLIAM W. CRAWFORD,

Counsel for Petitioner.

HUMPHREY, CRAWFORD & MIDDLETON,

Of Counsel.

Louisville, Kentucky,

January 26, 1927.

WESTERFIELD-BON TE CO., INCORPORATED, LOUISVILLE, KY.

Se vO RTP:

eT ees

OF AD A RE a Bel

RECEIPT.

Counsel for respondent, Atlantic Coast Line Rail-

road Company, hereby acknowledges receipt of notice

of filing of the within petition for certiorari, with a

copy of the petition and printed record, this January

26, 1927, at Louisville, Kentucky.

Heim Bruce,

Counsel for Respondent.

Bare

Raia ti enaon

HEADINGS.

INL ds coduunet utc cyucacseys causes vee edt

rounds for Application .. ...... 6. escccessesecescs

ene UNIS WE INE bee ivivvcceirceccuneecsacs.

Discussion of Decision of Circuit Court of Appeals...

Brief Discussion of Grounds for Application.........

i RT Sera Te en Ty om Mls Fan TxA

CASES MENTIONED IN PETITION.

PAGES

Atlantic Coast Line R. R. Co. v. Standard Oil Co. of

New Jersey, 12 Fed. (2d Series) 541. Also see Su-

preme Court Journal, October 18, 1926, page

oe iS CVERE SET PSROROSC Veo e RRS aEE DA Se eRe OME

Seaboard Air Line Ry. Co. v. State of Florida, ex rel,

R. Hudson Burr, et ai., Supreme Court Journal,

November 23, 1926, page 97

ee a ee Oe se oe ee vw

Atlantic Coast Line R. R. Co. v. State of Florida, ex

rel. R. Hudson Burr, et ai., Supreme Court Jour-

nal, November 23, 1926, page 97. .............. 3

State of Florida, ex rel. R. Hudson Burr, et al., vy. Sea-

board Air Line Ry. Co. and Atlantie Coast Line

R. R. Co., 109 So. 656 (not yet officially reported) .4, 13

Hamilton-Brown Shoe Co. v. Wolf Bros. & Co., 240

U. 8. 261 ..

FHS PERENVES SSE DY Sowa ec ea Reso o el. 4

Magnum v. Coty, 262 U. S. 159 .................... 4

General Oil Co. v. Crane, 209 U.S. 211............... 10

Washington Dehydrated Food Co. v. Great Northern

Ry. Co., 102 I. C. C. 363 .........ccceccavccces., 13

Missouri v. Kansas Gas Ls it = see 13

Southern Pacifie Co. v. Arizona, 249 U. S. 472........ 14

SR ES TRE A SIRE ETE ION AL RAVI RE DS BRIO | SONECNE TENS ae RCE aU aR

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Supreme Court of the United States

OCTOBER TERM, 1926.

STANDARD Ot Company, INcoRPORATED IN

KENTUCKY, - - - - - - ~- Petitioner,

US.

AtLantic Coast Line Raitroap Company, Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES CIRCUIT COURT OF AP.-

PEALS FOR THE SIXTH CIRCUIT.

To the Honorable, the Chief Justice and Associate Jus-

tices of the Supreme Court of the United States:

Your petitioner hereby respectfully applies for a

writ of certiorari addressed to the Cireuit Court of

Appeals for the Sixth Circuit directing it to certify to

this Honorable Court for review and determination

the record in a certain cause numbered 4691, styled

Atlantic Coast Line Railroad Company, Appellant,

against Standard Oil Company, Incorporated in Ken-

tucky, Appellee.

By its judgment therein rendered on December 17,

1926, said Circuit Court of Appeals affirmed in part

and modified in part a judgment entered in favor of the

petitioner by the United States District Court for the

Western District of Kentucky.

Ree <i,

The petitioner applies for a writ of certiorari from

said judgment in so far as it modifies the judgment of

the District Court. The respondent herein has like-

wise applied for a writ of certiorari in so far as the

judgment of the Circuit Court of Appeals affirms the

judgment of the District Court.

The question presented in the case was whether pe-

titioner’s petroleum products moving from Tampa,

Port Tampa and Jacksonville, all in the State of Flor-

ida, to interior points in the State of Florida should

pay intrastate rates or interstate rates. The suit was

filed in the District Court for the Western District of

Kentucky by the petitioner, the grounds of Federal

jurisdiction being diversity of citizenship. he peti-

tioner sought reparation and an injunction enjoining

the respondent from enforcing any rate other than the

lawfully published intrastate rate and the District

Court adjudged that the traffic was intrastate traffe

and that the petitioner was entitled to the relief sought.

The respondent appealed, and the Circuit Court of

Appeals split up the traffic as between the cities of Port

Tampa and Jacksonville, holding substantially that the

traffic from Port Tampa was interstate and that the

traffic from Jacksonville was intrastate. The District

Court was directed to modify its decree accordingly,

The petitioner challenges the ruling directing the

District Court to split up the traffic as hereinabove in-

dicated. The petitioner takes the position that all of

the traffic is intrastate and asks that the decree of the

District Court be affirmed in its entirety.

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GROUNDS FOR APPLICATION.

The petitioner asks for this writ upon the follow-

ing grounds:

FIRST. Because the decision of the Circuit Court

of Appeals in so far as it holds part of the traffic in-

volved to be interstate traffic conflicts with three de-

cisions of this Court—

a. Atlantic Coast Line R. R. Co. vy. Standard Oil

Company of New Jersey, 12 Fed. (2d Series) o41, in

Which case the Circuit Court of Appeals for the Fourth

Circuit held that traffic in all substantial respects simi-

lar to that in the case at bar was intrastate traffie and

in which case a petition for writ of certiorari was de-

nied by this Honorable Court on October 18, 1926. (See

Supreme Court Journal, Monday, October 18, 1926, at

page 57).

b. Seaboard Air Line Ry. Co. v. State of Florida.

er rel, R. Wudson Burr, et al., in which case the Su-

preme Court of Florida held that the same traffie as is

involved in the case at bar was intrastate traffie and in

which case a petition for a writ of certiorari was denied

by this Honorable Court on November 23, 1926. (See

Supreme Court Journal, November 23, 1926, at page

97).

c. Atlantie Coast Line R. R. Co. v. State of Flor-

ida, er rel. R. Hudson Burr, et al., in which case the

Supreme Court of Florida held that the same traffie as

is involved in the case at bar was intrastate traffic and

in which case a petition for a writ of certiorari was de-

pe ae tee es

nied by this Honorable Court on November 23, 1926.

(See Supreme Court Journal, November 23, 1926, at

page 97.)

SECOND. Because the decision of the Cireuit

Court of Appeals in the case at bar in so far as it holds

part of the traffic involved to be interstate traffic con-

flicts with the decision of the Circuit Court of Appeals

for the Fourth Circuit in the case of Atlantie Coast Line

R. R. Co. v. Standard Oil Co. of New Jersey, 12 Fed.

(2d Series) 541, hereinabove referred to.

THIRD. Because the decision of the Circuit Court

of Appeals in the case at bar in so far as it holds part

of the traffic involved to be interstate traffic conflicts

with the decisions of the Supreme Court of Florida in

the two cases of State of Florida, ex rel. R. Hudson

Burr, et al., v. Seaboard Air Line Ry. Co., and State

of Florida, er rel. R. Hudson Burr, et al., v. Atlantie

Coast Line R. R. Co., 109 So. 656 (not vet officially re-

ported), in which cases the Supreme Court of Florida

held that the very traffie involved in the case at bar was

intrastate traffie.

FOURTH. Because the decision of the Circuit

Court of Appeals in the ease at bar in so far as it holds

part of the traffie to be interstate traffie conflicts with

other decisions of this Honorable Court applicable to

the question presented, and involves a question of im-

portance which is in the public interest to have decided

by this Honorable Court. |

Hamilton-Brown Shoe Co. v. Wolf Bros. & Co.

240 U.S. 251.

Magnum v. Coty, 262 U. S. 159.

A brief statement of the facts will disclose the error

of the Circuit Court of Appeals in holding that part of

the traffic involved was interstate traffic.

BRIEF STATEMENT OF FACTS.

The petitioner does a general retail and wholesale

oil business in the State of Florida. It is not a produc-

ing company and buys its products delivered to it by

boat at Port Tampa and Jacksonville, at which points

it maintains large storage tanks, the capacity of which

is 619,075 barrels. The petitioner has nothing to do

with the movement by boat of the petroleum products

to the Florida ports and only acquires title to the same

as and when the petroleum products are delivered into

its storage tanks. The capacity of the tanks is largely

in excess of any vessel making delivery of petroleum

products at the points named, the capacity of the tanks

being some thirteen times as large as the largest vessel.

The capacity of the tanks is made large for two reasons

—first, because the petitioner endeavors to maintain at

all times an adequate supply of petroleum products for

Florida business, and, second, because the petitioner

takes advantage of the market conditions in petroleum

products and business beyond its current needs when

it feels the markets on such products are low and stores

its excess purchases in these tanks. The tanks, there-

fore, constitute far more than a mere unloading device

or means of shifting petroleum products from water to

rail transportation.

In addition to the storage tanks at the ports named,

the petitioner has 123 bulk marketing stations at inland

points, 165 drive-in service stations, approximately

410 delivery vehicles, approximately 5,000 dealer cus-

tomers, and several hundred thousand retail customers.

In other words, the petitioner has the usual equipment

of oil companies carrying on a similar business, and

conducts its business in the usual way.

The petroleum products remain in the storage tanks

at the ports for varying lengths of time, depending

upon the exigencies of petitioner’s business. In times

of intense business activity, products leave the tanks

at the ports rapidly. At other times they do not so

leave. The products may stay in the tanks for a week

or two weeks or they may stay there for two months

or three months, depending entirely upon the demands

of the petitioner’s local business in the State of Florida.

The water movement of the products into the tanks has

nothing to do with the rail movement from the tanks.

The products come to a complete state of rest upon be-

ing pumped from the boats into the tanks, and con-

tracts with railroad companies for movements by rail

are made after the products reach a state of rest in

the tanks. <A single cargo of oil is broken up into

many different shipments by rail, and no one can tell

at the time a cargo is unloaded into how many rail

shipments it will be broken up, nor to whom it will 20,

to what point it will go or when it will go. The only

thing that can be said with certainty is that it will move

as, when and where the exigencies of the petitioner’s

business require it to move. An activity in one section

of the State may create a large demand for the prod-

ucts entirely unanticipated when the products reach

the port, and the slowing down in business activity, of

course, has the opposite effect.

The petitioner pays local taxes to the State of Flor-

ida on all products on hand in its tanks on the Florida

assessing days.

While the products are subject to no manufactur-

ing process in the State of Florida at the ports, yet

everything is done that is necessary to be done in han-

dling petroleum products. However, a large amount of

lubricating oil is barrelled after it comes into Florida—

about 3,500 barrels per month at Jacksonville and about

600 or 700 barrels per month at Tampa (R. 58). No

particular tanks are used for products going to any par-

ticular section (R. 80). Gasoline is pumped into the

gasoline tanks, kerosene into the kerosene tanks and

fuel oil into fuel oil tanks, and the gasoline, kerosene

and fuel oil may go to one place or they may go to an-

other.

Some thirteen per cent of all the products coming

into Jacksonville are used in that city and some twenty

or thirty per cent of those products are shipped in in-

terstate commerce to Southern points in Alabama and

Georgia, the latter shipments, of course, properly tak-

ing the interstate rate. There is, however, no separa-

tion made in the tanks at Jacksonville between any of

the products moving in the various Ways mentioned.

All of the oil in one tank may be used in J acksonville,

or it may go to inland points of Florida, or it may go to

PADIS oak

Southern points in Georgia or Alabama, depending

upon the exigencies of petitioner’s business.

None of the petitioner’s products are use at Port

Tampa. Some of them, of course, the record not dis-

closing the exact percentage, are used at Tampa, which

is nine miles farther on and which is reached by rail on

a regular switching or tariff charge not in controversy.

In addition to the storage tanks at Tampa and Jack-

sonville, the petitioner maintains two warehouses at

the points named in which it carries an assortment of

petroleum products, such as lubricating oil in cans,

candles, stoves and the lubricating oil which it actually

barrels at these points.

The facts in regard to petitioner’s method of han-

dling fuel oil are somewhat different from those in re-

gard to the other products and special mention must be

made of that branch of petitioner’s business. The ree-

ord discloses that ninety-five per cent of fuel oil comes

into the State of Florida on contracts theretofore made

for its sale. In other words, ninety-five per cent of the

fuel oil is sold before it reaches a state of rest in the

storage tanks. Other than that, however, the fuel oil

is handled exactly as the other products. It comes into

the ports in large steamers and is pumped into the

tanks. It may stay there for a short time or a long

time, depending upon the demands of business. It may

go to one point or it may go to another. There is no

allocation as to cargoes or parts of cargoes, as to any

point in Florida to which it may go, as to the time it

may move out of the tanks, or as to the person to whom

it may go. There is no certainty as to its destination

at the time of its arrival. It is held in storage tanks to

meet the demand. The only certainty is that at some

time it will move out.

Summarized, the petitioner does in Florida a. strict-

ly local oil business. It keeps on hand in its storage

tanks sufficient supplies to meet the demands of its

Florida customers. Those demands are made in the

course of a trade that is strictly intrastate. Indeed,

for years prior to June 15, 1923, the railroads applied

the intrastate rate to all of this traffic. Since that time

and up to the time this Honorable Court denied the pe-

tition for writ of certiorari in the case in the Florida

Supreme Court already mentioned, the respondent and

some of the other Florida roads applied the interstate

rate. The record does not disclose what rate the re-

spondent has applied since the petition for writ of

certiorari was denied in the case from the Florida Su-

preme Court. It should be said, however, that the ree-

ord does disclose that the Florida East Coast Railroad,

the Southern Railway Company and the Louisville &

Nashville Railroad Company have consistently applied

the intrastate rates to all of this traffic.

Upon these facts the District Court held that the

business done by the petitioner in the State of Florida

was purely a local business and that the transportation

to serve such business was intrastate transportation at

intrastate rates. The Circuit Court of Appeals, how-

ever, divided the traffic and held part of it to be inter-

state traffic and the rest of it intrastate traffic. Of

course, the practical confusion from such a holding

would be material and neither of the parties litigant

is satisfied with that decision.

The Cireuit Court of Appeals held that the fuel

oil, gasoline and kerosene traffic from Port Tampa is

interstate traffic and that the lubricating oil from Port

Tampa moved in intrastate traffic, but that the gasoline,

kerosene and lubricating oil moving from Jacksonville

to Florida points was intrastate traffic, and that, as to

the fuel oil from Jacksonville, the record was obscure

and not sufficient for a satisfactory determination.

As we read the opinion of the Circuit Court of Ap-

peals, the basis for this distinction between Port Tampa

and Jacksonville is that no petroleum products are used

at Port Tampa and that a substantial percentage of pe-

troleum products are used at Jacksonville; that, ac-

cordingly, the stoppage at Port Tampa is a stoppage in

transitu, and that any movement thereafter by rail is

a continuation of the water transportation.

We submit that the distinction is not well taken.

The petroleum products come to rest at Port Tampa

just as definitely as they come to rest at Jacksonville,

and the movement out from Port Tampa is just as dis-

tinct and separate a movement as the movement out

from Jacksonville. The stoppage at both places is for

bona fide business reasons of the petitioner, without

which stoppages it could not conduct its business.

The distinction which the Circuit Court of Appeals

makes was condemned in the case of General Oil Co. v.

Crane, 209 U. 8. 211, where the oil company had a bat-

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tery of tanks at Memphis, Tennessee, and labeled some

of the tanks ‘‘Oil Already Sold in Arkansas, Louisiana

and Mississippi”’ and labeled others ‘‘Oil to be Sold in

Arkansas, Louisiana and Mississippi,’’ and then con-

tended that the oil in the tanks so labeled was still mov-

ing in interstate commerce and that the delay in Mem-

phis was merely for the purpose of reshipment; that

the interstate transit was not ended, but only tempo-

rarily interrupted. This Court said, however, on page

230, that the oil had reached the destination of its first

shipment and was held there, not in necessary delay or

accommodation to the means of transportation, but for

business purposes and profit of the company, that the

interstate commerce had ended, and that the property

was subject to the State tax laws of Tennessee,

We submit, therefore, that the distinction made by

the Circuit Court of Appeals is not sound and that all

of the traffic is intrastate.

BRIEF DISCUSSION OF GROUNDS FOR THIS

APPLICATION.

That part of the decision of the Cireuit Court of

Appeals holding some of this traffic to be interstate

traffic directly conflicts with the decisions of this Court

and of the Circuit Court of Appeals for the Fourth

Cireuit. The case of Atlantic Coast Line Ry. Co. v.

Standard Oil Co. of N. J., 12 Fed. (2d Series) 541, is

exactly analogous to the case at bar. All the large oil

companies doing business in states along the seaboard

have adopted substantially the same methods. A read-

ing of the opinion of the Court in the case from the

Fourth Circuit will disclose that the Standard Oil Com-

pany of New Jersey’s method of doing business in

North Carolina was in all substantial respects similar

to that used by the petitioner. In the North Carolina

case the Standard Oil Company of New Jersey had

large tanks at Wilmington, North Carolina, and

brought its products into that port by boats. It con-

centrated its products in large storage tanks at Wil-

mington and thereafter served its customers in the

State of North Carolina from these tanks. There may

be minor differences, but substantially the New Jersey

Company carried on its business in North Carolina as

the petitioner carries on its business in the State of

Florida. The District Court in the North Carolina case

held the traffic to be intrastate. The Circuit Court of

Appeals in a very extensive opinion affirmed the de-

cision of the District Court, and this Honorable Court

denied a petition for writ of certiorari. Accordingly,

the traffic in the North Carolina case has been held to

be intrastate traffic by three Courts and we submit that

there can be no doubt about the correctness of those de-

cisions.

The Florida traffic is in all substantial respects sim-

ilar to the North Carolina traffic and is intrastate traffi,

and the ruling of the Circuit Court of Appeals for the

Sixth Circuit holding part of it to be interstate traffic

is in direct conflict with the decisions we have men-

tioned.

This view is doubly fortified when we come to con-

sider the case from the Supreme Court of Florida which

involved this very same traffic—State of Florida, ez rel.

R. Hudson Burr, et al., v. Seaboard Air Line Ry. Co.

and Atlantic Coast Line R. R. Co., 109 So. 656 (not yet

officially reported). There the Supreme Court of Flor-

ida held this very traffic to be intrastate traffic and this

Court has denied a petition for writ of certiorari in

that case, and, as we understand, has also denied a mo-

tion for rehearing on that application.

We submit that the question is a closed question and

that the Circuit Court of Appeals for the Sixth Cir-

euit was in error in failing to follow the North Caro-

lina case and the Florida case just referred to.

There is no valid ground for distinguishing the fuel

oil from other petroleum products. A fuel oil case was

presented to the Interstate Commerce Commission—

Washington Dehydrated Food Co. v. Great Northern

Ry. Co., 102 I. C. C. 363, decided on September 22,

1925. The facts in that case were exactly similar to the

ease at bar regarding fuel oil, and the Interstate Com-

merce Commission held the traffic to be intrastate

traffic.

This petition should be granted also on the author-

itv of the case of Missouri v. Kansas Gas Co., 265 U. S.

298. In that case the Kansas Natural Gas Company

purchased gas in Oklahoma and Kansas, transported

it in pipe lines to Missouri and sold it there to distrib-

uting companies. This Court held that the first sale,

that is the sale to the distributing companies, was in

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interstate commerce, but that the subsequent sale of

the smaller companies to the consumers constituted in-

trastate commerce. The Court said, on page 308:

66% * *

With the delivery of the gas to the

distributing companies, however, the interstate

movement ends. Its subsequent sale and delivery

by these companies to their customers at retail is

intrastate business and subject to State regula-

tion. * * ** (Jtalics ours.)

And again, on page 309:

ce * * The business of supplying, on de-

mand, local consumers is a local business, even.

though the gas be brought from another State and

drawn for distribution directly from interstate

mains; and this is so whether the local distribution

be made by the transporting company or by inde-

pendent distributing companies. In such ease the

local interest is paramount, and the interference

with interstate commerce, if any, indirect and of

minor importance. * * *’’ (Italics ours.)

The quotations apply exactly to the case at bar.

The essential nature of the petitioner’s business is that

of supplying on demand local consumers in Florida

and that business is a local business.

As said by this Court in the case of Southern Pa-

cifie Co. v. Arizona, 249 U. S. 472, the question whether

a shipment is in interstate commerce is a question of

fact, and we submit the facts in the case at bar show

conclusively that the petitioner’s business in Florida

is strictly intrastate business.

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The Circuit Court of Appeals has erroneously held

that part of the traffic is interstate. That ruling con-

flicts with the North Carolina case from the Circuit

Court of Appeals for the Fourth Circuit and with other

cases from this Court. Accordingly, the petitioner

asks for a writ of certiorari.

On the other hand, the Circuit Court of Appeals has

held that part of the traffic, that is, the part from Jack-

sonville, is intrastate traffic. That ruling is correct and

does not conflict with other decisions, Accordingly, it

is submitted that the respondent, which has asked for

a writ of certiorari, is not entitled to the same.

Accordingly, your petitioner pleads that the judg-

ment of the Circuit Court of Appeals in so far as it

holds that part of the traffic involved is interstate is

erroneous and this Honorable Court should require the

case to be certified to it for its review and determina-

tion and for a modification of the opinion and judg-

PES ti ersacet

ment of the Circuit Court of Appeals in the respect

mentioned.

WHEREFORE, your petitioner respectfully prays

that a writ of certiorari may be issued out of and under

the seal of this Court directed to the United States

Cireuit Court of Appeals for the Sixth Circuit, com-

manding said Court to certify and send to this Court on

a day certain to be therein designated a full and com- :

plete transcript of the record and all proceedings in

the Circuit Court of Appeals in said case, styled At- E

Jantie Coast Line Railroad Company, Appellant, versus .

Standard Oil Company, Incorporated in Kentucky, Ap-

Sih Re airs Le A ot

pellee, Number 4691, to the end that said case may be

reviewed and determined by this Honorable Court, as

provided in Judicial Code, Section 240, and that this

Honorable Court modify the opinion and judgment of

the Circuit Court of Appeals in so far as the same holds

part of the traffic to be interstate traffic, and that your

petitioner may have such other and further relief or

remedy in the premises as to this Court may seem ap-

propriate and in conformity with said Judicial Code

and that the said judgment of the Circuit Court of Ap-

peals, in so far as it reverses and modifies the judg-

ment of the District Court of the United States for the

Western District of Kentucky, be reversed, and that

the judgment of said District Court in said case be af-

firmed by this i'onorable Court.

And your petitioner will ever pray.

CHARLES G. MIDDLETON,

Counsel for Petitioner.

Epwarp P. HumpnHeey,

WitiiamM W. CrAwForp,

Of Counsel.

STaTE OF KENTUCKY, -

CouNTY OF JEFFERSON. :

Charles G. Middleton, being duly sworn, says that

he is one of the counsel for the petitioner, Standard Oil

Company, Incorporated in Kentucky, that he has had

charge of this case for the petitioner from the incep-

tion thereof; that he prepared the foregoing petition,

and that the allegations thereof are true as he verily

believes.

CHARLES G. MIDDLETON.

Shite ad ane ated

Subscribed and sworn to before me by Charles G.

Middleton this 26th day of January, 1927. My com-

mission expires March 16, 1930.

ALICE JACKSON, ;

Notary Public, Jefferson County, Kentucky.

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OcT 3 1927

CHARLES ELMuat GHOPLEY

CLERK

Supreme Court of the United States

OCTOBER TERM, 1927.

No. 176.

ATLANTIC COAST LINE RAILROAD COMPANY, Petitioner,

vs.

STANDARD OIL COMPANY (Incorporated in

Kentucky), - -

No. 177.

STANDARD OIL COMPANY (Incorporated in

Kentucky), - - - - - Petitioner,

- - Respondent.

us.

ATLANTIC COAST LINE RAILROAD COMPANY, Respondent.

BRIEF FOR STANDARD OIL COMPANY

(INCORPORATED IN KENTUCKY),

RESPONDENT IN No. 176 AND

PETITIONER IN No. 177.

CHARLES G. MIDDLETON,

EDWARD P. HUMPHREY,

WILLIAM W. CRAWFORD,

Louisville, Ky.,

Counsel for Standard Oil Com any,

(Incorporated in Kentucky), Re-

spondent in No. 176, Petitioner in

No. 177.

September 23, 1927.

WESTERFIELD-BONTE CO., INCORPORATED, LOUISVILLE, KY.

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SUBJECT INDEX.

First: The Oil Company’s business in Florida is ea

local business carried on in intrastate commerce and

intrastate rates should be applied to the transportation

necessary to serve the business..................... 16

Atlantie Coast Line Railroad Co. v. Standard Oil

Co. of New Jersey, 12 Fed. (2d Series) 541

(Certiorari denied by this Court) ;

Standard Oil Co. v. Atlantic Coast Line Railroad

Co., 6 Fed. (2d Series) 911;

Seaboard Air Line Railway Co., Petitioner, v.

State of Florida, ex rel., ete., Supreme Court,

Docket No. 128; 109 So. 656 (not yet officially

reported) ;

Atlantic Coast Line Railroad Co., Petitioner, v.

State of Florida, ex rel., ete., Supreme Court,

Docket No. 129; 109 So. 656 (not yet officially

reported).

Second: When products are unloaded, stored and

mixed with other property in the State, interstate com-

merce is ended for all purposes. ................... 18

General Oil Co. v. Crain, 209 U. 8. 211;

Texas Co. v. Brown, 258 U. S. 466;

Sonneborn Bros. v. Cureton, 262 U. S. 506.

Third: The business of supplying on demand local

consumers is a local business. ...................-. 22

Publie Utilities Commission v. Landon, 249 U. 8.

236;

Missouri v. Kansas Gas Co., 265 U. S. 298;

People’s Natural Gas Co. v. Public Service Com-

mission, 270 U. S. 550;

Public Utilities Commission of Rhode Island v.

Attleboro Steam & Electric Co., 273 U. S. 88.

Oe a

Fourth: The Florida ports are in good faith and

for business purposes points of distribution for the Oil

Company’s products. The movement out, therefore, is

a separate and distinct distributing movement and not

a continuation of the original movement. ...........

Gulf, Colorado & Santa Fe Railway Co. v. Texas,

204 U.S. 403;

Chicago, Milwaukee & St. Paul Railway Co. v.

State of Iowa, 233 U. S. 334;

Arkadelphia Co. v. St. Louis Southwestern Rail-

way Co., 249 U. S. 134.

Distinguished:

Texas & New Orleans Railroad Co. v. Sabine Tram

Co., 227 U.S. 111;

Baltimore & Ohio Railroad Co. v. Settle, 266 U. S.

166;

Stafford v. Wallace, 258 U. 8. 495:

Binderup v. Pathe Exchange, 263 U.S. 291;

Lemke, Attorney General, v. Farmers Grain Co.,

258 U.S. 50.

Fifth: The traffic in fuel oil is also intrastate

ENO eee eA kleine wales sis ca'videeck csi ckccc:

Washington Dehydrated Food Co. v. Great North-

ern Railway Co., 102 I. C. C. 363.

Distinguished:

International Agricultural Corporation v. Direc-

tor General, as Agent of the Seaboard Air Line,

60 I. C. ©. 726;

Alexander Grocery Co. v. Beaumont, Sour Lake &

Western Railway Co., 1041. C. C. 155;

Tampa Fuel Co. v. Atlantic Coast Line, 43 I. C. .

231.

WE MN ee Sis vine aa ecedenedicccece

PAGE

“ Nea Seni

aren

TABLE OF CASES.

PAGES

Alexander Grocery Co. v. Beaumont, Sour Lake &

Western Railway Co., 104 I. C. 0.155 .......... 13, 45

Arkadelphia Co. v. St. Louis Southwestern Railway

gS ey ae en ie 12, 34

Atlantic Coast Line Railroad Co. v. Standard Oil Co.

of New Jersey, 12 Fed. (2d Series), 541......... 11

Atlantic Coast Line Railroad Co., Petitioner y. State

of Florida, ex rel., etc., Supreme Court, Docket

No. 129; 109 So. 656 (not yet officially reported) .12, 18

Baltimore & Ohio Railroad Co. v. Settle, 266 U. S.

ME Fe NReRNE NO NakWE we Veveveatis ec l ives 5, 13, 31

Binderup v. Pathe Exchange, 263 U.S. 291.......... 13, 40

Chicago, Milwaukee & St. Paul Railway Co. v. State

of Towa, 233 U.S. 334 ........ 6.0... c ccc nee. 12, 33

General Oil Co. v. Crain, 209 U.S. 211.............. 12,18

Gulf, Colorado & Santa Fe Railway Co. v. Texas, 204

cs cng dh OE ET ET Tr en apie eee 12, 31

International Agricultural Corporation yv. Director

General, as Agent of the Seaboard Air Line, 60

WONT Sc eubdne cr ecaxes vince ws 13, 45

Lemke, Attorney General, v. Farmers Grain Co., 258

POM Eh imrewkwxneiiksuds vonceselaccdcvo. 13, 40

Missouri v. Kansas Gas Co., 265 U. S. 208.......... 12, 27

People’s Natural Gas Co. v. Public Service Commis-

sins sentli ge dy fe 12, 28

Public Utilities Commission vy. Landon, 249 U. 8, 236.12, 23

Public Utilities Commission of Rhode Island vy. Attle-

boro Steam & Electric Co., 273 U. S. 83........ 12, 29

PAGES

Seaboard Air Line Railway Co., Petitioner, v. State of

Florida, ex rel., ete., Supreme Court, Docket No.

128; 109 So. 656 (not yet officially reported)..... 11,18

Sonneborn Bros. v. Cureton, 262 U. S. 506.......... 12, 22

Southern Pacific Co. v. Arizona, 249 U.S. 472 ....... 16

Stafford v. Wallace, 258 U. S. 495..............000- 13, 40

Standard Oil Co. v. Atlantic Coast Line Railroad Co.,

2. SF Rr ere r rr e ll

Tampa Fuel Co. v. Atlantie Coast Line, 43 I. C. C.

ls kb ska tute n uae id eks Sed deen eekane cane 13, 45

Texas Co. v. Brown, 258 U. S. 466 ................. 12, 21

Texas & New Orleans Railroad Co. v. Sabine Tram

Le Ce eh eeadkenshd octkbecvckes 13, 36

Washington Dehydrated Food Co. v. Great Northern

Railway Co., 102 L. C. C. 363. 2... cece ec eee 13, 44

a WRAY ORR ALMA Wd TREATS ARSE GBR REP TEI

Supreme Court of the United States

OCTOBER TERM, 1927.

Sm LPI, IE ROLE

No. 176.

Attantic Coast LINE Ratmroap Company, Petitioner,

vs.

SranpDaRD Or, Company (INCORPORATED IN

KENTUCKY), - - - - - = Respondent.

No. 177.

Stanparp On. Company (INCORPORATED IN

KENTUCKY), - - - - - - - Petitioner,

SARMIENTO EL ERIE RE ET OE

Vs.

AtLantic Coast Line RatLroap Company, Respondent.

BRIEF FOR STANDARD OIL COMPANY (INCORPO.

RATED IN KENTUCKY), RESPONDENT IN No.

176 AND PETITIONER IN No. 177.

OFFICIAL REPORT.

This case is reported below in 16 Fed. (2d) 441.

The District Court’s opinion will be found in 13 Fed.

(2d) 633.

The case came to this Court on petitions for certio-

rari to the United States Circuit Court of Appeals for

ae SATA OAD EET ah OI

the Sixth Cireuit. A petition for certiorari was filed

by the Atlantic Coast Line Railroad Company Febru-

ary 2, 1927. Likewise on the same date a petition for

certiorari was filed by the Standard Oil Company (In-

corporated in Kentucky).

On March 21, 1927, both petitions were allowed and

the case is now here upon its merits.

In view of the fact that two petitions for certiorari

were filed and allowed, the parties will be hereinafter

referred to for the sake of clarity as the Railroad Com-

pany and the Oil Company.

JURISDICTION.

The judgment which the parties ask to be reviewed

was entered December 17, 1926, by the Circuit Court

of Appeals for the Sixth Cireuit (R. 132).

The Oil Company is a corporation organized under

the laws of the State of Kentucky. It is a resident of

the Western District of said State. The Railroad Com-

pany is a corporation organized under the laws of the

State of Virginia, but is engaged in business in the

State of Kentucky and has an agent in that State for

the service of process. The amount involved in the con-

troversy exceeds $3,000. The ground of Federal juris-

diction is diversity of citizenship. Judicial Code Sec-

tions 24 and 51. The jurisdiction of this Court is con-

ferred by Judicial Code Section 240, as amended.

The Oil Company filed its bill in the United States

District Court for the Western District of Kentucky

against the Railroad Company. The bill charged that

the Railroad Company transports the Oil Company’s

petroleum products from Tampa, Port Tampa and

Jacksonville, Florida, to interior points in that State;

that prior to June 15, 1923, the Railroad Company

charged State rates for that traffic, but that since said

date the Railroad Company has charged interstate

rates for the traffic handled. The bill alleged that the

traffic was intrastate traffic and that the State rates

only should be applied; further that the Railroad Com-

pany was wrongfully imposing the interstate rates.

Accordingly the bill prayed for an injunction against

the application of the wrongful interstate rates and ’

against the application of any rate other than the .

lawfully published intrastate rate, and further prayed E

for an accounting. :

The Railroad Company, in its answer, denied that

Se ee BR an 3 PED

the traffic was intrastate traffic and alleged that it was :

interstate traffic. The sole question involved therefore

is as to the character of this traffic, whether it is intra- :

state or interstate.

The District Court held that the commerce involved

was State commerce and that the proper rates to be

applied were the intrastate rates. Accordingly, it en-

tered a decree enjoining the future charging of any t

rate other than the intrastate rate. t

The Railroad Company appealed from the decree

to the Circuit Court of Appeals and the operation of

the decree was suspended pending the appeal. The Cir-

cuit Court of Appeals reversed the judgment of the

District Court in part and affirmed it in part, holding

substantially that the traffic from Port* Tampa to in-

terior points in Florida was interstate and that the

traffic from Jacksonville was intrastate. Both parties

then sought a review of the judgment of the Circuit

Court of Appeals by certiorari. The Oil Company con-

tends that all of the traffic is intrastate traffic, and the

Railroad Company, that all of the traffic is interstate

traffic.

STATEMENT OF THE CASE.

The Oil Company is a Kentucky corporation doing

business in some of the southern States, including Flor-

ida. It is not a producing company. It buys its sup-

plies of petroleum products upon the open market,

largely from the Standard Oil Company of New Jersey

at Tamp-.2o, Mexico, and from the Standard Oil Com-

pany of Louisiana at Baton Rouge, Louisiana. The

Oil Company does a general retail, wholesale and job-

bing oil business in the State of Florida. The products

which it sells come into the Florida ports by vessels

from points out of the State—the fuel oil from Tampi-

co, Mexico, and the other products from Baton Rouge,

Louisiana. In order for the Oil Company to carry on

its business it is necessary for it to have storage facili-

ties for the petroleum products so coming into the

Florida ports and it is further necessary for it to main-

tain at all times supplies of petroleum products ade-

quate for its business. Accordingly, it maintains in

Florida at Port Tampa and Jacksonville, large bat-

teries of storage tanks and a warehouse at each of said

points. °

The capacity of the storage tanks at the points

named is 619,075 barrels. In these tanks the Oil Com-

pany stores petroleum products sufficient to meet the

demands of its Florida business and supplies that busi-

ness from the tanks. The Oil Company purchases its

supplies delivered to it in the tanks at the ports and has

nothing to do with the movement of the vessels carrying

the oil. These vessels are owned or chartered by the

companies selling the oil to the Oil Company. When

a vessel arrives at port the Oil Company’s agent is

notified and the oil is thereupon pumped from the ves-

sel into the storage tanks. The Oil Company then for

the first time takes possession, settles for the petroleum

products on the basis of the gallonage actually pumped

into the tanks and then holds the products subject to

the demands of its Florida business. The capacity of

the storage tanks is some thirteen or fourteen times as

large as the cargo capacity of any ship used by the sell-

ing companies carrying the petroleum products into

the Florida ports.

The Railroad Company has nothing to do with the

boat movement. There is no through rate nor any joint

water and rail rate. The boats are private car-

riers. After the petroleum products come to rest in the

storage tanks at the ports their future movement de-

pends entirely upon the exigencies of the Oil Com-

pany’s business. The stay of the petroleum products

in the tanks is entirely indefinite. They may move

from the tanks rapidly if business is brisk. They may

remain in the tanks for a great length of time if the

Oil Company’s business is not active at that time. No

are

‘

ERNE RL T UC aeRO OT hain RONEN UAL

particular oil is destined for any particular point in

the State of Florida and the only known destination b

of the petroleum products when they are loaded on the ©

boat is the Florida port. The products may stay in

the tanks for one week or they may stay there for two

months or three months and sometimes longer. Fur-

thermore, no particular cargo of oil is allocated to any

particular tank or to any particular shipping point in ©

the interior of Florida. All of these things depend

upon the exigencies of the Oil Company’s business. No

one knows or can tell at the time a cargo of oil is

pumped into the tanks at the ports where it will go, or

to whom, or into what number of railroad shipments it

may be broken up (R. 48, 49, 50, 51 and 113),

The Railroad Company has no notice as to when a

cargo of oil comes into port and indeed has nothing to

do with the petroleum products until the Oil Company

makes a definite contract of carriage with it. The oil

may stay in the tanks three months before it is shipped

out by rail or it may stay there only one week, but in

any event no contract of shipment of the oil from the

tanks is made with the Railroad Company until after ©

the oil has been in the tanks for a varying length of &

time. It is simply known in a general way that the

oil will leave the tanks by rail sometime, but where or

when it will go is not known at the time the cargo is

unloaded.

Special mention must be made of lubricating oil

and fuel oil, as these two petroleum products are har- ‘

dled somewhat differently from the kerosene and gaso- |

line. Lubricating oil at Port Tampa is pumped di- |

rectly from the steamers into tank cars and is there-

upon hauled to the city of Tampa, about nine miles dis-

tant, on a regular switching or tariff rate, which rate is

not involved in the controversy. There the lubricating

oil is pumped from the tank cars into storage tanks,

some of the oil being barreled and shipped out from

the city of Tampa to other Florida points in the barrels.

Some of it is used in the city of Tampa. Some leaves

the city of Tampa in tank cars and some in smaller

quantities. About six hundred barrels per month are

barreled at Tampa. Of course the lubricating oil comes

into Port Tampa in tank steamers (R. 60).

At Jacksonville the Oil Company’s docks are lo-

cated at what is called the St. Johns River Terminals

and there, in addition to large storage tanks for fuel

oil, gasoline and kerosene, the Oil Company also has

storage tanks for lubricating oil. Accordingly, the lu-

bricating oil is pumped from the steamer into the lubri-

eating oil storage tanks. Thereafter it is pumped out

of these storage tanks into tank cars and hauled to

Kings Road Station in Jacksonville, which is about two

and one-half miles distant from St. Johns Terminal.

This movement is on a regular switching charge and

the rate is not involved in this controversy. After the

lubricating oil reaches Kings Road, it is put into tanks

with other lubricating oil at that point and then distrib-

uted through the State of Florida. A large amount of

lubricating oil is barreled at Jacksonville, about 3,500

barrels per month (R. 60, 61).

The facts in regard to fuel oil are somewhat differ-

ent from all the other products handled by the Oil

;

ie: |

ELITE LE IE

as Chen

Company. This difference lies in the fact that approxi-

mately 95 per cent of the fuel oil that comes into the

State of Florida is sold on contracts theretofore made

for its sale. In other words, the Oil Company makes

contracts of sale for 95 per cent of the fuel oil that it

brings into the State before the fuel oil comes into the

State. Other than that, however, fuel oil is handled ex-

actly as the other products. It comes in in large tank

steamers. It is pumped at the port into large storage

tanks. It may stay there for a short time or a long time,

depending upon the demands of the Oil Company’s

business. It may go to one point or it may go to an-

other. There is no allocation as to cargoes or parts of

cargoes as to the particular points in Florida to which

it will go, or as to the time it may move out of the

tanks, or as to the person or company to

whom it may go. There is no certainty as

to its destination at the time of its arrival. It

is fair to state, however, that nearly all of the fuel oil

goes into a certain district in Florida, called the Bone

Valley District. It is used in the fertilizer business, of

course as fuel to get the rock out, which is crushed and

of which a fertilizer is made. A small percentage of the

fuel oil is held subject to current demands. The deliv-

eries of fuel oil to Florida customers are very irregular.

They are delivered on requirement contracts and the

requirements depend upon the customers’ business. It

is necessary in handling the fuel oil to have large stor-

age tanks and to have a large reserve supply of fuel oil

on hand at all times (R. 121, 122, 123 and 124).

i i a Bisa Sh MLS SNE GR I SS PLIN BEASTS ORIEN ne

oe tae oad *

The Oil Company also maintains one warehouse

each at Port Tampa and Jacksonville. In these ware-

houses it carries a varied assortment of products, such

as lubricating oil in cans, candles, stoves and lubricat-

ing oil in barrels. Curiously enough, the Railroad

Company applies the interstate rate to oil in barrels

and applies the State rate to candles and stoves which

may move in the same car to the same point from the

same warehouse (R. 119).

It should also be stated that some thirteen per cent

of all of the petroleum products coming into the city

of Jacksonville are used in that city and somewhere be-

tween twenty and thirty per cent of the products com-

ing into Jacksonville are shipped from that city to

Southern points in Georgia and Alabama. Of course,

these latter shipments properly take the interstate rate.

Tn other words, petroleum products coming into Jack-

sonville may move in one of three different ways—some

of them are used at Jacksonville, some go to southern

points in Georgia and Alabama, and the balance to in-

terior points in the State of Florida. There is no sep-

aration made in the tanks at Jacksonville between any

of the products moving in the various wavs mentioned.

All of the oil in one tank may be used in Jacksonville,

or it may go to inland points in Florida, or it may go to

southern points in Georgia or Alabama, depending en-

tirely upon the demands of the Oil Company’s business

at the time (R. 90).

None of the petroleum products coming into the

port at Port Tampa are used at that point. The Oi

Company maintains no delivery facilities or wagons

ocd oar eat i

Pe NT TA RT AS I

Sse ERERRR NR TRRRTRRALETINAREAREEEEEEE 4

there, but of course some of these products are used in

the city of Tampa, the record not disclosing the per-

centage (R. 90).

It was this slight difference in the Oil Company’s

method of doing business at Jacksonville and at Port

Tampa that led the Circuit Court of Appeals to hold

that the traffic from Jacksonville was State traffic and

that the traffic from Port Tampa was interstate traffie.

If the decision of the Circuit Court of Appeals were al-

lowed to stand, the greatest confusion would result be-

eause for all practical purposes the business is handled

the same way from both cities and the traffic is either

all intrastate or interstate and the same rate should be

applied to traffie from both points.

It should also be stated that the Oil Company pays

local taxes to the State of Florida upon all of its pe-

troleum products (R. 120).

The above constitutes a statement of the facts in

the case. There is no dispute about them and a state-

ment of the facts simply involves a statement of the Oil

Company’s method of doing business. The Oil Com-

pany has used the present method of conducting its

business for years and, as already stated, prior to June

15, 1923, the Railroad Company applied the State rate

to all of this traffic, but on the date named it made the

change. In fact some of the railroads, namely, the

Florida East Coast Railway Company, the Southern

Railway Company and the Louisville & Nashville Rail-

road Company, still apply State rates to all of this

traffic (R. 114).

Summarized, the Oil Company does in the State of

Florida a strictly local business. Its products move

into the State in interstate or foreign commerce and

thereafter are held by it in storage tanks for indefinite

periods of time. It keeps on hand at all times adequate

supplies to meet the demands of its Florida customers.

It is purely State commerce from the time the petrole-

um products come to rest in the tanks and the rates to

be applied to the transportation necessary to serve that

commerce should be the State rates.

ASSIGNMENT OF ERROR.

The Circuit Court of Appeals erred in holding that

the traffic in gasoline, refined oil and fuel oil from Port

Tampa to interior points in Florida was interstate ecom-

merce and governed by interstate rates, and in not hold-

ing that the fuel oil movement from Jacksonville was

intrastate traffic.

POINTS AND AUTHORITIES.

First: The Oil Company’s business in Florida is a

local business carried on in intrastate commerce and

intrastate rates should be applied to the transportation

necessary to serve the business.

Atlantie Coast Line Railroad Co. v. Standard Oil

Co. of New Jersey, 12 Fed. (2d Series) 541

(Certiorari denied by this Court) ;

Standard Oil Co. v. Atlantie Coast Line Railroad

Co., 6 Fed. (2d Series) 911;

Seaboard Air Line Railway Co., Petitioner, v.

1 6P al SEB

SRE: Bind BrCl Ly ed TA. Se BEI AS DL ode bee a a

State of Florida, ex rel., ete., Supreme Court,

Docket No. 128; 109 So. 656 (not yet officially

reported) ;

Atlantic Coast Line Railroad Co., Petitioner, y,

State of Florida, ex rel., ete., Supreme Court,

Docket No. 129; 109 So. 656 (not yet officially

reported).

Second: When products are unloaded, stored and

mixed with other property in the State, interstate com-

merce is ended for all purposes.

General Oil Co. v. Crain, 209 U. S. 211;

Texas Co. v. Brown, 258 U. S. 466:

Sonneborn Bros. v. Cureton, 262 U. S. 506.

Third: The business of supplying on demand local

consumers is a local business.

Publie Utilities Commission v. Landon, 249 U. §.

236;

Missouri v. Kansas Gas Co., 265 U. S. 298:

People’s Natural Gas Co. v. Publie Service Com-

mission, 270 U.S. 550:

Publie Utilities Commission of Rhode Island v.

Attleboro Steam & Electric Co., 273 U. 8. 83.

Fourth: The Florida ports are in good faith and

for business purposes points of distribution for the Oil |

Company’s products. The movement out, therefore, is |

a separate and distinct distributing movement and not

a continuation of the original movement. |

Gulf, Colorado & Santa Fe Railway Co. v. Texas, _

204 U. S. 403;

Chicago, Milwaukee & St. Paul Railway Co. v. |

State of Iowa, 233 U. S. 334; |

Arkadelphia Co. v. St. Louis Southwestern Rail-

way Co., 249 U. S. 134. |

. PI tee nae * Se AT eT Nae LA PRL ee la) ae ay

WAS PAE tree 9 obtr ,

UTTER TT ain een

| Distinguished:

- nee

Texas & New Orleans Railroad Co. v. Sabine Traum

Co., 227 U. S. 111;

Baltimore & Ohio Railroad Co. v. Settle, 266 U. S.

166;

; Stafford v. Wallace, 258 U. S. 495;

Binderup v. Pathe Exchange, 263 U. S. 291;

; Lemke, Attorney General, v. Farmers Grain Co.,

258 U.S. 50.

Fifth: The traffic in fuel oil is also intrastate

traffic.

Washington Dehydrated Food Co. v. Great North-

ern Railway Co., 102 I. C. C. 363.

Distinguished :

International Agricultural Corporation v. Diree-

tor General, as Agent of the Seaboard Air Line,

60 I. C. C. 726;

Alexander Grocery Co. v. Beaumont, Sour Lake &

Western Railway Co., 104 I. C. C. 155:

Tampa Fuel Co. v. Atlantic Coast Line, 43 I. C. C.

231.

Sixth: Conclusion.

ARGUMENT.

The Oil Company’s storage tanks at Port Tampa,

Tampa and Jacksonville, and also its warehouses, are :

an essential part of its equipment for carrving on its i

Florida business. They are not simply means of trans-

ferring commodities from water to rail transportation.

They are, as their names imply, storage tanks and ware-

houses in truth and in fact, and petroleum products are

AOS AE i SSRN COOL CLT LEDS a IER we oe

stored in them indefinitely, awaiting the call of Florida

business. They are in principle exactly like a ware-

house or other storage depot of a jobber in any other

line of business, such as the hardware business. Prod-

ucts move into them from outside of the State. The

products are held there indefinitely and are shipped out

only upon demands from local customers.

It is essential in the Oil Company’s business for it

to have an enormous storage capacity and the reasons

for this are two-fold. First, it must be able at all times

to satisfy its Florida customers, and, second, the oil

market is a fluctuating one and the Oil Company must

be in a position to accumulate large reserves of pe-

troleum products when its officers are of the opinion

that the oil market is going to advance, and according

to the testimony in this case the storage capacity of the

Oil Company is used frequently for that purpose.

It appears from the record that during the months

of July, August and September of 1925, the price of

gasoline was declining. During that period the Oil

Company received at Port Tampa and Jacksonville ap-

proximately 210,000 barrels of gasoline. In those same

three months it shipped out approximately 400,000 bar-

rels, allowing its stocks to drop from 223,000 barrels on

June 30, to 42,000 barrels on September 30. In oth-

er words, the opinion of the Oil Company’s officers was

that the stock should be depleted because these officers

thought that the market was going lower. It only made

small purchases during that period and of course tried

to buy the gasoline as close to the bottom of the market

as possible (R. 60).

——

On the other hand, during the months of April, May

and June, 1925, the gasoline markets were advancing

and the officers of the Oil Company were of the opin-

ion that the markets were going higher. During that

period therefore the Oil Company made large pur-

chases and accumulated stocks in its tanks. It put into

its tanks at Port Tampa and Jacksonville, 408,600 bar-

rels of gasoline, but its shipments from those two points

during that period approximated only 333,000 barrels.

In other words, it was accumulating stock and taking

advantage of the market conditions by the proper use

of its storage facilities (R. 60).

In January, 1925, the Oil Company shipped from

Port Tampa 58,406 barrels of gasoline; in December

of the same year it shipped 88,862 barrels; in May of

1925, it shipped from Jacksonville, 64,805 barrels; in

November of the same year it shipped 102,702 barrels,

all of which shows that the movements into and out of

these ports are irregular, depending entirely upon the

varying conditions of the Oil Company’s business in

the State of Florida (R. 63, 64, 77 and 78).

It is submitted therefore that it cannot be truthful-

ly said that the storage tanks at the Florida ports are

part of the transportation facilities. If that were so,

it would not be necessary to have the storage capacity

of the tanks very much larger than the size of any one

ship serving the traffic. As a matter of fact, however,

the tanks are, as already stated, some thirteen or four-

teen times as large in capacity as the cargo capacity of

any ship serving the trade. The storage tanks, there-

fore, are much more than transportation facilities.

tig

ey et

APTI RGE EEG LITT EM IL Ee

They are an essential part of the Oil Company’s equip-

ment to carry on a strictly local business in the State of

Florida.

As this Court has said, the question of what is in-

terstate or intrastate traffic is in the last analysis one of

fact. It is having that principle in mind that we have

made such a detailed statement of the conduct of the

Oil Company’s business.

In Southern Pacific Co. v. Arizona, 249 U. S. 472,

at page 477, the Court said:

ce * * Whether a shipment was at a given

time in interstate commerce is a question of fact,

* & #99

It is necessary to keep that principle in mind in

reading the cases discussing this question, because un-

less it is kept in mind constantly the principles laid

down in the various cases are somewhat confusing.

THE TRAFFIC IS STATE TRAFFIC.

The exact question involved in the case at bar was

before the Circuit Court of Appeals for the Fourth

Circuit in the case of Atlantic Coast Line Railroad

Co. v. Standard Oil Co. of New Jersey, 12 Fed. (2d

Series) 541, in which case this Court denied a petition

for writ of certiorari. There the Standard Oil Com-

pany of New Jersey filed two suits, one against the At-

lantie Coast Line Railroad Company and one against

the Seaboard Air Line Railway Company, asking for

an injunction enjoining those Companies from charg-

ing anything other than the State rates. The case pre-

SIE IE OE IEIE RE

sented exactly the same question as is involved in the

ease at bar. The traffic in that case moved from Wil-

mington, North Carolina, a port point, to interior

points in the State of North Carolina. Of course the

products came into the port at Wilmington in tank

steamers exactly as in the case at bar, the only differ-

ence being that in that case the oil company brought

petroleum products into Wilmington in its own tank

steamers, directed that movement, and of course owned

the petroleum products during the entire boat move-

ment. In the case at bar the Oil Company has nothing

to do with the boat movement and does not acquire title

to or possession of the petroleum products until they

are delivered to it in its storage tanks at the Florida

ports. Of course the entire opinion in the North Caro-

lina case is pertinent to the discussion of the case at bar

and we do not undertake to quote from the opinion. It

is sufficient to say that the opinion of the Circuit Court

in the North Carolina case went fully into all of the au-

thorities and held that the traffic involved was State

traffic and should carry the State rates.

The Cireuit Court of Appeals in the North Carolina

ease affirmed the District Court of North Carolina,

which Court had theretofore considered the case and

delivered a written opinion which is reported under the

style of Standard Oil Co. v. Atlantic Coast Line Rail-

road Co., 6 Fed. (2d S.) 911.

The Supreme Court of Florida has also recently de-

cided a case that involved the traffic under considera-

tion in the case at bar and that case is now before this

Court on certiorari under the style of Seaboard Air

SSL

HM LY

PPAR TTL PS

PRE UOTE RAEI AS PENA RT RET IE EOLA DG NY ETNA NIE Flee

Line Railway Co., Petitioner, v. State of Florida, ez

rel., ete., and Atlantic Coast Line Railroad Co., Peti-

tioner, v. State of Florida, ez rel., ete., No. 128 and 129.

In that case the Supreme Court of Florida, speaking of

the very traffic involved in the case at bar concluded it

opinion with the following language:

“In this view of the facts we are of the opinion

that the petroleum and petroleum products stored

in storage tanks and warehouses at Jacksonville

and Tampa come to rest there; that the interstate

movement ceases and that subsequent shipments

of it to points within the state are intrastate move-

ments and subject to the rates prescribed by the

relators.”’

We have mentioned the North Carolina case and

the Florida case first in our brief for the reason that

both of these cases deal with the oil business and with

the exact question presented in the case at bar. There

are other cases, however, from this Court which lay

down principles which, we submit, control the decision

of the case at bar, that where petroleum products come

to a state of rest in storage tanks the interstate journey

is over.

WHEN PRODUCTS ARE UNLOADED, STORED AND

MIXED WITH OTHER PROPERTY IN THE STATE,

INTERSTATE COMMERCE IS ENDED.

The case of General Oil Co. v. Crain, 209 U. S. 211,

has long been a leading case. That is the case in which

the oil company sought to escape taxation upon the

ground that its products were moving in interstate

ecommerce. The oil company brought a suit to enjoin

BO Ge PANELS A IE VTS PLA MIILED 0 2) Baa ee BING Saba We Sp ARM AAD ah

the State officers of Tennessee from enforcing an in-

spection tax on oil and gasoline. The Company main-

tained a large place of business at Memphis. consisting

of storage tanks and other equipment. Its wells, refin-

ing and manufacturing plants were located in Penn-

sylvania and Ohio. It transported its products by rail

from those States to Memphis. The Company had sep-

arate tanks in Memphis labeled as follows: ‘‘Oil al-

ready sold in Arkansas, Louisiana and Mississippi’

and others labeled ‘‘Oil to be sold in Arkansas, Louisi-

ana and Mississippi.’’ The Company took the position

that the oil in tanks so labeled was not subject to local

Jaws, upon the ground that it was moving in interstate

commerce, that the delay in Memphis was merely for

the purpose of separation, distribution and reshipment,

and was no longer than was required by the nature of

the business and the exigencies of the business, that the

interstate transit of the oil was not finally ended at

Memphis but was only temporarily interrupted there.

The Court, however, said on page 230 of its opin-

ion, that the property was receiving the protection of

the State, that it had reached the destination of its first

shipment, and was held there, not in necessary delay or

accommodation to the means of transportation, but for

the business purposes and profit of the Company. The

Court, accordingly held that the interstate commerce

had ended and that the property was subject to the

State Tax Laws of Tennessee.

One of the points made in the Crain ease was that

that part of the oil being held there to fill orders al-

ARR hTERT EOE EY

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sig SO an mals SP Loach

CL MOET RS

PRIS RE ie PER AE ne

ready received, just as fuel oil is held in the ease at

bar, was still moving in interstate commerce, but the

Court dismissed this contention of the oil company by

stating that in order to fill those orders it was necessary

that the property be given a locality in the State of

Tennessee beyond a mere halting in its transportation.

In other words, it required storage there, maintenance

of the means of storage, putting it in and taking it from

storage, and that that in reality was a necessary branch

of the oil business.

The only way that the Crain case can be distin-

guished from the case at bar is to say that the Crain

ease involved a question of taxation, while the ease at

bar involves a question of transportation, but we be-

lieve that this is a distinction without a difference.

The question to be decided in both cases was whether

the petroleum products come to such a state of rest that

the interstate journey is ended and the Court in the

Crain case answered the question affirmatively. In-

deed, if the Court had not answered the question in that

way, then practically all oil business would be an in-

terstate business in States where no oil is produced, be-

cause in every such case the petroleum products would

have to come into the State from outside, and if the

movement from outside should so color subsequent

movements within the boundaries of a particular State,

then practically all the oil business in States where

there is no production has to be carried on in interstate

commerce. We submit that such a principle applied to

the oil business would not be sound.

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x ERP BAT EP PIN DISS ORR 9. 2B EB PUTIN ‘ ARR VUE VS

This Court has also recognized the principle in the

ease of Texas Co. v. Brown, 258 U. 8. 466. That was a

suit for an injunction to restrain the officials of the

State of Georgia from enforcing an inspection law of

that State. The conditions under which the Texas

Company did business in Georgia are stated on page

472 of the Court’s opinion and the conditions there

stated are similar to the case at bar, except that the oil

came into Georgia by tank car instead of by tank steam-

er. Indeed the oil business all over the country is con-

ducted in more or less the same way. One of the impor-

tant points made in the case was that the Inspection

Law was an interference with interstate commerce in

that it inspected products brought in from other States.

It was necessary for the Court to decide when the inter-

state commerce ended in the oil business, and the Court

said on page 473:

“* * * that so far as plaintiff’s products

were indefinitely stored within the State, or sold

there after breaking bulk or original packages,

they were subject not only to inspection but to the

tax imposed, as soon as the interstate transporta-

tion was ended; and that the State should be per-

mitted to enforce the inspection fees so soon as the

products passed out of interstate commerce, al-

though restrained with respect to products while

in such commerce; citing Ratterman v. Western

Union Telegraph Co., 127 U.S. 411.”

Here is a plain statement that, when the oil or gaso-

line is indefinitely stored within the State, interstate

commerce has ceased.

Again, the Court said, on page 477:

Sy Thy al at ope

= SA oh LORETO NOMS MFI

GIT TSE A ILENSLSL IY IE ELON LG SS ELL LI I EAT LOA IE

“‘Ordinarily, unless a loaded car be used for

indefinite storage, or as a distributing tank for

local sales (nothing of either kind appears in the

ease), it remains in interstate commerce until un-

loaded, and the agents of the State may not law-

fully subject its contents to the inspection charges

until transferred to the storage tank, unless with

plaintiff’s consent * * *’’ (Italics ours).

Here the Court plainly states that, after the prod-

ucts are pumped into storage tanks, interstate com-

merce is over.

The case of Sonneborn Bros. v. Cureton, 262 U. S.

506, laid down the same principle. That was a case

involving a tax upon receipts for the sale of oil shipped

into the State of Texas from outside of the State and

afterwards sold from the storerooms in unbroken pack-

ages. The Court held that the traffic was intrastate

traffic and the receipts subject to the tax.

The three cases just cited involved the oil industry

and we submit that the Court has laid down principles

decisive of the ease at bar holding that the interstate

traffic in the petroleum industry ends when the petrole-

um products are brought to a state of rest in large

storage tanks thereafter to be distributed in local

commerce.

THE BUSINESS OF SUPPLYING ON DEMAND LOCAL

CONSUMERS IS A LOCAL BUSINESS.

As has already been stated, the Oil Company’s busi-

ness in Florida is a local business. In addition to the

large storage tanks at the ports, the Oil Company has

123 bulk marketing stations at inland points, 165 drive-

in service stations, approximately 410 delivery vehi-

eles, approximately 5,000 dealer customers and several

hundred thousand retail customers (R 61).

It sells its products in the usual way. No contract

is made in advance of the arrival of the product at the

port except in the case of fuel oil. All of the other

products come into the port and await the orders and

pleasure of the Oil Company’s customers. In such a

case, even though the petroleum products have come

into the State of Florida in interstate or foreign com-

merce, the subsequent commerce is state commerce.

This rule was laid down in the ease of Publie Utili-

ties Commission v. Landon, 249 U. 8. 236. The impor-

tant facts in that case were that the Receivers of the

Kansas Natural Gas Company sued to prevent the vari-

ous defendants, including the State Utilities Commis-

sions of Kansas and Missouri from interfering with

the establishment and maintenance of rates for gas con-

sumers sufficiently high to compensate the Receivers.

The Gas Company owned a system of pipe lines ex-

tending from Oklahoma and Kansas points to certain

towns and cities in Kansas and Missouri. The Gas

Company produced, purchased, transported and dis-

tributed gas under agreements to local companies. The

local companies in turn sold the gas to their customers.

The Missouri Public Service Commission suspended

the proposed advance in rates to consumers and the Re-

ceivers began a proceeding against the Missouri Com-

mission and others for an injunction restraining the

Commissions and others from interfering with the es-

tablishment of reasonable compensatory rates. The

PELLETS ALINE OBE ME ELITIST EE ALE TENE BE LE PE IIT PE

Court below held that the commerce was interstate

commerce of a national character and that the action of

the Public Service Commissions interfered with and

burdened interstate commerce. This Court in consid-

ering the case said:

““But we cannot agree with its conclusions that

local companies in distributing and selling gas to

their customers acted as mere agents, immediate

representatives or instrumentalities of the receiy-

ers and as such carried on without interruption

interstate commerce set in motion by them.

“That the transportation of gas through pipe

lines from one State to another is interstate com-

merce may not be doubted. Also, it is clear that as

part of such commerce the receivers might sell and

deliver gas so transported to local distributing

companies free from unreasonable interference by

the State. American Express Co. v. Iowa, 196 U.

S. 133, 143; Oklahoma v. Kansas Natural Gas Co.,

221 U.S. 229; Haskell v. Kansas Natural Gas Co.,

224 U. S. 217.

‘“‘But in no proper sense can it be said, under

the facts here disclosed, that sale and delivery of

gas to their customers at burner-tips by the local

companies operating under special franchises con-

stituted any part of interstate commerce. The

companies received supplies which had moved in

such commerce and then disposed thereof at retail

in due course of their own local business. Pay-

ment to the receivers of sums amounting to two-

thirds of the product of these sales did not make

them integral parts of their interstate business.

In fact, they lacked authority to engage by agent

or otherwise in the retail transactions carried on

by the local companies. Interstate commerce is

a practical conception and what falls within it

must be determined upon consideration of estab-

lished facts and known commercial methods.

a nae meee

Rearick v. Pennsylvania, 203 U. S. 507, 512; The

Pipe Line Cases, 234 U. 8. 548, 560. The thing

which the receivers actually did was to deliver sup-

plies to local companies. Exercising franchise

rights, the latter distributed and sold the commod- |

ity so obtained upon their own account and paid ;

the receivers what amounted to two-thirds of their

receipts from customers. Interstate movement

ended when the gas passed into local mains. The 1

Court below erroneously adopted the contrary

view and upon it rested the conclusion that the

Public Commissions were interfering with estab-

lishment of compensatory rates by the receivers in

violation of their rights under the Fourteenth

Amendment.’’ (Italies ours.)

Accordingly the case was reversed. The language

of the Court is pertinent to the case at bar. The Oil

Company receives supplies which have moved in inter-

state or foreign commerce, but it receives those sup-

plies, stores them and then disposes of them in a purely

local business, and the transportation movement neces-

sary to the local distribution of its supplies is an intra-

state movement. In its essential facts the Landon case

is almost identical with the case at bar and this Court

took the broad view in the Landon case that the inter-

state commerce movement ended when the gas was

delivered to the distributing companies and that there-

after intrastate commerce began. In other words, we

submit that it looked at the situation as it is and

treated local commerce as local commerce.

The Landon case answers two arguments that have

been used by the Railroad in the case at bar. The

Railroad Company draws a picture of the great

flow of oil from Baton Rouge and Tampico, through

PSI LO SAN OG Ee ON TT I COT

Dee GP Peale an BRA oe

the tank steamers, into the large storage tanks, then

into tank cars, then into the smaller storage tanks, and

then into the gasoline tanks of the automobiles. The

picture is one of a continuous flow of oil from Tampico

and Baton Rouge to the gasoline tanks in the automo-

biles in the State of Florida. The same picture could

have been drawn in the Landon case, gas flowing from

the wells, through the pipe lines in Kansas and Okla-

homa, through the tanks of distributing companies in

Missouri, to the gas burner tips of the consumers, but

the fact is commerce in any article which is imported

into the various states can be pictured in exactly the

same way and if this argument establishes that all such

business is interstate commerce, then practically all of

the business of the country is interstate commerce and

there could be very little local business. Of course, i:

the case at bar the stop at the ports is much more pro-

nounced than appears in the Landon ease.

The second argument referred to is that made by

the Railroad Company that the Oil Company knows

that its petroleum products are not going to stop at the

ports, but are going to interior points and that this

makes the movement continuous, but the same argu-

ment could have been advanced in the Landon case

about the gas. But evidently the Court did not con-

sider it of importance.

The fact remains that in the ease at bar the business

is essentially local just as much so as the hardware

business or any other business in which large storage

facilities are required to gather goods and products

a — Lae ES NR A I ae 5 Peles LIER D RIS 11 HOT oe |

from other states and hold them in the one state sub-

ject to local demands.

Another gas case was that of Missouri v. Kansas

Gas Co., 265 U. S. 298. In that case the question was

directly presented as to the character of the commerce

carried on between the Gas Company and distributing

companies in Missouri and Kansas, and the Court held

that the sale from the Gas Company to the distributing

companies was interstate business and not subject to

state regulations. The Court, however made it per-

fectly plain that under the Landon case this rule would

not apply in the sale of gas by the distributing com-

panies to the consumers. The Court said, on page 308:

PRE IU OR eer ay

8 ae ee

“ee * With the delivery of the gas to the

distributing componics, however, the interstate

movement ends. Its subsequent sale and delivery

by these companies to their customers at retail is

intrastate business and subject to State regula-

tion. Publie Utilities Comm. v. Landon, supra,

p. 245. In such case the effect on interstate com-

merce, if there be any, is indirect and incidental.

But the sale and delivery here is an inseparable

part of a transaction in interstate commeree—not

local, but essentially national in character—and

enforcement of a selling price in such a transac-

tion places a direct burden upon such commerce

inconsistent with that freedom of interstate trade

which it was the purpose of the commerce clause

to secure and preserve. * * *’’ (Italics ours.)

And again, on page 309:

‘**In both cases the things done were local and

were after the business in its essentially national

aspect had come to an end. The distinction which

constitutes the basis of the present decision is

clearly recognized in the Landon ease. The busi-

ness of supplying, on demand, local consumers is

a local business, even though the gas be brought

from another State and drawn for distribution

directly from interstate mains; and this is so

whether the local distribution be made by the

transporting company or by independent distrib-

uting companies. In such case the local interest

is paramount, and the interference with interstate

commerce, if any, indirect and of minor import-

ance. But here the sale of gas is in wholesale

quantities, not to consumers, but to distributing

companies for resale to consumers in numerous

cities and communities in different States. The

transportation, sale and delivery constitute an un-

broken chain, fundamentally interstate from be-

ginning to end, and of such continuity as to amount

to an established course of business. The para-

mount interest is not local but national, admitting

of and requiring uniformity of regulation. * * *”

(Italics ours.)

Here it seems to us that the Court has stated the

rule very clearly that the business of supplying on de-

mand local consumers is a local business and the fact

that the Oil Company’s products come into the State

of Florida in interstate commerce should not be al-

lowed to color the entire transaction and make inter-

state business out of what is a purely local affair.

Another gas case was that of People’s Natural Gas

Co. v. Public Service Commission, 270 U. 8. 550. In

that case the validity of an order of the Public Service

Commission of Pennsylvania requiring the People’s

Gas Company to continue its prior practice of supply-

ing natural gas to another company at Johnstown for

sale to consumers in that city was involved. It appears

_—

that the People’s Company purchases two-thirds of its

gas from a producing company in West Virginia, hav-

ing pipe lines leading from wells in that state to the

boundary between West Virginia and Pennsylvania,

and that the People’s Gas Company produced the other

one-third from its own wells in the Southwestern coun-

ties of Pennsylvania. What this Court held was that

as there was enough Pennsylvania gas flowing into the

mixture to meet the requirements of the Public Service

Commission, interstate commerce was not involved and

the order was upheld. This Court said in concluding

its opinion as to whether the order, if it did apply to

interstate commerce, could have been sustained became

immaterial in view of the conclusion the Court had

reached. There is some language in the opinion, how-

ever, Which seems to indicate that the Court considered

the gas from West Virginia passing through the pipe

lines without a stoppage of any kind at the state boun-

dary and a prompt delivery to purchasers, as a move-

ment in interstate commerce. But the Court at two

points in its opinion indicated that the reason for this

expression of opinion was that the transportation was

not interrupted at the state border line and that the gas

passed over the boundary without its movement being

arrested.

Of course in the case at bar the transportation is

interrupted for a varying length of time at the Florida

ports and this fact we submit distinguishes the case at

bar from the People’s Gas case.

The most recent case we have found is that of Pub-

lie Utilities Commission of Rhode Island v. Attleboro

Py.

Steam & Electric Co., 273 U. S. 83. The subject of

commerce dealt with was electric current and the Court

held that under the facts of the case the commerce was

interstate commerce. The Court, however, recognized

the principles for which we contend in the language

that it used in its opinion. It said, on pages 88 and 89:

‘“* * * that in the Pennsylvania Gas Co.

ease, the decision rested on the ground that the

service to the consumers for which the regulated

charge was made, was ‘essentially local,’ and the

things done were after the business in its essential-

ly national aspect had come to an end—the sup-

plying of local consumers being ‘a local business,’

even though the gas be brought from another

State, in which the local interest is paramount and

the interference with interstate commerce, if any,

indirect and of minor importance; * * *”

So in the case at bar. The national aspect of the

Oil Company’s business has come to an end when it

purchases its supplies from the selling companies and

the selling companies deliver these supplies into the

Oil Company’s tanks in the Florida ports. Thereafter

the dealings in these supplies are of concern only to

itself and its customers in Florida.

THE FLORIDA PORTS ARE IN GOOD FAITH AND FOR

BUSINESS PURPOSES POINTS OF DISTRIBU-

TION FOR THE OIL COMPANY’S PRODUCTS.

The Florida ports are nothing more nor less than

points of distribution. There the products come to an

indefinite state of rest and bulk is broken. The move-

ment out therefore is a separate and distinct distribut-

ing movement and not a continuation of the original

movement. This rule is laid down in all of the cases

involving transportation questions.

Gulf, Colorado & Santa Fe Railway Co. v. Texas,

904 U.S. 403. In that case there was involved the ques-

tion of a penalty which was to be imposed upon the

Railway Company for exacting an interstate instead of

an intrastate charge on grain shipped from Texar-

kana, Texas, to Goldthwaite, Texas, upon a bill of lad-

ing which showed upon its face only a local transporta-

tion. The Railway Company took the position, how-

ever, that the local transportation was a continuation

of the shipment from outside of the State, that the corn

started from Hudson, South Dakota, and that its desti-

nation was Goldthwaite, Texas. The Court said, how-

ever, on page 409:

‘*When the commodity transported has reached

the termination of its journey and has been deliv-

ered to the consignee, it ceases to be a subject of

interstate commerce, and the subsequent ship-

ment from the point at which it has been delivered

to another point in the State, is an intrastate ship-

ment.”’

We take it that what the Court meant in the Tex-

arkana case was that in the absence of bad faith on the

part of the shipper in an effort to take advantage of the

rate, the actual facts in regard to the movement econ-

trol. If the corn were stopped in good faith at one

point in the state and then in good faith shipped to an-

other point, the latter movement is local.

This seems to us to be the difference between the

Texarkana case and the case of Baltimore & Ohio Rail-

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road Co. v. Settle, 266 U.S. 166. That case was a trans-

portation case but it involved the question of good

faith on the part of the shipper, it appearing that the

stoppage was not for the business purposes of the

shipper but that the sole and only purpose was to ob-

tain a cheaper rate. We quote from page 167 of the

Court’s opinion:

‘*The Baltimore & Ohio Southwestern Railroad

has freight stations at Oakley and at Madisonville,

both within the city limits of Cincinnati. It duly

published, in connection with other carriers, inter-

state carload rates on lumber from southern points

to Oakley and to Madisonville. It also duly pub-

lished intrastate carload rates from Oakley to Mad-

isonville. The interstate rates to Madisonville

were higher than the interstate rates to Oakley

plus the local rate from Oakley to Madisonville.

W. H. Settle & Co., who are lumber dealers, with

a place of business at Madisonville, had lumber

shipped from the South to Oakley ; paid the freight

to that point; received at that station delivery of

the loaded cars on the team tracks or in the bulk

yard; and, without unloading any of the ears,

reshipped them within a few days to Madisonville

on local bills of lading, paying the local freight

rate. Thus, the shippers secured transportation

of the lumber to Madisonville by paying less in

freight charges than would have been payable ac-

cording to the interstate tariff, if the cars had been

billed through to Madisonville. At the time these

cars were shipped from points of origin, and con-

tinuously thereafter, it had been the intention of

the shippers that the cars should go to Madison-

ville. They were billed to Oakley and physical pos-

session was taken by the shipper there, in order to

get the benefit of the lower freight charges result-

ing from the combination of rates.’’ (Italics

ours. )

There was a deliberate attempt on the part of a

shipper to take advantage of an anomalous situation

and secure a lower freight rate than that provided for

in the tariff, but the Supreme Court refused to permit

it. But we submit that that case does not lay down

any principle contrary to the principle for which the

Oil Company contends in the case at bar. There is no

question of the Oil Company arranging its business or

shipments so as to take advantage of the lower rates.

The Oil Company’s business is conducted now as it

has been conducted for years past and there is no in-

timation of bad faith in the case at bar, such as was di-

rectly involved in the Settle case.

The Davenport case is also an important case. It

is reported as Chicago, Milwaukee & St. Paul Railway

Co. v. State of Lowa, 233 U.S. 334. There the Railroad

Commission had ordered the Railroad Company to ac-

cept shipments of coal in foreign cars at Davenport,

Iowa, and move them to other points in Iowa. The

Railroad Company claimed that the Commission had

no authority to make such an order, because the move-

ment was a movement from outside the State and con-

stituted interstate commerce. The Railroad Commis-

sion found that the city of Davenport, under the facts

in the case, had become a distributing point for coal

shipped from outside the State, and that the movements

from Davenport to other points in Iowa were intra-

state. This Court adopted the same view and stated, on

page 343:

Ty No it ee as a a a a

AN CN AEB ALTE hon LEAD PEBBLE, BS? . ewes:

“The record discloses no ground for assailing

this finding. It is undoubtedly true that the ques-

tion whether commerce is interstate or intrastate

must be determined by the essential character of

the commerce and not by mere billing or forms of

contract. (Citing cases.) But the fact that com-

modities received on interstate shipments are re-

shipped by the consignees, in the cars in which

they are received, to other points of destination,

does not necessarily establish a continuity of move-

ment or prevent the reshipment to a point within

the same State from having an independent and

intrastate character. * * *”

Of course the facts in the case at bar are much

stronger in supporting the view of intrastate com-

merce than they were in the Davenport case. The

state of rest to which the coal came in the Davenport

case is not comparable to the state of rest to which the

petroleum products come in the case at bar. The divi-

sion line between the inbound movement and _ the

outbound movement is much more distinct in the case

at bar. The fact is that in the case at bar the move-

ment outward bound from the tanks has nothing to do

with the inbound movements from the steamers and

oftentimes they are as far as three months.

The ease of Arkadelphia Co. v. St. Louis South-

western Railway Co., 249 U.S. 134, is also a transpor-

tation case, which we submit sustains the Oil Com-

pany’s contention in the case at bar. In that case the

business involved is the lumber business. It appeared

that the lumber left the woods and the bill of lading

was issued from the woods to the mill. When the lum-

ber reached the mill it was finished into barrel staves,

—" a aeraoM

stayed there over a course of several months. All of

or headings, or hoops, stacked in the yard to dry, and

these things took place in the State of Arkansas. The :

Court then goes on to say, on page 150:

“* * * The markets for the manufactured s

articles were almost altogether in other states than

Arkansas, or in foreign countries, and about nine- §

ty-five per cent. of the sale of finished articles, that ‘

is, of the total outbound shipments, were made for :

delivery at points outside the State of Arkansas, ‘

the remaining five per cent. being sold and deliv- :

ered, or shipped to points within the State of Ar-

kansas. At the time the rough material was |

shipped to the mills, the mills did not know to é

whom they would sell the finished product, or to

what points it would be shipped, but did know

that there was little market for the finished articles

in the State of Arkansas, and expected that they

would sell ninety-five per cent. of said finished

articles and ship them to points outside the State

of Arkansas.

‘It was the intention of all the claimants here-

in, at the time they shipped the rough material

into the milling points, to mill said rough material

with the object of selling the said finished product

and shipping it out as soon as practicable, and all ‘

of them knew and intended at the time they :

brought the rough material into the mill, on ae-

count of previous course of dealings in the busi-

ness, that ninety-five per cent. of the finished prod-

uct would be by them shipped to points outside the

State of Arkansas.

“The claimants paid the usual property tax to

the State of Arkansas on their stock of materials

on hand at the milling point, whether said stock

was in the rough or finished, the amount of the

tax being arrived at according to the methods in

use in the State of Arkansas by the use of an aver-

age basis.’’

repeat

Sly cs

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It is submitted that the facts stated bring the Ar-

kadelphia case extremely close to the case at bar and

the Court held of course in the Arkadelphia case that

the movement from the forest to the mill was not an

interstate movement but was separate and apart from

the outward bound movement.

So in the case at bar. While the Oil Company

knows that a large percentage of the petroleum prod-

ucts will move eventually from Port Tampa and Jack-

sonville to interior points in Florida, this knowledge

does not alter the character of the movements from the

ports, which are in their essential characteristics local

movements. Of course attention has already been

called to the fact that in Jacksonville thirteen per cent.

of all products are used there and that some fifteen to

twenty per cent. are shipped from Jacksonville to

points in Georgia, so that the movement after the prod-

ucts reach Jacksonville is uncertain in the last degree.

At Port Tampa there is no market for petroleum prod-

ucts and none are used there. At Tampa, however,

which is nine miles from Port Tampa, a certain per-

centage of the products are used, but the record does not

disclose what percentage.

The Railroad Company in the case at bar relies

largely on the case of Texas & New Orleans Railroad

Co. v. Sabine Tram Co., 227 U.S. 111. In that case it

appeared that an export firm by the name of W. A.

Powell Company bought for export from Sabine Tram

Company 500,000 feet of heavy pine lumber to be deliv-

ered at Sabine, Texas. From this point we state the

ease in the language of the Court. The Court said at

page 114:

‘“‘At the date of the transactions in question

the Sabine Tram Company was engaged in the

manufacture of lumber at its mill at Ruliff, a

station in Texas on the line of the Texarkana &

Fort Smith Railway Company. W. A. Powell

Company, Limited, was engaged in buying lum-

ber for export to different points in Europe,

through the ports of Sabine and Port Arthur,

both in the State of Texas. On August 28, 1906,

having made sales to customers for future deliv-

ery in Europe of large amounts of heavy pine lum-

ber, for the carriage of which steamships had in

part already been chartered, to fill such contracts,

W. A. Powell Co. bought of the Sabine Tram Com-

pany 500,000 feet of heavy pine lumber of certain

dimensions, to be delivered during the months of

September and October. The contract provided

for delivery either in the water at Orange, Texas,

or f. 0. b. cars at Sabine, Texas, at the option of the

seller. The seller exercised the option to deliver

at Sabine, a station on the line of the Texas & New

Orleans Railway. * * *”

Again, the Court said, on page 115:

‘“* * * Upon arrival at the station of Sa-

bine it was, by direction of the agent of Powell

Company carried without delay about a quarter

of a mile beyond the station to the dock, where

the lumber was to be unloaded. The lumber was

unloaded from the cars into water of the slip in

reach of ship’s tackle, ready for loading onto ships.

The Sabine Tram Company had no connection

with this further carriage or switching of the lum-

ber to the docks after its arrival at the station of

Sabine, but this was done solely at the instance

and under the direction of the agent of Powell

LSS PRISE SOLES NE RAE ORE EE BN

ee er tee

SEL RELL OA EDEL OY SO

‘

ra ee ee

Company. The transportation from Ruliff to Sa-

bine was entirely within the State of Texas.’’

The Court said again, on page 116:

‘““W. A. Powell Company, Limited, regarded

the shipments in controversy as export shipments,

and demanded, expected, and received, the use of

terminal facilities, additional free time and other

privileges accorded to shippers of export freight

under export tariffs.”’

| The Court said again, on page 117:

‘*All the lumber in question was in fact un-

| loaded from the cars by W. A. Powell Company,

Limited, into the Texas & New Orleans Railroad

Company’s slips, or upon its docks, in reach of

ships’ tackle and loaded into the ships previously

chartered for the purpose by W. A. Powell Com-

pany, Limited, which steamships carried same

thence direct to Europe, where this lumber was ap-

plied upon contracts for sale in Europe made be-

fore the lumber began to leave Ruliff, and made in

fact before the lumber was purchased from the

Sabine Tram Company, and before it was sawed,

and before the logs from which it was sawed left

the State of Louisiana for the Sabine Tram Com-

pany’s mill at Ruliff, in the State of Texas. One

of the ships actually waited at the docks at Sabine

for the arrival of part of this lumber which con-

stituted a portion of its cargo.

‘The ship which carried the last of this lumber

from Sabine to Europe was chartered by W. A.

Powell Company, Limited, for this purpose after

these lumber shipments began to arrive at Sabine,

but before all of the shipments had left Ruliff.”’

It is apparent from reading the above and other

quotations which we might make from the statement

of facts by the Court that the Sabine Tram Company

ae memantine meecemenemeemees

was not engaged in any local business in Sabine, had

no facilities for a local business, and never intended to

nor actually did any business of that character. The

business was essentially a foreign one and was im-

pressed with a foreign character from its inception.

In the case at bar, however, the ultimate commerce

to be served is the local commerce, and as the Court

said in the case of Public Utilities Commission y. Attle-

boro Co., supra, the business is ‘‘essentially local’? and

the things done were after the business in its essential-

ly national aspect had come to an end—the supplying of

local consumers being ‘‘a local business.”’

The Sabine Tram case was a case in which the

business transacted was essentially foreign and all of

the things done in regard to it were essentially foreign.

The Railroad Company also relies on a line of eases

involving the prosecutions under the various Anti-

Trust Acts, but it is submitted that in such class of

eases the Court will frequently extend its rule further

towards interstate commerce than it will in an ordi-

nary transportation or taxation ease.

We believe the language of the opinion in the ease

of Pennsylvania Railroad Co. vy. Knight, 192 U. 8. 21,

justifies such a statement. In that case the Court held

that the Pennsylvania Company’s cab system operated

from its station in New York was not such a compo-

nent part of its system as to constitute the traffie in its

cabs interstate commerce, yet the Court saie if the

Pennsylvania Railroad Company should have used the

agency of its cab system as a part of a conspiracy to

aK:

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SEA

;

unduly and constantly monopolize interstate passen-

ger traffic, it could and would have been brought with-

in federal restraint.

The Cireuit Court of Appeals for the Fourth Cir-

cuit in the case of Atlantic Coast Line Railroad Co. y.

Standard Oil Co. of New Jersey, supra, took the same

view of the cases involving the Anti-Trust Acts.

We submit therefore that the cases of Stafford vy.

Wallace, 258 U. 8S. 495; Binderup v. Pathe Exchange,

263 U. S. 291, and Lemke, Attorney General, v. Far-

mers Grain Co., 258 U. 8S. 50, are not important in the

discussion of the question involved in the case at bar.

The Binderup case was a conspiracy case and in order

to break up the combination the Supreme Court held

that the facts presented constituted interstate com-

merce. In the Stafford case the facts involved a con

spiracy by the Meat Trust. The Court held that the

facts constituted interstate commerce. Also the Lemke

ease, involving the Grain Futures Act, was disposed of

in the same way.

Under authority of the ‘transportation cases which

we have cited under this heading, we submit that the

storage tanks and warehouses at the Florida ports are

essential equipment for the carrving on of the Oil Com-

pany’s business in Florida. The initial movement ends

when the products reach these tanks and warehouses.

Thereafter the movement is a distributing movement,

separate and distinct from the original movement.

We believe that an illustration taken from another

business would be helpful. We have in Louisville a

oer

re er a Oe Oe Seem ee ee ee Se ee Se

large hardware company known as the Belknap Hard-

ware & Manufacturing Company. This company main-

tains a number of very large warehouses in the city of

Louisville. It purchases large quantities of hardware

from Pittsburg and other eastern cities. A large pro-

portion of these products come down the Ohio River to

Louisville on barges. The products are then unloaded

and placed in the hardware company’s warehouses.

The hardware company holds these products then sub-

ject to the demands of its local business in Kentucky

and in the other southern States. Of course the hard-

ware company realizes fully that the hardware will not

stop permanently in the warehouses in Louisville. It

realizes that part of its hardware will move to other

and smaller cities in the State of Kentucky. We do not

helieve, however, that this intention or this knowledge

on the part of the Belknap Company would character-

ize the movement out of its warehouses to the smaller

cities in Kentucky as part of the original movement

into the warehouse and make of it an interstate move-

ment. The movement from the warehouse in Louisville

to the small town in Kentucky is a separate and distinct

movement from the inbound movement and is a State

movement.

Furthermore, the fact that a steady and constant

stream of hardware is constantly coming down the Ohio

River by barge and passing through the warehouses of

the Belknap Company at Louisville to the smaller towns

in Kentucky does not impress the movement from

Louisville to the smaller towns as a continuation of the

PEEING LY IOLE, VOIR ITLL ROSIE

IPSS

weeent ni. win

PRED. PR RR de ACTIN ALITY, Bt 0g» wo

original movement into the warehouse. Louisville is a

distributing point for the hardware. The Florida ports

are distributing points for the Oil Company’s petrole-

um products. The movement in to the distributing

points is one movement; the stay there is indefinite, and

the movement out is another and separate movement.

It is submitted that the case at bar cannot be distin-

guished from the illustration which we have drawn. It

is further submitted that the movement of the hard-

ware from the warehouse in Louisville to the smaller

towns in Kentucky and the movement from the Florida

ports of the petroleum products to interior points in

Florida are both State movements.

The illustration does not apply exactly to the Oil

Company’s method of conducting its fuel oil business

because fuel oil moves into Florida on contracts of sale

previously made and it has always been conceded by

the Oil Company that its case with respect to fuel oil

is not as strong as the other branches of its case.

THE TRAFFIC IN FUEL OIL IS ALSO STATE

TRAFFIC.

As has already been stated several times, the fuel

oil business is handled somewhat differently from the

other products. Ninety-five per cent of the fuel oil

comes into the State of Florida on contracts previously

made for its sale. A sample copy of these contracts was

put into the record (R. 121), and showed that the pur-

chaser contracted for 50,000 barrels of fuel oil, deliver-

able over a year’s time, at the rate of about 4,000 bar-

rels per month. The testimony in regard to these con-

tracts was that the customers were not held to regular

deliveries, but that the contracts as performed were

in reality requirement contracts. As long as the cus-

tomer acted in good faith he was allowed to take more

or less than the amount stated in the contract, that the

deliveries were not made in regular quantities but were

irregular and dependent upon the business of the custo-

mer (R. 123). Furthermore it appears that a small

proportion (approximately five per cent) of the fuel

oil is held subject to current demands and that there is

no separation between the two classes of fuel oil. It all

comes in on the same steamer, goes into the same tank

and comes out of the same tank. When a cargo is re-

ceived no one can tell where it is going or when it is

going (R. 123). While the Oil Company admits that

its case in regard to fuel oil is different and somewhat

weaker than the situation in regard to its other prod-

ucts, yet it is submitted that the fuel oil also moves in

intrastate commerce in the State of Florida after it is

delivered in the storage tanks. No one can tell when

fuel oil is pumped into the tanks how long it will stay

there, or where it will go, or to what customer, or in

what quantity, and the movement out of the port by rail

is separate and distinct from the movement into the

port by boat. The Oil Company’s case with regard to

fuel oil is weaker only because ninety-five per cent of

the fuel oil is sold before it comes to rest in the tanks

and is not held subject to calls of local business as the

other products are.

;

¥ |

OLESEN OLE fT

LTA PE TR ae

The Interstate Commerce Commission had before it

a case with regard to fuel oil which we submit is prac-

tically the same as the case at bar, and it decided that

the movement from the ports to interior points in the

State was a state movement. Washington Dehydrated

Food Co. v. Great Northern Railway Co., 102 I. C. C.

363. There the Food Company had two places of busi-

ness in the State of Washington. It made a complaint

to the Interstate Commerce Commission about rates

from a port point in the State of Washington to in-

terior points in the same State. The Commission re-

fused to take jurisdiction, however, upon the ground

that the movements were intrastate movements. It ap-

peared that the oil was shipped without any previous

rail haul from California ports to Richmond Beach

in tank steamers owned and operated by the Oil Com-

pany exclusively for the transportation of its own com-

modities. No tariffs were filed by the Oil Company for

such service and the tank steamers did not operate on

any regular schedule. When the vessel arrived at

Richmond Beach the oil was discharged through the

pipe line into the storage tanks and thereafter rail

transportation took place from Richmond Beach to

interior points. The traffic involved is exactly like the

traffic in the ease at bar and, as already stated, the In-

terstate Commerce Commission took the view that the

movement from the port to interior points was intra-

state commerce.

The Railroad Company relies upon two other cases

decided by the Interstate Commerce Commission. One

iss ae

———

of them was International Agricultural Corporation v.

Director General, as Agent of the Seaboard Air Line,

60 I. C. C. 726, which was a case dealing with fuel oil,

but in that case the question of jurisdiction was not

raised, the jurisdictional question being conceded by all

parties to the proceeding. f

The second case relied upon by the Railroad Com- '

pany was that of Alexander Grocery Co. v. Beaumont, ;

Sour Lake & Western Railway Co., 104 I. C. C. 155. 6

That case involved the coffee business. There is not a |

full statement in the opinion of how the coffee busi- f

ness is conducted, but the Commission simply concludes ‘

that the temporary storage of coffee at the ports did ;

not divest the traffic in that commodity of its foreign

character or deprive the Commission of its jurisdie-

tion.

The Railroad Company also refers to the ease of

Tampa Fuel Co. v. Atlantic Coast Line, 43 I. C. C. 231,

but it is submitted that that case is an excellent ex-

ample of a through movement. The complainant in

that case was a coal dealer in Baltimore and sold coal

to the phosphate rock producers in the Bone Valley

District of Florida. It had no place of business in

Florida and so far as the record shows did no local

business. The coal shipments originated at Baltimore

and other North Atlantic ports and moved in ocean

vessels directly to Port Tampa. Before the arrival of

the vessel the Atlantic Coast Line’s agents were notified

of the expected arrival and what part of the cargo was

to go to Tampa and what portion to the Bone Valley

District. The coal was unloaded directly onto the cars

a eae ae

from the boats without any stoppage of the movement,

and went on to its ultimate destination. The Atlantic

Coast Line agent did the unloading from the vessel to

the railroad cars and billed the coal either to Tampa

or Bone Valley, according to instructions given by the

shipper before the vessel ever reached Port Tampa.

The Commission held that the movement out by rail

was simply a continuation of the boat movement. A

definite arrangement for a continuous movement was

made in advance and there was no actual or construe-

tive stoppage of the traffic at the port. In fact the

whole arrangement was designed to avoid unnecessary

stoppage. Under those circumstances there is no doubt

that the movement from Port Tampa to the Bone Val-

ley District was part of a definite through movement

from Baltimore to the Bone Valley District, and the

Commission so held.

One of the Railroad Company’s witnesses testified

that frequently oil was coming out of the tanks at the

same time it was being pumped into them by the ship

(R. 128). Upon cross-examination, however, it devel-

oped that in some months the Oil Company has only

two steamers coming in and in some months four and

occasionally as many as five in one month, that some of

the steamers take one day to unload and others pos-

sibly two days (R. 129, 130). In a month therefore

in which the Oil Company only received two steamers

and it so happened that these steamers only took a day

each to unload, there would only be two days on which

steamers were being unloaded at the same time tank

MOET

& DIS OLA I AO LED AMES ABATE [BABAR LD SA ALO

cars were being filled, assuming that tank cars were

filled every day. We do not believe this point is im-

portant. We only mention it because some point is

made of it in the Railroad Company’s brief. The im-

portant fact is that the storage tanks are of far greater

capacity than any steamer serving the trade and that

large reserve supplies of petroleum products are stored

in the tanks for indefinite periods of time.

CONCLUSION.

The Oil Company submits the following summari-

zation of its case:

FIRST: The Oil Company does a strictly local

business in Florida. It must have products and facili-

ties to serve that business. Its products are petroleum

products, none of which are produced in Florida. Its

facilities are storage tanks and warehouses at the ports,

and bulk stations, drive-in service stations, tank wagons

and trucks at the interior points.

LOSE PLE NOLIN ED STE Oe a

SECOND: The petroleum products are purchased

from companies outside of the state—the fuel oil from

Tampico, Mexico, and the other products from Baton

Rouge, Louisiana. They move into the Florida ports

in tank steamers, private carriers, under the direction

and control of the selling companies. The Oil Com-

pany itself has nothing to do with this movement.

THIRD: After the vessels are docked in the Flor-

ida ports the products are pumped into the Oil Com-

pany’s storage tanks. There the title passes and the

Oil Company takes possession. Up to this point the

‘ PEE Te WS ‘

products have never been in the hands of a carrier and

the Railroad Company has had nothing to do with the

products or the movement.

FOURTH: Bulk is broken and the products then

remain in the tanks for varying and_ indefinite

lengths of time. They become mixed with the

general mass of Florida property and are sub-

jected to state taxation there. The stay in

the tanks varies from a short time to a long time, de-

pending upon the Oil Company’s local business in

Florida. Thereafter, it may be within one week or it

may be within three months, the contract of carriage

is made with the Railroad Company. Then for the

first time does the Railroad Company appear in the

transaction. It hauls all the products from Port

Tampa to interior points in Florida. It hauls twenty

or thirty per cent. of the products, excluding fuel oil

from Jacksonville to points in Southern Georgia and

Alabama on an interstate rate. It hauls approximate-

ly sixty-two per cent. to interior points in Florida to

serve the local business, and the balance, approximate-

ly thirteen per cent., is consumed in Jacksonville.

FIFTH: No separation as between the products

moving in the various ways is made in the tanks. At

the time the products come into the tanks no one knows

in how many shipments they will leave, or to what |

points they will go, or to whom, or in what quantities. |

One cargo of oil may remain in the tanks for three

months, or it may be broken up and part of it may

leave in one week and the rest of the cargo in three |

IN - : ei

————

months, or it may move away in a solid trainload of

tank cars, or it may be broken up into a hundred or five

hundred different shipments to various interior points.

To say that under these circumstances the intrastate

movement out of the tanks is a continuation of the in-

ward bound movement in the vessels violates the facts.

The Oil Company submits the following principles

deducted from the facts:

FIRST: The Oil Company’s business in Florida is

a local business and the traffic rates to be applied to

such a business are the intrastate rates and not the in-

terstate rates.

SECOND: The indefinite stoppage in the tanks is

for the bona fide business purposes of the Oil Company

and not incident to the transportation, and the further

movement within the State is state commerce.

THIRD: The traffic, although from outside the

State, having come to a state of rest in the State of

Florida in such a manner as to form part of the stock in

trade of the Oil Company there, the further movement

Within the State is state commerce and not interstate

commerce.

FOURTH: The movement to the storage tanks at

the ports is a gathering movement made to serve a lo-

cal business but the final movement does not start until

the contract of carriage is made with the Railroad

Company and shipments delivered to that Company.

The final movement within the State is an intrastate

movement.

SRR eae

EEN A ERNE FOE EIN INCRE S TY

CENTS RTA PIII Tp US

Silents Rab NESSES AES EIR BAS LR RE EL BA PEP as os

FIFTH: A general intention upon the part of the

Oil Company of shipping all or part of its produets

from the ports to interior points in Florida does not

make the final movement a part of the original move-

ment, because the only known destination at the time

of the original movement is the Florida port. The

movement thereafter is uncertain up to the time a con-

tract of shipment is made with the Railroad Company,

The outbound intrastate movement from the tanks is

definitely and clearly separated from the inbound

movement into the tanks.

Finally, it is submitted that the Oil Company’s

business in Florida is a local business and that the

transportation rates to serve that business should be

the state rates.

It is submitted that in so far as the decree of the

Circuit Court of Appeals applied the intrastate rates

it should be affirmed, but that in so far as it applied

the interstate rates to the traffic it should be reversed.

Respectfully submitted,

CHARLES G. MIDDLETON,

Epwarp P. HUMPHREY,

WILuiAM W. CRAWFORD,

Louisville, Kentucky,

Counsel for Standard Oil Company (In-

corporated in Kentucky), Respondent

in No. 176, Petitioner in No. 177.

a. = = 2 & 2S & 2 BO mn oD ®Y oOo mM rs _s +

aes R TERM I 1927.

meaish Coast Linn Rarroan at:

iesganteces Seis Petitions’, :

i ie

Sinead, “On Conae or”?

TUOKY, =. }

= ate 1 rip 3

Stata On.’ Gedo’ Incor-

paged in Sremtucky,.

' Petitioner,

4 ~ . ‘ ame

;

Amarr Coasr Live Raar.noap

~ Comp. ANY. Oe + 99

BRIEF OF COUNSEL FOR THE-STATR OF

' FLORIDA “AND ITS RAILROAD. COM:

“MISSION IN CASES No. 128 AND 129

“AS AMICI CURIAE”

FRED H. DAVIS, :

Attorney General, f : |

Pecrba T. TURNBULL, ” SSOP niga

Gente Commeel: to Railroad. {Amici Cumuar, »

' Commission.\.

INDEX

Page

Similarity of Florida Cases Pending in this

Court

Florida Rates First Questioned June 15, 1923 4

Basis of Decision of Supreme Court of Florida 5

Similarity of View of United States Circuit

Court of Appeals of the Fourth Cireuit... 7

Distinction Between Transportation to Point

of Distribution and Beyond.............. 8

Principal Cases Relied on by Petitioners... ... 14

’

- ore rad

TABLE OF CASES

Page

Atlantie Coast Line R. R. Co.—Seaboard Air

Line Rwy. Co. vs. Standard Oil Co. of New

woreey, 12 Fed. Caee) BSL... cesccccccsus 8

Baltimore & Ohio S. W. R. R. Co. vs. Settle,

Be a ow cae eae s eee eave 9,14

Bracht vs. San Antonio Ete. Rwy. Co., 254 U.S

os wie sees seb ek eek eet ee 12

Chicago, Milwaukee & St. Paul Rwy. Co. vs.

State of Iowa, 233 U. S. 334.............. 4)

Douglas Co. vs. Southern Rwy. Co., 216 IIL.

ME Sve wae Vind sh coe earn eee 16

Fuller & Co. vs. Southern Pacifie Co., 128

i ee SOR Ws o's Wha sine ac deat be yas 13

General Oil Co. vs. Crain, 209 U.S. 344....... 12

Gulf, Colorado & Santa Fe Rwy. Co. vs. Texas,

err re me re rey ore 1]

International Agricultural Corp. vs. The Di-

rector General, 60 I. C. C. 726............ 13

Pennsylvania R. R. vs. Clark Coal Co., 238 U.S.

PRET eee eee CEOS Te ere 15

R. R. Commission vs. Worthington, 225 U.S. 101 15

Stafford vs. Wallace, 258 U.S. 495............ 16

Texas Ete. R. R. Co. vs. Sabine Tram Co., 227

ie ee Motes wero ne os aA SALAW RTs oes ees 14

Washington Dehydrated Feed Co. vs. Great

Northern R. Co., 102 I. C. C. 363......... 12

Florida Cases Reported in 109 Sou. Rep. 656

PER OR I IRE I LOOTED Mt GS SVOPE MIE I, BORE

Baa aa SR A AR ESR RN LD 8 Cre TIRES RMDP AOR RIEL ILA I, a

: In the

Supreme Court of the United States

de. Aruantic Coast Ling Rat roap

ss CoMPANY, Petitioner, No. 872.

Vs.

October Term, j

Sranparp Or Company oF 1926. 3

aes KENTUCKY, Respondent. i

5, :

1s Hi

ie Sranparp Ou. Company, a Cor- f

bs. poration of Kentucky o , ;

Fie = Perr No. 873.

fg Petitioner, :

m vs. October Term, .

s 1926, ‘

Die Atiantic Coast Line Ratmroap e

og CoMPANY, Respondent. &

ea ¢

me ;

BRIEF OF COUNSEL FOR THE RESPOND-

ENTS IN CASES No. 128 AND No. 129, OC-

TOBER TERM, 1927, AS AMICI CURIAE,

This brief is filed in the interest of the State of 6

Florida and its Railroad Commission, respondents ;

in the cases of Seaboard Air Line Railway Company, :

Petitioner, vs. State of Florida ex rel, ete., and At- ;

lantic Coast Line Railroad Company, Petitioner, vs. bE

State of Florida ex rel, ete., Nos. 128 and 129. E

Those cases arose upon petitions for writ of ¢

mandamus to enforce the rate prescribed by State

OR,

authority for the transportation of petroleum and

petroleum products from Jacksonville, Tampa and

Port Tampa to divers points within the State of

Florida. Those rates are the same rates involved

in the case at bar.

The mandamus cases were instituted by the Rail-

road Commission in the interest of the public gen-

erally, and the case made by the pleadings was not

confined to the operation of any one oil company,

but extended to the business of the entire industry

at the ports mentioned and throughout the State.

It was upon the case made in those pleadings that

the judgment of the Supreme Court of Florida

awarding a peremptory writ) of mandamus was

based.

Admittedly a very large portion of the commodi-

ties in question are brought to the ports in ships—

some are brought by rail. In either event they are

placed in storage tanks or wareliouses and from

these tanks and warehouses they are distributed by

rail and tank wagons to the bulk marketing stations,

retailers and consumers throughout the State, and in

some instances to points beyond the State.

In the case at bar, a witness for the railroad com-

pany testified as follows:

“The flow of oil through the tanks is prac-

tically continuous. They are loading tank cars

through the receiving tanks continuously

throughout every day in the year, except some

Sundays. The Standard Oil Company does not

do that on every Sunday; but it is practically

continuous from the tanks. Frequently oil is

coming out of the tanks at the same time that it

is being pumped into them by the ship.’’ (Ree.

p. 128).

The witness speaks with some generality of

statement. An accurate statement of the use of the

tanks is contained in the elaborate compilations set

forth in the record, pages 63 et seq. The testimony

of the witness does not tell the whole story. It may

be true that the cars are often drawing petroleum

from the tanks at the very time that a ship is pump-

ing petroleum into the tanks. It must be so unless

all other work were suspended during the unloading

of the ship. But the essential fact is that immense

quantities of petroleum are from time to time accu-

mulated in these tanks to serve the exigencies of the

market.

Thus of fuel oil there was on hand in Port Tampa

on December 31, 1924, 58,837 barrels, and on April

30, 1925, 105,084 barrels, and at the end of December,

1925, 33,872 barrels. Of gasoline there was on hand

at Port Tampa on the 31st of December, 1924, 75,107

barrels; on September 80, 1925, but 11,277 barrels,

and on the Sist of December, 32,735 barrels. Of fire

proof oil there was on hand at Port Tampa on

December 51, 1924, 16,709 barrels; on September 30,

1925, 260 barrels, and on December 31, 1925, 3,890

barrels. (Ree. pp. 63 to 67). Similar variations are

shown for Jacksonville. (Ree. pp. 77 to 81).

“We hold these products subject to the de-

mands of our customers and business. The vol-

ume of business shifts with the seasons of the

year and in the different departments.’’ (Ree.

p. 62).

ABS

In each of the cases the question to be determined

is Whether the rates governing this rail movement

from the tanks and warehouses to the interior points

within the State are controlled by the law of the

State. Until June 15th, 1923, the State rates were

generally recognized. They are still recognized by

the Louisville & Nashville Railroad, the Southern

Railway Company and the Florida Kast Coast Rail-

way Company. (Ree. p. 114).

It appears from the record in this case that a

very large part of the fuel oil is moved in tank cars

to the larger consumers under annual contracts to

supply given quantities, or requirement contracts.

(Ree. pp. 120 to 123). The Court of Aj peals found

that 95°, of the fuel oil distributed from Port Tampa

is so sold, and held shipments of fuel oil from

Port Tampa to interior points not subject to the

State rate. (Ree. p. 134). It held as to the fuel

oil distributed from Jacksonville that the record was

not sufficient and remitted the case for further in-

vestigation. (Ree. p. 139).

A large part of the gasoline and kerosene is trans-

ported by rail from the tanks to the bulk marketing

stations at divers points, 123 in number. <A smaller

part is distributed among the retailers by tank

wagons. The Court of Appeals found that at Jack-

sonville 13%, of the gasoline and kerosene received

into the tanks is used locally at Jacksonville and

never gets any further. It therefore decided that all

gasoline and kerosene distributed from Jacksonville

was subject to the State rate. (Ree. p. 139). It

held, as to the gasoline and kerosene distributed

re.

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from Port Tampa, that the gasoline and kerosene

was not subject to the State rate.

Lubricating oils are distributed from Jackson-

ville and Tampa by tank wagons, or in barrels or

other small containers, and were held by the Court

of Appeals to be subject to the State rate.

In the mandamus cases, the case was considered

in its larger aspect and not with respect to particu-

lar percentages. In this view of the case, Ellis, J.,

says:

‘*The cause and purpose of the deiay at Jack-

sonville and Tampa of the petroleum and petro-

leum products of the oil companies is the de-

termining factor by which it may be determined

whether the reshipment of the products at those

points from storage tanks and warehouses is or

is not a continuation of the original interstate

movement.

“* * * Krom anything averred to the con-

trary, the oil companies retain the ownership of

all the products arriving at the ports; that

storage there is for their convenience and sub-

sequent disposition of the commodity; that all,

or any portion, of it may be resold in fact and

diverted from the original destination of it;

that it is held there for the profit of the com-

panies by sales of a larger portion, or all of it,

to customers with whom at the time of original

shipment they have no contract.

‘It affirmatively appears from the allega-

tions of the writs and the averment of the

answers that actual transportation of the pe-

troleum and petroleum products ceases at

Tampa and Jacksonville; that the warehouses

and storage tanks are the property of the oil

“x

companies; that when placed in the storage

tanks and warehouses of the oil companies it is

withdrawn from the carriers which transperted

it to Florida; that subsequent movements are

the result of new contracts of carriage with the

respondents and the time of such subsequent

movements is indefinite and dependent upon the

convenience and pleasure of the oil companies;

that an indeterminate quantity of the products

(fol. 67), brought in any one shipment to

Florida may be disposed of by the companies to

persons other than those for whom the particu-

lar shipment was originally intended.

‘‘In this view of the facts we are of the

opinion that the petroleum and_ petroleum

products stored in storage tanks and ware-

houses at Jacksonville and Tampa come to rest

there; that the interstate movement ceases and

that subsequent shipments of it to points within

the State are intrastate movements and subject

to the rates prescribed by the relators.’’ (Ree.

in cases Nos. 128 and 129, p. 61).

These same facts are shown by the testimony in

the ease at bar:

“oe * * We do not use any particular tanks

for products going to any particular section, ee

All of our gasoline tanks are lumped, and all of ;

our refined oil tanks are lumped, ete. When .

any particular cargo of either gasoline or re-

fined oil is pumped into a tank, nobody knows

where it is going.’’ (Ree. p. 90).

In the course of its opinion in the case of Atlan- ae

‘ie Coast Line Railroad Company and Seaboard Air =

Line Railway Company vs. Standard Oil Company a

7 t

of New Jersey, 12 Ped. (2nd) 541-544, the Court of .

Appeals for the Fourth Circuit says: :

ve * *§ We regard it as relatively unim-

portant that a part of the oil and gasoline re-

mained in Wilmington, that a large percentage

thereof was shipped to substations of complain-

ant instead of direct to purchasers, that the

shipments from Wilmington to the substations

were directed by the manager of the Charlotte

Branch who had charge of the Wilmington

storage plant, or that the shipments to tank car

customers Were in some instances made under

continuing contracts. The determining factors

in thy case are that the cargo shipments from

without the State ended at Wilmington; that the

large quantities of oil and gasoline brought in

by the tank steamers, came to rest and lost their

identity there in complainant’s storage tanks,

and were mingled with its general stock; and

that the shipments from Wilmington were made

as a distribution from the general stock and not

as a mere means of continuing the transporta-

tion begun with the tank steamers. These

shipments were, therefore, independent move-

ments. They cannot be distinguished in prin-

ciple from shipments made by the owner of a

chain of stores, who ships a ecarload of shoes

from without the State to a central warehouse,

and later ships them out by the box to his va-

rious stores as the needs of his trade require.

In such case the governing factor is not the fact

that the bulk of the car is broken, or that there

is a new billing of the goods, or that the mer-

chant may or may not have intended to reship

them, but the fact that the shipments out con-

stitute new movements, which are separate and

distinct from the movement to the warehouse.’

Sh FD Pas

EEROON EIS

Cereals and their products move in a seasonly

continuous flow from the farms to the consumers’

tables. But it would be whimsical to consider the

commodity a subject of Federal control as it passes

through its course from the farm to the consumer’s

table; while it rests in the farmer’s barn, in the grain

dealer’s elevator, the storage bins at the mill, the

jobber’s warehouse, the retailer’s store or the

baker’s store room.

‘“*Commerce with foreign nations and among the

several States’? includes not only traffic but also

transportation by land and water, and every means

and appliance directly employed in carrying it on.

But the essential thing is traffic, and the other things

are included because they are incidental. Where

the transaction in hand is merely incidental to the

traffic between the States it is subject to Federal

control. Where it is in substance an incident of dis-

tribution within the State, it is not a concern of the

Federal Congress.

This is pointed out in the opinion of the United

States Circuit Court of Appeals for the Fourth Cir-

cuit in Atlantie Coast Line R. Co.—Seaboard Air

Line Ry. Co. vs. Standard Oil Co. of New Jersey,

12 Fed. (2nd), 541, 547 and 548:

‘‘Here the journey of the cargo of oil as a

cargo had ended. It had come to rest at a point

of distribution, and its identity had been lost;

and while, as said in the Settle case, further

movements of a large part of the oil constituting

the cargoes was contemplated, it was contem-

plated by way of distribution, and not as a con-

tinuation of the original movement, as in the

cases relied on by defendants.

‘‘In Champlain Co. vs. Brattleboro, supra,

Chief Justice Taft distinguished a temporary

interruption of an interstate journey from

transportation to a central point preparatory

to shipment in interstate commerce such as was

dealt with in Coe vs. Errol, 116 U.S. 517; and,

in the course of his opinion, he said:

‘¢ <Tf the interruptions are only to pro-

mote the safe and convenient transit, then

the continuity of the interstate trip is not

broken. * * * Interstate continuity of

transit is to be determined by a considera-

tion of the various factors of the situation.

Chief among these are the intention of the

owner, the control he retains to change des-

tination, the agency by which the transit

is effected, the actual continuity of the

transportation, and the oceasion or pur-

pose of the interruption.’ ”’

The distinction between transportation to the

point of distribution and transportation beyond has

been uniformly recognized in decisions of his Court.

‘*The instances are many where a local ship-

ment follows quickly upon an interstate ship-

ment and yet is not to be deemed part of it, even

though some further shipment was contem-

plated when the original movement began.

Shipments to and from distributing points often

present this situation, if the applicable tariffs do

not confer reconsignment or transit privileges.”’

260 U.S. 173.

Thus in Chicago, Milwaukee and St. Paul Rail-

way Company vs. State of Lowa, 233 U.S. 334 and

1) err

PK, Ae so wd Neat AS tat ate

342, in which was involved the validity of an order

of the State Railroad Commission requirng the

handing of coal out of Davenport in the very cars

in which it was brought from outside the State:

‘**The Railroad Commission held that the

transportation desired from Davenport ‘was

a purely intrastate service, saying: ‘Under the

admitted facts, the City of Davenport became a

distributing point for coal shipped by the con-

signor. The certainty in regard to the ship-

ments of coal ended at Davenport. The point

where the same was to be shipped beyond

Davenport, if at all, was determined after the

arrival of the coal at Davenport. The coal was

under the control of the consignee and he could

sell it in transit or at Davenport or reconsign it

to a point on respondent’s railway, or any other

railway, at his own discretion.” Upon the trial

of the present suit in the State Court, the State

introduced in evidence the proceedings, decision

and order of the Commission, and without fur-

ther evidence both parties rested. The Su-

preme Court of the State took the same view of

the facts that the Commission had taken and

accordingly held that the shipments were in-

trastate. The Court said that the facts showed

that the coal was originally consigned to the

coal company in Davenport, that it was there

held until sales were made, that the consignee

had taken delivery, paying the freight to the

initial carrier and assuming full control.’’ 233

U.S. 343.

This Court in its opinion said further:

‘‘It is undoubtedly true that the question

whether commerce is interstate or intrastate

must be determined by the essential character

——————— b 4

PET,

11 é

of the commerce and not by mere billing or

forms of contract. Ohio Railroad Commission

vs. Worthington, 225 U.S. 101; Texas & N. O.

R. R. Co. vs. Sabine Tram Co., 227 U.S. 111;

Railroad Commission of Louisiana vs. Texas &

Pacific Rwy. Co., 229 U.S. 336. But the fact

that commodities received on interstate ship-

ments are reshipped by the consignees, in the

cars in which they are received to other points

of destination, does not necessarily estabiish a

Ty continuity of movement or prevent the reship-

cS ment to a point within the same State from hav-

a ing an independent and intrastate character.

Gulf, Colorado & Santa Fe Rwy. Co. vs. Texas,

204 U.S. 403; Ohio Railroad Commission vs.

Worthington, 225 U.S. 101, 109; Texas & N. O.

R. R. Co. vs. Sabine Tram Co., 227 U.S. 111,

129, 130. The question is with respect to the

a nature of the actual movement in the particular

es ‘ase; and we are unable to say upon this record

es that the State Court has improperly character-

ized the traffic in question here.’? 233 U.S. 343,

344.

Thus in Gulf, Colorado and Santa Fe Rwy. Co.

vs. Texas, 204 U.S. 403, a car load of corn was

shipped from Hudson, South Dakota, to Texarkana,

Texas. While in transit it was sold for delivery at

Goldthwaite, Texas, and the corn having reached

Texarkana was shipped out five or six days later

under original seals and without breaking packages.

The movement from Texarkana to Goldthwaite was

held to be subject to the State rate.

In Baltimore, ete., R. R. Co. vs. Settle, 260 U.S.

173, this Court said:

““The decision in Gulf, Colorado & Santa Fe

PE POI EE ihe dette SR 20

ON a ee Pose WA La

Ry. Co. vs. Texas, 204 U.S. 403, relied upon by

defendants in error, is entirely consistent with

these later decisions of this Court, although

some expressions in the opinion are not.’’

Indeed, it was made the basis of the decision in

the case of Bracht vs. San Antonio etc. Ry. Co., 254

U.S. 489.

In General Oil Co. vs. Crain, 209 U.S. 211, 213,

the crucial facts appear in the following paragraph

from the statement by the Court:

“* * * Kor some years plaintiff has been

engaged in business at Memphis, and has made

that city not only a place of business at which to

sell oil to the citizens and residents of Tennes-

see, but also has made it one of its distributing

points to which its oils are shipped from Penn-

sylvana and Ohio in tank cars, from which cars

the oils are unloaded into various tanks, buar-

rels and other receptacles for the purpose of

being forwarded to its customers in Arkansas,

Louisiana and Mississippi, in which States it

has many regular customers from whom it al-

ways has on hand many unfilled orders for oil

to be delivered as soon as possible or con-

venient.’’

This oil was held to be subject to the inspection

laws of the State of Tennessee.

The rules of the Interstate Commerce Commis-

sion are in accord with the decision of the Circuit

Court of Appeals for the Fourth Cireuit and the de-

cision of the Supreme Court of Florida.

Washington Dehydrated Feed Co. vs. Great

Northern R. Company, decided Sept. 22,

1925, 102 1. C. C. 363.

Fuller & Co. vs. Southern Pacifie Co., 128

I. C. C. 199.

In the case of the International Agricultural Cor-

poration vs. The Director General, 60 I. C. C. 726,

the defendants for reasons sufficient to themselves

conceded the jurisdiction of the Interstate Com-

merce Commission.

The decision of the Cireuit Court of Appeals for

the Sixth Circuit, in the case at bar, overlooks a dis-

tinction pointed out in the opinion of the Circuit

Court of Appeals for the Fourth Circuit, in Atlantic

Coast Line R. Co.—Seaboard Air Line Ry. Co. vs.

Standard Oil Co. of New Jersey (12 Fed. (2nd), 541,

547 and 548), namely:

In a certain class of cases the traffic in commod-

ities was directly involved. In another class of cases

the incidental transportation of the commodities was

alone involved.

In the opinion of the Cireuit Court of Appeals

for the Fourth Circuit the Court said:

“** * That there is a difference in the prin-

ciples applied to the two classes of cases, is ap-

parent at a glance. In the one case it is the es-

sential nature of the business which governs;

in the other it is the essential nature of the

particular transportation involved. If a group

of merchants buying and selling goods in inter-

state commerce should conspire to raise prices,

they would unquestionably be amenable to pros-

ecution under the Sherman Act; but this would

not authorize a transportation company to

charge interstate rates on a shipment of goods

which one of the merchants might make to an-

Cy hag eae

Se NGO ENGR SOE MERION ES. VRS AIRE DG . 22 |

other within the same State. As said by Judge

Sibley in 4. C. L. RL R. vs. RoR. Commission

of Georgia, 281 Fed. 321:

‘** While in the business of buying and

selling goods, interstate commerce may

reach all the way from first purchase to

final delivery, interstate transportation for

the purpose of determining the rate to be

charged may have narrower limits.’ Com-

pare Loewe vs. Lawlor, 208 U.S. at 301

with ‘rkadelphia Milling Co. vs. St. Louis

S.W. Ry. Co., 249 U.S. at 151.”’

PRINCIPAL CASES RELIED ON BY

PETITIONERS

In the case of Texas ete. R. R. Co. vs. Sabine

Tram Company, 227 U.S. 111, referred to as the

Sabine Tram case, it was perfectly apparent that the

transfer at Sabine was but a step in the unbroken

movement of the lumber to foreign ports.

“Upon the arrival of the lumber at Sabine it

was carried without delay beyond and unloaded

into the water in reach of the ship's tackle.’

227 U.S. 126.

In Baltimore & Ohio R. Ro. Co. vs. Settle, 260 0.

S. 166, the transfer at Oakley was obviously a de

vice to evade the interstate rates. **The shippers

had no place of business at Oakley. The delivery

there was the completion of one stage in the con-

templated movement to Madisonville.” 260 U.S.

169.

“The mere fact that cars received on inter-

SRS CRUE RG TIDE? SPARE NBEO LODO SEAS ODN isc ogee

SEE pees oe a |

state movement are reshipped by the consignee

after a brief interval to another point, does not,

of course, establish an essential continuity of

movement to the latter point. The reshipment,

although immediate, may be an independent in-

trastate movement. The instances are many

where a local shipment follows quickly upon an

interstate shipment and yet is not to be deemed

part of it, even though some further shipment

was contemplated when the original movement

hegan. Shipments to and from distributing

points often present this situation, if the appli-

eable tariffs do not confer reconsignment or

transit privileges.’? 260 U.S. 173.

And in R. R. Commission vs. Worthington, 225

U.S. 101, there was direct attack upon a State Com-

mission rate that actually covered the trimming and

distributing in the hold of vessels destined for ports

without the State.

“By every fair test the transportation of

this coal from the mine to the upper lake ports

ix an interstate carriage, intended by the parties

to be such, and the rate fixed by the Commission

which is in controversy here is applicable alone

to coal which is thus, from the beginning to the

end of its transportation, in interstate car-

riage, and such rate is intended to and does

cover an integral part of that carriage, the

transportation from the mine to the Lake Krie

port, the placing upon the vessel and the trim-

ming or distributing in the hold, if required, so

that the vessel may complete such interstate

v~arriage.’? 225 U.S. 108-109.

In Pennsylvania R. R. vs. Clark Coal Co., 238

U.S. 468, the question involved was ear distribu-

Beers rs

i 3 SA SU LOPEE LARD PCRS AT LP oa on Me whead hone ” Sarre Gah: nde 7

tion for the transportation of coal. *** * * for the

purpose of filling contracts with purchasers in other

States, coal is dclivered f. o. b. at the mines for

transportation to such purchasers.’

In Stafford vs. Wallace, 258 U.S. 495, the ques-

tion arose upon the Stock Yards Act, **The only

question’’ being ** whether the business done in the

stockyards between the receipt of the live stock in

the yards and the shipment of them therefrom is a

part of interstate commerce, or is so associated

with it as to bring it within the power of national

regulaton.’’ 258 U.S. 517.

In the case of Douglas Co. vs. Southern Railway

Co., 216 Ill. Apps. 148, the controlling consideration

seems to have been that with one unimportant ex-

ception the shipments were in the course of transit

to the purchasers until final delivery to the pur-

chasers, and that ‘‘plaintiff maintained no place of

business in Charleston nor did it have a warehouse

there.’’ 216 Il. App. 153-154.

In the case at bar the Florida plants were in

reality distributing plants. The movement from

those plants was in its essence local.

Respectfully submitted,

FRED I. DAVIS,

Attorney General.

THEODORE T. TURNBULL, its

General Counsel to Railroad Amici CUuRIAE.

Commission.

GEORGE C. BEDELL,

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.